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What You Should Know About the Medicare Fee Schedule

What Is the Medicare Physician Fee Schedule?

The Medicare Physician Fee Schedule (MPFS) is the formula that Medicare uses to pay doctors and other medical care providers for their services. The MPFS is a standardized system that determines costs and reimbursements for a variety of medical services, while factoring in for geographical variability. These services include physician consultation time, laboratory services, ambulance services, and medical equipment.

How Is the Medicare Physician Fee Schedule Determined?

Medicare determines how much it will pay for a medical service by assigning a value to three elements of the expense. These elements are:

  1. Resource-Based Relative Value Scale (RBRVS): This is a price that is assigned to the medical service itself. These services may range from a doctor’s office visit to a ride in an ambulance.
  2. Geographical Practice Cost Index (GPCI): The RBRVS may be adjusted based on the geographical location where the medical service was provided. Different geographical areas demand differences in costs and wage prices.
  3. Monetary Conversion Factor (CF): The conversion factor converts the RBRVS into a dollar amount. The CF changes yearly.

A mathematical formula using each of these three elements determines how much a doctor or medical provider will be paid.

What Does the Fee Schedule Mean for Me?

Medicare is a coinsurance plan. That means you’re responsible for a portion of your medical expenses, while Medicare covers the remainder. The MPFS decides how much a medical procedure or service is worth, or how much the medical provider should be paid.

Medicare will pay 80 percent of the fee they determine is right for the service. You are responsible for the remaining 20 percent. This 20 percent is your coinsurance.

Once you meet your yearly deductible, you will pay your coinsurance on every medical expense throughout the year. If you meet your yearly out-of-pocket maximum, you won’t have any additional coinsurance expenses until the next year begins.

Why the Fee Schedule Matters

The fee schedule helps you understand how much you can expect to pay out-of-pocket for a specific medical service. For a doctor’s office visit, that may not be expensive. However, if you’re looking to have a more costly procedure, such as a knee replacement, you may decide you want to limit your expenses.

A hospital or rehabilitation facility should be able to provide you with an estimated fee schedule. From that, you can determine how much you will have to pay out of pocket.

If you’re trying to limit your expenses, do your research. Contact hospitals in your area to compare prices and costs. You may be able to get the same procedure with the same quality level of care at a significantly lower cost.

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