The purpose of this article is to explain how the Medicare Physician Fee Schedule (MPFS) amount is calculated.
Methodologies
Medicare Part B contractors and the Centers for Medicare & Medicaid Services (CMS) use several methodologies to calculate reimbursement. The allowance for procedures submitted to Medicare may be based on:
Medicare Physician Fee Schedule (MPFS)
- CMS calculates the physician fee schedule payment amounts and releases them to carriers in the Medicare Physician Fee Schedule Database (MPFSDB). The MPFSDB is updated periodically throughout the year.
- These fee schedule amounts are calculated according to a formula established by Congress
- Physicians may provide feedback to CMS on payment and other national Medicare issues through national, state, or local medical or specialty societies. For example:
- Society of Cardiovascular and Interventional Radiology
- American College of Radiology
- Radiology Business Management Association
- American Healthcare Radiology Administrators
- American Medical Association
Calculating the MPFS
- The fee schedule amount is the product of three numbers: Relative Value Units (RVUs), Geographic Practice Cost Index (GPCI) and the Conversion Factor (CF)
- RVUs are established for physician work, practice expense (PE) and malpractice. Work RVUs are reduced by the Budget Neutrality (BN) factor, which is published annually in the Federal Register
- GPCIs are established to adjust each RVU component geographically
- The CF is a national number established by Congress
- RVUs, GPCIs and the CF are published in the Federal Register
- Radiology services may be subject to additional reductions
- CMS has modified the multiple procedure payment reduction to the technical component of certain diagnostic imaging procedures
- CMS has also implemented a procedure-specific payment cap on the technical component payment of imaging procedures effective 1/1/2007, as required by the Deficit Reduction Act of 2005
- For additional information on reimbursement for radiology services, please refer to MLN Matters article SE0665 (PDF, 303 KB)
Steps to calculate the MPFS amount:
- Multiply Work RVUs by the Budget Neutrality Factor (BN) (for 2009, the BN is 1.0008)
- Multiply the answer from step 1 by the Work GPCI. This is the 'physician work' component of the MPFS
- Multiply the Practice Expense RVUs by the Practice Expense GPCI. This is the 'practice overhead expense' component of the MPFS.
- Multiply the Malpractice RVUs by the Malpractice GPCI. This is the malpractice component of the MPFS.
- Add the outcomes from Steps 2, 3, and 4
- Multiply the outcome from Step 5 by the Conversion Factor (CF): this is the MPFS amount (note: the CF is different for each state; refer to the examples for specifics)
Examples:
(Note: When applying the 1.0008 work adjustor to the work RVU, round the product to two decimal places.)
Example 1: CPT code/CPT modifier 71010-26, facility setting, West Virginia
2009 Facility Pricing Amount = [((Work RVU * Budget Neutrality Adjustor (1.0008)) (round product to two decimal places) * Work GPCI) + (Transitioned Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor
- Work RVU (0.18) times Budget Neutrality Factor (1.0008) = 0.18 (rounded to two decimal places)
- Transitioned Facility PE RVU (0.06) times PE GPCI (0.827) = 0.04962
- MP RVU (0.01) times MP GPCI (1.353) = 0.01353
- Add results from steps 1-3: 0.18 + 0.04962 + 0.01353 = 0.24315
- Multiply results of step 4 times conversion factor: 0.24315 x 36.0666 = $8.77. This is the fee schedule amount.
Example 2: CPT code 20550, non-facility setting, Ohio
2009 Non-Facility Pricing Amount = [((Work RVU * Budget Neutrality Adjustor (1.0008)) (round product to two decimal places) * Work GPCI) + (Transitioned Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor
- Work RVU (0.75) times Budget Neutrality Factor (1.0008) = 0.75 (rounded to two decimal places)
- Transitioned Non-Facility PE RVU (0.65) times PE GPCI (0.927) = 0.60255
- MP RVU (0.09) times MP GPCI (1.232) = 0.11088
- Add results from steps 1-3: 0.75 + 0.60255 + 0.11088 = 1.46343
- Multiply results of step 4 times conversion factor: 1.46343 x 36.0666 = $52.78. This is the fee schedule amount.
Example 3: CPT code 99213, non-facility setting, South Carolina
2009 Non-Facility Pricing Amount = [((Work RVU * Budget Neutrality Adjustor (1.0008)) (round product to two decimal places) * Work GPCI) + (Transitioned Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor
- Work RVU (0.92) times Budget Neutrality Factor (1.0008) = 0.92 (rounded to two decimal places).
- Transitioned Non-Facility PE RVU (0.75) times PE GPCI (0.906) = 0.6795
- MP RVU (0.03) times MP GPCI (0.446) = 0.01338
- Add results from steps 1-3: 0.92 + 0.6795 + 0.01338 = 1.61288
- Multiply results of step 4 times conversion factor: 1.61288 x 36.0666 = $58.17. This is the fee schedule amount.
Other Notes About the MPFS
Anesthesia services are priced differently from other CPT and HCPCS codes. Reimbursement for anesthesia services is calculated using a special anesthesia conversion factor, which is also published in the Federal Register.
The MPFS is used as the basis for calculating reimbursement for other provider types besides physicians.
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Provider Type
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Basis for Calculating Reimbursement
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Physician Assistant
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Lesser of one of the following:
- 80 percent of submitted charge
- 85 percent of MPFS
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Nurse Practitioner
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Lesser of one of the following:
- 80 percent of submitted charge
- 85 percent of MPFS
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Clinical Nurse Specialist
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Lesser of one of the following:
- 80 percent of submitted charge
- 85 percent of MPFS
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Clinical Nurse Midwife
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65 percent of MPFS
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Clinical Psychologist
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100 percent of MPFS
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Clinical Social Worker
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75 percent of Clinical Psychologist rate (same as 75 percent of MPFS)
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Fee Schedule Answers!
- How can I find out the current fee schedule amount in the MPFS for a particular CPT code?
Option 1: Go directly to the CMS Web site: www.cms.hhs.gov/PFSlookup/
Option 2: Access the Palmetto GBA Web site (be sure to access the most current version of the fee schedule):
Tip: Search the Excel version of the fee schedule by hitting 'Control' and 'F', then type in the CPT or HCPCS code.
- What if my code is not listed in the MPFS?
- Your code may be priced on a fee schedule other than the MPFS. Check the other fee schedules, if appropriate, to locate the reimbursement amount.Reference the list at the beginning of this article.
- Your code may be designated as 'carrier priced' in the MPFS, which means that the MPFS will not contain a fee schedule amount. Carrier priced codes are listed in the 2009 Coding & Reimbursement Update, which is available on our Web site under the link to Medicare Advisories. Tip: some carrier priced amounts are available on the Palmetto GBA Web site. See Option 2 (above) for Web site addresses. Amounts for carrier priced codes for 2008 and 2009 are included in the MPFS file on the Palmetto GBA Web site.
- How does Palmetto GBA communicate changes in the fee schedule?
Changes are made in the fee schedule throughout the year, most often on a quarterly basis. When a change is made in a fee schedule amount or another aspect of the MPFS, Palmetto GBA publishes the information in the 'Medicare Advisory' and on our Web site, usually in the form of a MLN Matters article. We will also post the updated information on the Fee Schedules pages of our Web site.
If the entire fee schedule changes, Palmetto GBA will republish the complete list of procedure codes/modifiers and MPFSDB indicators.
Tip: Be the first to know about these changes by registering to receive e-mail notifications.
- Can I ask for payment adjustments if the fee schedule changes in the middle of the calendar year?
When a fee schedule change is made mid-year, the change will be published in the Medicare Advisory and on our Web site, and is also communicated via MLN Matters articles. At the time that Medicare contractors are officially notified of fee schedule changes, CMS instructs carriers how adjustments may be made. Most commonly, providers must submit redetermination requests for payment adjustments. It is important to refer to MLN Matters articles and other educational information published by Palmetto GBA to find out specific instructions about requesting adjustments for each change that is made.
Resources: