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Secrets of the Medicare Physician Fee Schedule


The Medicare Physician Fee Schedule is packed with information that guides coding and leads to better reimbursement. So why not do your homework?

When medical practices think about Medicare's Physician Fee Schedule (PFS) the first thing that comes to mind is relative value units (RVUs). And while RVUs are important, the PFS is packed with information that guides coding and reimbursement for Medicare patients. Many commercial payers adopt both the RVUs and the payment indicators from the PFS and use them in processing claims, as well.

The PFS is released in draft form each year in the Proposed Physician Rule and is finalized in late October in the final rule. RVUs get most of the attention because RVUs measure physician work and determine payment. CMS assigns CPT codes three values: work RVUs; practice expense RVUs; and malpractice expense RVUs. Work RVUs have become the most common measure of physician work, used in compensation agreements and to distribute bundled payments. Each of the three values is multiplied by Geographic Practice Cost Indices (resulting in different payments for the same CPT code, based on location), and then the sum is multiplied by a conversion factor to calculate how much is paid for the service. Some procedure codes have both facility and non-facility values- the practice value is lower than the facility value. Non-facility rates are higher and apply when the service is performed in a physician office or the patient's home.

In addition to the Excel file that contains these values and payment indicators, there is a Word file that defines the payment indicators. For example, the first non-RVU column is the status indicator. Some of the common indicators are A for active codes, B for bundled codes, and N for noncovered services. Anticoagulation therapy, CPT codes 99363-99364, has a status indicator of bundled - indicating that a medical practice could not bill the patient when Medicare denies the service. Telephone calls, CPT codes 99441-99443, have a status indicator of noncovered -a medical practice could bill the patient for those services. Lab services are paid under the lab fee schedule and have a status indicator that reflects that.

The PFS also provides the global days for surgical services, the breakdown between the technical and professional component for diagnostic services, and the physician supervision required for diagnostic tests. Surgical practices can discover if a procedure can be reported as a bilateral procedure, when an assistant at surgery is allowed, and when co-surgeons may be reported. The PFS also lists the percentage of surgical procedures that are preoperative, intraoperative and postoperative.

Medical practices can access this information in many ways. The PFS is available for download for free from the CMS website. A user may search for individual codes using the online PFS search function.

There are also many commercial resources available that make accessing the data easier. There are books for specialties that show RVUs, global days, covered diagnosis codes, and bundling edits. There are software programs available for a fee that make it easy to look up all of the information in the PFS. However a medical practice accesses the data, the information contained in the physician fee schedule is critical to proper coding and reimbursement.

Betsy Nicoletti is the founder of Codapedia.com. She is the author of “A Field Guide to Physician Coding.” She believes all physicians can improve their compliance and increase their revenue through better coding. She may be reached at betsy.nicoletti@gmail.com or 802 885 5641.

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