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April 24, 2013 - Revised: 03.06.15

Medicare Physician Fee Schedule (MPFS): How Are Fees Calculated?

Medicare contractors, including CGS, reimburse some services based on the CMS Medicare Physician Fee Schedule (MPFS). CMS calculates fee schedule amounts and provides these amounts directly to Medicare contractors, including CGS, and these amounts become the basis for payment for services that are paid based on the MPFS. This article explains how the fees are calculated based on a standard formula and the following variables:

  • Geographic Practice Cost Index (GPCI)
  • Practice Expense (PE), which differs for facility vs. non-facility settings and is adjusted based on the GPCI
  • Malpractice Insurance (MP), which is adjusted based on the GPCI
  • Conversion Factor (CF), which adjusts fees by state
  • In the formula below, RVU stands for Relative Value Units

Formula

The formula for calculating the MPFS, from the CMS websiteExternal Website, uses the Fully Implemented Non-Facility PE RVU instead of the Transitioned Non-Facility PE RVU:

2015 Non-Facility Pricing Amount =
[(Work RVU * Work GPCI) +
(Fully Implemented Non-Facility PE RVU * PE GPCI) +
(MP RVU * MP GPCI)] * Conversion Factor (CF)

Conversion Factor (CF) for January-March 2015 = $35.7547

Examples: how does the math work?

Ohio example: CPT code 99213, non-facility setting

Work RVU: 0.97
Work GPCI: 1.00
Fully Implemented Non-Facility PE RVU: 1.01
PE GPCI: 0.918
MP RVU: 0.06
MP GPCI: 0.993

[(0.97 * 1.00) + (1.01 * 0.918) + (0.06 * 0.993)] * .35.7547 = MPFS amount
(0.97 +  0.92718 + 0.05958) * .35.7547 = MPFS amount
1.956576  .35.7547 = $69.9633668 (round to $69.96)

Kentucky example: CPT code 96422, non-facility setting

Work RVU: 0.17
Work GPCI: 1.00
Fully Implemented Non-Facility PE RVU: 4.51
PE GPCI: 0.872
MP RVU: 0.10
MP GPCI: 0.795

[(0.17 * 1.00) + (4.51 * 0.872) + (0.10 * 0.795)] * $35.7547 = MPFS amount
(0.17 + 3.93272 + 0.0795) * $35.7547 = MPFS amount
4.18222 * $35.7547 = $149.534021 (round to $149.53)

Ohio example: CPT code 45378 (no modifiers), facility setting

Work RVU: 3.69
Work GPCI: 1.00
Fully Implemented Facility PE RVU: 1.94
PE GPCI: 0.918
MP RVU: 0.56
MP GPCI: 0.993

[(3.69 * 1.00) + (1.94 * 0.918) + (0.56 * 0.993)] * $35.7547 = MPFS amount
(3.69 + 1.78092 + 0.55608) * $35.7547 = MPFS amount
6.027 * $35.7547 = $215.493577 (round to $215.49)

Reference:


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