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What is a Medicare Reimbursement Schedule?

By Ken Black
Updated May 16, 2024
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A Medicare reimbursement schedule is the amount of money a doctor or medical facility will receive for a certain procedure in the United States when treating a patient covered by the Medicare program. This money is set by the United States government and can change based on a number of different factors. The Medicare reimbursement schedule is generally less than doctors will receive if a patient has private insurance or is paying personally for the procedure. Some in the medical community have criticized the lower payments and, because of that, the issue is often politicized.

The fee schedule is determined by the Physician Payment Review Commission, which recommends the schedule to Congress. Under the previous system, Medicare payments were determined by a "reasonable fee" policy, which led to big differences between health care providers. Congress has the final say in any schedule, and can potentially be swayed by constituent groups. The fee schedule is based on the relative cost of the procedure, the area, and other parts of a formula may include such provisions as a 10 percent incentive for those providers practicing in areas that have critical shortages.

If a hospital, private doctor, or other type of medical facility accepts Medicare patients, then they must also accept the Medicare reimbursement schedule. Those who try to increase income by requiring a certain co-pay from the individual are in violation of the law, if that co-pay extends beyond the maximum allowed by the schedule. While these payments may not be as much as they may get from other sources, medical providers may be more willing to accept patients because of the sheer number of individuals using Medicare. The economies of scale may still make it possible for facilities to turn a profit.

One of the major factors in determining the Medicare reimbursement schedule is the geographic location. Some procedures may receive higher payments in certain areas because of factors such as the cost of providing service. If the physician's costs are lower, then physicians in those areas may receive a lower payment. Some physicians feel this amounts to a type of geographical discrimination, where states with higher populations, and thus more influence in Washington, D.C., get more benefits for certain constituent groups. Others argue the practice helps keep costs down and provides a fair payment for everyone based on costs.

The Medicare reimbursement schedule outlines payments that the federal government will pay directly, and payments that the patient is responsible for paying. For example, if Medicare will pay 80 percent of a certain procedure, then the patient is responsible for the rest. This is one of the only legal times a Medicare patient can be billed. One of the other major exceptions is when the procedure being done is not covered under the Medicare reimbursement schedule.

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