Reimbursement

Nuts and Bolts of the US Medicare Reimbursement System

2024 Outpatient Prospective Payment System (OPPS) 11.28.2023

*N/A = Status Indicator B – Not recognized by OPPS when submitted on an outpatient Part B bill type.

For more information regarding Hospital Outpatient Prospective Payment System (OPPS):  OPPS | CMS

Medicare Physician Fee Schedule (MPFS) Background

Since 1992, Medicare payment has been made under the PFS for the services of physicians and other billing professionals. Physicians’ services paid under the PFS are furnished in various settings, including physician offices, hospitals, ambulatory surgical centers (ASCs), skilled nursing facilities and other post-acute care settings, hospices, outpatient dialysis facilities, clinical laboratories, and beneficiaries’ homes. Payment is also made to several types of suppliers for technical services, most often in settings for which no institutional payment is made.

For most services furnished in a physician’s office, Medicare makes payment to physicians and other professionals at a single rate based on the full range of resources involved in furnishing the service. In contrast, PFS rates paid to physicians and other billing practitioners in facility settings, such as a hospital outpatient department (HOPD) or an ASC, reflect only the portion of the resources typically incurred by the practitioner in the course of furnishing the service.

For many diagnostic tests and a limited number of other services under the PFS, separate payment may be made for the professional and technical components of services. The technical component is frequently billed by suppliers, like independent diagnostic testing facilities and radiation treatment centers, while the professional component is billed by the physician or practitioner.

Payments are based on the relative resources typically used to furnish the service. Relative value units (RVUs) are applied to each service for work, practice expense, and malpractice expense. These RVUs become payment rates through the application of a conversion factor. Geographic adjusters (geographic practice cost index) are also applied to the total RVUs to account for variation in practice costs by geographic area. Payment rates are calculated to include an overall payment update specified by statute.  Source:  Centers for Medicare and Medicaid Services:  Calendar Year (CY) 2023 Medicare Physician Fee Schedule Final Rule | CMS

2024 Medicare Physician Fee Schedule