Physician Fee Schedule

Since 1992, Medicare payment has been made for physicians’ services under the PFS to the physicians, health care practitioners, and other suppliers that furnish these services (referred to collectively in this section as suppliers). Physicians’ services paid under the PFS are furnished in a variety of 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. PFS 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 physicians’ services furnished in the office setting, Medicare makes payment to the supplier at a single rate based on the full range of resources involved in furnishing the service. In contrast, PFS rates paid for most services furnished in facility settings, such as an HOPD or an ASC, reflect only the resources typically incurred by the supplier in the course of furnishing the service outside the office setting.

For many diagnostic tests and certain other physicians’ services, separate payment may be made under the PFS for the professional and technical components of services when they are furnished by different suppliers. The technical component is frequently billed by suppliers like independent diagnostic testing facilities and radiation treatment centers, while the professional component is billed by a physician or other health care practitioner.

PFS payment rates are based on the relative resources typically used to furnish the service which are reflected by three categories of relative value units (RVUs) established by CMS for each service for work, practice expense, and malpractice expense. These RVUs are converted into PFS payment rates through the application of a fixed-dollar conversion factor. Geographic adjusters (geographic practice cost indexes) are also applied to the RVUs to adjust for variation in resource costs by geographic area. PFS payment rates are modified each year through notice and comment rulemaking to reflect any statutory payment updates to the conversion factor and other changes.

For more information, refer to:

• Physician Fee Schedule
• PFS Lookup Tool
• Physician Center

Contractor-Priced Services

In some instances, an item or service coverable when furnished in a physician’s office does not have a national payment rate under the PFS. When that happens, each Medicare Administrative Contractor (MAC) establishes an appropriate payment rate for the item or service in their area. Most of the contractor-priced items or services are low-volume, or are new items or services that are not accurately described by established HCPCS codes and are therefore billed using not otherwise classified (NOC) codes.