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AH 120 Calculating Reimbursement Methodologies
Using the Medicare Physician Fee Schedule, there are different methods to calculate the reimbursement for participating providers and non-participating providers.
Under Medicare, participating providers are reimbursed at 80% of the fee schedule amount. To calculate the reimbursement, use the following formula:
MPFS amount x 80% = This is the allowed charge.
The patient is responsible 20% of the MPFS amount, and a participating provider will accept the MPFS amount as payment in full, regardless of what he charged. The difference between the MPFS amount and the physicians charge is called a write off.
Reimbursement for non-participating providers (non-pars) is more complex.
Below are the steps for calculating the non-par reimbursement
Non-pars are reimbursed 5% less than the Medicare Physician Fee Schedule (MPFS) amount.
The non-pars may not charge the patient more than what is called the limiting charge. The limiting charge is 115% of the reduced MPFS amount.
The formula for calculating the limiting charge is :
[MPFS – (MPFS x 5%)] x 115% = limiting charge
Medicare will reimburse the non-par 80% of the reduced amount
Non-pars do not accept the MPFS amount as payment in full and may charge the patient for the difference between the limiting charge and the MPFS amount
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