Fee schedules play an important role in the realm of medical billing practices. Inefficient or ineffective fee schedule practices can lead to claim rejections, claim denials, and other delays that might interrupt an otherwise consistent revenue stream.

The Centers for Medicare and Medicaid Services (CMS) sponsors a comprehensive list of charges for health care services on a fee-for-service basis. These fee schedules play a critical role in making sure that practitioners providing care are reimbursed for the treatments they provide. This includes things like:

  • Clinical laboratory services
  • Providing durable medical equipment
  • Ambulance transportation and emergency care services
  • Prosthetics
  • Orthotics
  • Miscellaneous medical supplies.

A thoughtful fee schedule helps establish a measurable breaking point between discounting a service and turning a reasonable profit. It also helps to establish a defensible fee schedule for overcoming a variety of other revenue stream problems.

Most providers find it helpful to update their fee schedule quarterly or at least annually. This serves as an up-to-date safety net to ensure that your practice isn’t missing out on any entitled revenue opportunities.

Of course, maintaining an updated fee schedule also ensures that you are keeping up with the current market dynamics. This can also factor into other overhead costs that your small practice has to deal with such as the cost of your liability insurance as well as your manageable patient volume. You can then cross-check this information with private payers and public institutions to help catch any incongruities.

How To Determine A Fee Schedule For A Small Practice

There are a few key steps and factors to keep in play when assessing the fee schedule for your practice. Taking the time to update it every fiscal quarter or at least on an annual basis will make sure your small practice is keeping up with the current market dynamics.

Perform A Self-Cost Study

Understanding your internal costs and the overhead for your small practice is vital for making sure you have the most accurate fee schedule. Some small practices and solo practitioners will do this in-house. Though if it isn’t your area of expertise, or your efforts are better focused on serving your patients, there are third-party consultants who can take care of your small practice’s cost study at a very reasonable rate.

Apply Analytics

Once you have the basic self-cost study data in hand you can analyze it by breaking the cost and margins down into hourly units of work. This will give you a comprehensive list of all overhead charges, margins, and the actual charges that your small practice incurs to provide them using the industry’s best practices. This includes material costs as well as accounting for the wages of your clinical and administrative staff.

Check Your Fee Schedule Using Relative Values

Public health institutions like the Centers for Medicaid and Medicare services use a special resource-based relative value scale or RVUs. They are input into every code. You can then multiply them by the conversion factor to get a fee schedule. Once the total cost has been calculated you can apply it to every CPT code that your practice bills. Just make sure to exclude any codes that don’t have an existing RVU.

Determine RVUs On An Annual Scale

The total cost of all your RVUs billed in a single year can then be used to determine your annual profitability. antitrust laws.

Determining The Levels Of Fee Schedule

Different public health institutions and payers may use different coding systems and may have different reimbursement rate processes. It’s important to understand some of the finer points of each to optimize the profitability of your small practice as well as improve the consistency of your revenue stream.


They have their own in-house fee schedule administers that determine the maximum amount that will be reimbursed by Medicare for a specific service. They use a basis of 7,000 unique codes, and not every code defines the exact reimbursement amount that a single small practice can assess on a claim.

It’s also worth noting that Medicare classifies different services as being primary or secondary. A primary service receives reimbursement by the Medicare fee schedule with very few exceptions. Though a secondary service may be treated dependently. The Medicare fee schedule for a specific practitioner is adjusted basis RVUs and is directly applicable to the conversion factor. At the same time, the adjustment includes the area code of the practitioner, as well as the facility, and a non-facility service.


The difference with Medicaid is that the fee schedule is determined at the state level and, therefore, the lowest fee schedule is considered to be the most favorable for Medicaid payor’s reimbursement rates. This ultimately means that the beneficiary receives less reimbursement. Though some practitioners view this as a subsidized fee schedule and by their own internal policy will not accept some patients who only have exclusive Medicaid coverage.


This is a negotiated fee schedule that involves a fair amount of back and forth between the practitioner and the payer insurance company. The reimbursement rate can also vary from one insurance provider to the next, which can make establishing the initial fee schedule a little bit tedious.

With a commercial fee schedule, the practitioner can bill any amount that they consider to be reasonable. At the same time, many insurance providers also prefer in-network practitioners for establishing commercial fee schedules. This can benefit the practitioners as it means they have a higher potential reimbursement rate for the services rendered.

However, the negotiation depends on the insurance payor, the provider, the state, and the region. Any one of which can influence the acceptable fee schedule that you as the small practice can assess when generating a claim. It ultimately depends on negotiation, the payor puts a higher commercial fee schedule if the practitioner is already part of the Medicare system.

When you factor in the current market dynamics, and the pressure from new and established patients to lower your fee schedule, outsourcing your medical billing needs to a third-party vendor might be a great way to trim your overhead costs. Not only does it ensure greater accuracy in every claim submitted, but it also frees up clinicians in your practice to spend more time serving patients and expanding the patient base, without losing countless hours to medical billing coding.