# Allied Health 120

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

1. Non-pars are reimbursed 5% less than the Medicare Physician Fee Schedule (MPFS) amount.
2. 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.
3. The formula for calculating the limiting charge is :

[MPFS – (MPFS x 5%)] x 115% = limiting charge

1. Medicare will reimburse the non-par 80% of the reduced amount
2. 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

Example: The MPFS amount is \$80.

[\$80 – (\$80 x 5%)]) x 115% =

[\$80 – \$4] x 115% =

\$76 x 115% = \$87.40

Medicare will reimburse the non-par based on the \$76.

\$76 x 80% = \$60.80 This is the allowed charge.

and the patient is responsible for the difference between the amount reimbursed by Medicare and the limiting charge. In this case: \$87.40 – \$60.80 = \$26.60

1. Calculate the following amounts for a participating provider who bills Medicare

Submitted charge \$75

Medicare physician fee schedule \$60

Coinsurance amount \$12

Medicare payment (80%) ________

Medicare write-off ________

1. Calculate the following amounts for a nonPAR who bills Medicare

Submitted charge \$650

NonPAR Medicare physician fee schedule allowed amount \$450

Limiting charge (115% of MPFS allowed amount) ________

Medicare payment (80% of the MPFS allowed amount) ________

Beneficiary is billed 20% plus the balance of the limiting charge \$157.50

Medicare write (NOT to be paid by Medicare or beneficiary) ________

3. Calculate the non-par limiting charge for a MPFS allowed charge of \$75

4. Calculate the non-par allowed charge for a MPFS amount of \$75.