Fee Schedule
Definition
A fee schedule is a list of reimbursement rates a payer assigns to each CPT/HCPCS code. Medicare publishes the Medicare Physician Fee Schedule (MPFS) annually, setting rates based on the Relative Value Unit (RVU) system. Commercial payers negotiate fee schedules with providers individually, typically expressed as a percentage of Medicare rates (e.g., "130% of Medicare"). The fee schedule determines the maximum a provider will be paid for each service.
Why Fee Schedules Matter
The fee schedule is the financial backbone of every provider contract. A practice billing 99214 at $150 but contracted at $120 will receive $120 — the $30 difference is written off. Understanding your fee schedule per payer prevents underpayment and identifies renegotiation opportunities. Compare your payer fee schedules against Medicare rates annually to benchmark your reimbursement.
How Fee Schedules Work
Medicare MPFS: Each CPT code has an RVU value multiplied by the conversion factor ($33.29 for 2025). Example: 99214 has an RVU of ~3.5, so Medicare pays ~$116. Commercial payers: negotiate rates per code or as a percentage multiplier. The allowed amount on the EOB reflects the fee schedule rate. Charges above the fee schedule are written off for in-network providers.
Related Terms
CPT code — the code the fee schedule is based on. EOB — shows the allowed (fee schedule) amount. In-network — providers bound by the fee schedule. Downcoding — when the payer pays at a lower code's fee schedule rate.
Common Questions
Can I negotiate my fee schedule with commercial payers?
Yes. Commercial fee schedules are negotiable during contract renewal. Use Medicare MPFS as a benchmark, compare against other payer contracts, and present volume data to negotiate higher rates. Practices with higher patient volume and lower denial rates have stronger negotiating positions.
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This glossary is for informational purposes. Consult official billing guidelines and payer policies for definitive definitions. Last updated: 2026-04-06.