What is a Medicare Fee Schedule?

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  • Written By: Brenda Scott
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 September 2019
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Medicare is a government run, single-payer social insurance program in the United States for people over age 65, or who meet certain disability requirements. Established in 1965, the plan is funded with payroll deductions, and in the case of Medicare B, with additional premiums paid by recipients. A Medicare fee schedule is a complete listing of the maximum fees that Medicare will pay for physicians, hospitals and various medical providers and suppliers.

When Medicare was first established, physicians were compensated based upon their charges, and allowed to bill patients for any outstanding balance. In time, that method was replaced by a Medicare fee schedule which determines the reimbursement allowed to Medicare providers for different services, and limits the amount a non-Medicare provider could charge a Medicare patient. Payment levels under the Medicare fee schedule are set by federal legislation.

In the US, there are several factors which can cause differing payments to providers for similar services even though the Medicare fee schedule is used. Adjustments are made if the hospital is a teaching hospital, or if it cares for a disproportionate share of indigent patients. The fees may also be adjusted if the facility is in an area with a significantly higher cost of living than the national average.


Medicare is also the name of the publicly-funded universal health care plan in Australia. A small portion of the program cost is raised through a Medicare Levy, or income tax surcharge. Medicare reimburses patients for out-patient medical care, optometry and hospitalization. The program is open to Australian citizens, with the exception of those residing on Norfolk Island, non-citizens who hold a permanent resident visa, and citizens of New Zealand.

Limited health care is also provided to visitors from nations which have a reciprocal health care agreement with Australia. Some of these nations include the Republic of Ireland, the United Kingdom, Malta, Finland, Sweden and Italy. The level of Medicare coverage offered to visitors from these countries is generally restricted to emergency hospital treatment.

The Medicare fee schedule, which is set by the Australian government, determines the amount of benefit a patient will receive under the program, though a doctor is free to charge more for his services and bill the patient for any difference. For out-of-hospital charges, the patient may choose his own provider. Medicare will usually pay all general practitioner costs and 85% of the Medicare fee schedule amounts for out-of-hospital services. If a patient requires hospitalization, all of his costs are covered if he chooses a public hospital; if he chooses a private hospital, Medicare will cover 75% of Medicare fee schedule. If the public hospital option is made, the patient will not be able to choose his own physician, but will have one assigned to him.

The universal health care plan in Canada is unofficially referred to as Medicare. This program also uses a Medicare fee schedule to determine physician and other medical payments. Unlike the US, where the fees are set at a federal level, Canadian provinces operate as single-payers and negotiate with a provincial medical association to set payment amounts for the fee schedules.


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