Calculation and Update of Payment Rates (Rev. 1, 10-01-03)

by  Jared Staheli
June 17th, 2015

Section1834 of the Act requires the use of fee schedules under Medicare Part B for reimbursement of durable medical equipment (DME) and for prosthetic and orthotic devices, beginning January 1 1989. Payment is limited to the lower of the actual charge for the equipment or the fee established.

Beginning with fee schedule year 1991, CMS calculates the updates for the fee schedules and national limitation amounts and provides the contractors with the revised payment amounts. The CMS calculates most fee schedule amounts and provides them to the carriers, DMERCs, FIs and RHHIs. However, for some services CMS asks carriers to calculate local fee amounts and to provide them to CMS to include in calculation of national amounts. These vary from update to update, and CMS issues special related instructions to carriers when appropriate.

Parenteral and enteral nutrition services paid on and after January 1, 2002 are paid on a fee schedule. This fee schedule also is furnished by CMS. Prior to 2002, payment amounts for PEN were determined under reasonable charge rules, including the application of the lowest charge level (LCL) restrictions.

The CMS furnishes fee schedule updates (DMEPOS, PEN, etc.) at least 30 days prior to the scheduled implementation. FIs use the fee schedules to pay for covered items, within their claims processing jurisdictions, supplied by hospitals, home health agencies, and other providers. FIs consult with DMERCs and where appropriate with carriers on filling gaps in fee schedules.

The CMS furnishes the fee amounts annually, or as updated if special updates should occur during the year, to carriers and FIs, including DMERCs and RHHIs, and to other interested parties (including the Statistical Analysis DMERC (SADMERC), Railroad Retirement Board (RRB), Indian Health Service, and United Mine Workers).


Calculation and Update of Payment Rates (Rev. 1, 10-01-03). (2015, June 17). Find-A-Code Articles. Retrieved from

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