Business Case Studies & Business Publications

Physician Fee Schedule: A Primer

Herpfer, Christoph...

Technical Note

Physician Fee Schedule: A Primer

Herpfer, Christoph; Adkins, Thomas

F-2129 | Published October 21, 2025 | 4 Pages Technical Note

Collection: Darden School of Business

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This technical note provides an overview of the Centers for Medicare & Medicaid Services (CMS) physician fee schedule (PFS), which governs payment rates for physicians and health care providers under Medicare Part B. The note outlines the annual update process, covering the political and stakeholder dynamics that influence rate-setting through lobbying and public comment periods. The document explains the structure of PFS payment calculations based on relative value units (RVUs) that capture physician work, practice expenses, and malpractice costs, each adjusted for geographic variations using geographic practice cost indices (GPCIs). By detailing both the methodology and the legislative underpinnings of the PFS, this note serves as a foundational reference for understanding how Medicare reimbursement rates are established and maintained across diverse health care settings.