ReimbursementQuestion 69 of 100
In the Medicare Physician Fee Schedule, the payment for a service is calculated by:
a.Multiplying the billed charge by the deductible
b.Adding the copay to the coinsurance
c.Multiplying the total relative value units by a conversion factor (after geographic adjustment)
d.Dividing the allowed amount by the number of diagnoses
Explanation
Medicare payment equals the sum of geographically adjusted relative value units multiplied by a national conversion factor expressed in dollars. The conversion factor translates the relative values into an actual payment amount. Understanding this formula clarifies why identical services can pay differently across regions.
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