Definition
A fee schedule assigns a dollar amount to each procedure code. Practices keep their own fee schedule for billed charges, while payers publish or contract allowed amounts. The Centers for Medicare & Medicaid Services (CMS) updates the Medicare Physician Fee Schedule each year.
Why it matters
Your fee schedule sets billed charges, and payer fee schedules set what you actually get paid. Medicare and many commercial contracts pay the lesser of your charge or their rate. Loading payer fee schedules into your system lets you spot underpayments during posting.
Example
A practice bills $95 for a code that a commercial payer allows at $110. Under a lesser-of contract, the payer bases payment on $95, and the practice loses $15 per claim.