Billing and Coding of Medicare Fee-for-Service Claims

Fee for service (FFS) is a traditional payment model in healthcare. With this model, the healthcare providers and clinicians are reimbursed based on the various services they provide or their procedures.

FFS model doesn’t include bundled payments. This suggests that the insurance companies or the government agencies are billed for each test, procedure, and treatment provided whenever a patient visits the healthcare provider, has a consultation, or is hospitalized. This payment method offers physicians for the volume and quantity of services provided, no matter what the outcome is.

What Is the Fee for Service Health Plan?

Before the value-based care initiative was introduced, the fee-for-service health plan was the primary health care insurance. Also known as indemnity plans, the FFS coverage is costlier; but, a fee-for-service health plan offers end-to-end independence and flexibility to those who can afford it.

With FFS, clients can freely choose their doctors and hospitals, with less interaction with the insurance provider. A fee for a service health plan demands more expenses as clients may need to pay their medical fees upfront and submit bills for reimbursement.

Billing and coding Medicare Fee-for-Service claims

Since the inception of telehealth during the COVID-19 pandemic, more Medicare Fee-for-Services are billable. We recommend you go through the updated guide to billing and coding FFS telehealth claims.

Calculating Medicare Fee Schedule Rates

The Medicare Physician Fee Schedule (MPFS) has a resource-based relative value system (RBRVS) that assigns a relative value to current procedural terminology (CPT) codes. These codes are developed and copyrighted by the American Medical Association (AMA) along with inputs from representatives of healthcare professional associations and societies.

The relative value unit or RVU is curated from a resource-based relative value scale. The elements of the RBRVS for every process are the (a) professional component; (b) technical component or the practice expense expressed in heavy costs like assistant’s time, equipment, supplies); and (c) professional liability component.

The Centers for Medicare and Medicaid Services (CMS) decides the final relative value unit (RVU) for every code, which is then multiplied by the annual conversion factor (a dollar amount) to get the national average fee. Rates are determined based on geographic indices with provider locality.

Once enrolled with a Medicare provider, you need to bill on an assignment basis and accept the Medicare allowable fee as payment in full. Medicare accepts 80% of the allowable amount of the Medicare Physician Fee Schedule (MPFS) and the patient will pay a 20% co-insurance while rendering the services or ask you to bill their Medicare supplemental policy.


Healthcare institutes use revenue codes to show the type of service provided by the facility. It describes a category of service and is entered on the UB-04. The codes are 4-digit codes “that are descriptions and dollar amounts charged for hospital services provided to a patient. The revenue code tells an insurance company whether the procedure was performed in the emergency room, operating room, or another department.”

Revenue Code 780 is used for telemedicine institutional claims billed to Medicare.


This category of CPT codes, primarily outpatient ‘office visit”, are used for telehealth, as opposed to having a separate code solely describing a telehealth E/M service. The updated guidelines were announced in 2019 for implementation in 2021. The 2021 Outpatient E/M Guidelines allow providers to bill CMS and private payors based on time or medical decision-making (MDM). The CPT codes affected are 99202-99215, only. 99201 was deleted.

Let’s take an example of a patient encounter and how you should code the interaction

Patient Named ABC

The practitioner documented a synchronous telehealth visit, with an established, follow-up patient, aged 65, for a level 3 problem (99213), with a diagnosis XX.

Insurance: Medicare


Facility Fee: For in-clinic encounters, the G0463 is billed for all outpatient evaluation and management visits.


For telehealth, CMS does not pay for distant site facility charges.

The originating site facility can bill Q3014 (originating site facility fee) and that can be submitted on the CMS 1500 or UB-04.

Finally, what if the Medicare beneficiary’s originating site address had NOT met HRSA’s guidelines?

Then you bill the same, except with a GY modifier.

The GY tells the Medicare Administrative Carrier (MAC) that the service was statutorily excluded and to not pay the practitioner.

PHE Exception: Medicare

During COVID-19, patients and providers are encouraged to remain home.

Pro Fee: 99213-95; POS 22

Distant Site Facility: Q3014 (Same place where Pro Fee took place)

If the provider is on the facility site, then G0463 may be billed with a PN modifier.

Well, we can talk more on billing and coding of Medicare fee-for-service claims but this article is meant to give you a basic idea. We are open to discussing many things over a call or helping you with your Medicare fee-for-service claim requirement for your practice.

Are you interested? Please drop us an email at and we are ready to help right away.

Read more: Medicare Payment Rules For Telehealth Billing Services

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