When a patient receives medical treatment after a motor vehicle accident in Florida, the amount ultimately paid to the medical provider is often not the same as the amount billed. This is because insurers frequently reimburse providers based on fee schedules, rather than the provider’s full charges. Understanding how Medicare fee schedules works is essential to understanding Personal Injury Protection (PIP) reimbursement in Florida.
What Is a Physician Fee Schedule?
A physician fee schedule is a predetermined list of reimbursement amounts assigned to specific medical services and procedures. Each service is identified by a billing code (such as a CPT or HCPCS code), and the fee schedule establishes how much an insurer will pay when that service is performed.
Medicare Fee Schedules Explained
The Medicare Physician Fee Schedule is created and maintained by the Centers for Medicare and Medicaid Services (CMS), a federal agency within the U.S. Department of Health and Human Services.
Medicare reimburses physician services using a system that includes:
- Over 7,000 medical billing codes
- Relative Value Units (RVUs) assigned to each service
- A conversion factor that translates RVUs into a dollar amount
- Geographic adjustments, which account for differences in practice costs based on location
- Place of service adjustments, distinguishing between facility and non-facility settings
Not every code has a standalone reimbursement amount. Some services are considered secondary or bundled services and are reimbursed as part of a primary service rather than paid separately.
Medicare fee schedules are designed to standardize payments and, when operated efficiently, are intended to allow providers to remain profitable while controlling costs.
How Florida PIP Uses Fee Schedules
Florida’s PIP statute allows insurers to limit reimbursement by using a fee-schedule methodology rather than paying 80% of the provider’s billed charges.
Under § 627.736(5)(a), Florida Statutes, an insurer may limit reimbursement to 80 percent of the following schedule of maximum charges, which includes:
- 200% of the applicable Medicare Part B fee schedule for most physician services
- 200% of the Medicare Part B fee schedule for durable medical equipment
- Hospital and emergency services reimbursed under separate Medicare-based methodologies
This means the insurer does not look at what the provider charged but looks at what Medicare would allow, applies the statutory multiplier, and then pays 80% of that amount, subject to policy limits and deductibles.
Key Distinction: Charges vs. Reimbursement
Under Florida PIP:
- Providers are allowed to bill their usual and customary charges
- Insurers are permitted to reimburse based on the statutory fee schedule
- The statute controls how much the insurer must pay, not what the provider may charge
This distinction is the source of many PIP disputes.
Geographic and Locality Adjustments Matter
Just like Medicare, PIP fee schedule calculations depend on geographic locality. Medicare reimbursement amounts vary by region, meaning the same CPT code may have different allowable amounts depending on where the provider is located.
Florida insurers are required to use the applicable Medicare fee schedule in effect on the date of service, including any locality-specific adjustments.
Why Fee Schedules Are Central to PIP Litigation
Fee schedules are one of the most litigated issues in Florida PIP cases because disputes commonly arise over:
- Whether the insurer properly elected the fee schedule in the policy
- Whether the insurer used the correct Medicare year
- Whether the insurer applied the correct locality
- Whether deductibles were applied before or after the fee schedule
- Whether the insurer improperly bundled or downcoded services
Understanding how Medicare fee schedules work is therefore essential to evaluating whether a PIP payment is correct.
Note: This article is for general educational purposes only and does not constitute legal advice. Application of Florida PIP statutes may vary based on policy language and specific claim facts.
