Dr. Thompson wants to update the fee schedule for the office. He has asked you to select a percentage of the Medicare rate between 100% and 500% in lieu of the CMS on which to base the new fee schedule.

1. Explain the disadvantages of billing at 100% or 500% of the Medicare Fee Schedule as it relates to profitability?
2. State your recommendation and describe the reason why you would choose that percentage to determine the revised fee schedule?
3. Describe how the conversion factor for the fee schedule is determined and why is this important?