Resource Based Relative Value System

[(Physician Work RVU)x(Work GPCI)] + [(Practice Expense RVU)x(Practice Expense GPCI) + [(Malpractice Expense RVU)x(Malpractice Expense GPCI)] X Conversion Factor = Fee Schedule Payment Amount

Background

Since 1992, physicians have been reimbursed under a fee schedule based on a national, uniform relative value scale

The scale has been transitioning to a resource-based methodology, away from historical costs and payment rates

HCFA uses two data sources : the Socioeconomic Monitoring System (SMS) and the Clinical Practice Expert Panel (CPEP) survey

RVU Components

Each CPT code has a numeric value assigned to it for physician work, practice expense and malpractice

These three components add up to the Total RVU’s for each CPT code

For example : 99213 = 1.32 rvus 99203 = 2.39 rvus 99214 = 2.06 rvus 99204 = 3.47 rvus

Physician Work

The work component measures physician effort, time and expertise

For example : 99213 - office visit = 0.67 w rvus 99214 - office visit = 1.10 w rvus 99291 - critical care first hour - 4.00 w

rvus 47135 - liver transplant - 81.52 w rvus

Practice Expense

The practice expense component measures the use of overhead, such as staff and facilities

For example : 99213 - office visit = 0.62 pe rvus 99214 - office visit = 0.92 pe rvus 59400 - obstetrical care = 15.03 pe rvus

Malpractice

The malpractice component measures the use of liability coverage for physicians, equipment and staff

For example : 99213 - office visit = .03 mp rvus 99214 - office visit = .04 mp rvus 59400 - obstetrical care = 4.14 mp rvus

Facility versus Non-Facility

Government payors differentiate between facility (hospital) and non-facility(office) rates. The practice expense component changes - work and malpractice remain the same.

This is referred to as the site of service differential

Not all codes have a site of service differential.

Facility versus Non-Facility

For example :Non-Facility PE

Facility PE

99214 - office visit 0.92 0.37 99223 - hospital care 1.11 1.11 43239 - upper GI endo 4.65 1.76 26720 - tx fracture 2.41 1.33 33821 - revision vessel 17.46 17.46

The non-facility rate is higher, because the practice covers the overhead costs

Benchmarking Data

Physician work RVUs/year provide a national measurement with which to benchmark physician activity. Median production varies by specialty.

For example : general internal medicine = 3,814 w rvus/yr general pediatrics = 4,003 w rvus/yr orthopedic surgery = 6,402 w rvus/yr cardiovascular surgery = 7,895 w rvus/yr

Pro, Tech and Global

HCFA defines the component of certain codes as Pro and Tech

Most of these codes have an “equipment” component and a “physician interpretation” component

HCFA uses modifiers as follows : 26 = Professional component TC = Technical component

Pro, Tech and Global

71010 - chest x-ray 71010 = 0.76 rvus 71010 - 26 = 0.26 rvus 71010 - TC = 0.50 rvus

93510 - heart catheterization 93510 = 45.00 rvus 93510 - 26 = 6.79 rvus 93510 - TC = 38.21 rvus

Note - pro plus tech equals global

UCSF - One more Layer of Pro, Tech and Global

Because of the routing of charges to IDX and SMS, UCSF uses prefixes to differentiate pro and tech components

Prefix 3 = pro = work plus malpracticePrefix 7 = tech = practice expensePrefix 2 or no prefix = globalFor example :

99213 - pro = 0.70 rvus; tech = 0.62 rvus; global = 1.32 rvus

Modifiers

Certain modifiers affect reimbursement.For example :

Modifier 62 - two surgeons = 62.5% Modifier 80 - assistant surgeon = 16%

Many modifiers do not have federal guidelines associated with reimbursement. Treatment of modifiers varies by payor

GPCI : Geographic Practice Cost Index

The GPCI takes into account geographic differences in wages, malpractice, etc. Each RVU component has a GPCI component. National average GPCI = 1.

For example :Work PE MP

San Francisco 1.067 1.378 0.677 Los Angeles 1.055 1.169 0.901 Tennessee 0.975 0.900 0.572

Conversion Factor

The national conversion factor for 2001 is $38.2581

The conversion factor converts the RVU to a fee

Multiply each RVU component by its GPCI value and total the RVU. Multiply this total by $38.2581

Conversion Factor

For example :99214 - office visit at 100% RBRVS

San Francisco = $94.44 Los Angeles = $86.92 Tennessee = $73.58

99214 - office visit at our various contract rates 85% RBRVS = $80.27 125% RBRVS = $118.05

Budgeting Data

National data - all specialties Physician work = 54.5% Practice expense = 42.3%

employee costs = 16.8%occupancy = 11.6%other operating expenses = 13.9%

Malpractice = 3.2%How do each of our departments compare?

How does revenue break-down compare to expense break-down?

Contracting Data

What % of RBRVS is a good contract?When does more volume equal profit,

and when does more volume equal loss?Do our contracted rates cover our costs?Are our contracts using the current year

RVU table and the San Francisco GPCI?What are our high volume codes (99214)

that we need to price appropriately?

Where do I get more info?

Go to http://www.cms.hhs.gov/center/physician.asp and look for links under Billing/Payments section. Tables can be downloaded (you need unzip software). Some are in text format (if they are huge). Most are in excel. A word document accompanies each download which explains the various data elements.