1. Revenue Cycle Inc SROA/ASTRO Meeting Denver 2005

2. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 2 RBRVS in 4 Phases Section 121 of the Social Security Act Amendments of 1994 required HCFA to replace the existing charge-based practice expense relative value units for all Medicare Physician Fee Schedule services with new resource-based ones. The Balanced Budget Act of 1997 required a four-year transition from the existing charge-based system to the new resource-based system beginning on January 1, 1999. In 1999, the practice expense relative value units are based on 75 percent of the charge-based system and 25 percent of the resource-based system. In 2000, they are based on 50 percent of the charge-based system and 50 percent of the resource-based system. In 2001, they are based on 25 percent of the charge-based system and 75 percent of the resource- based system. In 2002, the practice expense relative value units were based entirely on the resource-based system.

3. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 3 RVU - What is it (Riding Virtual Unicorns??) Medicare uses a resource-based relative value scale (RBRVS) to reimburse physicians. Under this system, medical procedures are ranked according to the relative costs of resources required to perform the procedures. Medicare implements RBRVS by assigning three different types of relative value units (RVUs) for every procedure listed on its fee schedule: an RVU for physician work, an RVU for practice expense, and an RVU for professional liability insurance. The sum of these three relative value units is multiplied by a dollar conversion factor, and the result is a payment rate for a particular procedure.

4. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 4 Practice Expense The trend of decreasing practice expense payment for many procedures is mainly the result of Medicare’s decision to transition to resource-based practice expense RVUs. Medicare began the transition in 1998 and completed this task in 2002. Since the transition to resource-based practice expense RVUs is complete, there have been fewer fluctuations in practice expense payments.

5. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 5 Why do Surveys Matter Anyway??? When you receive a survey from ASTRO, ACRO, SROA, ASRT, AFROC or some other entity, complete it to the best of your ability. The data you submit is combined for cummulative study. If you fail to report data, we may have numbers filled with errors that can not be corrected by statistical smoothing and averaging. 23 Free standing centers answered the ASTRO practice expense survey 67 Hospital Based Centers answered the ASTRO practice expense survey CMS reviews these type surveys to make national decisions!!

6. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 6 Practice Expense Accuracy is necessary but how do we get it? ASTRO randomly chose 1000 Radiation Oncologists from the 3356 listed in the AMA physician master file. 103 had bad or missing phone numbers 545 were not available or refused to be survey 197 were screened and disqualified as ineligible 115 completed the survey, of the 115 only 90 were used! The survey failed to meet established criteria set by CMS.

7. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 7 Practice Expense Per Hour Figures for 2006 SpecialtyClinical Staff Admin. Staff Office Expense Med supplies Med EquipOtherTotal Radiation Oncology 39.020.431.13.821.722.0138.0 Radiology 22.829.718.88.821.435.2136.7 Allergy 62.153.162.121.25.929.3233.7

8. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 8 Liability Insurance Medicare revised all professional liability insurance RVUs for 2005. It adopted a specialty-weighted approach where professional liability insurance RVUs are based upon the weighted average of the risk factors for all specialties performing a given service. In addition, Medicare used updated data to calculate professional liability insurance RVUs. This included actual 2001 and 2002 malpractice premium data, projected 2003 premium data, and actual 2003 Medicare payment data on allowed services and charges. For several specialities, the overall impact of these changes is that professional liability insurance RVUs for many procedures will increase by approximately 0.4%. However, it is important to remember that changes in professional liability RVUs will not significantly affect payment rates because professional liability insurance accounts for only 3.9 percent of the reimbursement rate for a procedure.

9. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 9 Conversion Factor The conversion factor is a multiplier used to convert RVUs into dollar amounts. A change in the conversion factor affects payment for all procedures and services under the Medicare fee schedule. The conversion factor for 2005 was $37.89, which was a 1 percent increase from 2004. Medicare normally updates the conversion factor each year through a complex formula specifically defined by federal statute. Under this formula, the 2005 conversion factor would have decreased 3.3 percent. This cut was averted because Congress mandated in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that the update to conversion factor for 2005 could not be less than 1.5 percent.

10. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 10 Historical Conversion Factors 200036.6137 200138.2581 200236.1992 200336.7856 200437.3374 200537.8975

11. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 11 GPCIs (Great People Choose Idiots?) The Medicare physician fee schedule amounts are adjusted to reflect the variation in practice costs from area to area. A geographic practice cost index (GPCI) has been established for every Medicare payment locality for each of the three components of a procedure’s relative value unit (i.e., the RVUs for work, practice expense, and malpractice). The GPCIs are applied in the calculation of a fee schedule payment amount by multiplying the RVU for each component times the GPCI for that component.

12. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 12

13. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 13 One of those easy equations! Non-Facility Pricing Amount = [(Work RVU * Work GPCI) + (RB Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor

14. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 14 77301 IMRT Planning How does this finally make it to us? IllinoisSuburban Chicago Technical $1249.50 Professional $437.52 Chicago$1278.50$446.87 Rest of IL$999.43$406.36 Alabama$950.35$397.44 Arizona$1102.50$414.57 Colorado$1106.60$412.28 Alaska$1861.30$693.01

15. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 15 IMRT Planning in CA

16. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 16 IMRT Planning $ in Texas

17. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 17 IMRT $ Planning 77418 IMRT Treatment Delivery (MLC only) 0073T IMRT Treatment Delivery for Compensator-based beam modulation treatment delivery of inverse planned treatment using three or more high resolution (milled or cast) compensator convergent beam modulated fields, per treatment session $309.20 per treatment delivery (APC 412) $709 per treatment delivery Oregon $722 Texas $783 Connecticut $590 Alabama $986 Northern CA Report 77301 for MLC, Compensator, & Tomotherapy IMRT treatment planning

18. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 18 CAH Critical Access Hospital – CAH – Located in a rural area, provide 24 hour emergency care services, average length of stay 24 hours or less More than 35 miles from a hospital or another CAH or more than 15 miles in areas with mountainous terrain or hazardous roads or only secondary roads or certified by the state as being a “necessary provider” of healthcare services to residents in the area.

19. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 19 HPSA/PSA Health Professional Shortage Area – Physicians who render covered Medicare services in a geographic HPSA are entitled to a 10% incentive payment. Incentive payments are made quarterly and are based upon where the service is actually rendered. This is based upon the amount paid not the Medicare payment approved amount. To determine if you qualify, visit www.cms.hhs.gov/providers/bonuspayment

20. 02/01/05 © 2004 RCI - All Rights Reserved. Confidential: Do not re-distribute. 20 Questions?