1. Where does the money come from in Radiology?
An Application of Relative Value Units (RVUs)

2. A Special Thank You to: Dr. David M. Yousem, M. D. , M. B. A
A Special Thank You to: Dr. David M. Yousem, M.D., M.B.A.
Professor, Department of Radiology
Vice Chairman of Program Development
Director of Neuroradiology
Johns Hopkins Hospital for allowing the use of his material/content in this presentation Dr. Yousem’s online lecture series can be viewed at: Dr. Yousem’s project was funded through an RSNA Educational Grant

3. Relative Value Units and the RBRVS – A Brief Review
RVUs are assigned to specific CPT codes
The total radiology bill has two components
Technical Fee
Paid to the facility (owner/operator of the equipment)
Professional Fee
Physician Work, Practice Expense, and Malpractice Expense
RVUs do not translate directly into money
Modified by geographic and budgetary multipliers
Money Paid = (RVU x GPCI) x Conversion Factor

4. Medicare – There are (usually) two bills for every study
Medicare Part A
Submitted by the “facility” performing the study
Technical component
Medicare Part B
Submitted by the interpreting physician
Professional component
Patient pays 20% of both bills, Medicare covers 80% of both
The patient may have supplemental insurance to cover their 20%
Global Reimbursement
For the freestanding entity that may bill for both the technical and professional components of the CMS Physician Fee Schedule under Medicare Part B

5. Follow the Money
Over the next few slides we will create a simplified example of the reimbursement process
Certain assumptions will be made to facilitate understanding the numbers on a fundamental level
As always, reality is much more complicated
To start, we will try to answer the following question:
How many studies do I have to read each day to make $300,000 in a year?

6. Follow the Money – Assumptions
Net payment per RVU of $30
This allows for incomplete collections in a mixed payer population
Calculated across all departments within a practice
Goal personal income of $300,000
Benefits amount to 25% of salary
Malpractice costs are $25,000 (high end of the scale)
Cash allowance of $10,000 (meetings and travel)
Practice Expenses of 35%
Based on survey data from the ACR and median reported expenses per FTE radiologist

7. Follow the Money – Assumptions continued
Work Days
250 workable weekdays a year
50 days for vacation and/or meetings
5 weekends of coverage
Total of 220 work days
CMS Physician Fee Schedule RVU files for 2010
Geographic Practice Cost Index (2010)
GPCI (physician work) in North Carolina is 1.0
Conversion Factor (2010) $

8. Follow the Money – The Challenge
Our hypothetical radiologist must produce $515,000 in a year
This covers his salary, group benefits, and expenses
Stated another way
$2,341 a day

9. Follow the Money – The Details
Using the CMS formula for reimbursement
$ = RVUprofessional x GPCI x CF
We break it down into parts
In our case, the payment per RVU reflects the GPCI and CF modifiers
$510,000 = Payment per RVU x RVUtotal
RVUtotal = Sum of {RVUstudy x Number of each type of study}
To break it down further into the workload required in a single day
$510,000 / 220 days = $2,341/day
Number of studies = $2,341 / (RVUstudy x Payment per RVU)

10. Follow the Money – The Details
The previously described equations are calculated to show how many of one specific study (e.g. Chest Radiographs) must be read in a single day to meet the goal income
Calculating a mix of studies is simple, but less illustrative

11. Follow the Money – The Work
Using only the professional component of reimbursement, these are the numbers of each type of study you would have to read in a single day to produce $2,341 of income for your practice
Specifically, if you are a neuroradiologist, and only read noncontrast Head CTs, you would have to interpret, and be reimbursed, for 68 exams to meet your goal
Exam
RVU (prof)
Number / Day
CXR (2 view)
0.3
260
CT Head wo
1.14 68
CT A w/wo
1.89 41
MR Head w/wo
3.18 25
MR Knee wo
1.86 42
Xray Hand
0.24
325
US Abd Complete
1.09 72
NM HIDA
1.11 70

12. Follow the Money – Own the Equipment
The aforementioned examples are for reimbursements with only the professional component
The technical component of reimbursement reflects 85% of the global bill compared to the professional component’s 15%
Here are the numbers again when receiving the global reimbursement (e.g. if all imaging was performed at your outpatient imaging center)
Exam
RVU (prof)
# / Day
RVU (global)
CXR (2 view)
260
103
CT Head wo 68 22
CT A w/wo 41 10
MR Head w/wo 25 6
MR Knee wo 42 9
Xray Hand
325 96
US Abd Complete 72
NM HIDA 70

13. Conclusions Study volume is important to produce revenue
So are your payer mix and contracts
Medicare vs. Medicaid vs. Private Insurance
Efficiency in Billing and Collections is essential to actually receiving the revenue you have “earned”
Accounts Receivable is an critical asset (see Accounting)
Owning the equipment is crucial
This is the basis of turf wars between radiology and some other clinical subspecialties
ACR has ongoing legislative efforts at closing Stark law loopholes

14. The Big Picture
Managing a practice with multiple radiologists exponentially increases the complexity of generating and measuring income
Referral Base influences the RVU calculations and billing
Inpatient vs. Outpatient and Medicare vs. Private Insurance
Hospital vs. Imaging center vs. Physician Office
Productivity Measurement and other Metrics
As well, there are many facets to both Accounting and Expenses
Capital Purchases
Marketing
Technology
Medicolegal and Legislative Issues