1. 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

2. Background zSince 1992, physicians have been reimbursed under a fee schedule based on a national, uniform relative value scale zThe scale has been transitioning to a resource-based methodology, away from historical costs and payment rates zHCFA uses two data sources : the Socioeconomic Monitoring System (SMS) and the Clinical Practice Expert Panel (CPEP) survey

3. RVU Components zEach CPT code has a numeric value assigned to it for physician work, practice expense and malpractice zThese three components add up to the Total RVU’s for each CPT code zFor example : y99213 = 1.32 rvus99203 = 2.39 rvus y99214 = 2.06 rvus99204 = 3.47 rvus

4. Physician Work zThe work component measures physician effort, time and expertise zFor example : y99213 - office visit = 0.67 w rvus y99214 - office visit = 1.10 w rvus y99291 - critical care first hour - 4.00 w rvus y47135 - liver transplant - 81.52 w rvus

5. Practice Expense zThe practice expense component measures the use of overhead, such as staff and facilities zFor example : y99213 - office visit = 0.62 pe rvus y99214 - office visit = 0.92 pe rvus y59400 - obstetrical care = 15.03 pe rvus

6. Malpractice zThe malpractice component measures the use of liability coverage for physicians, equipment and staff zFor example : y99213 - office visit =.03 mp rvus y99214 - office visit =.04 mp rvus y59400 - obstetrical care = 4.14 mp rvus

7. Facility versus Non-Facility zGovernment payors differentiate between facility (hospital) and non-facility(office) rates. The practice expense component changes - work and malpractice remain the same. zThis is referred to as the site of service differential zNot all codes have a site of service differential.

8. Facility versus Non-Facility zFor example : Non-Facility PEFacility PE y99214 - office visit 0.92 0.37 y99223 - hospital care 1.11 1.11 y43239 - upper GI endo 4.65 1.76 y26720 - tx fracture 2.41 1.33 y33821 - revision vessel 17.46 17.46 zThe non-facility rate is higher, because the practice covers the overhead costs

9. Benchmarking Data zPhysician work RVUs/year provide a national measurement with which to benchmark physician activity. Median production varies by specialty. zFor example : ygeneral internal medicine = 3,814 w rvus/yr ygeneral pediatrics = 4,003 w rvus/yr yorthopedic surgery = 6,402 w rvus/yr ycardiovascular surgery = 7,895 w rvus/yr

10. Pro, Tech and Global zHCFA defines the component of certain codes as Pro and Tech zMost of these codes have an “equipment” component and a “physician interpretation” component zHCFA uses modifiers as follows : y26 = Professional component yTC = Technical component

11. Pro, Tech and Global z71010 - chest x-ray y71010 = 0.76 rvus y71010 - 26 = 0.26 rvus y71010 - TC = 0.50 rvus z93510 - heart catheterization y93510 = 45.00 rvus y93510 - 26 = 6.79 rvus y93510 - TC = 38.21 rvus zNote - pro plus tech equals global

12. UCSF - One more Layer of Pro, Tech and Global zBecause of the routing of charges to IDX and SMS, UCSF uses prefixes to differentiate pro and tech components zPrefix 3 = pro = work plus malpractice zPrefix 7 = tech = practice expense zPrefix 2 or no prefix = global zFor example : y99213 - pro = 0.70 rvus; tech = 0.62 rvus; global = 1.32 rvus

13. Modifiers zCertain modifiers affect reimbursement. zFor example : yModifier 62 - two surgeons = 62.5% yModifier 80 - assistant surgeon = 16% zMany modifiers do not have federal guidelines associated with reimbursement. Treatment of modifiers varies by payor

14. GPCI : Geographic Practice Cost Index zThe GPCI takes into account geographic differences in wages, malpractice, etc. Each RVU component has a GPCI component. National average GPCI = 1. zFor example : WorkPE MP ySan Francisco1.0671.378 0.677 yLos Angeles1.0551.169 0.901 yTennessee0.9750.900 0.572

15. Conversion Factor zThe national conversion factor for 2001 is $38.2581 zThe conversion factor converts the RVU to a fee zMultiply each RVU component by its GPCI value and total the RVU. Multiply this total by $38.2581

16. Conversion Factor zFor example : z99214 - office visit at 100% RBRVS ySan Francisco = $94.44 yLos Angeles = $86.92 yTennessee = $73.58 z99214 - office visit at our various contract rates y85% RBRVS = $80.27 y125% RBRVS = $118.05

17. Budgeting Data zNational data - all specialties yPhysician work = 54.5% yPractice expense = 42.3% xemployee costs = 16.8% xoccupancy = 11.6% xother operating expenses = 13.9% yMalpractice = 3.2% zHow do each of our departments compare? How does revenue break-down compare to expense break-down?

18. Contracting Data zWhat % of RBRVS is a good contract? zWhen does more volume equal profit, and when does more volume equal loss? zDo our contracted rates cover our costs? zAre our contracts using the current year RVU table and the San Francisco GPCI? zWhat are our high volume codes (99214) that we need to price appropriately?

19. Where do I get more info? zGo 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. http://www.cms.hhs.gov/center/physician.asp