HI 225 Ch07 rbrvs pp ts.ab202017

1. © 2018 American Health Information Management Association© 2018 American Health Information Management Association
Principles of Healthcare Reimbursement
Sixth Edition
Anne B. Casto, RHIA, CCS

2. © 2018 American Health Information Management Association
Chapter 7
Ambulatory and Other Medicare-Medicaid
Reimbursement Systems
• Learning Objective
– Identify the elements of the relative value unit
and the major components of the resource-
based relative value scale payment system
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RBRVS
• Key Terms
– Resource-based relative value scale (RBRVS)
– Relative value scale
– Relative value unit (RVU)
– Physician work (WORK)
– Practice expense (PE)
– Professional liability insurance (PLI)
– Malpractice (MP)
– Geographic practice cost indexes (GPCIs)
– Localities
– Market basket
– Conversion factor (CF)
– Medicare physician fee schedule (MPFS)
– Participating physician
– Nonparticipating physician
– Assignment of benefits
– “incident to”
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RBRVS
• Reimbursement for professional services
under Part B
– Numerous settings
• Physician offices
• Ambulatory surgical centers
• Hospitals, inpatient and outpatient
• Skilled nursing facilities
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RBRVS
• Numerous types of professionals
– Physicians
– Audiologists
– Chiropractors
– Clinical social workers
– Optometrists
– Podiatrists
– Psychologists
– Nurse midwives
– Nurse practitioners
– Nutritionists
– Physician assistants
– Physical and occupational therapists
– Speech-language pathologists
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RBRVS
• Effective January 1, 1992
• Fee schedule reimbursement methodology
– Not prospective
• Although rates are predetermined, the services
and the volume of services per encounter are not
predetermined
• Increase volume of procedures = increase in
reimbursement
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RBRVS Structure
• Three components
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RVU
Relative Value Unit
Assigned to
HCPCS codes are
a measure of
resource utilization
There are 3 RVU
categories
GPCI
Geographic
Practice Cost Index
Adjustment for
geographic
differences in cost
Each RVU
category has a
corresponding
GPCI
CF
Conversion Factor
National dollar
multiplier that sets
the reimbursement
rate

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RVU Categories
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Time required and intensity of procedureWORK
• Mental effort and judgment
• Technical skill
• Physical effort
• Psychological stress
Overhead costs of the practicePE
• Clinical and administrative payroll, office expenses, medical material and supply costs, medical
equipment costs
• Two PE components: Facility (hospital); Nonfacility (physician office)
• See table 7.1 in text for setting examples
Cost of insurance premiumsMP or PLI
• MP = malpractice
• PLI = professional liability insurance
• CMS collects data from insurance carries to set the MP RVUs

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Categories % of Total RVU
RVU Categories
WORK PE MP/PLI
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GPCI
• Based on “locality” or payment areas
– Can be
• Large metropolitan area
– Boston or San Francisco
• Portions of states
– Rest-of-state areas
• Entire state
• One GPCI for each RVU category (see figure
7.2 in textbook)
– WORK GPCI
– PE GPCI
– MP GPCI
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Conversion Factor
• Set prior to the start of the rate year
(calendar year) and remains constant
throughout the year
• CY 2018 = $35.9996
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RBRVS Calculation
[(WORK RVU) (WORK GPCI) + (PE RVU)
(PE GPCI) + (MP RVU) (MP GPCI)] =
(SUM) × CF = Medicare Physician Fee
Schedule (MPFS) Amount
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Third party payers who utilize
RBRVS for reimbursement modify
the system to fit their own needs
by modifying the CF

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RBRVS Calculation Example
99202, Office visit, new patient, expanded problem focused
RVU Category RVU GPCI Product
WORK 0.93 0.990 0.9207
PE 1.11 0.917 1.0179
MP (or PLI) 0.08 1.005 0.0804
SUM 2.0190
SUM * Conversion Factor ($35.9903) = TOTAL $72.68
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[(0.93) (0.990) + (1.11) (0.917) + (0.08)
(1.005)] = (SUM) × $35.9996 = $72.66

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RBRVS Cost Sharing
Payment for Code 99202
Medicare Beneficiary
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MPFS Look Up Tool
• https://www.cms.gov/apps/physician-fee-
schedule/overview.aspx
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Potential Adjustments
Clinician Type
Participating provider
Nonparticipating provider
that accepts assignment
Nonparticipating provider
that does not accept
assignment
MFPS rates are adjusted for
nonparticipating providers.
See table 7.4 in text
Anesthesiologists
Separate and unique
payment system
Utilized base units for
anesthesia services, time
intervals and conversion
factor
See table 7.5 in text
Nonphysician
Providers
NPP
Examples include clinical
psychologists, nurse
practitioners, physician
assistants
85% of MPFS when NOT
“incident to” nor under the
direct supervision of a
physician
See figure 7.4 in text
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Special Circumstances
Bilateral
procedure
• Lesser of actual
charge or 150%
of MPFS
amount
Multiple
procedures
• First procedure
- 100%
• 2nd to 5th - 50%
• 6th or more
requires review
Physicians
Assisting Surgery
• 16% MPFS
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Underserved Area
• Health Professional Shortage Area
– As designated by the US Health Resources
and Services Administration (HRSA)
• Providers received a 10% increase in
payment
• The address where the service was
provided is used for this provision
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Operational Issues
• Many offices are solo or two-person
practices – close management of
operations essential
• Key issues
– Processes to ensure full and accurate
reimbursement
– Impact of unnecessary administrative costs
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Correct Coding and Good
Documentation
• See table 7.6 in text for an example of the importance
of correct coding
– This example shows how incorrect coding impacts the
procedure reimbursement
• See table 7.7 in the textbook for examples of
reimbursement loss that is due to poor documentation
and/or incorrect coding
– This example compares 4 procedures
• See table 7.8 for examples of facility vs nonfacility
reimbursement levels
– Highlights the importance of documenting and abstracting
service location
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Impact of Unnecessary
Administrative Costs
• Time spent on administrative details for multiple
health plans
• IOM report $190 billion (2009)
• Administrative cost rate of about 20% for private
insurers
– Medicare is about 2%
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