RBRVS

1. RBRVS Resource Based Relative Value Scales

2. Definition of RBRVS • Financing mechanism reimbursing providers on a classification system which measures training & skill required to perform a given health service

3. RBRVS • Used to correct Medicare’s tendency to: • Overcompensate for services (e.g. surgery, diagnostic tests) • Underpay for primary care services

4. Three Factors Which Combined to Force RBRVS • Dissatisfaction with original payment system • Escalation of Part B costs • Promise of credible basis for new payment system

5. Problems with Previous System • Customary, prevailing, reasonable system (CPR) • Some intermediaries had one prevailing charge • Others had charges based on medical specialty • Wide variations between physician specialties & geographic regions

6. TEFRA 1983: Precursor to RBRVS • Use of a Prospective Payment System (PPS) to pay for hospital care for Medicare patients • Standardized payment for each hospital admission • Variation according to geographic differences in wage rates • Variation according to whether hospital is urban or rural • “Outlier” cases requiring longer LOS permits higher rate of payment

7. TEFRA 1983:Precursor To RBRVS • Admissions are categorized according to 492 DRGs • Payment based on national average cost for patients with that diagnosis • Success of DRGs focused attention to physician reimbursement

8. RBRVS Study: Phase 1 • Hsiao & Braun conducted a 1985-1988 study to develop RBRVS for 12 medical specialties - Anesthesiology - Family Practice - General Surgery - Internal Medicine - OB/GYN - Ophthalmology - Orthopedic Surgery - Otolaryngology - Pathology - Radiology - Urology - Thoracic/ Cardiovascular Surgery

9. RBRVS Study: Phase 1 • Six additional specialties were funded independently & included in the study - Allergy & immunology - Dermatology - Oral & maxillofacial surgery - Pediatrics - Psychiatry - Rheumatology

10. RBRVS Study: Phase 2 • Added 15 specialties in 1990 - Cardiology - Emergency Medicine - Gastroenterology - Hematology - Infectious Disease - Nephrology - Neurology - Neurosurgery - Nuclear Medicine - Oncology - Osteopathic Medicine - Radiation Oncology - Plastic Surgery - Physical Medicine & - Pulmonary Medicine Rehabilitation

11. RBRVS Method • Total work units for a practice calculated by weighting RBRVS value for each procedure by its function • Total practice expenses then divided by total work units to arrive at a cost conversion factor (CCF)

12. RBRVS Method • CCF then applied to specific RBRVS for an individual service & this yields estimate of the relative costs of providing that service in a specific market • This estimate applies to physician services to which direct costs cannot be assigned • i.e. visits, consultation, surgical procedures

13. RBRVS Method • Method of calculating CCF __Total Annual Practice Expense__ Total Annual Relative Value Units • First step in costing is to compile relative values for all prominent procedures performed over a 12 month period

14. RBRVS Method • Method of calculating CCF (cont.) • Second step is to total all expenses • Includes physician & staff income, benefits, practice expenses, malpractice insurance costs • Excludes any expenses which can be direct-costed • This is a quick way to determine relative costs by CPT code or for set of codes • i.e. those to be included in a cap rate

15. Legislation Creating Medicare RBRVS Payment System • OBRA 89: Physician Payment Reform Provisions • Congress enacted new Medicare physician payment system • RBRVS narrowed specialty & geographic differences • Retained some balance billing limits for patients • Established mechanism of monitoring expenditure increases for the government

16. Key Features of New System • Five year transition, commencing January 1, 1992 • Adjust each component of RBRVS for geographic differences • Eliminate specialty differentials • Medicare payments now the same for all physicians providing the same services in a locality • Calculate budget neutral CCF

17. Key Features of New System • Establish process for annually updating CCF • Limit balance billing • Establish Medicare Volume Performance Standard • Assist Congress in understanding increased acuity of Medicare services

18. Four Step Transition to New System • Adjust CPR rates & eliminate specialty differentials • Historical payment basis decreased by 5.5% • Later increased by 1.9% • Applied to RBRVS schedule

19. Four Step Transition to New System • Implement new payment schedule • If adjusted historical payment basis changed by more or less than 15%, payment was adjusted accordingly for that year

20. Four Step Transition to New System • Standardize payment schedules among intermediaries • Currently 28 carriers administer claims for 211 Medicare localities • After 1992, carriers no longer had latitude in establishing their own policies governing payments

21. Scope of RBRVS System Today • Most physician services now included in RBRVS payment system • Exceptions: • Medicare patients enrolled in Medicare HMO • Some physician services provided in hospitals, SNFs, outpatient rehabilitation facilities, & some services of teaching physicians

22. Four Major Components of RBRVS Payment System • Relative Value Scale • Cost Conversion Factor • Geographic Adjustments • Limits on Balance Billing • Virtually eliminated • Balance Billing = billing patient for amount Medicare does not pay

23. Six Parts of Each RBRVS Assigned to a CPT Code • Physician Work Required • Practice Costs • Professional Liability Insurance • Work GPCI • Practice Cost GPCI • Professional Liability Insurance GPCI

24. Physician Work Component • Time required to perform service • Technical skill & physical effort • Mental effort & judgment • Psychological stress associated with physician’s concern regarding iatrogenic risk to patient • Adverse effects induced by physician during care of patient

25. Physician Work Component • Total work performed includes: • Intraservice Work • Actually providing service or performing procedure • i.e. office visit, hospital visit, surgical procedure • Pre-Service Work • Preparing for a procedure • Post-Service Work • Writing records

26. Practice Costs Component • Practice expenses average 41% of total practice revenues

27. Professional Liability Insurance Component • PLI averages 4.8% of practice revenues

28. Geographic Variations • Calculate using Geographic Practice Cost Indices (GPCIs) • Work GPCI • Geographic differences in earning of all professional workers • Practice Costs GPCI • Differences in rents & employee wages • PLI GPCI • Geographic differences in premiums for mature claims made policy providing $1M or $3M limits

29. Surgery Iteration • Government further specified work RVUs for surgeons • Physician work RVUs based on the following activities: • Pre-op visits • Hospital admission workup • Primary operation • Immediate post-op care • i.e. notes, family talk, meetings with other physicians

30. Surgery Iteration • Physician work RVUs based on the following activities: (cont.) • Writing orders • Evaluating patient in recovery room • Post-op follow up on day of surgery • Post-op hospital & office visits

31. Surgery Iteration • Many surgical reimbursements are handled as Global Package • Limits number of post-op services eligible for separate billings • i.e. dressing changes, incision care, removal of op packs/sutures/cast/lines/catheters/IV lines/tracheostomy tubing, pain management

32. Surgery Iteration • Payment to assistant surgeons • Lower of actual charge or 16% of global payment amount

33. Formula For Calculating Medicare Payments • Payments are a function of three key factors: • RBRVS • GPCIs • Cost Conversion Factor

34. Formula For Calculating Medicare Payments • Translates into six component parts: • Physician Work RVUs • Physician Work GPCI • Practice Cost RVUs • Practice Costs GPCI • PLI RVUs • PLI GPCI

35. CPT Code Explanations • 99211 • Office or other outpatient visit • Established patient • May not require the presence of a physician • Presenting problem(s) are minimal • 5 minutes are spent performing or supervising these services

36. CPT Code Explanations • 99212 • Office or other outpatient visit • Established patient • Requires at least 2 of these components: • Problem-focused history • Problem-focused examination • Straightforward medical decision making

37. CPT Code Explanations • 99212 (cont.) • Counseling and/or coordination of care with other providers/agencies are provided • Based on nature of problem(s) & patient’s/family’s needs • Presenting problem(s) are self limited or minor • Physicians spend 10 minutes face-to-face with patient/family

38. CPT Code Explanations • 99213 • Office or other outpatient visit • Established patient • Requires at least 2 of these components: • Expanded problem-focused history • Expanded problem-focused examination • Medical decision making of low complexity

39. CPT Code Explanations • 99213 (cont.) • Counseling and/or coordination of care with other providers/agencies are provided • Based on nature of problem(s) & patient’s/family’s needs • Presenting problem(s) are low to moderate severity • Physicians spend 15 minutes face-to-face with patient/family

40. CPT Code Explanations • 99245 • Office consultation • New or established patient • Requires at least 2 of these components: • Comprehensive history • Comprehensive examination • Medical decision making of high complexity

41. CPT Code Explanations • 99245 (cont.) • Counseling and/or coordination of care with other providers/agencies are provided • Based on nature of problem(s) & patient’s/family’s needs • Presenting problem(s) are moderate to high severity • Physicians spend 80 minutes face-to-face with patient/family

42. Calculating RBRVS • Central Florida GPCIs(1998) _Work_ Practice Costs __PLI__ 0.976 0.946 1.372

43. Developing An Organization’s Cost Conversion Factor: Example #1

44. Developing An Organization’s Cost Conversion Factor: Example #2

45. Adapting RBRVS to Central Florida Market: Example #1

46. Adapting RBRVS to Central Florida Market: Example #1

47. Adapting RBRVS to Central Florida Market: Example #2

48. Adapting RBRVS to Central Florida Market: Example #2

49. Case #15,000 Patients are Expected to Generate an Estimated 3,000 Visits

50. Case #15,000 Patients are Expected to Generate an Estimated 3,000 Visits