Transcript Document

The RBRVS System: How it can be used to
manage the physician practice
Jeff L. Good, MBA
Program Director, FPSC Analytics and Quality Assurance
Phone: 630.954.4717
E-mail: [email protected]
© 2006, UHC and AAMC
Page 1
Session Outline
• Quick Overview of the UHC-AAMC Faculty Practice
Solutions Center (FPSC)
• History and workings of the Resource-Based Relative
Value Scale (RBRVS)
• Using Relative Value Units (RVUs) for:
• Calculating Medicare payments
• Budgeting
• Measuring Productivity
• Questions & Answers
© 2006, UHC and AAMC
Page 2
The FPSC in Brief
Participating Institutions
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© 2006, UHC and AAMC
Began as UHC CPT Database in 1995
FPSC Advisory Group created in 2000
FPSC created in 2001
77 participating institutions nationwide
50,000+ participating physicians
108 unique subspecialties
Line-item data collection from billing system
Hundreds of performance measures
Page 3
RBRVS Developed to Better Align
Physician Payments with Costs
• Prior to RBRVS, physician payments based on fee-for-service methodology, in
which physician reimbursement was based on CPR (customary, prevailing,
and reasonable) charges
• Alarming growth rate of health care expenditures
• Medicare reimbursement for physician services grew at 15% compound
rate between 1975 and 1987
• Increased call for an alternate payment methodology was called for as:
• Dissatisfaction with original payment scheme grew
• Expenditures for Medicare Part B continued to grow
• Price freezes were put into effect on physician services
• 1985-1988 – National RBRVS developed at Harvard University (William Hsiao,
Ph.D. and Peter Braun, M.D.)
• 1989 – President George H. W. Bush signed into law the Omnibus Budget
Reconciliation Act, switching Medicare to RBRVS payment schedule effective
Jan. 1, 1992
© 2006, UHC and AAMC
Page 4
RBRVS System Mechanics
• Payments for services are determined by the resource costs to
provide them
• Relative Value Units (RVUs) are used to rank the costs
• Work RVUs updated annually
• Entire system reviewed every 5 years by law
• Relative Value Update Committee’s (RUC) role
• Represents specialty societies
• Makes recommendations for RVU changes
• Conversion factor (CF) is used to determine payment when
multiplied by total RVU; CF updated annually
• Adjustments to the fee schedule:
• Geographic adjustment
• Budget neutrality adjustment (BNF), if changes in schedule
change outlays in excess of $20 million
© 2006, UHC and AAMC
Page 5
The Components of the Total RVU
Total RVU
(tRVU)
Work RVU
(wRVU)
=
+
The work RVU consists
of the physician’s
(provider’s) time,
mental effort, technical
skill, judgment, stress,
and amortization of the
physician’s education.
Practice
Expense RVU
(peRVU)
The practice expense
RVU consists of the
direct expenses related
to supplies, non-MD
labor, the pro-rata cost
of equipment used, and
an amount for indirect
expenses. There are 2
types of peRVU:
Facility PE – Use facility
value for services provided
in a hospital-based setting.
© 2006, UHC and AAMC
+
Malpractice
RVU (mpRVU)
The malpractice RVU
represents the cost of
malpractice risk for the
procedure.
Nonfacility PE – Use
nonfacility values for non
hospital-based settings (i.e.,
physician office).
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Accounting for Geographic
Differences in Costs
Geographic Practice Cost Indices (GPCI)
•
•
•
Payments need to be adjusted to account for cost differences from
region to region
Regional cost estimates are developed and used to develop GPCI
values
Separate values are applied to each RVU component:
Work GPCI
(wGPCI)
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Practice
Expense GPCI
(peGPCI)
Malpractice
GPCI
(mpGPCI)
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The Payment Formula
=
GPCI-adj
tRVU
(
(
* wGPCI )
+
peRVU
* peGPCI ) =
+
( mpRVU * mpGPCI )
wRVU
GPCI-adj
tRVU
© 2006, UHC and AAMC
*
CF
GPCI-adj wRVU
+
GPCI-adj peRVU
+
=
GPCI-adj
tRVU
GPCI-adj mpRVU
=
Payment
($)
Page 8
Example Calculations of Medicare
Payments
EXAMPLE 1:
On Dec 1, 2006, Dr. Smith provides a level 3 established patient visit (99213)
in the University Hospital’s outpatient clinic (facility setting) located in
Manhattan.
(wRVU * wGPCI) + (peRVU * peGPCI) + (mpRVU * mpGPCI) = GPCI-adj tRVU * CF
(0.67 * 1.065)
+
(0.24 * 1.298)
+
(0.03 * 1.504)
=
(1.07)
= Payment
* $37.8975 = $40.56
EXAMPLE 2:
On Dec 1, 2006, Dr. Smith provides a level 3 established patient visit (99213)
in the her physician office (nonfacility setting) located in Manhattan.
(wRVU * wGPCI) + (peRVU * peGPCI) + (mpRVU * mpGPCI) = GPCI-adj tRVU * CF
(0.67 * 1.065)
+
(0.69 * 1.298)
+
(0.03 * 1.504)
=
(1.65)
= Payment
* $37.8975 = $62.53
The difference in this example is the facility versus nonfacility practice
expense RVU, which is determined by the site of service.
© 2006, UHC and AAMC
Page 9
Using RBRVS for Budgeting
• The RBRVS system can be used in budgeting to:
• Model subsequent year’s Medicare payments
• Estimate payments for commercial payers, as
many follow RBRVS
• Model revenue impact that a change in mix of
services would have on the practice
© 2006, UHC and AAMC
Page 10
FPSC Medicare Impact Analyses
• FPSC team produces a Medicare Impact Analysis each
year for participants when the subsequent year’s fee
schedule is released
• Most recent 12 months data utilized
• Assume same volume of services are provided in
subsequent year as current year
• All payment modifications are taken into account –
modifiers, GPCI, budget neutrality adjustments
• Aggregate analysis models the impact across all 70+
participants by specialty
• Individual participant analyses distributed to show the
impact based on that institution’s mix of services (also
by specialty)
© 2006, UHC and AAMC
Page 11
Significant Changes in 2007’s Fee
Schedule
• The RUC proposed and CMS accepted many changes
to wRVU values, especially for E&M services
• i.e., 99213 work RVU increasing by 37%
• The proposed increase in RVUs increased payments by
more the $20 million – adjustments required to maintain
budget neutrality
• BNF will be applied by reducing wRVUs by 10.1%
• The BNF reduction to wRVUs ONLY applies during
the calculation of payments
• CF will decline by 5.0% as well
NOT SO FAST!!!
© 2006, UHC and AAMC
Page 12
Applying the BNF to Calculate
Payments for 2007
EXAMPLE 1:
On Dec 1, 2006, Dr. Smith provides a level 3 established patient visit (99213) in
the University Hospital’s outpatient clinic (facility setting) located in Manhattan.
(wRVU * wGPCI) + (peRVU * peGPCI) + (mpRVU * mpGPCI) = GPCI-adj tRVU * CF
(0.67 * 1.065)
+
(0.24 * 1.298)
+
(0.03 * 1.504)
=
1.07
= Payment
* $37.8975 = $40.56
EXAMPLE 2:
On Jan 5, 2007, Dr. Smith provides a level 3 established patient visit (99213) in
the University Hospital’s outpatient clinic (facility setting) located in Manhattan.
(wRVU * BNF * wGPCI) + (peRVU * peGPCI) + (mpRVU * mpGPCI) = GPCI-adj tRVU * CF
(0.92 * .8994 * 1.065) +
(0.25 * 1.3)
+
(0.03 * 1.48)
=
1.25
= Payment
* $35.9849 = $44.98
There are a number of changes between the 2 examples. Note the
application of the BNF to wRVUs for 2007.
© 2006, UHC and AAMC
Page 13
2007 Interim Fee Schedule
Analysis Example
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Page 14
Use of RVUs for Measuring
Productivity
• Prior to development of RBRVS, many measured
productivity by:
• Counting the number of visits
• Counting the number of procedures performed
• This methodology did not take into account
visit/procedure intensity
• RVUs, specifically wRVUs, give appropriate weighting
based on the physician effort for a procedure
Count of
Visits
Sum of
wRVUs
Physician A
500 units of 99212
225 wRVUs
Physician B
400 units of 99213
368 wRVUs
© 2006, UHC and AAMC
Page 15
Know Your Cost of Practice;
Use RVUs in Budgeting
MD-Related
Expenses
wRVUs
Practice-Related
Expenses
+
peRVUs
Your Cost =
Medicare Payment (non GPCI-adj) =
© 2006, UHC and AAMC
Malpractice
Insurance Expense
+
mpRVUs
$40.46 per
tRVU
$37.8975
per tRVU
Total
Expenses
=
tRVUs
In this example, your
contracts need to
average about 107%
of Medicare to
breakeven
Page 16
Questions & Answers
Contact Information:
Jeff L. Good, MBA
Program Director, FPSC Analytics and Quality Assurance
University HealthSystem Consortium
630/954-4717
[email protected]
© 2006, UHC and AAMC
Page 17