General Category > General Questions

ICD procedures vs. CPT&HCPCS procedures and how physicians get paid

(1/4) > >>

rferreira:
Hi!
I'm trying to get acquaintance with the US health care system with focus in Coding, Billing and what influences the hospital revenue and physicians payments, disregarding PQRI/PQRS or other Quality Reporting initiatives.

As far as I understood the physicians get paid based on the RBRVS prospective schema. Is this applicable only to physician private practices or physicians working for an hospital still get paid through this scheme instead of a periodic salary paid by the hospital?
what is taken into consideration for the RBRVS? all the procedures and services provided to the client? Or, just the E/M CPT code?
In case the RBRVS is also applicable to the physicians working for an hospital, specifically in the Inpatient setting, does that mean that all the procedures that were performed will have to be coded both in ICD and CPT? ICD for DRG computation for hospital reimbursement purposes and CPT for physician payment (RBRVS based) purposes?

Any thoughts/hints on these topics will be appreciated.
Thanks in advance

Ricardo

PMRNC:
Good luck because none of us still understand it. LOL

From the AMA
In the RBRVS system, payments for services are determined by the resource costs needed to provide them. The cost of providing each service is divided into three components: physician work, practice expense and professional liability insurance. Payments are calculated by multiplying the combined costs of a service by a conversion factor (a monetary amount that is determined by the Centers for Medicare and Medicaid Services). Payments are also adjusted for geographical differences in resource costs.

The physician work component accounts, on average, for 48 percent of the total relative value for each service. The initial physician work relative values were based on the results of a Harvard University study. The factors used to determine physician work include the time it takes to perform the service; the technical skill and physical effort; the required mental effort and judgment; and stress due to the potential risk to the patient. The physician work relative values are updated each year to account for changes in medical practice. Also, the legislation enacting the RBRVS requires the Centers for Medicare and Medicaid Services (CMS) to review the whole scale at least every five years.

The practice expense component of the RBRVS accounts for an average of 48 percent of the total relative value for each service. Practice expense relative values were based on a formula using average Medicare approved charges from 1991 (the year before the RBRVS was implemented) and the proportion of each specialty's revenues that is attributable to practice expenses. However, in January 1999, CMS began a transition to resource-based practice expense relative values for each CPT code that differs based on the site of service. In 2002, the resource-based practice expenses were fully transitioned.

On January 1, 2000, CMS implemented the resource-based professional liability insurance (PLI) relative value units. The PLI component of the RBRVS accounts for an average of 4 percent of the total relative value for each service. With this implementation and final transition of the resource-based practice expense relative units on January 1, 2002, all components of the RBRVS are resource-based.

Annual updates to the physician work relative values are based on recommendations from a committee involving the AMA and national medical specialty societies. The AMA/Specialty Society RVS Update Committee (RUC) was formed in 1991 to make recommendations to CMS on the relative values to be assigned to new or revised codes in Current Procedural Terminology (CPT®). Nearly 8,000 procedure codes are defined in CPT, and the relative values in the RBRVS were originally developed to correspond to the procedure definitions in CPT. Changes in CPT necessitate annual updates to the RBRVS for the new and revised codes.

rferreira:
"Good luck because none of us still understand it. LOL"
Phew!... I was starting to feel I'm a bit dumb by not figuring it out...  :)
I'm going to continue searching for all the answers.

BTW, there is a good example about how to compute the RBRVS-based payment at http://www.acs-inc.com/ov_rbrvs_based_payment_methods.pdf but no details are presented, for instance, about whether that is applicable to physician payments at inpatient setting.

RichardP:
If you haven't yet read through this link, it is a good read also.  Check out the references provided at the bottom of the article.  Googling on RBRVS also brings up other resources.

http://en.wikipedia.org/wiki/Resource-based_relative_value_scale


--- Quote from: rferreira on May 09, 2013, 06:25:41 AM ---Is this applicable only to physician private practices or physicians working for an hospital still get paid through this scheme instead of a periodic salary paid by the hospital?
--- End quote ---

This question makes me think that you are asking for some foundational information about medicine financials in the U.S.  There are variations that I don't include here, but this will give you an understanding that you can build on.  If you already know this, then my appologies for misinterpreting your question.

* Who gets paid; the billing unit; Type 2 NPI Number:
    any legal entity (corporation, partnership; group; sole proprietor)

* Who did the work; the actual provider of the care; Type 1 NPI Number:
    only a real, live person

Any request for payment for medical services (billing) requires that the payor (insurance carrier) be told who the billing unit is and who the actual provider of care is.  I simplify that by saying who gets paid? and who did the work?.  This is done by providing the appropriate Type 1 and Type 2 NPI Numbers on the invoice submitted for payment.

Any billing also requires that the payor (insurance carrier) be told what the complaint was and what the solution was.  Or, what was the diagnosis, and what were the procedures done to provide relief from the diagnosis.  This is done by providing the appropriate diagnosis/ICD-9 and procedure/CPT codes on the invoice submitted for payment.

Payment is always provided by the payor (insurance carrier) based on the diagnosis (ICD-9) and procedure (CPT) codes supplied with the payment invoice.  This is true whether the work was done in the private doctor's office of a sole proprietor, or in a clinic, or in a hospital.  Therefore, a hospital gets paid in the same way a doctor in private practice gets paid - based on the diagnosis and procedure codes they submit to the payor.

To repeat: the basis for payment for medical care, regardless of where that care is performed, is the combination of diagnosis (ICD-9) and procedure (CPT) codes supplied with the payment invoice.

Assume that I split my foot open with an axe.  I am are wheeled into the examining room, bleeding vigorously from my foot.  Q:  What is my complaint?  A:  My foot is split open.  Q:  What procedure must be done?  A:  Put my foot back together.  The doctor will not get paid for noticing that my foot is split open (the diagnosis; ICD-9 code).  He will get paid for putting my foot back together (the procedure; CPT code).  If the doctor is in private practice, he is both the entity who did the work and the entity that will get paid (even if he did the work in a hospital).  If the doctor has been hired by the hospital, he is the entity who did the work, so he will be paid a salary by the hospital.  But the hospital is the billing entity, and is therefore the entity that will get paid by the insurance carrier - based on what diagnosis (ICD-9) and procedure (CPT) codes are submitted.
-----------

Payment to the billing entity is based on the procedure performed, regardless of whether the procedure was performed in a private doctor's office, a clinic, or a hospital (remember that the billing entity can be a private person or a corporation such as a hospital).  Payment is based on the procedure code submitted to the payer (insurance carrier) on the payment invoice.  The RBRVS you talk about are connected to each individual CPT code.  The RBRVS are not connected to the place of service.  The RBRVS determines what payment/reimbursement will be for each individual procedure/CPT code - regardless of where that procedure was performed (private office, clinic, hospital, etc.).

The fundamental information provided above is complicated just a bit by the following.  Level I and Level II HCPCS Codes http://patients.about.com/od/costsconsumerism/a/hcpcscodes.htm .  And - the amount of reimbursement can vary depending on which CPT/HCPCS Code is listed first on the billing invoice; reimbursement can also vary depending on the order in which diagnosis codes are linked to a given CPT Code on the billing invoice.  There are also such things as facility fees, the professional component vs. the technical component, etc. that figure into this.  But the first thing to know is that the RBRVS schema is attached to the CPT/HCPCS codes that providers of care use to bill for their services / supplies / equipment.  In turn, these CPT/HCPCS codes are used whenever payment is sought for services / supplies / equipment provided - regardless of the location where these things were provided (although some CPT/HCPCS codes will indicate the type of location where the services / supplies / equipment were provided).

Remember that there are variations on the foundational information I provided.  For clarification, let me make this point again, and again I'm leaving out some detail.  A doctor in private practice would be both the billing entity and the one who did the work.  The insurance company will pay the doctor, regardless of whether he repaired my foot in his private office or in the hospital.  If the doctor who repaired my foot is employed by the hospital, he is the one who did the work, but he gets paid by receiving a salary from the hospital.  The hospital is the billing entity, and would therefore get paid by the insurance carrier.  In either case, private practice or employed by hospital, the insurance carrier pays the billing entity based on what diagnosis and procedure codes the doctor provided to describe his encounter with me.  And the dollar value attached to the CPT/HCPCS Codes is determined through the RBRVS process.

rferreira:
Richard,
Thank you very much for your clear and thorough explanation.

Now the only doubt that remains in my head concerns the DRG based payment used to reimburse the billing entity (Type 2 NPI).
May I assume that DRG based payment is an alternative to RBRVS based payment and DRGs are used mainly for reimbursement in Inpatient settings while RBRVS is the main reimbursement basis when not using DRGs?

Then, I believe that in the situations where we have DRG based reimbursement, the procedures have to be reported in ICD (ICD-9-CM Vol.3 or ICD-10-PCS) instead of CPT/HCPCS. Is this true?

Navigation

[0] Message Index

[#] Next page