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presentation

Deciphering Medicare Fee Schedules

October 18, 2011



A proactive affinity to Medicare Fee Schedule alerts physicians to the efficacy of attending to Medicare beneficiaries, and also plans their revenue prospects in advance. But, with the legislation firm on mandatory medical service to Medicare patients, physicians are inevitably driven to seek and understand Medicare Fee Schedule.

The sheer volume of Medicare transactions (more than 50% of the total health insurance transactions in the US health insurance sector) is reason enough for physicians to understand the mechanism of Medicare payments from medical services provided to Medicare beneficiaries. Although the proposed inclusion of a substantial population into Medicare’s ambit should be a reason for celebration amongst practicing physicians, yet, the accompanying reforms that seek to economize and optimize Medicare payments should equally evoke anxiety among them. Therefore, given this unique situation of optimism and anxiety, physicians would be well-off with a proactive knowledge about Medicare Fee Schedule.

As Medicare Fee Schedule – which decides on the reimbursement to be allowed to Medicare providers for different services, and restricts the amount a non-Medicare provider could charge a Medicare patient – is the governing fee schedule promulgated by the Federal Legislation for both Medicare and non-Medicare providers, there is a growing significance of being knowledgeable about the likely reimbursement from attending to Medicare patients. Such proactive affinity to Medicare Fee Schedule alerts physicians to the efficacy of attending to Medicare beneficiaries, and also plans their revenue prospects in advance. However, with the legislation firm on mandatory medical service to Medicare patients, physicians are inevitably driven to seek and understand Medicare Fee Schedule.

Further, there are several prevailing factors that contribute to differential reimbursements to providers despite providing similar services under Medicare fee schedule. Usually, such cases can be found if the hospital is a teaching hospital, or if it cares for a disproportionate share of indigent patients, or if the facility is located in an area with a higher cost of living.

Amidst this complex Medicare Fee Schedule regimen, the following ready-reckoner released by the American Medical Association (AMA) should be comforting for physicians:

The current ready-reckoner works on the geographic adjustment provisions of the Omnibus Budget Reconciliation Act of 1989 (OBRA 89), which requires all three components of the relative value for a service – physician work relative value units (RVUs), practice expense RVUs, and professional liability insurance (PLI) RVUs -- to be adjusted by the corresponding GPCI for the locality. Effectively, the sweeping provision has increased the number of components in the payment schedule from three to the following six:

  • Physician work RVUs: better known as Physician Work Relative Value Units
  • Physician work GPCI: better known as Physician Work Geographical Practice Cost Index
  • Practice expense RVUs: better known as Practice Expense Value Units
  • Practice expense GPCI: better known as Practice Expense Geographical Practice Cost Index
  • PLI RVUs: better known as Professional Liability Insurance Relative Value Units
  • PLI GPCI: better known as Professional Liability Insurance Geographical Practice Cost Index

The comprehensive general formula for calculating Medicare payment amounts for 2011 is arithmetically expressed as:

Work RVU1 x Work (GPCI)2

+ Practice Expense (PE) RVU x PE GPCI

+ Malpractice (PLI) RVU x PLI GPCI

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= Total RVU

x CY 2011 Conversion Factor of $33.9764

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= Medicare Payment

But, given the intricacies involved in computing resultant payments, physicians would be hard-pressed for time and resource, which otherwise could be diverted to the most crucial aspect of their core services: keeping their medical efficiency benchmark improving. With the current dynamic changes in the healthcare scenario, the proven capabilities of Medicalbillersandcoders.com (www.medicalbillersandcoders.com), the largest consortium of medical billers and coders in the US, in imparting the crucial knowledge on Medicare Fee Schedule as part of its comprehensive Medical Billing Management is also an useful option for healthcare providers.

 

Category : Revenue Cycle Management