RBRVS: how new physician fee schedule will work - resource-based relative value scale payment system

Healthcare Financial Management, Sept, 1991 by Paul L. Grimaldi

Exhibit 3 illustrates the calculation of the blended fee schedule amount for 1992 through 1996, for annual inflation update factors of zero to 6 percent. As OBRa '89 requires, the fee schedule amount decreases 15 percent in 1992. After 1992, the amount rises or falls depending on inflation assumptions. A physician would be paid the fee schedule amount, unless the actual billed charge is lower.

Intentions and effects

The RBRVS fee schedule will apportion Medicare payments among physicians differently than do reasonable charges. The new approach's resource-based nature will mean higher average fees for evaluation and management services and lower average fees for surgery and other procedures. Higher evaluation and management fees are intended to emphasize the importance of time a physician spends with patients in assessing health, diagnosing illnesses, and listening to patients' health complaints.

Aside from any volume-inducing effects associated with fee changes, the RBRVS fee schedule may lift the average Medicare income of family practitioners and other physicians whose practices consist largely of visits and consultations. Average Medicare income of radiologists, pathologists, thoracic surgeons, and physicians primarily performing procedures are expected to decline.

A significant portion of fee reductions from RBRVS will occur by Jan. 1, 1992, because of cutbacks that OBRA '89 and OBRA '90 mandated in Medicare fees for about 250 "overvalued procedures." Similarly, recent reductionsi n fees paid to radiologists, anesthesiologists, and physicians assisting at surgery will soften the new system's sting.

On the other hand, part of the inflation-adjusted gains originally touted for evaluation and management services will not materialize because Medicare's overall increase in physician fees has not kept pace with inflation.

CODING. Two areas that must be addressed before the RBRVS fee schedule is implemented pertain to the coding of evaluation and management services and globla surgery packages. Physician office staff members will have to learn new CPT-4 coding and billing requirements to avoid lost or delayed payments. The same is true of hospitals and other organizations that perform physician billing.

Evaluation and management services. Current CPT-4 codes for evaluation and management services are open to varying interpretations by physicians and Medicare carriers. For a national fee schedule to be equitable, a uniform coding system is essential. Without one, the same amount would not be paid for the same work.

The PPRC has proposed a generic system for revising the approximately 100 (out of 7,000) CPT-4 codes that cover evaluation and management services. (The CPT editorial panel has proposed its own, more complex, system.) The commission's system would be structured as follows:

* Classes of visits. Twelve classes of visits would be recognized:

* New and established patient office visits;

* New and established patient home visits;

* Inital and subsequent hospital visits;