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

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

Action plan

Adopting the RBRVS fee schedule may have important implications for a hospital. Areas of possible concern are:

* Revenue collections. The new approach may substantially increase or decrease the Medicare revenue a hospital collects for salaried physicians and physicians with income guarantees. A hospital's physicians may not accept new Medicare patients or may stop seeing Medicare patients altogether. The effect may be even grater if other payers follow Medicare's lead.

In teaching facilities, faculty practice plans may need to be revised to reflect revenue shits between primary care physicians and specialists. Physicians expecting to be hurt financially may ask hospitals for additional compensation for administrative duties;

* Non-physician practitioners. Paralleling the change in physician fees, a substantial increase or decrease may occur in Medicare revenue collected for certain non-physician practitioners, such as salaried certified registered nurse anesthesiologists. Because of an overall fee increase, one or more NPPs who are salaried but whom Medicare permits to bill separately may switch to independent practice, perhaps causing staffing problems for a hospital;

* Coding and billing. If a hospital performs physician billing, its staff will have to learn new CPT-4 coding and biling requirements. Related spreadsheets, accounting records, and computer edits must be revised;

* Service migration. Faced with reduced fees, some physicians may try to maintain their income by competing with hospital outpatient departments and clinics. Increased competition also is likely if RBRVS fees relative to costs are higher in a physician office than in a hospital outpatient setting; and

* Joint ventures. The changeover in payment systems may disturb the financial feasibility of existing or planned business arrangements between a hospital and its medical staff. The effect may be even greater if Medicare revamps hospital outpatient payment. Strategic and tactical plans will be needed to cope with the new environment.

A hospital can help physicians prepare for rthe new payment environment by providing education sessions and other information about RBRVS. Education sessions regarding new coding and billing requirements also could be held for physicians' office staff members. Many physicians undoubtedly would welcom the help.

Paul L. Grimaldi, PhD, is director of health reimbursement policy at Coopers & Lbrand in Washington, D.C.