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Economics: Reimbursement
How does the RVU translate into reimbursement?
The RVU is converted into a monetary value by multiplying it by a
national Conversion Factor (CF) and a local Geographic Practice Cost
Index (GPCI). The CF is determined through a complex formula and is
always at risk of resulting in decreased physician reimbursement from
year-to-year. It is always a focus of Government Relations and the
ACR's annual visits to Capitol Hill. The Conversion Factor for CY
(calendar year) 2005 was $37.8975.
What are the "Technical Component" and "Professional Component"?
The majority of radiology and radiation oncology codes are reimbursed in
two parts: a Professional Component (PC) that reflects physician work
and a Technical Component (TC) that reflects the facility's service.
The combination of the two is known as the "global" fee. In the
hospital setting, for example, a common practice is for the radiologist
to bill for the PC while the hospital bills for the TC.
This is a particularly important concept to understand when considering
imaging facilities that are owned by non-radiologists. In this
situation, the owners of the imaging equipment bill for the TC. The
group can then contract with a radiologist for an interpretation or
attempt to provide an interpretation from a non-radiologist. Because
the overall fee is frequently weighted towards the technical component,
it is the desire to profit from the TC that is a major driver of
economically motivated self-referral and increased utilization.
So who pays the bill?
Medicare services are divided into hospital inpatient services (Medicare
Part A) and outpatient services (Medicare Part B). Most of our
discussion is based on physician reimbursement under Medicare Part B.
But the discussion grows more complex: Medicare is locally administered
by Local Carriers, who make local reimbursement decisions (such as
approved indications and Category III code reimbursements). And while
Medicare serves a signficant proportion of our patients, there are also
numerous local private payors: while these local payors utilize the CPT®
terminology, the reimbursement decisions and rates are made separately.
What are CCI edits?
Correct Coding Initiative (also known as CCI edits) was created by
Medicare in order to control fraud and abuse. The CCI edits were created
in order to detect unbundling of certain procedure codes when one
procedure code would have been sufficient. The CCI edits apply only to
services performed on the same patient by the same doctor on the same
day. The ACR reviews and comments on a high volume of edits related to
radiology. The ACR typically comments on over 10,000 edits a year.
What is the Ordering of Diagnostic Tests Rule?
The Ordering Diagnostic Tests Rule was established by Medicare to
provide guidelines that dictate the procedure that must be followed when
performing tests and services on Medicare beneficiaries. Visit the
following website for more information regarding the rule.
http://www.cms.hhs.gov/manuals/14_car/3b15000.asp#_15021_0
Author:
Sanjay K Shetty, M.D.
Chair and Councilor
Continue reading to learn about the details of the process.
Learn more:
- Creating a CPT® Code
- Assigning a Value to the Code
- Reimbursement
Other links:
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