What is the difference between transitional and fully implemented rvu

Reference Guides NEW! Knowledge Center. Hot Topics Toggle navigation. Print Post. Understand how Medicare payments are made by learning how to calculate them. These RVUs are specifically to pay for physician effort.

All work RVUs must be reviewed and may be changed at least once every five years. Practice expense PE RVUs reflect the cost of non-physician labor, and expenses for building space, equipment, and office supplies. Malpractice MP RVUs are meant to cover the cost of malpractice insurance for each procedure and service. These typically account for the smallest overall contribution to the total RVU value of a given procedure or service.

MP RVUs must be reviewed and may be changed at least once every five years. Returning to , for instance, the fee schedule lists the following PE values:. From this example, we see that the current transitioned RVUs in the facility setting are 0. In the facility setting, the total RVUs are 2. GPCI Account for Regional Cost Differences The Physician Fee Schedule is a national fee schedule, but the cost of living—as well as practicing medicine and providing medical services—varies from one location to another.

Author Recent Posts. Latest posts by admin aapc see all. Demystify the Physician Fee Schedule was last modified: November 1st, by admin aapc. Excludes1 and Excludes2. External cause coding. Sequencing guidelines. What is Medical Coding? What is Reimbursement? What is Medical Auditing? Under the new system, payments are based on the number of RVUs assigned to each service.

Total RVUs reflect three cost components: 1 physician work or time and effort , 2 practice expenses, and 3 professional liability insurance for a given service. Costs associated with each component are given a weight, or index value, and are adjusted to account for area price differences. The three index values for a service are then summed and multiplied by a standard dollar amount a conversion factor to arrive at a payment amount.

On average, work represents 52 percent of total physician payments, practice expenses represent 44 percent, and liability insurance represents 4 percent U. General Accounting Office, Medicare payments represent roughly 20 percent of revenues to physicians, although the share varies by specialty Smith et al.

While resource-based work RVUs were the foundation of the MPFS, practice expense and liability insurance RVUs continued to be based on historical charges until and , respectively, when resource-based values for these components were phased in Federal Register, a , b. By , most of the system's relative values were derived from estimates of resources, however the program made substantial refinements to the RBPE values between and Federal Register, ; One aspect of the new practice expense payment system is that CMS substantially increased the number of services for which the practice expense payment is affected by the site of service, and changed the level of the site of service differential for services that already had a differential.

In essence, these changes regarding site of service differentials were designed to more accurately compensate physicians when they furnish procedures in their offices versus in other ambulatory settings. For a service with a site of service differential, facility practice expense RVUs are applied when that service is furnished in a setting whose facility costs are reimbursed under other Medicare payment systems such as hospital outpatient departments or ambulatory surgical centers Federal Register, Non-facility practice expense RVUs which are higher in value than the facility RVUs are applied when a service is furnished in a setting where no other Medicare payment system covers the facility-related expenses.

By far the most common non-facility setting, in terms of service quantity and Medicare spending, is the physician office. However, when developing the RBPE RVUs, average practice expenses were estimated in both the facility and non-facility settings, for the services that Medicare determined would have a site of service differential. Advances in clinical care, anesthesia methods, and medical technologies have allowed many elective procedures that used to be furnished in the hospital inpatient setting to be furnished in ambulatory settings, and it is estimated that at least 60 to 70 percent of all surgeries are done on an ambulatory basis Owings and Kozak, The shift toward furnishing services in hospital outpatient departments and ambulatory surgical centers has been occurring for over 20 years, while the trend to furnish some procedures in the office setting is more recent Pasternak, Recognizing the trend toward performing more procedures, and more complex procedures, in the office setting, in the American Society of Anesthesiologists developed formal guidelines for office-based anesthesia, and over 24 States have considered legislation, regulation, or guidelines in the area Sutton, Across the elderly and non-elderly population, the office setting accounts for estimates ranging from 5 Pasternak, to 10 percent American Society of Anesthesiologists, of all surgeries, with common procedures in the office setting ranging from, for example, relatively simple biopsies to hernia repairs to knee arthroscopies American Society of Anesthesiologists, Our focus is in identifying the additional services with site of service payment differentials and seeing whether changes occurred in setting choice and in RVU volume during the period that site of service differentials were added and that RBPE RVUs were implemented.

While the current literature includes assessments of the impact of the new practice expense RVU system Maxwell, Zuckerman, and Aliaga, ; U. General Accounting Office, ; Federal Register, b , we are not aware of studies that have examined both aspects of the new system—RBPE and expansion of the site of service differential policy—across services.

Moreover, if the new payment system results in some shift of services into non-facility settings, then it could be contributing to the growth in Medicare physician expenditures and the size of the conversion factor reductions resulting under the sustainable growth rate SGR policy.

In this study, we identified: 1 changes in the site of physician services furnished between and , 2 the types of services in which site of service differentials now apply, and 3 the level of the site of service differentials per service. We then analyzed aggregate growth in Medicare physician practice expense and total RVU volume the latter being a counterpart to Medicare spending on physician services and the sources of that growth in terms of: 1 shifts in site of service, 2 changes due to shifting from charge-based to RBPE RVUs, and 3 changes in the quantity and mix of services furnished.

RVU files list the work, practice expense, and liability insurance relative values for each service code paid under the Medicare fee schedule. To permit our decomposition analyses, we restricted our attention to services utilized in both and In any given year, new codes introduced in that year represent less than 1 percent of Medicare physician payments in that year Medicare Payment Advisory Commission, Since payment rates are determined by multiplying RVUs by a single conversion factor, total RVUs are analogous to relative payment rates.

Thus, RVU volume in a given year is the sum, across services, of the number of units of each service multiplied by the RVU value assigned to that service in that year. We computed both practice expense and total RVU volume which includes work, practice expenses, and liability insurance RVUs as well as their aggregate change between and We then decomposed the change in practice expense and total RVU volume over the 6 years into three factors: 1 changes due to site of service, 2 changes due to the implementation and refinement of RBPE RVU values, and 3 changes in the quantity and mix of services furnished over the period.

In essence, we isolated and quantified each of these components of change by alternately holding constant the other two factors over the study period.

First, we identified volume change due to shifts in site of service using the following calculation, summed across all services:. Equation 1 Site of Service Component :.

We define this share as:. Thus, the change in RVU volume resulting from Equation 1 quantifies the change in RVU volume due purely to shifts in site of service between and Third, we identified residual RVU volume change, due to changes in the mix and quantity of services furnished over the 6-year period, using the following calculation:.

Equation 3 Service Mix and Quantity Component :. Thus, the change in RVU volume resulting from Equation 3 quantifies a residual change in RVU volume, due to changes in the mix and quantity of services furnished over the period.

Service mix and quantity is a unified concept used by policymakers and researchers when analyzing changes in physician service volume Dummit, ; Medicare Payment Advisory Commission, ; Mitchell, ; Zuckerman and Holahan, ; Barer, Evans, and Labelle, We first present the data according to five BETOS summary groups: 1 evaluation and management services, 2 major procedures, 3 other procedures, 4 imaging services, and 5 tests.

Major procedures include coronary artery bypass grafts and hip and knee replacement surgeries. Other procedures include cataract extractions, colonoscopies and other endoscopic procedures, and routine dermatology procedures.

Payment for the vast majority of imaging services are split into technical and professional components, 3 and changes in the growth and mix of those components are captured in Equation 3. Table 1 shows the share of services furnished in non-facility namely physician office settings in and , by type of service.

Varying levels of shift toward the non-facility setting is seen across the five service categories. The very small shift among evaluation and management services from 61 to almost 62 percent is driven mainly by an increase in pathology services located in the specialty visit group and consultations occurring in the non-facility setting.

Among major procedures, a broad range of minimally invasive cardiovascular major procedures and other major procedures shifted toward the non-facility setting, causing a shift from 2. In the other procedures category, the increase in the share of non-facility services from The increasing share of imaging procedures and tests in non-facility settings occurred across a broad range of services.

To identify the type of services affected by Medicare's application of a site of service practice expense payment differential in versus and currently , we examined the number of services used in both and that have site of service differentials Table 2. In many cases this table confirms the findings from Table 1 , in that many of the types of codes with newly added site of service differentials are consistent with the types of services that exhibited some shift in quantity toward the non-facility setting.

In , services were used in which site of service differentials applied, compared with 1, in After , site of service differentials were added to four additional types of visits— 1 psychiatry, 2 pathology, 3 nursing home, and 4 critical care data not shown. Among major procedures, site of service differentials were added to several orthopedic procedures, and to a range of other services including prostate procedures, skin grafts, and various types of biopsies data not shown.

As Table 2 shows, several hundred types of other procedures gained site of service differentials, including services in the eye, ambulatory, minor, and endoscopy categories— codes used in had differentials, compared to 1, in Examples of the codes in the other procedures category in which site of service differentials were added include colonoscopies, upper gastrointestinal endoscopies, skin graft and wound procedures, and several types of fracture and tendon repairs.

As noted, X-rays and most other imaging services do not have site of service differentials. However as Table 2 indicates, site of service differentials were added to several codes grouped in this category, most of which describe injections and other preparations for X-rays. This occurred, in part, because the PE RVU values applied to the non-facility setting increased more, on average, among the newly designated services than among services that had previous differentials.

This also occurred because the numbers of services furnished in the non-facility setting were much higher among those codes that already had site of service differentials, which results in a much smaller rate of service growth. Services that exhibited particularly large growth in both non-facility service frequency and their PE RVUs included a range of codes related to injections for X-rays, wound management, minor orthopedic procedures such as strapping, and some eye, endoscopic, and prostate procedures data not shown, but available on request from the authors.

Figure 1 illustrates the variation in site of service differentials between non-facility and facility PE RVUs per service in , and the number of codes with a given level of differential. Under the RBPE payment system, the variation in the differentials, calculated here as the percent decrease from the non-facility to facility value, span the entire range from a 1- to a percent difference. The average non-facility-to-facility differential, among services with a non-zero differential, is 51 percent.

Figure 2 illustrates our decomposition analysis of change in practice expense RVU volume between and , by type of service. Across all services, changes in the site of service and the corresponding application of a site of service differential —controlling for all other changes in implementing RBPE RVUs and for changes in service quantity and mix— resulted in an increase of The importance of the factors varies across service types, for example resource-based RVUs is the largest source of volume growth for evaluation and management, while resource-based RVUs and changes in site of service are comparable sources of volume growth for the other procedures category.

For major procedures and imaging, volume growth due to changes in site of service offset some of the volume losses attributable to the shift to resource-based PE RVUs. Figure 2 also illustrates that changes in service quantity and mix are substantial drivers of volume. This factor serves essentially as a control variable in the PE RVU analysis, and our discussion of it is reserved for the decomposition analysis of total RVU volume, which provides a more comprehensive context for examining the factor.

Site of service changes among nursing home visits reflect a shift from physicians billing for visits regarding beneficiaries in skilled stays to those in non-skilled stays. In contrast, eye procedures and endoscopies experience an RVU volume decrease due to the shift to RBPE values, whereas a broad range of services in the minor procedure category had substantial increases in volume due resource-based PE RVUs.

Figure 3 illustrates the decomposition analysis in terms of total i. Across all services, service quantity and mix is the overriding source of total RVU volume growth, increasing it by While changes in PE RVUs per service and shifts in site of service were substantial sources of practice expense volume growth in the evaluation and management and other procedures categories, service quantity and mix was the dominant source of growth across each service category when viewing total RVU volume growth.

While the relative impact of the factors varies in terms of practice expense volume growth versus total volume growth, note that the absolute levels of volume change due to setting shifts are the same across the practice expense and total volume analyses. This level of change is the same because practice expense RVU values can vary by setting, but work and liability insurance values do not.

Thus, RVU volume changes associated with setting shifts captures change only in practice expense values, whether one is examining practice expense volume or total volume. Comparing the three factors of growth—changes in site of service and the corresponding application of site of service differentials , changes in RVU values per service due to implementing resource-based values, and changes in service quantity and mix—the latter factor is the dominant source of growth in terms of total volume, and this factor has a larger relative influence in total volume than it does with regard to practice expense volume.

The relative influence of service quantity and mix is larger because practice expense payments represent only about 44 percent, on average, of total payments to physicians, and thus the impact of changes related to PE RVUs and shifts in site of service are diluted when examining total RVU volume. Among major procedures, cardiovascular and orthopedic were equal drivers of growth in service quantity and mix; and among other procedures, a range of services in the minor procedures group contributed to the growth in quantity and mix.

Among imaging services, four types of services were the largest drivers of growth in quantity and mix— 1 nuclear medicine detail not shown, but is located in the standard imaging group ; 2 computerized axial tomography, 3 magnetic resonance imaging detail not shown, but is located in the advanced imaging group ; and 4 echographies of the heart.

Between and , we found that, across all five main types of services, more services were being provided in physicians' offices. Among major procedures, this shift was driven by, for example, minimally invasive cardiovascular and a broad range of other services in the major procedures category. In the other procedures category, the shift was driven mainly by eye, minor skin, and endoscopies. These findings are consistent overall with other literature Pasternak, ; Fields, ; Society for Ambulatory Anesthesia, indicating a trend toward furnishing an increasing number of procedures, and increasingly complex ones, in the physician office setting.