AMA's Guide to Medicare Payment System Now Available

Practice managers who need to understand the ins and outs of Medicare’s resource-based relative value scale (RBRVS) can purchase an updated physician guide from the American Medical Association. The RBRVS is used to determine how much money medical providers should be paid.

RBRVS assigns procedures performed by a physician or other medical provider a relative value which is adjusted by geographic region (so a procedure performed in Manhattan is worth more than a procedure performed in Dallas). This value is then multiplied by a fixed conversion factor, which changes annually, to determine the amount of payment. RBRVS determines prices based on three separate factors: physician work (54%), practice expense (41%), and malpractice expense (5%).

The physician work component accounts, on average, for 48 percent of the total relative value for each service. The factors used to determine physician work include the time it takes to perform the service; the technical skill and physical effort; the required mental effort and judgment; and stress due to the potential risk to the patient.

The practice expense component of the RBRVS accounts for an average of 48 percent of the total relative value for each service.

The 23^rd edition of the guide provides the following updates:

· New payment rules for 2014 CPT codes that provide an explanation of how they may affect a practice.

· Correct payment schedule calculations with updated payment policies, payment calculations and information on appropriate use of modifiers.

• Detailed background about the RBRVS system, an in-depth explanation on the key components and operation of the payment system, geographic adjustments, conversion factors and limits on physician charges.
• Tables that include all elements needed to calculate the Medicare payment schedule.
• Listing of the geographic practice cost indices provides information for each Medicare payment locality.
• Detailed discussion that covers the use of the RBRVS by Medicare and the private sector, and the Centers for Medicare and Medicaid Services, adoption of the Physician Practice Information Survey Data and other Practice Expense Methodology changes.

Annual updates to the physician work relative values are based on recommendations from a committee involving the AMA and national medical specialty societies. Nearly 8,000 procedure codes are defined in CPT, and the relative values in the RBRVS were originally developed to correspond to the procedure definitions in CPT. Changes in CPT necessitate annual updates to the RBRVS for the new and revised codes.