Brian’s Note: Readers may know that, on this site and on Replace The RUC, I re-published the article below by the Happy Hospitalist, a physician intimate with coding and its craziness. His explanations of the system’s inconsistencies are lucid and compelling, as are his descriptions of how adhering to this system is overwhelmingly burdensome. Those of you who have read it before may want to scroll down to the content that follows and responds to it.
Then, last week, I received a long complaint from an orthopedic surgeon who appeared knowledgeable about coding, and who defended the RUC’s approach. He claimed that, properly understood, specialists make approximately the same as primary care physicians on an hourly basis. I am by no means a coding expert, but I responded that, while his argument may have some merit, the facts remain that specialists have made increasingly more over time than generalists who see many more patients. I thought there was a logical flaw in his approach.
Then I passed along his note to the Happy Hospitalist, who immediately responded with the final piece below.
It struck me that, its length notwithstanding, readers should see this exchange. Please feel free to comment.
I should note that both these physicians insist on anonymity. This escapes me, since I believe that, if one has the convictions associated with an opinion, in a non-totalitarian society one should also have the courage to be identified with it.
THE HAPPY HOSPITALIST
First published 11/29/2007 on The Happy Hospitalist
RVU, or relative value unit, is the single most important part of your medical care. And you’ve probably never even heard of it. In the last week I have attempted to take you down that difficult, arbitrary path of coding and documentation. How it affects what doctors document. How documentation is a strong determinant on not only what, but how much is documented.
I have shown you the ludicrous rules Medicare says we must follow and document in order to prove we have provided a level of service. The whole process is incredibly time consuming and leadis to insurmountable loss of productivity and expense. It takes away time devoted to patient care and creates insecurity in physicians who don’t want to be accused of fraud.
And when physicians invest in EMR comparison technology to figure it all out, they are accused of up coding. All this has taken away from the most important part of health care delivery: the patient and doctor behind closed doors. However, because the Medicare National Bank controls the money, we physicians must abide by their rules, or risk going out on our own. A risk some are taking successfully. A risk some aren’t quite ready to endure.
A cash only system which is starting to take foothold in many areas. It’s called concierge medicine. Where the patient pays. And both patient and doctor are happy with the services rendered. If you stay in the system, you get paid by the system. And you agree to the system’s rules. So here goes. This is how the system converts a CPT E&M 99223 (high level hospital admission note) into cold hard cash for your doctor. Dollars that pay the overhead. Dollars to pay for capital improvement. Dollars to pay for taxes. Dollars to pay for malpractice. Dollars to take home.
How I get paid:
To calculate the payment for every physician service, the components of the fee schedule (physician work, practice expense, and malpractice RVUs) are adjusted by a geographic practice cost index (GPCI). Payments are converted to dollar amounts
through the application of the conversion factor which is updated annually. The general formula for calculating the fee schedule amount is: Payment = [(RVU work x GPCIwork) + (RVU PE x GPCI PE) + (RVU malpractice x GPCImalpractice) x Conversion Factor. The conversion factor for 2007 is $37.8975; the same as in 2006
Courtesy of Dr Ray Sowers, Chair of the Joint Committee on Quality Reimbursement and former member of the Medicare Payment Advisory Committee (MedPAC).
Did you get that? Of course it is. Why didn’t I think of that?
In simple terms what I get payed is a function of
- What my service has been deemed to be worth (the “work RVU (relative value unit))
- Practice expenses (PE).
- Malpractice expenses.
And all three of them are adjusted for your geographical location. (GPCI) A defined adjustment factor based on where you live.
So living in NYC gets you higher reimbursement across the board because living in NYC is generally more expensive than in Nebraska.. It all seems so simple. Right?
You can go here and navigate the Medicare Internet to find more. Strip out the practice expenses and malpractice expense portion and you are theoretically left with your take home pay, the work RVU. What your service as a physician is considered to be worth.
I have in my possession a giant 1,400 page file from CMS that tells me exactly what each component of every billable encounter is worth. So let’s examine a 99223. Refer back to the above stated formula.
Payment = [(RVU work xGPCI work) + (RVU PE x GPCI PE) + (RVU malpractice x GPCI malpractice) xConversion Factor. The conversion factor for 2007 is $37.8975
Physician Work RVU 3.78
Practice Expense RVU 1.11
Malpractice RVU 0.13
Total RVU =5.02 for a 99233
Lets use Nebraska GPCI as an example. GPCI for Nebraska is 1.0 for workRVU, 0.876 for practice expense and 0.447 for malpractice.
So enter your data.
(1 *3.78)+(0.876*1.11)+(0.447*0.13) *$37.8975=$182.30
One hour of work (on average) for a highly complex full admission to the hospital in Nebraska.
Lets look at Miami, Florida. The GPCI for work RVU is 1.0, 1.048 for practice expense, and 2.233 for malpractice. Notice the incredible difference in payment rate for malpractice between Miami (in a crisis state) and Nebraska (currently stable). Malpractice costs Medicare money. Lots of it. 4x more money when comparing Miami with Nebraska.
Enter your data for a 99223.
Lets look at Manhattan
The difference in total payment between Nebraska and Manhattan for a 99223 if about $32, or 18% more on a relative basis. For each and every 99223. The complexity is unbelievable. You can see how the answer to the question to the right, “How much does your doc get paid for a mid complex office visit” is dependent on the locality at which they live.
That code is a 99214. Moderate complex office visit
Physician work RVU 1.42
Practice expense RVU 1.05
Malpractice RVU .05
In Nebraska, this 20-30 minute visit would pay $89.51.
$90 for a 20-30 minute visit. This is total reimbursement. It covers all expenses.
A level 3 follow up visit, a 99213, the most common code, would collect about $60.
Take a blended average of level 3 and 4 and a primary care doc will collect roughly $75 for a 20-30 minute visit assuming an equal number of level 3 and level 4 visits. This represents full collected revenue from which to pay all expenses fixed and variable. To make capital improvements. To buy thatEMR. To give your RN that raise. Overhead routinely runs 50% in physician offices. If you cut that $75 in 1/2, to remove overhead expenses, you are left with a fee to the doctor of about $35-$40 for your 20-30 minute moderately complex visit.
1.42 Physician work RVU.
Compare this to total knee arthoplasty 22447
Physician work RVU 23.04 (worth 16 times more)
Practice expense (If done at the hospital) RVU 14.14
Malpractice RVU 3.8
Compare to a laparoscopic cholecystectomy 47562
Physician work RVU 11.63 (worth 8 times more)
Practice expense (if done at the hospital )RVU 5.29
Malpractice RVU 1.46
Compare to a diagnostic colonoscopy 45378
Physician work RVU 3.69 (worth 2.6 times more)
Practice expense (facility fee if done at the hospital) RVU 1.57
Practice expense RVU (if done at your office) 6.20
Malpractice RVU 0.30
Compare to removal of a kidney stone 50081
Physician work RVU 23.32 (worth 16 times more)
Practice expense RVU 9.68
Malpractice RVU 1.54
Compare to complex brain aneurysm repair 61698
Physician work RVU 69.45 (worth 50 times more)
Practice expense RVU 27.88
Malpractice RVU 12.54
Compare to laser treatment of retina 67040
Physician work RVU 19.23 (worth 13 times more)
Practice expense RVU 13.41
Malpractice RVu 0.81
One could go on and on and on and on and compare service to service, time to time, risk to risk. Why is an brain aneurysm repair worth more than an aortic valve replacement, or a retina laser treatment. Both highly specialized procedures. And why is it worth 50 times more than a primary care office visit. Who says so? Who made that decision? You can see how the physician work RVU, the value established to a physicians service and the largest part of the reimbursement formula affects physician reimbursement.
It is far and away ingrained into the system that procedural/surgical/and imaging is valued at much higher rates than cognitive care. Even when one could generally correct for the extra training and specialization.
3, 4, 5, 6, 10, 20 , 30, 50 times more. What’s fair? One need only scour the thousands of codes to understand this recurring theme. And the fixed pot of money called Medicare part B creates a constant battle between specialists, sub specialists and primary care, each battling for the same dollar from the Medicare National Bank.
You can find all my medical billing and coding lectures to help you guide the world of evaluation and management.
Dear Dr. Klepper:
Efforts to clarify and improve the methodology used for determining physician reimbursement are overdue. Accuracy in presentation of information is needed to have an educated discussion. As such I would recommend immediate and significant updates to your website replacetheruc.com.
Graphs that point to the increase cost of Medicare expenditures and those that show a significant disparity between primary care and specialist compensation are disturbing. Only 13% of Medicare costs are related to physician compensation. That percent has significantly decreased in the last 20 years. Is it possible your Replace the RUC battle will contribute to a dysfunctional sound bite confrontation similar to Fox News vs. CNN? Is not the bigger issue where 87% of Medicare’s money is spent? Focusing on the 13% allows payors to continue to de-value physician services as doctors are pitted against each other in what some believe is a “zero-sum game.”
However, let’s assume that all aspects of healthcare spending need to be evaluated and physician compensation, while not the biggest issue, is an issue. The primary premise of the question that you raise relates to the hourly rate for physician compensation. Is one physician’s knowledge or skill more financially valuable than another? Is there a scalable rate adjustment that could be applied to years of training or complexity of care provided? Is there a value to technical skill? Can technical skills be evaluated by a metric? Can those with exceptional technical skills be compensated at a higher rate? And as it relates to the primary care fields, can those with experiential knowledge that allows for an accurate diagnosis in a shorter time with less additional diagnostic tests be compensated at a higher rate?
You conclude that primary care physicians are currently under-compensated for the care they provide. I completely agree.
Your hypothesis is that the reason for their under-compensation is because of the overcompensation of procedural physicians. Somehow you believe this is the will of the RUC. The data does not support this hypothesis.
The Powerpoint primer by Dr. Bodenheimer refers to data that is at least five years old. There should be an update of the facts associated with these slides. Perhaps they could address a number of comments in Dr. Levy’s Powerpoint such as the following:
1. The RUC has recommended increases in the value of E/M services each time primary care organizations and/or CMS have requested a review.
2. Since the start of RBRVS a mid-level office visit has increased in compensation from $31 (1992) to $66 (2010). Many procedures have seen significant decreases in their cost during that time.
Another needed update is “Relative Value Unit (RVU) Explained: CPT E&M Code 99223.” Authored by The Happy Hospitalist and published over three years ago, this contains Carville-like incomplete information that adds confusion to the discussion. Either the author does not understand the process or there is intent to inflame. I believe the physician author can be excused for a lack of complete knowledge. I have a difficult time giving a Ph.D. with a resume’ such as yours a free pass. How about we go ahead and dive into “RVU Explained” and complete the explanation in a constructive fashion. Perhaps this will be educational to you and others.
In rewriting that piece I would make a number of suggestions. The whole system of comparison is confusing—that we can agree on. When many people compare the financial value of physician services they focus on just the work RVU. This assumes the practice expense and malpractice RVUs are properly accounted for which is, of course, subject to debate. I believe the references to geographic variations also detract from the point of the discussion. So we are going to look at just work RVU and we are not going to throw geographic mud into the water, yet.
We will also look away from the continuing decline in the Medicare Conversion Factor (CF). The CF is multiplied by the RVU’s to determine the actual dollars paid for the service provided. The 2011 CF is $33.9764; 2010 was $36.0791; 2009 was $36.0666; 2008 was $38.0870. From 2008 to 2011 that is a 10.8% decrease that has nothing to do with the RUC and nothing to do with specialist compensation.
The Happy Hospitalist (Dr. HH) goes over the value associated with the following codes:
99223 High Level Hospital Admission
99214 Established Patient Moderate Complex Office Visit
27447 Total Knee Arthroplasty (note: there is a typo in the article by Dr. HH as it is incorrectly listed there as 22447)
47562 Laproscopic Cholecystectomy
45378 Diagnostic Colonoscopy
50081 Removal of Kidney Stone
61698 Repair Complex Brian Aneurysm
67040 Laser Treatment of Retina
Dr. HH is apparently is unaware of the 90 day Global period and presented procedure values as if they are for just that with no other care included. What the 90 day Global means is that all care related to the patient for that procedure is included in the value. It is a “package price” that was enacted in part to simplify issues with billing for services. The 90 day Global includes the pre-operative office visit, all pre and post procedure care, the procedure, and all follow up for a period of 90 days after the procedure. The number of these visits, the complexity of the visits, the time associated with performing the procedures are estimated by surveys by providers of what would be considered a “average” patient having a certain problem. Generally, more than 50 surveys are completed and the 50th and 25th percentiles are calculated. The validity of the surveys is discussed at the RUC.
(Historically the RUC recommended wRVU at the 50th percentile and CMS, who has representation at these meetings, accepted more than 90% of the values. Recently, the RUC has more commonly submitted the 25th percentile to CMS which is now rejecting more than 30% of even these lower than average suggested values. This is considered by many to be an inappropriate devaluation of physician services.)
If we take 27447, Total Knee Replacement, as an example, the wRVU is 23.25. The 90 day Global includes:
1- 99212: established office visit; wRVU= 0.48
2- 99213: established office visit; wRVU= 0.97
1- 99214: established office visit; wRVU= 1.5
3- 99231: subsequent hospital care; wRVU= 0.76
1- 99232: subsequent hospital care; wRVU= 1.39
1- 99238: hospital discharge day; wRVU= 1.28 When you subtract the total of these wRVUs you are left with a wRVU of 14.38 for performing the procedure.
Our goal on this road to clarity is to speak in dollars and cents, not wRVUs. So if we take 14.38 wRVUs and multiply it by the 2011 conversion factor of 33.9764 we find that the surgeon is paid $488.58 for actually doing a total knee replacement.
The surveys performed by providers that are reviewed by the RUC also account for details regarding the time associated with performing a service. Dr. HH refers to 99214 as a “20-30 minute visit.” Actually, according to the RUC database, that visit, on average, is 40 minutes, which includes 5 minutes of pre-service time, 25 minutes of intra-service time and 10 minutes of post-service time. The wRVU for a 99214 is 1.50 and that translates to $50.96. If we calculate that out to an hourly rate you get a rate of $76.45 per hour of physician work. The numbers Dr. HH listed included funding for practice expense and malpractice expense. As stated earlier, I am leaving those factors out of this analysis.
Now if we circle back to our Total Knee example and look at the times listed for the procedure we see the following:
Pre-Service eval: 45 minutes
Pre-Service positioning: 15
Pre-service scrub, dress, wait: 15
Immediate post-service: 30
That totals to 229 minutes or 3.82 hours. $488.58 divided by 3.82 hours equals $128.01 per hour of physician work. For the combination of cognitive and technical skill to eliminate pain and improve the function of the patient with arthritis. However, that overstates the hourly rate as it does not include the time associated with the other visits.
Let’s dive deeper into the weeds and add back in the RUC times for all the additional visits that are part of the 90 day global. That would be another 4 hours of physician time in this example.
The 90 day Global total wRVU for a total knee replacement is 23.25; multiply that times the CF equals $789.95. Divide that by 7.82 hours of care and the orthopaedic surgeon’s hourly rate is $101.02 per hour.
Just like I consider my primary care colleagues undercompensated for the care they provide, I also consider my orthopaedic colleagues undercompensated for the care they provide.
And in spite of the assertion by Dr. HH that the total knee is “worth 16 times more,” the hourly rate differential between the 99214 ($76.45/hr) and the 27447 ($101.05/hr) is $24.57/hour. So the time associated with a total knee is priced at 1.32 times the price of an office visit, not 16 times.
Next on Dr. HH’s hit list is the laproscopic cholecystectomy, cpt number 47562. Going through the same analysis as total knee, the rate for performing the surgery is $107.49/hr and the total care of the patient for the episode is $97.45/hr. That is not “eight times more,” it is 1.27 times more.
I consider my general surgical colleagues undercompensated for the care they provide.
Colonoscopy rate is $100.29/hr. 1.32 times, not “2.6 times” more.
I consider my gastroenterology colleagues undercompensated for the care they provide.
Removal of a kidney stone is $94.39/hr. 1.23 times, not “16 times” more.
I consider my renal colleagues undercompensated for the care they provide.
Complex brain aneurysm is $117.39/hr. 1.54 times, not “50 times” more.
I consider my neurosurgical colleagues undercompensated for the care they provide.
Retina surgery is $103.16/hr. 1.35 times, not “13 times” more.
I consider my ophthalmologist colleagues undercompensated for the care they provide.
These values for services are disturbingly low across the board. This is the key information that needs to find a massive audience. We cannot afford to get bogged down in a diversion by a Wall Street Journal writer. This cannot degenerate into a battle between physician specialties.
One could conclude from the hourly data presented that the RUC has done a very good job on completing its assigned mission: define the use of physician resources to complete a task. The data as accurately presented above should get you and others to stand up and thank the physician volunteers who attend the RUC meetings. There is another group of physician volunteers who attend the CPT meetings that deserve thanks for what also has been a very thankless job. These are not people blogging in an attempt to get a speaking engagement. These are caring professionals who see the RUC as a good collaborative option to help balance the payment system.
It is easy to point to something as a problem. Let’s work together to find a better way without being distracted by efforts to eliminate the method that has done as well as it could within the guidelines allowed.
I have further ideas on the graph that shows the gap between primary care and specialty care income. I have a number of ideas on how to begin to reformat physician reimbursement methodology. I have burning questions why there is such a state by state variability in Medicare payment to hospitals for the same procedure. (For example, the average Medicare payment to hospitals in Virginia for a total joint replacement in 2009 was $9,078. Right next door in Maryland the average payment was $16,760. A difference of $6,682 per case. That’s a lot of 99214’s.)
But I also have a job, a family, and a mortgage. I really do not have the time to pour into this at the level that is probably needed. So I have to hope that since we have the same first name, I can work with you and we can be allies with the same goal: the health of the people who live in the United States of America.
You may know that I republished a couple of your coding pieces on both Care & Cost and on Replace the RUC. I had an interesting response from an orthopod defender of the RUC. Can you please review and, if you can to, respond?
Sure thing. First of all. The basis for the comparison assumes that the input data is accurate. Based on my experience as a hospitalis5, It’s not. He’s asking to be paid for input time (scrub time, positioning, post -op 30 minutes (what ever that is, driving to the next hospital?). If the RUC considers all this time a cost of the case, then we have problem number one. I don’t get compensated under my E&M codes every time a nurse calls me on one of his patients to address a home med. I don’t get compensated while I sit at the nurses station waiting for my computer to turn on and log in. I don’t get compensated every time I follow up on a lab I ordered earlier in the day. I don’t get compensated to fill out the FMLA forms his daughter brought in to take care of his knee once they leave the hospital.
#1. There is a lot about medicine that isn’t compensated. Your ortho friend is saying that every single second he spends on the case should be included in the time of consideration. If that is how the RUC values surgical cases, then they are screwing E&M codes much more than I could even imagine. Getting paid for scrub time? Really? If only I could get paid for taking the time to hunt the surgeon down and tell them they are killing their patient by not using VTE prophylaxis. That’s not compensated, unless the the surgeon thinks it’s part of the bundled E&M code.
It’s not, but is assumed to be, because the time it takes to accomplish it far outweighs the effort needed to communicate my concerns. It’s uncompensated time that I do dozens of times a day. If ONLY I could get compensated for my phone calls like he feels his scrub time is valued.
#2. If you’re going to bill a 99232 hospital follow up note, you have to meet the documentation requirements of a 99232. Surgical notes rarely meet the criteria because they don’t get paid to document based on E&M. I would drop that back down to a 99231 for most surgeons, on most cases, on most days, except perhaps general surgeons that do a decent job of documenting in follow up notes and may actually meet the 99232 criteria. As for discharge, telling the hospitalist to address discharge meds and having the PA dictate 1/2 a paragraph of garbage is not a discharge summary. It’s garbage. More inflation of the value of the work.
#3. Many hospital follow up visits, on many patients, on many days are performed by a physician assistant hired by the surgeon to take care of all their follow up needs. That means the cost of the PA is more than compensated, many times over, because the surgeon is busy operating and collecting other global fees during time that the RUC says should be getting compensated for follow up surgical needs). It’s double, triple, quadruple dipping at it’s finest. But that’s how the game is played. How to maximize revenue and minimize costs.
The surgeon is getting paid full price to operate, and then paying someone else 1/5 his cost to do all the work the RUC says he/she should be doing for perioperative care under the global fee. It’s all legal and perfectly OK. Except when a surgeon claims that THEIR time is the input time in the equations presented above. It’s not their time. It’s hired time. That time should fall under the practice expense component, not the work RVU component, because that has become the standard way of doing business all across this country.
If this orthopaedic surgeon is going to be academically honest with themselves, then they need to recalculate all the follow up costs of caring for patient into the practice expense component (the cost of hiring a PA) and recalculate the actual cost of wRVU that they spend on their global fee.
I don’t know how orthopods handle all the follow up visits, but here’s my experience. Patient is discharged to a swing bed in their home town, has one appointment with the orthopod in 10-14 days, and will never be seen again. So there is perhaps some inflated value in the post op global follow up expectation as well that is embedded in the RUC calculations of wRVU value. In fact, I’ve had some general surgeons tell me they don’t need to even see the patient on follow up if the patient lives 300 miles away. The local doc can just take out the sutures and call if there are any concerns. At least that call is compensated under a global fee? Me? No such luck under E&M.
Now, us internists could play the same game. We could hire PAs and NPs and double, triple, quadruple dip the wRVU game. Unfortunately, our input data isn’t highly inflated because phone calls and computer time and research time and (input all the daily hassles of rounding time here) aren’t included in the wRVU formula. They’ are just expected to some how magically get done under the value the RUC assigns to E&M. Hiring a PA or NP doesn’t generate the same profit margin as say an orthopod who could do an extra case or two while his/her PA is doing all the perioperative grunt work.
The reason RUC is a scam is because the input data is highly inflated to favor those in control. I call bull to any orthopod who says they will spend a total of 4 hours of care on a case for direct face to face/actual OR time/ or documentation. If you’re going to hire someone else to do 80% of all your care the RUC is valuing as your work, that cost should be systemically embedded into the practice expense at the value of a PA, not the value of an orthopod.
We’d all like to get paid everytime we think about a patient. This surgeons feels he’s entitled to it. Getting paid for scrub time. How insulting. Well, us medical docs aren’t paid everytime we turn the faucet on to wash our hands as we leave a patient’s room. Welcome to E&M.
The issue here isn’t whether doctors are paid too much or too little. Most doctors will feel like they don’t get paid enough whether it’s internists working under E&M or orthopods billing surgical global fees. Most of America feels like they are paid too little. The issue is all relative under SGR economics. Your orthopod is asking to be compensated for input data that us E&M docs could only dream about. Why should I have to beg to be compensated for my communication when he says that’s a standard accepted practice for his payment scheme?
I stand by my position.