Opportunity: Physician fee schedules, coding are closely related

October 1, 2009

The responsibility of creating a fee schedule rests with the physician, and with this responsibility comes opportunity.

Key Points

Relative value units

Fee schedules are intimately tied to coding. Almost all current procedural terminology (CPT) codes are associated with specific relative value unit (RVU) figures. The RVU system is based on resource utilization and may be used to determine appropriate values in the physician fee schedule.

Practice expense RVUs reflect the cost to the physician (excluding physician effort and professional liability insurance) in providing professional service. Practice expense is composed of clinical labor, medical supplies, medical equipment, administrative labor, office expenses, and other expenses. "Non-facility" practice expense RVUs are relevant for services performed in the office, whereas "facility" practice expense RVUs apply to services performed in the hospital or in an ambulatory surgery center.

Professional liability insurance RVUs essentially represent the cost of malpractice insurance. These are the smallest component of the RBRVS.

A cost-based pricing approach underlies the concept of using RVUs to generate a fee schedule. (Other recognized pricing models include customer-based and competition-based.) The schedule of RVUs accepted by the Centers for Medicare and Medicaid Services reflects the resources required to provide a particular service (as represented by a CPT code) to the patient.