Calculating physcian payment - Using conversion factor

METHOD 1 (NON-GEOGRAPHICALLY ADJUSTED & USING NON-MEDICARE CONVERSION FACTOR)

This is an example of a physician payment mechanism in a non-facility setting that takes into consideration the total RVUs from theMedicare RBRVS but excludes all other components of the physician fee schedule. Often the total RVUs are multiplied by a payer-specific conversion factor that is not associated with the Medicare Conversion Factor.

STEP 1

Add together the physician work, non-facility practice expense, and professional liability insurance RVUs to obtain the total non-facility RVUs for the office visit.
  
                                                    Total non-facility RVUs for CPT code 99213 =
Work RVUs + Non-Facility Practice Expense RVUs + Professional Liability Insurance RVUs
                                                 (0.97) + (0.80) + (0.05) = 1.82

STEP 2
Multiply the total Medicare RVUs for CPT code 99213 by a non-Medicare, payer-specific primary care conversion factor (which may or may not be different than the 2010 Medicare Conversion Factor of $36.0846 $36.8729).

For example: Payer-specific primary care conversion factor = $38.00
Total physician payment for the provision of CPT code 99213 by this third-party payer =
                                          (Total Medicare RVUs) x (Payer CF)
                                              (1.82) x (38.00) = $69.16
Note: In some cases, payers will not use the Medicare total RVUs for a service in their calculation of physician payment. Instead, they may apply their own relative value adjustments.


METHOD 2 (GEOGRAPHICALLY ADJUSTED & USING MEDICARE CONVERSION FACTOR)

This is an example of the Medicare RBRVS physician fee schedule payment in a non-facility setting for CPT code 99213 in Marco Island, Florida. The following example assumes that a physician has accepted assignment and is practicing in an area of the country that does not have a shortage of medical professionals.

STEP 1
Multiply the physician work, non-facility practice expense, and professional liability insurance RVUs by the appropriate GPCIs; add the figures thus obtained to get the total geographically adjusted RVUs for the office visit.

Total non-facility RVUs for CPT code 99213 (geographically adjusted) =
(Work RVUs x Work GPCI) + (Non-Facility Practice Expense RVUs x Practice Expense GPCI) + (PLI RVUs x PLI GPCI)
                            (0.97 x 1.000) + (0.80 x 1.000) + (0.05 x 1.724)
                                    (0.97) + (0.80) + (0.0862) = 1.8562
STEP 2
Multiply the total geographically adjusted RVUs by the Medicare Conversion Factor to obtain the physician payment for the office visit.

                             2010 Medicare Conversion Factor (CF) = $36.0846 $36.8729
Total Medicare payment for the provision of CPT code 99213 in Marco Island, Florida =
Total geographically adjusted RVUs for CPT code 99213 x 2010 Medicare Conversion Factor
                               (1.8562 x $36.0846 $36.8729 = $64.27 $68.44)
In this example, a physician practicing in Marco Island, Florida would receive $64.27 $68.44 for providing the level 3 established patient office visit for a Medicare beneficiary.