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PubMed1993

The radiology relative value scale: its development and implications.

In a proactive response to federal government cost-containment pressures, the radiology profession, under the leadership of the American College of Radiology (ACR), in 1988 developed a relative value scale (RVS) for radiologic procedures. Like earlier radiology RVSs, its relative values reflected the physician work and practice costs involved in each procedure. The RVS was constructed by using (a) three types of data (magnitude estimation, charges, and practice costs) obtained by means of surveys and (b) expert consensus panels involving participants from all fields and many organizations in radiology. The RVS was accepted, essentially in toto, by Medicare. Subsequently, the RVS has required much work to correct errors by Medicare and the insurers that administer it, to improve procedure codes, and to develop codes and relative values for new procedures. By moving proactively, radiology preserved fee-for-service against a major threat, reduced payment cuts from those that seemed to be impending, and gained a unique degree of control over its payments. However, the new payment system is complex and does not reward efficacy, cost-effectiveness, or quality.

Cost Control↗
PubMed2006

Current procedural terminology, Resource-based Relative Value Scale, and the Center for Medicare and Medicaid Services: overview.

Coding and payment methodology for physician professional services has been standardized through the introduction of the Current Procedural Terminology, which is maintained by the American Medical Association. The codes contained within this dataset are used by health care professionals to describe their services to payers. Inherent in the development of the procedural codes, the Resource Based Relative Value Scale Update Committee recommends physician work relative value units and practice expense and professional liability inputs to the Center for Medicare and Medicaid Services. This article provides an overview of the processes in place that permit regular updates in physician payment continually to be updated.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed1998

Validation of relative value scale for congenital heart operations.

BACKGROUND: To determine the validity of the newly assigned work relative value unit (RVU) scale for surgical procedures for congenital heart disease, we measured its relationship to length of hospital stay, total hospital charges, and mortality. METHODS: We identified cases by the presence of ICD-9-CM codes in nine statewide, administrative hospital discharge abstract databases for 1992. Computer algorithms were generated to assign RVUs to individual cases. Spearman correlation coefficients between work and practice expense RVUs and median length of hospital stay, total hospital charges, and in-hospital mortality were determined, as well as parameter estimates from linear and logistic regression. RESULTS: Using data from 5,192 cases involving 34 surgical procedures for congenital heart disease, higher work RVUs were associated with longer lengths of hospital stay (rs = 0.72, p < 0.0001), higher total hospital charges (rs = 0.81, p < 0.0001), and higher in-hospital mortality (rs = 0.45, p = 0.01). A 5-point increase in the relative value scale was associated with an increase in the length of stay by a multiplicative factor of 1.3 (p < 0.0001); total hospital charges by 1.5 (p < 0.0001); and the odds of in-hospital death by 1.9 (p < 0.0001). Findings were similar for practice expense RVUs, as work and practice expense RVUs were highly correlated (rs = 0.93, p < 0.0001). CONCLUSIONS: The group of work RVUs for surgical procedures for congenital heart defects are reasonable relative measures, on average, of physician work for these procedures, thus supporting the use of this scale to determine physician reimbursement. Practice expense RVUs may not be an independent measure for these procedures.

Cardiac Surgical Procedures↗
PubMed1990

A critique of the Harvard Resource-Based Relative Value Scale.

Physician payment reform has assumed a prominent place in the national health policy debate. A key component in this debate is the Harvard Resource-Based Relative Value Scale (RBRVS). The Harvard research effort relied upon several necessary methodologic assumptions and compromises that must be understood to appreciate the RBRVS's strengths and weaknesses. For example, the Harvard group surveyed too few cases to cover the range of clinical practice in a specialty, had too little input in the selection of cases that were judged to be the same or equivalent between specialties, and used an unproven extrapolation methodology to assign final values for total work to non-surveyed physician services. This methodology led to a number of anomalies in the final RBRVS, such as values for comprehensive services for some specialties that were lower for new than for established patients, and total work values for many new patient office services that were lower for Internal Medicine than for Family Practice, a finding inconsistent with empiric evidence. The Harvard RBRVS represents a significant contribution that increases our understanding of physician practice. The system should not be viewed as a finished product. Further investigation and explanation of the assumptions and anomalies are needed to construct a system that reflects adequately the complexity in physician work.

Economics, Medical↗
PubMed2004

Application of the resource-based relative value scale system to pediatrics.

In today's rapidly changing health care environment, it is crucial to understand the genesis and principles behind the Medicare Resource-Based Relative Value Scale (RBRVS) physician fee schedule. Many third-party payers, including state Medicaid programs, BlueCross BlueShield, and managed care organizations, use variations of the Medicare RBRVS to determine physician reimbursement and capitation rates. Because the RBRVS fee schedule was created originally for Medicare only, pediatric-specific Current Procedural Terminology (CPT) codes and pediatric practice expense calculations were not included. The American Academy of Pediatrics supports the use of CPT codes and the RBRVS physician fee schedule and continues to work to rectify certain inequities of the RBRVS system as they pertain to pediatrics.

Forms and Records Control↗
PubMed1992

An overview of the development and refinement of the Resource-Based Relative Value Scale. The foundation for reform of U.S. physician payment.

Responding to distortions in payment rates between services, policymakers in the United States have sought a systematic and rational foundation for determining physician fees. One such approach to paying physicians, the Resource-Based Relative Value Scale (RBRVS), determines fees by measuring the relative resource costs required to produce them. On January 1, 1992, the Medicare program implemented a new payment system for physician services based on the RBRVS. This article provides a brief history of the RBRVS and a summary of the methods and data used to derive it. This overview represents the culmination of 6 years of research by the Harvard RBRVS study team and provides a road map to the study's concepts and definitions. The overview also provides a context for the articles in this issue that describe five major studies undertaken since 1988. The study's overall results are presented in the last article of the series.

Data Collection↗
PubMed1985

Relative value scales for physicians' services.

A key element in the construction of a physician fee schedule is the underlying relative value scale (RVS). The focus in this article is on the development and comparison of RVS's based on alternative data sources and construction methods. Results suggest that medical procedures' values are preserved across alternative charge-based RVS's. Some differences are observed, however, when comparing procedures' values on scales derived from charges versus those derived from time data. The major conclusion is that the choice of a charge data base and method of constructing an RVS need not be a primary concern in the process of developing physicians' fee schedules.

Fee Schedules↗
PubMed1991

Analysis of the resource-based relative value scale for Medicare reimbursements to academic and community hospital radiology departments.

The authors examined a homogeneous sample of 40 radiologists from four academic centers (ACs) and four community hospitals (CHs) to assess the prevalence, accuracy, and sources of knowledge regarding the resource-based relative value scale (RBRVS) reform of Medicare. The radiologists were also asked to estimate the relative intraservice work values of 12 of the radiologic services in the original RBRVS study, using the same definitions and the same standard service. The radiologists were found to be relatively well informed and accurate regarding the RBRVS-based Medicare reform. However, the standard errors of estimated work in the sample were much greater (from 56% to over 800%) than those reported for the nationally based RBRVS. The AC and CH radiologists also appeared to differ qualitatively in their perceptions of intraservice work. These findings suggest that the RBRVS may not represent accurately the spread of perceived relative work values among radiologists, including differences between AC and CH components in terms of site-specific radiologic work.

Health Knowledge, Attitudes, Practice↗
PubMed1993

Vascular laboratory cost analysis and the impact of the Resource-Based Relative Value Scale payment system.

PURPOSE: This study compares the actual cost of performing noninvasive laboratory studies with reimbursement under the previous Medicare Part B system and under current resource-based relative value scale (RBRVS) guidelines. METHODS: We calculated the cost to operate our own laboratory and estimated national costs for small- and large-model laboratories. Reimbursement under Medicare Part B was calculated for each Current Procedural Terminology code from average Medicare reimbursement allowances and national case volumes in 1990, which were obtained from the Health Care Financing Administration. All data were expressed as dollars per hour of study time to allow universal comparison of costs and reimbursement among tests that require differing lengths of time for completion. RESULTS: Technical costs for laboratory time ranged from $143 to $173 per study hour. The largest components of laboratory expenses were fixed costs, including personnel (37% to 46%), equipment (30% to 42%), and facilities (6% to 8%). Variable costs such as billing (9% to 10%) accounted for most of the remainder. More efficient allocation of equipment resulted in lower costs in large laboratories, whereas continued use of depreciated equipment resulted in lower costs in our own laboratory ($127/hr). CONCLUSIONS: We project that technical reimbursement under RBRVS will be $82/hr nationally and $80/hr locally, whereas global reimbursement (technical plus professional) will be $116/hr and $110/hr, respectively. On the basis of 1990 case volumes, the RBRVS system will decrease national global reimbursement by at least 35% compared with the previous Medicare Part B system. Under the new system, technical reimbursement will decrease by an estimated 27% nationally, whereas professional reimbursement will decrease by 52%. Revenue under RBRVS will not meet the cost to perform studies either nationally or locally. Technical reimbursement is 37% to 54% below actual technical costs, and even global reimbursement is 13% to 34% less than technical costs. Our analysis revealed that costs will exceed reimbursement despite maximization of operating efficiency. This analysis applies to outpatients only. A case mix including inpatients will further reduce reimbursement, because only the professional component is allowed. By setting reimbursement of vascular laboratories below actual costs, the new RBRVS system may ultimately reduce the availability of noninvasive vascular testing for elderly patients.

Computer Simulation↗
PubMedDate not supplied

Resource-based relative-value scale expansion: implications for performance and quality of care.

OBJECTIVE: To assess the impact on the delivery of physician services from expanded use of Medicare's Resource-Based Relative-Value Scale (RBRVS) by multiple payers. DESIGN: A 1993 survey of insurers and targeted case studies of payers. RESULTS: Approximately one third of surveyed payers were using RBRVS in some fashion to pay for physician services, while another 40% were considering its adoption. The RBRVS is spreading to many types of payers--both public and private--and to health insurance product lines. Penetration of RBRVS is most prevalent within managed-care arrangements, accounting for 75% of all RBRVS-based products among payers. Many payers were found to be modifying aspects of the RBRVS and applying payment policies tailored to their specific needs. Most payers expect to achieve cost control, and several may be using RBRVS to profile physician service utilization. CONCLUSIONS: The diffusion or RBRVS to multiple payers may have a profound impact on the distribution of services provided, how these services are delivered, and the quality of care provided. Providers may respond to RBRVS by reducing some types of services, while increasing others, and using new resource combinations. Managed-care payers are likely to continue using RBRVS for negotiating fee schedules or for allocating payments for bundled service packages and capitation and sub-capitation products among physicians. As larger shares of physicians' incomes are driven by RBRVS, the underlying incentives become more critical. Nevertheless, RBRVS will remain an important payment approach in the future. The impact on quality and delivery of physician services from broader use of RBRVS cannot be measured adequately until future empirical studies are undertaken.

Data Collection↗
PubMed1990

Physician payment reform--implementing resource-based relative value scales.

In this article, the author summarizes recently enacted legislation that will result in a phaseout of the traditional usual and customary fee reimbursement system for physicians under Medicare, explains how a system of relative value scales will be implemented, and offers some suggestions for physicians concerned about their economic futures.

Fee Schedules↗
PubMed1993

The Resource-Based Relative Value Scale. Methods, results, and impacts for ophthalmology.

In January 1992, the Health Care Financing Administration implemented sweeping legislation that reformed the way Medicare pays for physicians' services. The cornerstone of the reform consists of a new fee schedule based on the Resource-Based Relative Value Scale. This article summarizes the methods and data used to derive the scale for ophthalmology. The results and impacts of the new Medicare payment rates for ophthalmology are also assessed. Using our methods and assumptions, ophthalmologists stand to lose 16% of their Medicare revenues under a fully implemented relative value-based fee schedule. Overall, the fees for performing evaluation and management services will increase, while those for most surgical procedures and diagnostic tests will decrease. Physicians' practice decisions and medical students' specialty choices could be affected. Ophthalmologists who perform work-intensive surgical procedures and spend the majority of their time in the operating room will continue to earn much higher incomes than those who do not.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed2004

Reimbursement and costs of pediatric ambulatory diabetes care by using the resource-based relative value scale: is multidisciplinary care financially viable?

BACKGROUND: The ambulatory care for children with diabetes mellitus (DM) within an endocrinology specialty practice typically includes services provided by a multidisciplinary team. The resource-based relative value scale (RBRVS) is increasingly used to determine payments for ambulatory services in pediatrics. It is not known to what extent resource-based practice expenses and physician work values as allocated through the RBRVS for physician and non-physician practice expenses cover the actual costs of multidisciplinary ambulatory care for children with DM. STUDY SETTING: A pediatric endocrinology and diabetes clinic staffed by faculty physicians and hospital support staff in a children's hospital. METHODS: Data from a faculty practice plan billing records and income and expense reports during the period from 1 July 2000 to 30 June 2001 were used to determine endocrinologist physician ambulatory productivity, revenue collection, and direct expenses (salary, benefits, billing, and professional liability (PLI)). Using the RBRVS, ambulatory care revenue was allocated between physician, PLI, and practice expenses. Applying the activity-based costing (ABC) method, activity logs were used to determine non-physician and facility practice expenses associated with endocrine (ENDO) or diabetes visits. RESULTS: Of the 4735 ambulatory endocrinology visits, 1420 (30%) were for DM care. Physicians generated $866,582 in gross charges. Cash collections of 52% of gross charges provided revenue of $96 per visit. Using the actual Current Procedural Terminology (CPT)-4 codes reported for these services and the RBRVS system, the revenue associated with the 13,007 total relative value units (TRVUs) produced was allocated, with 58% going to cover physician work expenses and 42% to cover non-physician practice salary, facility, and PLI costs. Allocated revenue of $40.60 per visit covered 16 and 31% of non-physician and facility practice expenses per DM and general ENDO visit, respectively. RBRVS payments ($35/RVU) covered 46% of all expenses ($76.74/RVU), including 132% of physician expenses for the time worked in the clinic ($27/RVU), and only 23% of actual incurred practice expenses ($152/TRVU). CONCLUSIONS: Clinical revenues in a pediatric endocrinology practice, allocated by using the RBRVS system, do cover physician expenses for the time spent working in a hospital ENDO and DM clinic, but do not closely approximate non-physician and facility practice expenses while delivering multidisciplinary care to children with DM. Using payment based on the RBRVS system, and without additional payments to compensate for increased practice expenses incurred in the delivery of multidisciplinary care, this care model may not be financially viable.

Ambulatory Care↗
PubMed1995

Validating the Resource-Based Relative Value Scale cross-specialty alignment. A survey of double-boarded physicians.

In 1992, Medicare changed significantly how it paid physicians: instead of basing payment rates on charges, the federal government established a fee schedule based on the Resource-Based Relative Value Scale (RBRVS). Central to the development of the RBRVS was the methodology used to align the work of all specialties onto a single, common scale, termed "cross-specialty alignment." This article presents the methods and results of an alternative approach to cross-specialty alignment. We surveyed physicians who were board certified in both pathology and internal medicine (double-boarded) and asked them about the work of services in both specialties. The results provide a natural bridge between the work of the two specialties. The double-boarded survey results agreed closely with the RBRVS findings. Furthermore, the findings were robust after weighting the estimates by how frequently a physician performs a service or after grouping the physicians by the mix of services in their practice. We conclude that the relative work positions of pathology and internal medicine in the RBRVS have validity. Our findings suggest that a survey of physicians with expertise in multiple specialties is a useful approach for developing cross-specialty linkages for an RBRVS or for validating existing linkages.

Adult↗
PubMed1992

Results and impacts of the Resource-Based Relative Value Scale.

On January 1, 1992, the Health Care Financing Administration implemented the 1989 legislation reforming the Medicare payment system for physicians' services. The cornerstone of the new payment reform is the Medicare Fee Schedule (MFS), which is based on the Resource-Based Relative Value Scale (RBRVS). In this article, the major findings of the RBRVS study and its impacts on physician payment are summarized. The authors report the impacts of a RBRVS-based fee schedule on Medicare fees and physicians' income if it were fully implemented, assuming budget neutrality and absence of volume changes in services. Under this scenario, fees for evaluation and management services increase by 15% to 45%, while fees for invasive services and diagnostic tests decrease by 20% to 30%. These changes increase the Medicare income of family practitioners by more than 30% while decreasing the income of most surgical specialties by 10% to 20%.

Economics, Medical↗
PubMed1991

A critical analysis of the resource-based relative value scale.

UNLABELLED: BACKGROUND--There is a general perception that procedural medical services are reimbursed at an inappropriately greater rate than cognitive services. By congressional mandate, the Health Care Financing Administration (HCFA) has been directed to establish a Medicare fee schedule to shift funding under a budget-neutral assumption from procedural to cognitive services. To provide a rational basis for this change, Hsiao et al (Harvard-Hsiao) developed a resource-based relative value scale (RBRVS) that equates the value of a service to the resources necessary to generate the service. METHODS--Instead of focusing on relative values and fee schedules ("price-per-unit-service"), the present study employs the standard commercial/industrial method of determining reimbursement rate (income divided by hours of labor) for 15 medical and surgical specialties. Data from independent sources are used to determine income and hours of professional effort for each of the specialties studied. Harvard-Hsiao and HCFA predicted the percent change in income for each of the specialties under the initial RBRVS and the HCFA fee schedule. The predicted income was then employed in this study to recompute reimbursement rates under the newly proposed payment systems. RESULTS: CURRENT PAYMENT SYSTEM--Average annual incomes for medical and surgical specialties are $124,500 and $176,600, respectively, a 42% difference (P = .03). Average weekly work hours (nominal hours, as adjusted for overtime) for medical and surgical specialties are 70.6 and 87.8, respectively (P = .005). Average hourly reimbursement rates for medical ($33.90) and surgical ($38.80) specialties are not substantially different (P, not significant). The difference in annual income is explained by the 17.2 hours per week of additional work hours by surgeons. The erroneous perception that procedurists are reimbursed at a higher rate than cognitive practitioners likely arises from differences in billing methods by which surgeons shift charges for cognitive work hours to the 18% of their time spent in the operating room. RESULTS: PROPOSED RBRVS AND HCFA PAYMENT SYSTEM--The income of all specialties is equalized about a mean of $132,500 (+/- $21,400 [1 SD]) by varying reimbursement rates in such a way that the effect of working hours is fully discounted. Reimbursement rates under the proposed payment system make no recognition of the hours of professional effort, postgraduate specialty training, or putative differences in the nature of the physician's work. CONCLUSION: --The RBRVS, and the HCFA fee schedule to the extent that it is based on that scale, are inappropriate bases for the reform of the physician reimbursement system.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed1990

Resource-based relative value scale: a new payment system for practitioners under Medicare.

Congress has directed the Physician Payment Review Commission to evaluate ways that the Part B Medicare program may be changed to modify the way physicians are reimbursed and to slow down the growth of expenditures in the program. This survey article summarizes the work in the development of a resource-based relative value scale (RVS), discusses the major issues dealt with by the PPRC, the results of Congressional action, and the issues of concern for optometrists.

Fee Schedules↗