Please note that this article contains information that is only relevant to American clinics.

              

To recap, in Part 1 of this series, we discussed how the CMS utilizes the RBRVS to determine the price for each CPT code. We also looked at how the RBVRS takes data from the GCPI and your clinic’s geographic location impact the amount of compensation they’ll be receiving for treatments or services rendered. But, the amount of money they receive is also based on a few other factors, such as physician work and practice expense. In this article, we’ll be examining the later, and further discussing how the CMS determines the dollar value of each CPT code.

 

When calculating the cost of each CPT code, the CMS factors in “physician work” and “practice expense”, accounting for 52% and 42% of the price respectively. The final 4% is attributed to “malpractice insurance”.

 

The “physician work” components is comprised of the following factors: the amount of time it takes to perform the treatment or service, the technical skill and physical effort associated with it, and the required mental effort and judgment, as well as the stress, due to the potential risk the treatment imposes on the patient.

 

Meanwhile, the “practice expense” component, a few different factors contribute to this. Most notably, they’re: the non-medical staff members at the practice, the rent or mortgage of the building itself, and equipment and office supply expenses.

 

Last but not least, the CMS factors in the cost of the malpractice insurance premium, too.

 

Keep your eyes peeled for Part 3 of this series, where we going to look at some practical examples and see how payment for treatment and services rendered varies from state to state.

 

We hope you found this article helpful. Be sure to check out Gawenda Seminars and Consulting for more great information about Medicare.

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