ED Coding and Reimbursement Alert

So, you know you need a fee schedule that keeps you competitive with other emergency physician groups and you want one that establishes an appropriate payment for the services you provide. The question is, what is the best way to develop this system?

Dieter Lehnortt, MA, manager of compliance for Southwestern Medical Center in Dallas, TX, is the former reimbursement director at the American College of Emer-
gency Physicians (ACEP) and a former coding and reimbursement consultant to emergency medicine groups. He also has presented numerous educational seminars about developing appropriate emergency medicine professional fee schedules.

Here are his tips for designing a schedule for your group:

1. Find out whether your current schedule is in the ballpark. Before you establish a schedule that links your fee structure with RVUs, you need to make sure the fees you start with are within an appropriate range. How do you do that when you cant directly discuss your fees with someone else? Purchase one of the published books of fee ranges per CPT code. There are a number of different resources on the market with this information, says Lehnortt. There are many that will custom tailor those numbers to a particular region or state. Use such references to compare each of your fees with the range published for that code in your region. If you dont take this first step, then your fees will be internally consistent, but they may still be way out of whack with the marketplace, he notes.

2. Decide on an established RVS system and use its RVUs. Once you know your fees are not exorbitantly high or low for your area, decide on a system of relative value units to apply for each code. Some groups, like MedAmerica, Inc., which manages 500 emergency physicians in several groups in California, use Medicares Resource-Based Relative Value System (RBRVS) as its base, says Jeri Bennett, MedAmericas manager of coding and reimbursement.

Our schedule is 99 percent based on RBRVS, although we look individually at some of the codes we use and make adjustments, she notes.

Using a relative value system ensures that the fees for each code are linked to the amount of resources and services required for that procedure. Using Medicare or McGraw-Hill or another nationally recognized system ensures that these values are ones that have been widely accepted, adds Lehnortt.

There are several sources for getting RVUs. McGraw-Hill, I think, publishes the best-known set, he advises. Remember, also, that you are not just treating Medicare patients; you need a relative value scale that is going to cover all of your codes. Medicare doesnt publish RVUs for some codes, particularly pediatric codes, because Medicare, for the most part, doesnt cover children.

The McGraw-Hill system uses the same RVUs for codes that Medicare does cover, and also contains RVUs for the other CPT codes not covered by the government payer.

3. Decide on a conversion factor to set the final fee for each code. Once you have your list of current fees and have chosen a set of RVUs, you must establish a conversion factor that ensures your fees for each code vary specifically according to the number of RVUs assigned to each code. You do this by establishing a conversion factor. This factor is the number multiplied by the RVUs to establish the fee.

Bennett says MedAmericas factor takes into consideration Medicares geographic practice cost indexes (GPCIs) and some of their internal data. You can use a set conversion factor or group of factors, such as the Medicare conversion factors, or develop one of your own for your feesonce you are confident your fees are within an appropriate range, says Lehnortt.

Lehnortt recommends not only setting your individual conversion factor but developing separate conversion factors for different groups of codes. The next step would be to break up your codes into different groups mirroring how CPT divides them, he explains. For example, you would have all of your E/M codes in one section, then all of your surgical procedures in another section, and codes for the interpretations of diagnostic testslike x-raysin another section.

Grouping codes by similar services ensures that the schedule takes into account local practice variations and individual variations in the frequency that certain codes
are reported.

Groups can decide on how many groups of codes they will have. For example, some groups divide all of the codes into just four groupings, while some have 10 or 12.

4. Calculate a conversion factor for each grouping. To do this, Lehnortt instructs coders to take a sample of the codes in each group. For example, experts generally recommend arranging your procedures in each grouping in ascending order (high to low) and selecting the procedures with the highest volume/utilization to have the most effective impact on the procedures you perform the most.

Take the current fees for each sample code and divide by the RVU assigned to that code to establish the current fee/RBRVS. Once you have this figure for each of the sample codes, add all of the current fees/RBRVS and divide by the total number of codes sampled. (See chart below.) This final number will be the average conversion factor for that grouping of codes.

Note: The charges listed below are hypothetical and do not reflect actual physician charges for any services rendered.

The total ($382.76) should be divided by 7 to arrive
at the final conversion factor for this grouping of
codes (54.68).

5. Use the conversion factors to establish fees for each code based on RVUs. For example, code xxxx1 has an established RVU of 0.57 and the average conversion factor for this group of codes is 54.68. You would multiply 54.68 by 0.57 to arrive at a fee for this code: $31.17.