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Radiology Coding Alert

Physician Payment Conversion Factor Decreased for 2002

Published on Tue Jan 01, 2002

Representatives from CMS explained the decreased conversion factor that will be used to determine payment through the Medicare Physician Payment Schedule in calendar year 2002 during the sixth annual Resource Based Relative Value System (RBRVS) Symposium. Speaking in Chicago on Nov. 15 and 16, Kenneth Simon, MD, FACS, noted that the new conversion rate, $36.1992, is a 5.5 percent decrease from 2001 when the conversion factor was $38.2581. It is the first decrease in 10 years.
 
Unfortunately, he added, CMS had little control over the rate, which was published in the Nov. 1, 2001, Federal Register. Instead, he said, the conversion factor was generated by a formula established by Congress. Increases in the conversion factor in recent years have been a result of the "robust economy of 1998 and 1999." The current downturn, however, necessitated the lower rate in order to comply with congressional mandates regarding overall Medicare expenses.
 
Simon added that several U.S. senators are considering legislation that would allow CMS to adjust the conversion factor for 2002 and override the decrease. If this avenue works, an adjustment may be made before the end of this year.
 
Payment Schedule Streamlined

The complete Physician Payment Schedule was published as a final rule in the Nov. 1 Federal Register. Carolyn Mullen, MPA, also appearing at the RBRVS Symposium, noted that the 2002 Payment Schedule is easier to read than in years past because of streamlined column headings. In recent years, the schedule included information on relative value units (RVUs) during a transition period when practice expense (PE) portions of Medicare payments were being changed from a "reasonable-charge" system to a "resource-based" system. As a result, the schedule reflected these transitional rates as well as the final fully implemented resource-based system. Because full implementation has been achieved for 2002, the transitional information no longer appears on the schedule.
 
When reviewing the categories of RVUs in the 2002 Payment Schedule, radiologists and coders will see columns representing physician work, fully implemented non-facility PE, fully implemented facility PE, and malpractice RVUs. In addition, it provides fully implemented non-facility total and fully implemented facility total RVUs, which is an aggregate of the component columns.
 
Mullen said that some healthcare professionals express confusion about the differences between non-facility PE and facility PE RVUs. Simply put, she says, if a facility charge will be generated for the majority or the technical component of the service (e.g., a bill from a hospital, ambulatory surgical center, skilled nursing facility or community mental-health center), the PE portion would be calculated using the facility RVUs. In all other settings, non-facility RVUs are used.

Calculating Medicare Payments

Calculating the national Medicare payment rate for healthcare services using the Payment Schedule is relatively easy, Mullen adds. Coders and radiologists choose either the fully implemented facility or non-facility total RVU for the appropriate CPT code and multiply that figure by the 2002 conversion factor. For example, the fully implemented facility total RVU for 70470 (computerized axial tomography, head or brain; without contrast material, followed by contrast material[s] and further sections) is 8.80. Multiplying this figure by a conversion factor of $36.1992 equals a payment of $318.55. Likewise, the fully implemented non-facility total RVU for 77407 (radiation treatment delivery, two separate treatment areas, three or more ports on a single treatment area, use of multiple blocks; up to 5 MeV) is 2.08, which pays $75.29. Similarly, the fully implemented non-facility total RVU for nuclear medicine code 78000 (thyroid uptake; single determination) is 1.24, equaling a payment of $44.88.
 
To determine the payment rate in a particular geographic area, the 2002 Geographic Practice Cost Indices (GPCI) must be factored in. Also published in the Nov. 1 Federal Register, the GPCI is a tabular index of RVU correction indices to be used by Medicare carriers. It allows local practices to calculate physician work, PE and malpractice payments for their region. To determine their payment for a particular service in their geographic area (e.g., in Kentucky), coders would use the following formula, which may be applied to any CPT code:

EXAMPLE: 75662 (angiography, external carotid, bilateral, selective, radiological supervision and interpretation) in Kentucky.
 

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