Fee schedule calculation with example

Example of Computation of Fee Schedule Amount

The following example further clarifies the computation of a fee schedule amount.

Background Example
Nationwide, cardiovascular disease has retained its position as a primary cause of morbidity and mortality. Currently, cardiovascular disease affects approximately 61.8 million Americans. Cardiovascular disease is responsible for over 40 percent of all deaths in the United States. However, 84.3 percent of those deaths are persons age 65 and above.

Organ transplantation is one modality that has been used in the treatment of cardiovascular disease. Currently over 2,000 persons per year receive a heart transplant. However, another 2,300 persons are on the waiting list. Because of the disparity between the demand and supply of organs, mechanical heart valves are now covered under Medicare.

Sample Computation of Fee Schedule

Patients fitted with a mechanical heart valve require intensive home international normalized ratio (INR) monitoring by his/her physician. Physician services required may include instructions on demonstrations to the patient regarding the use and maintenance of the INR monitor, instructions regarding the use of a blood sample for reporting home INR test results, and full confirmation that the client can competently complete the required self-testing.

Assumptions
RVUw = 0
Given the nature of the example, the physician would, under product code G0248, not be allowed to assign work RVUs.
RVUm = .01
However, the treatment of the patient with a mechanical heart carries a level of risk.
RVUpe = 2.92

Based upon a relatively intense level of staff time for an RN/LRN, or MN, as well as a  supply list that includes a relatively sophisticated home INR monitor, batteries, educational materials, test strips and other materials, the RVUpe can be assigned a value of 2.92.

The above values require modification by regionally based values for work, practice, and malpractice. If the city is assumed to be Birmingham, Alabama, the values below can be assigned based upon current data.

GPCIw = 0.994
GPCIpe = 0.912
GPCIm = 0.927
The above indices suggest that the index in Birmingham is .6 percent below the national norm for physician work intensity, 8.8 percent below the national norm for practice expenses, and 7.3 percent below the national norm for malpractice.

If the assumption is made that the nonfacility payment for a home visit is $166.52, the full fee schedule payment can be computed through substitution into the formula.

Payment = (RVUw x GPCIw + (RVUpe x GPCIpe) + RVUm + GPCIm x physician fee schedule payment.
Payment = (0 x .994) + (2.92 x .927) + (.01 x .912) x $166.52 =
Payment = (0) + (2.70684) + (.00912) x 166.52
Payment = $452.26166 or $452.26 when rounded to the nearest cent.

The above example is purely illustrative. The CMS completes all calculations and provides
carriers with final fee schedule for each locality via the Medicare Physicians'Fee Schedule Database (MPFSDB).