Physician Reimbursement Case
Physician Reimbursement Case
Discuss the general differences between facility and non-facility rates. Discuss the MS-DRG system for hospital inpatient services. Include in your discussion the history of the MS-DRG system and the need for the updated system. There are two types of bills used in healthcare. Which type of bill is used for physician services? Which type of bill is used for hospital services? (Hint: your book is incorrect.)
Facility vs. Non-Facility Rates
The place of service can greatly affect reimbursement, depending on the type of service provided and the location. The reason being is that Medicare typically reimburses physicians based on a method called Relative Value Units (RVUs), which has three components: work, practice expense, and malpractice. Procedures that can be performed in either a facility or non-facility setting have different practice expense RVUs, depending on the place of service. Therefore, the practice expense is a major component in rate determination, because place of service is part of this practice expense component. The practice expense component includes rent/lease of space, supplies, equipment, and clinical and administrative staff expenses. In a general sense, facilities are hospitals, skilled nursing facilities, nursing homes, or any other place that bills for Medicare Part A. Some physicians work out of a hospital owned facility, meaning that they are employed by and work in a facility owned and billed for by a hospital, and those physicians would be billing based on the facility rates.
When physicians provide a service in a facility such as a hospital, the total RVU is lower due to the fact that they do not incur the full practice expense associated with providing that service; such expenses are the cost of having full staff, equipment, space, or supply costs. Hence, Medicare reduces the payment based on the location of service. On the other hand, the most common non-facility location is the physician’s office
Discuss the general differences between facility and non-facility rates. Discuss the MS-DRG system for hospital inpatient services. Include in your discussion the history of the MS-DRG system and the need for the updated system. There are two types of bills used in healthcare. Which type of bill is used for physician services? Which type of bill is used for hospital services? (Hint: your book is incorrect.)
Facility vs. Non-Facility Rates
The place of service can greatly affect reimbursement, depending on the type of service provided and the location. The reason being is that Medicare typically reimburses physicians based on a method called Relative Value Units (RVUs), which has three components: work, practice expense, and malpractice. Procedures that can be performed in either a facility or non-facility setting have different practice expense RVUs, depending on the place of service. Therefore, the practice expense is a major component in rate determination, because place of service is part of this practice expense component. The practice expense component includes rent/lease of space, supplies, equipment, and clinical and administrative staff expenses. In a general sense, facilities are hospitals, skilled nursing facilities, nursing homes, or any other place that bills for Medicare Part A. Some physicians work out of a hospital owned facility, meaning that they are employed by and work in a facility owned and billed for by a hospital, and those physicians would be billing based on the facility rates.
When physicians provide a service in a facility such as a hospital, the total RVU is lower due to the fact that they do not incur the full practice expense associated with providing that service; such expenses are the cost of having full staff, equipment, space, or supply costs. Hence, Medicare reduces the payment based on the location of service. On the other hand, the most common non-facility location is the physician’s office