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Where does the money come from in Radiology? An Application of Relative Value Units (RVUs)

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Presentation on theme: "Where does the money come from in Radiology? An Application of Relative Value Units (RVUs)"— Presentation transcript:

1 Where does the money come from in Radiology? An Application of Relative Value Units (RVUs)

2 A Special Thank You to: Dr. David M. Yousem, M.D., M.B.A. Professor, Department of Radiology Vice Chairman of Program Development Director of Neuroradiology Johns Hopkins Hospital for allowing the use of his material/content in this presentation Dr. Yousem’s online lecture series can be viewed at: =7e18b7d5-9c63-487e-aaf1-77a86f83b011 Dr. Yousem’s project was funded through an RSNA Educational Grant

3 Relative Value Units and the RBRVS – A Brief Review RVUs are assigned to specific CPT codes The total radiology bill has two components –Technical Fee Paid to the facility (owner/operator of the equipment) –Professional Fee Physician Work, Practice Expense, and Malpractice Expense RVUs do not translate directly into money –Modified by geographic and budgetary multipliers –Money Paid = (RVU x GPCI) x Conversion Factor

4 Medicare – There are (usually) two bills for every study Medicare Part A –Submitted by the “facility” performing the study –Technical component Medicare Part B –Submitted by the interpreting physician –Professional component Patient pays 20% of both bills, Medicare covers 80% of both –The patient may have supplemental insurance to cover their 20% Global Reimbursement –For the freestanding entity that may bill for both the technical and professional components of the CMS Physician Fee Schedule under Medicare Part B

5 Follow the Money Over the next few slides we will create a simplified example of the reimbursement process Certain assumptions will be made to facilitate understanding the numbers on a fundamental level As always, reality is much more complicated To start, we will try to answer the following question: –How many studies do I have to read each day to make $300,000 in a year?

6 Follow the Money – Assumptions Net payment per RVU of $30 –This allows for incomplete collections in a mixed payer population –Calculated across all departments within a practice Goal personal income of $300,000 –Benefits amount to 25% of salary –Malpractice costs are $25,000 (high end of the scale) –Cash allowance of $10,000 (meetings and travel) –Practice Expenses of 35% Based on survey data from the ACR and median reported expenses per FTE radiologist

7 Follow the Money – Assumptions continued Work Days –250 workable weekdays a year –50 days for vacation and/or meetings –5 weekends of coverage –Total of 220 work days CMS Physician Fee Schedule RVU files for 2010 Geographic Practice Cost Index (2010) –GPCI (physician work) in North Carolina is 1.0 Conversion Factor (2010) –$

8 Follow the Money – The Challenge Our hypothetical radiologist must produce $515,000 in a year –This covers his salary, group benefits, and expenses –Stated another way $2,341 a day

9 Follow the Money – The Details Using the CMS formula for reimbursement $ = RVU professional x GPCI x CF We break it down into parts –In our case, the payment per RVU reflects the GPCI and CF modifiers $510,000 = Payment per RVU x RVU total RVU total = Sum of {RVU study x Number of each type of study} To break it down further into the workload required in a single day $510,000 / 220 days = $2,341/day Number of studies = $2,341 / (RVU study x Payment per RVU)

10 Follow the Money – The Details The previously described equations are calculated to show how many of one specific study (e.g. Chest Radiographs) must be read in a single day to meet the goal income Calculating a mix of studies is simple, but less illustrative

11 Follow the Money – The Work Using only the professional component of reimbursement, these are the numbers of each type of study you would have to read in a single day to produce $2,341 of income for your practice Specifically, if you are a neuroradiologist, and only read noncontrast Head CTs, you would have to interpret, and be reimbursed, for 68 exams to meet your goal ExamRVU (prof) Number / Day CXR (2 view) CT Head wo CT A w/wo MR Head w/wo MR Knee wo Xray Hand US Abd Complete NM HIDA

12 Follow the Money – Own the Equipment The aforementioned examples are for reimbursements with only the professional component The technical component of reimbursement reflects 85% of the global bill compared to the professional component’s 15% Here are the numbers again when receiving the global reimbursement (e.g. if all imaging was performed at your outpatient imaging center) ExamRVU (prof) # / Day RVU (global) # / Day CXR (2 view) CT Head wo 6822 CT A w/wo 4110 MR Head w/wo 256 MR Knee wo 429 Xray Hand US Abd Complete 7222 NM HIDA 7010

13 Conclusions Study volume is important to produce revenue So are your payer mix and contracts –Medicare vs. Medicaid vs. Private Insurance Efficiency in Billing and Collections is essential to actually receiving the revenue you have “earned” –Accounts Receivable is an critical asset (see Accounting) Owning the equipment is crucial –This is the basis of turf wars between radiology and some other clinical subspecialties –ACR has ongoing legislative efforts at closing Stark law loopholes

14 The Big Picture Managing a practice with multiple radiologists exponentially increases the complexity of generating and measuring income –Referral Base influences the RVU calculations and billing Inpatient vs. Outpatient and Medicare vs. Private Insurance Hospital vs. Imaging center vs. Physician Office –Productivity Measurement and other Metrics As well, there are many facets to both Accounting and Expenses Capital Purchases Marketing Technology Medicolegal and Legislative Issues


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