(Medicare Claims Processing Manual)

10 - General  (Rev. 1, 10-01-03) B3-2020 This chapter provides claims processing instructions for physician and nonphysician practitioner services.  Most physician services are paid according to the Medicare Physician Fee Schedule.  Section 20 below offers additional information on the fee schedule application.  Chapter 23 includes the fee schedule format and payment localities, and identifies services that are paid at reasonable charge rather than based on the fee schedule.  In addition:  Chapter 13 describes billing and payment for radiology services.  Chapter 16 outlines billing and payment under the laboratory fee schedule.  Chapter 17 provides a description of billing and payment for drugs.  Chapter 18 describes billing and payment for preventive services and screening tests. The Medicare Manual Pub 100- 1, Medicare General Information, Eligibility, and Entitlement Manual, Chapter 5, provides definitions for the following: Physician; Doctors of Medicine and Osteopathy; Dentists; Doctors of Podiatric Medicine;  Optometrists;  Chiropractors (but only for spinal manipulation); and Interns and Residents. The Medicare Benefit Policy Manual, Chapter 15, provides coverage policy for the following services.  Telephone services;  Consultations; Patient initiated second opinions; and Concurrent care.  Chapter 26 provides guidance on completing and submitting Medicare claims.  20 - Medicare Physicians Fee Schedule (MPFS)  (Rev. 1, 10-01-03) B3-15000 A/B MACs (B) pay for physicians services furnished on or after January 1, 1992, on the basis of a fee schedule.  The Medicare allowed charge for such physicians services is the lower of the actual charge or the fee schedule amount.  The Medicare payment is 80 percent of the allowed charge after the deductible is met.  Chapter 23 provides a list of physicians services payable based on the Medicare Physician Fee Schedule (MPFS).  20.1 - Method for Computing Fee Schedule Amount  (Rev. 1, 10-01-03) B3-15006 The CMS continually updates, refines, and alters the methods used in computing the fee schedule amount.  For example, input from the American Academy of Ophthalmology has led to alterations in the supplies and equipment used in the computation of the fee s chedule for selected procedures.  Likewise, new research has changed the payments made for physical and occupational therapy.  The CMS provides the updated fee schedules to A/B MACs (B) on an annual basis.  The sections below introduce the formulas used for fee schedule computations.  A. Formula  The fully implemented resource -based MPFS amount for a given service can be computed by using the formula below:  MPFS Amount = [(RVUw x GPCIw) + (RVUpe x GPCIpe) +  (RVUm x GPCIm)] x CF  Where:  RVUw equals a relative value for physician work,  RVUpe equals a relative value for practice expense, and  RVUm refers to a relative value for malpractice.  In order to consider geographic differences in each payment locality, three geographic practice cost indices (GPCIs) are included in the core formula:   A GPCI for physician work (GPCIw),   A GPCI for practice expense (GPCIpe), and   A GPCI for malpractice (GPCIm).  The above variables capture the efforts and productivity of the physician, his/her individualized costs for staff and for productivity- enhancing technology and materials.  The applicable national conversion factor (CF) is then used in the computation of every MPFS amount. The national conversion factors are:  2002 -  $36.1992 2001 -  $38.2581 2000 -  $36.6137 1999 -  $34.7315 1998 -  $36.6873 1997 -  $40.9603 (Surgical); $33.8454 (Nonsurgical); $35.7671 (Primary Care)  1996 -  $40.7986 (Surgical); $34.6296 (Nonsurgical); $35.4173 (Primary Care)  1995 -  $39.447 (Surgical); $34.616 (Nonsurgical); $36.382 (Primary Care)  1994 -  $35.158 (Surgical); $32.905 (Nonsurgical); $33.718 (Primary Care)  1993 -  $31.926 (Surgical); $31,249 (Nonsurgical);  1992 -  $31.001 For the years 1999 through 2002, payments attributable to practice expenses transitioned from charge -based amounts to resource -based practice expense RVUs.  The CMS used the following transition formula to calculate the practice expense RVUs.  1999 -  75 percent of charged- based RVUs and 25 percent of the resource -based RVUs.  2000 -  50 percent of the charge -based RVUs and 50 percent of the resource -based RVUs.  2001 -  25 percent of the charge -based RVUs and 75 percent of the resource -based RVUs.  2002 -  100 percent of the resource -based RVUs.  As the tabular display introduced earlier indicates, CMS has calculated separate facility and nonfacility resource -based practice expense RVUs.  B. 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 betwe en 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 sam ple 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 val ue 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 A/B MACs (B) with final fee schedules for each locality via the Medicare Physicians Fee Schedule Database (MPFSDB).  Localities used to pay services under the MPFS are listed in Chapter 23.  20.2 - Relative Value Units (RVUs)  (Rev. 1, 10- 01-03) Resource- based practice expenses relative value units (RVUs) comprise the core of physician fees paid under Medicare Part B payment policies.  The CMS provides A/B MACs (B) with the fee schedule RVUs for all services except the following:  Those with local codes;  Those with national codes for which national relative values have not been established;  Those requiring By Report payment or A/B MAC (B) pricing; and  Those that are not included in the definition of physicians services.  For services with national codes but for which national relative values have not been provided, A/B MACs (B) must establish local relative values (to be multiplied, in the MCS system, by the national CF), as appropriate, or establish a flat local payment a mount.  A/B MACs (B) may choose between these options. The By Report services (with national codes or modifiers) include services with codes ending in 99, team surgery services, unusual services, pricing of the technical component for positron emission tomography reduced services, and radio nuclide codes A4641 and 79900.  The status indicators of the Medicare fee schedule database identify these specific national codes and modifiers that A/B MACs (B) are to continue to pay on a By Report basis.  A/B MACs (B) may not establish RVUs for them.  Similarly, A/B MACs (B) may not establish RVUs for By Report services with local codes or modifiers.  Additionally, A/B MACs (B) do not establish fees for noncovered services or for services always bundled into another service.  The MPFSDB identifies noncovered national codes and codes that are always bundled. A. Diagnostic Procedures and Other Codes With Professional and Technical Components  For diagnostic procedure codes and other codes describing services with both professional and technical components, relative values are provided for the global service, the professional component, and the technical component.  The CMS makes the determinati on of which HCPCS codes fall into this category.  B. No Special RVUs for Limited License Practitioners  There are no special RVUs for limited license physicians, e.g., optometrists and podiatrists.  The fee schedule RVUs apply to a service regardless of whether a medical doctor, doctor of osteopathy, or limited license physician performs the service.  A/B MA Cs (B) may not restrict either physicians, independently practicing physical therapists, and/or other providers of covered services by the use of these codes.  20.3 - Bundled Services/Supplies  (Rev. 147, 04- 23-04) There are a number of services/supplies that are covered under Medicare and that have HCPCS codes, but they are services for which Medicare bundles payment into the payment for other related services.  If A/B MACs (B) receive a claim that is solely for a s ervice or supply that must be mandatorily bundled, the claim for payment should be denied by the A/B MAC (B). A. Routinely Bundled  Separate payment is never made for routinely bundled services and supplies.  The CMS has provided RVUs for many of the bundled services/supplies.  However, the RVUs are not for Medicare payment use.  A/B MACs (B) may not establish their own relative values for these services.  B. Injection Services  Injection services (codes 90782, 90783, 90784, 90788, and 90799) included in the fee schedule are not paid for separately if the physician is paid for any other physician fee schedule service rendered at the same time.  A/B MACs (B) must pay separately for  those injection services only if no other physician fee schedule service is being paid.  In either case, the drug is separately payable.  If, for example, code 99211 is billed with an injection service, pay only for code 99211 and the separately payable drug.  (See section 30.6.7.D.)  Injection services that are immunizations with hepatitis B, pneumococcal, and influenza vaccines are not included in the fee schedule and are paid under the drug pricing methodology as described in Chapter 17.  C. Global Surgical Packages  The MPFSDB lists the global charge period applicable to surgical procedures.  D. Intra -Operative and/or Duplicate Procedures   Chapter 23 and 30 of this chapter describe the correct coding initiative (CCI) and policies to detect improper coding and duplicate procedures.