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Saturday, April 28, 2007Specifically, the method sets practice expense RVUS so that they are the same proportion of total RVUS as practice expenses are of total practice revenues: (4) [RVU.sub.pe,i] [ITRVU.sub.i] = [PEP.sub.i], where [TRVU.sub.i] = total relative value units for service i = [RVU.sub.w,i] + [RVU.sub.pe,i] with [RVU.sub.w,i] denoting the physician work RVU, and [RVU.sub.pe,i] the practice expense RVU (including malpractice) for service i. Equation (4) can be solved for [RVU.sub.pe,i]- (5) [RVU.sub.pe,i] = [[PEP.sub.i]I (1 - [PEP.sub.i]) [RVU.sub.w,i- Equation (5) states that if, for example, practice expenses account for one-half of physician revenues on average for the specialties performing a service (that is [PEP.sub.i] = 0.5), then the practice expense RVUs for that service equal the work RVUs. Substituting equation (5) into the expression for total RVUs, we have: (6) [TRVU.sub.i] = [1/(1 - [PEP.sub.i])][RVU.sub.w,i- [PEP.sub.i] = service i's practice expense percentage, that is, the percentage of practice expenses in total revenues for each specialty providing service i, weighted by the specialty's frequency of performing service i. Multiplied by an appropriate conversion factor and geographic adjustment factor, equation (6) gives the Medicare fee for service i under the proposed method. We call equation (6) a specialty resource-based relative value scale because it is calculated from only [RVU.sub.w,i] and [PEP.sub.i], which are both derived from actual physician resource costs by specialty. The percentage markup over physician work for service i implied by equation (6) is: ([TRVU.sub.i] - [RVU.sub.w,i])[IRVU.sub.w,i] = (7) [PEP.sub.i]I](1 - [PEP.subi]). If the practice expense percentage PEP were the same for all services, equation (6) shows that the method would allocate practice expenses in proportion to physician work. Also, the markup over work would be the same for all services (equation 7). However, [PEP.sub.i] does vary by service, though only according to the mix of specialties performing a service. For example, fees for services performed by psychiatrists are marked up less over physician work than fees for services performed by general practitioners, because psychiatrists have lower practice expenses relative to revenues than do general practitioners. How to calculate every other profession's fee: x amount of money multiplied by y amount of hours = payment How did we ever let it get to that? Oh, that's right. We're the only profession that relies on someone other than our customers to pay us. posted by Sydney on 4/28/2007 04:30:00 PM 3 comments 3 Comments:
How to calculate every other profession's fee:
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Diora,
Sydney, yes if you are comparing only to service professions, you have a point. I don't know much about those having being salaried for the past 20+ years, not to mention in the field where salaries dropped significantly since late 1990s.
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