The laws regulating Medicare managed care organizations (MCOs) do not specifically address nurse practitioners. Reimbursement from Medicare to an MCO and from an MCO to a physician is made under the terms of the contract between the parties. An MCO usually reimburses providers who are admitted to the plan's provider panel. Some admit NPs to the provider panel, some decline to admit NPs but allow them to provide services for patients on a physician's panel, and some decline to admit NPs and permit only those on provider panels to see patients.
Some MCO contracts allow a physician to delegate to an NP the authority to provide services. If this isn't confusing enough, reimbursement for MCO patients seen by NPs is less than that to physicians. In most cases, NPs need to set fees at 115% of the MCO rate or higher to get reimbursement comparable to a physician.
So how do you negotiate the best rates if you are seeing patients for a Medicare MCO? Don't even bother going through the Center for Medicare and Medicaid Services (CMS), advises Jan Towers, legislative and reimbursement specialist for the American Academy of Nurse Practitioners. Instead, Towers suggests that NPs use relative value units (RVUs) to set fee schedules that provide the highest level of reimbursement.
Each CPT code has an associated RVU or resource-based monetary conversion factor that will calculate the actual reimbursement for a particular service. RVU rates vary by geographic location. RVUs are payer neutral and are the same whether the provider receives capitated or fee-for-service reimbursement.
Medicare's allowable charge for a given CPT code is derived from a formula that contains eight components: three RVU values, three Geographic Practice Cost Index values (GPCI), the Budget Neutrality Adjustor and the Conversion Factor. The work RVU is designed to reflect the work effort and intensity required, the practice expense RVU value represents the expenses the practice incurs, and the malpractice expense RVU varies depending on the relative exposure.
Medicare recognizes that it costs more to practice in certain locations, and it adjusts payments accordingly by using the GPCI. In 2007, after a 5-year study, Medicare increased the work RVU values. However, legislation that covers Medicare payments puts a cap on the amount that fee expenditure can increase when work RVUs are adjusted. To keep payments under the cap, Medicare introduced the Budget Neutrality Adjustor. The Conversion Factor converts RVUs into dollar amounts.
Using the CMS Web Site
All current RVUs can be found on the CMS Web site at www.cms.hhs.gov/PhysicianFeeSched. These unit values are updated annually.
Tools for calculating fee schedules using RVUs are easily accessible on this site. Go to PFS Relative Value Files. Then find the latest zip file for 2010 by clicking "next" until you get to the last item on the list. When you download and unzip the file RVU10AR, you will find multiple documents. The three you need are PPRRVU10.xlsx (RVU values), GCPI.xls (GCPI codes for each geographic area) and RVUPUF10.xls (instructions on how to calculate the Medicare allowable amount). This last document also explains the components of the calculation spreadsheet.
To calculate a CPT code's allowable amount, use the following formula:
(Work RVU × Budget Neutrality Adjustor) × Work GCPI + (Practice Expense RVU × Practice Expense GCPI) + (Malpractice Expense RVU × Malpractice GCPI) = Geographically Adjusted RVU × Conversion Factor = Allowable Amount.
Use the RVU method of setting fees to generate marketable income and find ways to supplement revenue for your practice. Problems with managed care billing translate to diminished return.
Take steps to add income wherever possible. Routinely review your business plan and practice for areas that can be streamlined. Consider adding services for cash fees or bringing in other types of healthcare providers with whom you could share revenue.
NPs play a valuable role in the healthcare market. National NP organizations have been lobbying for increased autonomy and improved reimbursement. Add your voice by contacting your state legislators to advocate for these changes.
Nanette Lavoie-Vaughan is an adult nurse practitioner and former practice owner who provides consultant services to geriatric healthcare professionals and caregivers. She is a published author and professional speaker. For more information, visit www.nanettelavoie-vaughan.com
> Do market research: Call other providers to inquire about their fees.
> Follow Medicare reimbursement rates: Set rates at 1.8 to 2.5 times the base Medicare allowable rate.
> Use RVUs: This is how insurance companies set rates, and you can, too. Take the RVU and multiply it by the conversion factor to get your payment rate.