The discussion in the comments section here got me thinking. Why should procedures pay more for physicians than their E&M codes? For the non medical folks, I'll run you through a quick tutorial on how physicians bill and how much they collect from your insurance company.
STEP I:
Every time you go to a physician they will bill your insurance company a CPT code. CPT stands for Current Procedural Terminology (and it's owned by the AMA). They are a series of numbers assigned to every possible encounter your physician can have with you (usually five digits long). There are two broad categories of CPT codes. They are E&M (or Evaluation and Management) codes and non E&M codes.
E&M codes are used for encounters that are not procedural or surgical in natures. They include such things as ER visits, office visits, hospital consults, admissions and follow up visits. Most of the E&M CPT codes are 5 digits, beginning with 99_ _ _ . Within each type of encounter (ER, office, hospital) , different CPT codes are assigned based on criteria that must be met to determine what level of care was provided (low, medium, high). These guidelines are given in the 1995 and 1997 guideline files. To bill a E&M code, you must meet the requirements of either the 1995 or 1997 guidelines. For example the low, medium and high level hospital followup codes are 99231, 99232 and 99233 respectively.
Non E&M codes are pretty much everything else. You can think of non E&M codes as anything that is procedural or surgical based. For example, a laparoscopic appendectomy has CPT code 44970. A total knee arthroplasy has CPT code 27477.
Step II
Every CPT code that your physician submits to your insurance company must have an ICD code attached. ICD stands for International Classification of Diseases (and it's owned by the World Health Organization). Every disease you can think of has its own ICD code, generally a five or six digit number with two or three decimal points. For example, the ICD code for diabetes without complication is 250.0.. Every so often a new edition of codes comes out and makes the whole process of data mining much more difficult and labor intensive.
When your doctor submits a CPT code to your insurance, they must also submit an ICD code to go with it. Insurance companies won't pay your physician just to talk about baseball with you. There must be an ICD code attached to that visit as well.
Step III
Once your physician has attached the ICD code to the CPT code and submitted the whole thing to your insurance company, who decides how much money that visit is worth? Well, in the case of the Medicare National Bank, the RUC committee does. You see, the RUC, which stands for the Relative Value Scale Update Committee, is put together by, you guessed it, the AMA. Who's on this committee and what power do they have? Well, 23 of 29 committee members come from the major medical societies, major medical societies who's members make most of their money providing non E&M based care. Of those 23 societies, family medicine, internal medicine and pediatrics, which constitute a big bulk of the delivery of primary medical services E&M CPT codes in this country are represented by a total of three votes. And each of those votes carry the same weight as all the other 20 specialty societies who's income is highly dependent on procedural/surgical non E&M encounters.
Why is this important? Because the RUC makes recommendations tells Congress how to change the payment formulas that pay doctors. And those changes directly affect the income of all doctors. In the fixed pot economics of RVU/RUC, those 20 specialty societies that represent nonE&M clients have every interest in protecting the value of their non E&M turf at the expense of E&M economics.
And how does it do that? By dictating the value of the service through RVUs. RVU stands for Relative Value Units. Each CPT code your physician submits to your insurance company has a predefined RVU value. The RVU formula has three components.
- Work RVUs
- Practice Expense RVUs
- Malpractice RVUs
In each case, the RUC committee decides how many work, practice expense and malpractice RVUs the CPT code is worth. In the case of Medicare, your government, through the sustainable growth rate formula (SGR), assigns a hard dollar value to the RVU, currently about $35 per RVU. Then they assign a geographic modifier (you get paid more in NYC than in Kansas) and your CPT code gets a total dollar value.
Take for example a mid level hospital follow up visit (CPT 99232). In my state it earns about 1.4 work RVUs, 0.4 practice expense RVUs and 0.05 malpractice RVUs. That's about 1.85 RVUs, at $35/ RVU or about $65.
Take for example a laparoscopic appendectomy (CPT 44970). In my state it earns about 9 work RVUs, 4 practice expense RVUs and just under 1 malpractice RVUs. That's about 14 RVUs, at $35/RVU or $500.
Take for example a colonoscopy (CPT 45378). In my state it earns about 3.7 work RVUs, 1.7 practice expense RVUs (when done at the hospital) and about 0.3 malpractice RVUs. That's about 5.7 RVUs, at $35/RVU or just under $200.
Take for example a total knee arthroplasty (CPT 27447). In my state it earns about about 23 work RVUs, 14 practice expense RVUs and 4 malpractice RVUs. That's about 41 RVUs, at $35/RVU, or about $1,300.
Step IV
Let's look at the work value placed on each CPT interactions. Let's use the mid level hospital follow up code as the E&M benchmark (CPT 99232) . The AMA says that this encounter should take 25 minutes. Between evaluating the data, talking with the patient, evaluating the patient, discussing the care with the nurse and documentation, 25 minutes is often generous.
At 1.4 work RVUs per 25 minutes, the hourly value of E&M work is about 3.4 work RVU's per hour, or about $120 per hour. Let's compare this to the AMA/RUC/RVU value placed on the non E&M procedural/surgical CPT codes.
Applying the same work RVU value of E&M work to a lap appy would require a surgical and post surgical time commitment of 2 hours and 40 minutes. This does not include the pre operative consultation, which would also be paid for under E&M medicine.
Applying the same work RVU value of E&M work to a colonoscopy would require a colonoscopy time commitment of 1 hour and 6 minutes.
Applying the same work RVU value of E&M work to a total knee arthorplasty would require a surgical and post surgical time commitment of 6 hours and 50 minutes.
It's clear to me that using time to attribute the work RVU premium does not hold water. In none of these situations can time explain the premium in work RVUs, the component that is supposed to account for the physician effort in the care of the patient. In each situation, the time commitment is at least 2x perhaps 3x over estimated.
So if time commitment itself cannot explain the marked up premium of non E&M over E&M service, than what does? If in fact, the premium is attributed to extra training and experience in the delivery of procedural/surgical services, then I must ask the questions:
- Why does an E&M service pay the same between all specialties of care?
- Why does a lap appy pay the same whether a family medicine physician, a general surgeon or a colorectal surgeon is doing it?
- Why does a colonoscopy pay the same whether a family medicine doc, an internist, a gastroenterologist or a surgeon is doing it?
- Why does a total knee pay the same whether a general orthopaedic or an orthopaedic knee specialist is doing it?
- Why does a thoracentesis pay the same whether a hosptialist or pulmonary critical care physician is doing it?
- Why does a central line by myself pay the same as one placed by a surgeon with six years of residency/fellowship training.
- Why does suturing a leg laceration pay the same whether an ED doc does it or a plastic surgeon does it?
The fact of the matter is, there are many procedures and interventions that can be done by wildly differing specialties with wildly different lengths of training. Stating that training longer makes procedures worth more is a scam perpetrated by the RUC committee in an effort to maintain premium value for non E&M services over E&M services in the fixed pot known as RVU economics. There is nothing intrinsically special about non E&M work that places a higher dollar value on its service. It is a result of RUC economics and nothing else. Economics from a group of secretive representatives of medical societies each out to protect their own financial interests.
Claiming that a colonoscopy should be worth twice as much as E&M because it takes a GI fellowship to do them is simply false. Many family medicine and internists do them every day. When I was training in my residency, I practiced in a rural clinic for two months where the internists had done 1000s of them, and he did them every morning before hospital rounds.
Many procedures can be done across many different specialties of wildly varying intensities. The dynamics of which specialties can do which procedures are often determined by the local politics of the hospital, and not on a national level or by medical societies. Physicians apply for privilages to do procedures and surgeries and hospitals use their credentialing processes to determine whether to grant them or not.
In fact, there is nothing that would prevent a dermatologist from opening up an endoscopy suite and performing colonoscopies on their spare time. There is nothing to prevent a family medicine doctor from performing bowel resections at the local hospital, if the hospital is willing to grant him or her privileges. There is nothing to prevent me from reading chest xrays and billing an insurance company for my read or reading EKGs and billing an insurance company for that read, except for the politics of the hospital, politics which state only the radiologist can bill and only the cardiologist can bill.
You don't need to be a surgeon to get surgical privilages. You don't have to take a test or prove your worth to your medical society or even your state's Department of Health and Human Services. You just have to prove competency to the hospital for which you seek privileges. And that can vary widely between hospitals. Many hospitals deny privileges based not out of incompetency, but rather politics. For example, when one specialty doesn't want another to incringe on their turf. It's a money issue more than anything.
Look at the payment policies of NPs. When billed as a free standing note without physician involvement, they can collect 85% of the physician billed rate. Why is that? If they are providing the same service as their physician counterparts, shouldn't they be allowed to bill 100% of the physician allowed rate?
I don't think so. But I also think 85% is for too much. In fee for service, I believe you should be able to collect based on your length of training. And NP training, when considering the medical school and residency requirements, is perhaps 10-25% of the time commitment required of their board certified medical school comrades.
How do I think physicians should be paid? In a fee for service system, if that's what we are stuck with, they should be paid based on the experience they bring to the table. The longer you train, the more you should make, for every encounter you see. That means E&M should pay more for a colorectal surgeon than it does for a general surgeon than it does for an internist. Procedures should pay more for a colorectal surgeon than it does for a surgeon than it does for an internist. But none should pay more based simply on the fact that they are non E&M procedural codes. Because procedures by themselves have no intrinsic value that make them worth more than other procedures or E&M work.
I think all non E&M codes should be zeroed to equivalent work value as E&M codes on a time based axis and the bonus money currently being paid for non E&M work should be used to pay subspecialists more for the E&M encounters based on their length of training, with their procedural payment rates paying the equivalent as their E&M rates on a time based axis. That means as a gastroenterologist or a dermatologist or a cardiologist or even a general surgeon you get paid the same higher rate for your consultative and clinic visits as you do performing procedures and surgeries. But one is not valued more than the other, except when comparing their value against, say, an internist.
Many folks commenting on my blog think I don't appreciate the cognitive contribution to procedural medicine. I do, which is why I think you should be paid for it based on your length of training, and not on the basis of the procedure itself. Your E&M contributions should carry the same weight as your non E&M codes. And both should be higher based on the training you bring to the table. But neither should be worth more than the other. Since we all know you're just not a carpenter, but rather a thinking carpenter.
If you want more information on hospitalist RVU benchmark standards, go here.
You can see much more in my free lectures on medical billing and coding.
LINK TO E/M POCKET REFERENCE CARD POST
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