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Changes to the 2018 Medicare Fee Schedule – How will it impact your reimbursement? Use the StrataPT Calculator to find out!

StrataPT,

There were multiple changes made to the 2018 Medicare fee schedule – some that will work in your favor and another that will not.

Let’s start with a simple breakdown on how the Medicare fee schedule is determined:

Payment = Conversion Factor * (RVU [Practice Expense] + RVU [Work Expense] + RVU [Malpractice]) 

Conversion Factor: The conversion factor is the multiplier that all of the RVU’s are multiplied by.  Naturally, if the conversion factor is increased, then the payment amount is increased.   For 2018, the conversion factor was increased from $38.89 to $38.99 – this is a win!

Work Expense RVU: The relative value correlates to the level of skill, intensity and training required by a provider for a specific service.  Each CPT code is assigned a work expense RVU.  For 2018, eight CPT codes billed by therapists had an increase in their work expense RVU.   By referencing the above formula, you can see that with both the conversion factor and the work expense increasing, then the payment amount would also increase.

Practice Expense RVU: The relative value correlates to the costs of maintaining a practice including rent, equipment, supplies and non-physician staff costs.  Each CPT code is assigned a practice expense RVU.  This is the change that is not going to work in your favor – a large handful of very common physical therapy codes had a significant decrease in their practice expense RVU in 2018. By referencing the above formula, you can see that even with an increase in the conversion factor and the work expense RVU, if the practice expense RVU decrease is large enough, it will have a negative impact on the payment.

In order to get the full picture of how this will impact your revenue and without getting confused by the actual formula, let’s pull some examples and compare 2017 payments to 2018 payments.

Let’s use Washington DC as our locality:

2017 Payment 2018 Payment
97161 (1 unit) $90.60 $94.89 +
97110 (1 unit) $27.13 $26.09
97140 (1 unit) $25.09 $23.83
Total $143.67 $144.81 +

 

Another example:

2017 Payment 2018 Payment
97530 (1 unit) $39.71 $46.63 +
97110 (2 units) $54.26 $52.18
97140 (1 unit) $25.09 $23.83
Total $119.05 $122.65 +

 

And here is the most impactful example, as this as a very common combo with our clients:

2017 Payment 2018 Payment
97110 (3 unit) $90.95 $86.80
97140 (1 unit) $25.09 $23.83
Total $116.04 $110.64

 

In summary, you can see that even though the conversion and work RVU were increased in 2018, the decrease to the practice expense RVU is going to have a pretty meaningful negative impact on overall reimbursement for some CPT codes.

Looking specifically at the very last example, a combination of 3 therex and a single manual in 2017 paid out $116.04 in Washington DC.  While in 2018, that exact same combo is only set to pay out $110.64.  Over the course of the year, you can imagine the negative impact that this is going to have on overall reimbursement.

Try Our Medicare Fee Calculator

Here is a list of the codes in which the net RVU is going down and below is a Medicare calculator that will allow you to choose your locality, choose a CPT combination and determine 2017 reimbursement vs. 2018 reimbursement:

StrataPT Medicare Calculator97022

97113

97032

97016

97034

97018

97140

97110

97012

97033

97535

97014

With this negative impact to physical and occupational Medicare reimbursement, it is imperative that you are collecting every dollar owed to you from both insurance companies and patients.

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