Take the Mystery Out of the MPFS Conversion Factor and Calculations

In the 2019 Medicare Physician Fee Schedule (MPFS), the conversion factor is 36.0391 compared to 35.9996 in 2018. But that sort of information helps only if you know what a conversion factor is and what to do with it. Here’s a primer you can turn to when you need to brush up on your MPFS calculation skills.

Get a Handle on RVUs

The MPFS conversion factor (CF) helps you translate Medicare relative value units (RVUs) into dollar amounts. RVUs represent the relative resources used to provide a service. There are work RVUs, practice expense (PE) RVUs, and malpractice (MP) expense RVUs.

The practice expense RVUs may vary based on the setting of non-facility or facility. The idea is that an office that buys its own supplies has higher practice expenses for a service than a provider using supplies paid for by a facility. Additionally, the facility will be claiming reimbursement for its expenses for the service, so Medicare doesn’t want to pay the facility AND the doctor for the same expense.

Work RVU examples: Office visit code 99213 has 0.97 work RVUs. Routine obstetric care and delivery code 59400 has a much higher number of work RVUs, 32.16.

PE RVU examples: Returning to our 99213 example, the non-facility PE RVUs are 1.05 in Q1 2019. The facility PE RVUs are lower at 0.40.

Remember to Adjust Based on Geography

If you add the work, PE, and MP RVUs together and then multiply the sum by the CF, you get the national payment rate for that code:

  • (Work RVUs + PE RVUs + MP RVUs) x CF = national Medicare payment rate.

For instance, for 99213 in January 2019 you would have this calculation to get to the national rate of $51.90:

  • (0.97 + 0.40 + 0.07) x 36.0391 = 51.90 (rounded to two decimals).

So we’re finished right? No! It’s not that simple. Costs differ by geographic location, and the calculations need to account for that, too. For that, Medicare creates a geographic practice cost index (GPCI) for each RVU type and for each Medicare payment locality.

Your fee calculation has to take into account the three RVU types, the three GPCIs (for your specific geographic area), and the CF. And don’t forget that the PE RVU you use for the calculation depends on your service’s setting of non-facility or facility. Confused yet? Seeing the calculations as they are written on the CMS PFS Documentation and Files page may help:

Non-Facility Pricing Amount =

[(Work RVU * Work GPCI) +

(Non-Facility PE RVU * PE GPCI) +

(MP RVU * MP GPCI)] * Conversion Factor

Facility Pricing Amount =

[(Work RVU * Work GPCI) +

(Facility PE RVU * PE GPCI) +

(MP RVU * MP GPCI)] * Conversion Factor

Final Tips About MPFS Calculations

Tip 1: You can’t assume the dollar amount you calculate will match the fee you bring in. There are other factors like bilateral payment rules and multiple procedure payment rules to consider. But even if the CF is just a starting point in the final calculation, understanding the CF is an important part of coding and billing knowledge.

Tip 2: Remember that the information above relates to the MPFS in 2019. For instance, don’t confuse the MPFS CF with the separate anesthesia conversion factor. As of January 1, 2019, the anesthesia CF is 22.2730. The calculations for anesthesia code fees differ from MPFS calculations, too, so it helps to have an anesthesia coding tool that takes care of that specialized work for you.

What About You?

Do you think the calculations used to determine physician fees make sense? Do you ever manually calculate fees or do you use an online coding tool or other source to determine final fees?

About 

Deborah works on a wide range of TCI SuperCoder projects, researching and writing about coding, as well as assisting with data updates and tool development for our online coding solutions. Since joining TCI in 2004, she’s covered the ins and outs of coding for radiology, cardiology, oncology and hematology, orthopedics, audiology, and more.

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