The Commission has transitioned to an RBRVS reimbursement system which calculates fee by multiplying resources required to perform a service with a dollar value conversion factor. The RBRVS fee schedule used the following two-step methodology to compute reimbursement values for all service codes included in the 2017 ICA Fee Schedule:
- Assign RVUs to each service code
The first step in transitioning to an RBRVS based fee schedule required the development of RVUs for each service code included in the current Arizona workers’ compensation fee schedule. This was done using one of the four methods stated below:
- RVUs in the Medicare Physician Fee Schedule and BUs in the Anesthesia Base Units schedule. The Medicare Physician Fee Schedule (MPFS) is an RBRVS fee schedule used by CMS to reimburse Medicaid physician cost. It consists of RVUs created by the American Medical Association (AMA). The CY 2017 MPFS was used as the preliminary source of assigning RVUs to all service codes. In addition to the main MPFS, the Anesthesia Base Units schedule, a separate fee schedule maintained by CMS, was used to assign units to all anesthesia service codes included in the Arizona workers’ compensation fee schedule.
After this step, the codes remaining were either Arizona-specific codes, CPT codes without published RVUs, or codes not included in the MPFS. Following are the three alternate methods that were used to assign RVUs to the remaining codes.
- RVUs in the Office of Worker’s Compensation Program Fee Schedule. The second method used the Federal Department of Labor’s Office of Workers’ Compensation Program (OWCP) FY 2015 fee schedule to supply RVUs for all the remaining codes. The OWCP, uses the same measure as the PFS to reimburse medical services based on relative value units (RVUs) and was used to generate RVUs for most of the remaining codes not found in the MPFS.
- Calculated Using Maximum Allowable Rates (Clinical and Diagnostic Laboratory fee schedule). This method was used to assign RVUs to most pathology and laboratory service codes included in the current Arizona fee schedule. The 2016 Clinical and Diagnostic Laboratory (CDL) fee schedule publishes state specific dollar value reimbursements for pathology and laboratory service codes. RVUs were created for these dollar values by dividing them with the current CMS conversion factor.
- Back-filling. Lastly, the back-fill method was used to assign RVUs to all service codes that had a current ICA rate but could not be assigned RVUs using the three methods stated above. This method involved backing into overall RVUs using the current ICA rate. Dividing the current ICA rate by the budget neutral conversion factor delivered RVUs for these remaining codes.
- Conversion factor
Once RVUs were assigned to all service codes, the next step involved using an Arizona-specific conversion factor to calculate dollar value reimbursement rates for those relative unit values. A multiple conversion factor model was identified as most feasible for use in the ICA fee schedule consisting of one conversion factor for Anesthesia services, one for Surgery and Radiology and a third for all remaining service categories including E&M, Pathology and Laboratory, Physical Medicine, General Medicine, Special Services and Category III services.
To arrive at the conversion factor, payments were calculated based on the 2015 workers’ compensation claims and ICA rates to estimate the expected payments, considering all claims were paid according to the ICA rate. These estimated payments were then divided by the total RVUs utilization to calculate the three conversion factors. Below are the three conversion factors computed using this model which were ultimately used in calculating the rates for all service codes to be included in the RBRVS fee schedule.
The above mentioned methodology does not apply to following:
- If a service code could not be assigned an RVU using the methods stated earlier, then the code may be identified as RNE (Relativity Not Established) or BR (By Report).
- Codes specific to Arizona, the value of which may be determined through the hearing process.
- Codes otherwise designated as BR or Not covered.
The following changes have adopted by the Commission and implemented in the 2017/2018 Fee Schedule:
- The RBRVS based fee schedule adopts surgical global periods published by CMS, replacing those published by Optum.
- The RBRVS based fee schedule continues to assign RVUs to consultation services, recognizing the functional importance of these services. However, these consultation service codes will observe the bundling principles used by CMS.
- The Fee Schedule was updated to the 2017 CPT-® (which became effective January 1, 2017). The Commission adopted the reference deletions, additions, general guidelines, identifiers, modifiers, terminology changes associated with the adopted codes, and Appendix D Summary of CPT Add-on Codes 2017, and Appendix E Summary of CPT Codes Exempt from Modifier -51 2017 to ensure that the 2017/2018 Fee Schedule is current and reflects the latest changes to those editions of the CPT®-4. To the extent that a conflict may exist between the adopted portions of the CPT®-4, CMS guidelines, and a code or guideline unique to Arizona, the Arizona code or guideline would control.