Orthopedic Coding Alert

Figure out your acuity factor so you can compare apples to apples

If HIPAA has become a source of pain for medical practices, then benchmarking should be a source of pleasure. But because your practice doesn't perform every procedure on the Fee Schedule, you need a strategy for comparing your practice's most commonly billed services  against data that list every procedure in CPT.

The answer is to explore a unique area called acuity factors (AF). Simply put, the AF measures the average level of complexity of the services and procedures that your practice performs, based on your patient population and physician records.

The AF uses the Resource-Based Relative Value Scale (RBRVS) as a foundation for its calculations. Because relative value units (RVUs), the unit of measurement for the RBRVS, are relationally accurate, you can use them to determine a procedure's AF.

Higher RVUs Represent More Physician Resources

Assume that an RVU equals an associated unit of consumption. As the RVU increases, so do the resources that your practice devotes to the procedure. This is most obvious in E/M procedures - for example, 99204 carries more RVUs than 99201, consumes more resources and is generally accepted as being more complex.

Once you accept the fact that higher RVUs represent more difficult procedures, you can easily calculate the AF. Our primary rule is this: You must calculate AF by spe-cialty, regardless of whether you break it out by physician.
 
Step 1: You should create a table that contains the RVU values for every procedure you perform that has an RVU value.

Example: Just for the sake of the example, we'll list only the top-performed injection codes. Of course, your table should include all of the procedures that your practice performs. Or, if you plan to benchmark per physician, list on separate tables all of the procedures that each particular physician performs. Note: The RVUs listed below are fully implemented nonfacility totals but do not account for geographic pay differences.

Step 2: Multiply the RVU for each code by the reported frequency (the number of times that practices billed that code to Medicare).

Step 3: Compute the sum of the products for the "RVU x Frequency" column.

Example:                232,292
                                   34,681
                                 101,062
                                 185,610
                            +3,697,936
                                4,221,581

Step 4: Total up the frequency of the procedures in your table.

Example:                          162,442
                                             24,253
                                             72,707
                                            122,112
                                       +2,009,748 
                                         2,391,262 
 
Step 5: Divide the grand total RVUs by the grand total frequency and your result is the ratio of RVUs per procedure, or the acuity factor.

Example: 4,221,581 divided by 2,391,262 equals 1.77, which is the AF for this analysis.

The national average AF for orthopedic physicians based on analyzing 100 percent of all Medicare claims is 2.74. Therefore, the practice in our example is reporting their overall complexity for their patient population at only 64.6 percent of the average Medicare population.

This makes sense for our example, because we compiled only injection data and not surgical data. But if your practice's AF came out at 1.77, you'd know immediately that what you perform for your patients is 35.4 percent less complex that what your peers report for a Medicare population.

One More Thing: Factor in Coding Accuracy

The final consideration when tallying an AF revolves around coding accuracy. Generally, I assume that E/M coding is less accurate than non-E/M coding, so you can further specify your AF by calculating it for E/M claims only, and then for non-E/M claims only.

This is really no more complicated than calculating the AF for all procedures. Simply put the E/M codes (99201-99499) into a separate spreadsheet and run the calculations again. For the purpose of comparison, the national average AF for orthopedic specialists when calculating E/M codes only is 1.825, and the average AF for non-E/M codes only (everything except E/M codes) is 3.697.

Break down by work RVUs: I also advise my clients to further break down their AFs by using only the work RVU component from the Fee Schedule (in our example above, we used the fully implemented nonfacility total RVUs, not the work RVUs).

For the purpose of comparison, using only the work RVUs, the national average for orthopedic specialists is 0.943 for the E/M AF and 1.641 for the non-E/M AF (and 1.284 for all procedures and services combined). The work RVU AF is useful for benchmarking physician productivity against complexity.

In other words, it tackles directly the issue of "my patients are sicker than others'" by proving or disproving a correlation between complex patients and productivity. The figure weeds out any value set aside for supplies or other factors that are normally included in RVUs.

The acuity factor can be a useful tool for both normalizing E/M data for any control group (thereby setting the stage to quantify the level of potential under- and/or overcoding) and benchmarking the effects of patient-care characteristics against that of physician productivity (including work effort, profitability and FTE contributions).

 - Frank Cohen is a certified medical practice analyst and the senior analyst for MIT Solutions Inc., the industry leader in the development of decision support systems for the medical practice. For more information, or to read Mr. Cohen's more detailed white paper on calculating acuity factors, visit www.mitsi.org or contact Mr. Cohen at support@mitsi.org.