Question

Discuss how physician payments can be adjusted for the price differences among various parts of the country.

Answer 1

Hi Answer:

Answer: The service fee of physician and other workers which are engaged in the health services in different part of the country can be regulated by using Geographic Practice Cost Index (GPCI), which shows the difference in the market conditions and business costs at different geographical regions of the country. These adjustments make sure that physician must get uniform payments in every part of the country. The three main components of Medicare Physician Fee Schedule (PFS) are adjusted according to the geographical region i.e. Physician work (PW), practice expense(PE) and malpractice (MP) insurance. The combination of these 3 factors is known as geographic adjustment factor (GAF).

The payment to the physician is based on the HCPCS codes. These codes are provided for every relative value units (RVUs) that show the cost of resources required to provide a particular procedure or in simple words every medical procedure is defined by a particular code and every code has a particular cost. The total RVUs for a procedure are subdivided into the three components of the PFS: physician work, PE, and MP insurance:

•    Physician work: It is commonly known as the consultancy fee it is almost fixed in a particular region.

•    Practice expense: It is related to the cost of the procedure or treatment which is provided to the patient. It includes staff payments, clinical expenditure and instrumental maintenance etc.

•    Malpractice premium RVUs represent payment for professional liability insurance (PLI), also known as MP insurance.