Provider services that are billed to Medicare Part B are paid under the Medicare Physician Fee Schedule (MPFS) whose fee calculations are based on the Resource Based Relative Value Summary (RBRVS).

Each service covered under the RBRVS fee schedule has three components:

-Work Performed
-Practice Expense
-Malpractice Risk

The RBRVS team has assigned a Relative Value Unit (RVU) for each of these components.

It is recognized that there are geographic variations in the cost for these components. These variations are know as Geographic Practice Cost Indexes (GPCIs or 'gypsies'). Effective January 1, 2017 there are 112 recognized GPCIs in effect and are based on Practice Location.

Examples would be:
The practice expense for a clinic in rural Mississippi is less than downtown Manhattan
The malpractice cost in a state that has limits on jury awards (such as California) is less than a state that does not (such as Florida)

Each of the three Components is adjusted by its GPCI to provide an Adjusted Total.

So, the Total RBRVS Value for any affected code looks like this:

   (Work value x Work GPCI)=Adjusted Work RVUs

+ (Malpractice value x Malpractice GPCI) =Adjusted Malpractice RVUs
+ (Practice Expense value x Practice Expense GPCI)=Adjusted Practice Expense RVUs
Adjusted Total RBRVS RVUs

The last component is controlled by congress whose responsiblity is to balance the Medicare budget. They analyze expenses from previous years, then project costs into the future based on past trends. They review the TOTAL RVUS billed and divide that value into the medicare Part B budget to arrive at a Conversion Factor (CF). This is used to calculate the allowable amount for any code that is paid under the fee schedule:

Adjusted Total RBRVS RVUs x Conversion Factor = Medicare Allowable Amount

For participating physicians, Medicare will only pay 80% of the allowable amount, leaving the patient to pay the remaining 20% through a secondary insurance or self pay. Participating Medicare physicians receive payment directly from medicare.

Physicians who choose not to participate are allowed to charge 115% of the Medicare Allowable Amount, then are paid 95% of that. Nonparticipating physicians have to bill the patient---who receives a check from medicare for the physician's services.

Flash Code displays all of these calculated fees in the Fee Detail screen.