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Medicare Changes for 2010

The Centers for Medicare and Medicaid Services (CMS) uses the Resource-Based Relative Value Scale (RBRVS) as the basis for determining payments under the Medicare physician fee schedule. Under the RBRVS, each of the over 7,000 physician services is assigned a value that indicates its resource costs relative to all other services. Specifically, CMS assigns a relative value unit (RVU) that represents the relative resource costs associated with the physician work, practice expense (overhead), and professional liability insurance involved for each physician service. After the RVU for each of these three components is adjusted for geographic cost differences, with these adjustment factors known as Geographic Practice Cost Indices (GPCI), the total RVU for each service is multiplied by a dollar conversion factor (CF) to convert it into a payment amount.

CMS makes annual changes to the RBRVS. These changes can take the form of a change to: the numerical RVU assigned to a specific physician service; the methodology that the agency uses to produce a numerical RVU for the work, practice expense, and/or professional liability; and/or the GPCI factors used to adjust payment for geographic cost differences. In addition, CMS uses a formula, the Sustainable Growth Rate (SGR), established by Congress to determine the annual across-the-board update to Medicare payments. The update factor produced by SGR is used to change the CF.

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