§ 9789.12.2 Calculation of the Maximum Reasonable Fee - Services Other than Anesthesia

Summary

This article breaks down the process for calculating the Maximum Reasonable Fee for services excluding anesthesia. From determining place of service to applying the necessary values and ground rules, we explain how it’s done.

To calculate the Base Maximum Fee, the current RBRVS-based fee schedule (effective January 1, 2014) requires the calculation of three separate components:

  1. Relative Value Units (RVUs)
  2. Average Statewide Geographic Adjustment Factors (GAFs)
  3. Conversion Factor (CF)

Both the RVU and GAF components break down further into three subcomponents:  

  1. Physician Work (Work)
  2. Practice Expense (PE)
  3. Malpractice Expense (MP)

How do I calculate Base Maximum Fee?

To calculate the Base Maximum Fee for a procedure code, follow the steps below.

Step 1. Determine the Place of Service

First, determine if the place of service is Facility or Non-Facility. The place of service is defined by the setting in which the patient received the face-to-face service.

  • Regulation 9789.12.2(d) provides a table that assigns each type of Place of Service a “F” for Facility or “NF” for Non-facility.  

Calculation of the Base Maximum Fee: Physician Services Fee Schedule

Step 2. Determine RVU Values

Regulation 9789.19, which is the Update Table, Subsection C, contains a link to Medicare’s new RVUs. To download the new RVUs for procedure codes, click the RVU16A link to the Medicare website. The RVU file provides the three RVU values for the procedure code. The three RVU values are:

  • Physician Work (Work)
  • Practice Expense (PE)
  • Malpractice Expense (MP)

Relative Value File: Physician Services Fee Schedule

Step 3. Determine GAF Values

After determining the three RVUs, next determine the three Statewide Geographic Adjustment Factors (GAFs).

Statewide Geographic Adjustment Factors (GAFs)

Step 4. Identify the Conversion Factor

Regulation 9789.19, which is the Update Table, Subsection C provides the four conversion factors. Select the conversion factor that matches the type of HCPCS / Procedure Code.

  • Anesthesia Conversion Factor: $28.8003
  • Surgery Conversion Factor: $48.1743
  • Radiology Conversion Factor: $47.4332
  • Other Services Conversion Factor: $42.4361

Step 5. Apply the Formula

Select the correct formula (Non-Facility or Facility) and calculate the base maximum fee using the RVUs, GAFs, and Conversion Factor. To calculate the Base Maximum fee:

  1. First, Multiply the RVU Values by the GAF Values.
  2. Next add together the three Totals from the multiplied RVUs and GAFs to get the Sum of Values.
  3. Finally, multiply the Sum of Values by the appropriate Conversion Factor.

Calculation of the Base Maximum Fee: Physician Services Fee Schedule

Step 6. Apply Ground Rules

Apply relevant ground rules, if any, to the Base Maximum Fee to determine the payable fee.

Ground rules are located in the Physician Fee Schedule Regulations.

DaisyBill OMFS Calculator

Is the Physician Fee Schedule 120% of Medicare’s reimbursements?

The Physician fee schedule is NOT 120% of Medicare’s reimbursements. One of the most common misunderstandings about the RBRVU-based Physician Fee Schedule is the belief that the reimbursement is a simple calculation of 120% of the Medicare reimbursement rates. Other than sharing RVU values, there are no other similarities between the Medicare and the Physician Fee Schedule reimbursements.

California Code of Regulations (CCR)

§ 9789.12.2 Calculation of the Maximum Reasonable Fee - Services Other than Anesthesia

Division of Workers’ Compensation Websites

Official Medical Fee Schedule

DaisyBill Solution

For the easiest way to keep up with California fee schedules and rule changes, sign up for the DaisyBill Work Comp Wizard. Click below for a FREE three day trial and start easy calculations today.

Try the DaisyBill OMFS Calculator

Was this article helpful?

About Us

DaisyBill is a trusted authority on workers’ comp billing. Thousands of work comp professionals attend our webinars and state agencies and professional organizations turn to us for our expertise. We created this blog to help everyone involved in workers’ compensation; sharing news, tips, and data of interest to the community.

Drop us a line with any news you would like us to share or any issue that concerns you.

Read more

Search results for: