Practice Expense

Michael Sillers, MD
Chair: ARS Practice Expense Committee

The American Rhinologic Society has become actively involved in the practice expense update process in cooperation with the American Academy of Otolaryngology-Head and Neck Surgery. CMS (formerly HCFA) has mandated that the practice expense component of Medicare reimbursement must be reviewed and formally documented for each CPT code. Each specialty society within the Academy has been charged with the task of reviewing and updating existing CPT codes relevant to their society. Each of the nearly 7,500 CPT codes has 3 components based on the resource-based relative value scale (RBRVS) implemented by Medicare in 1992. The physician work component comprises an average of 55 % of the total value while the practice expense component comprises an average of 42 %. The balance is made up of the malpractice component.

The current focus is to review and update the existing data by which the practice expense component of each of the CPT codes is valued. In 1999, HCFA (now CMS) began to transition from an earlier method of calculation to one using resource-based practice expenses. This transition will be completed within this calendar year. Our task, along with the other specialty societies, has been to dissect the expenses associated with each of the procedures we perform. Components that are evaluated include clinical time (non-MD), supplies, and equipment. These components differ depending on the site of service-physician's office, outpatient surgery center, or hospital.

This process becomes quite labor intensive when you begin to consider each of these components. How much time does it take a nurse to organize a patient's chart, obtain x-rays, make follow-up phone calls? How many tongue depressors, 4 x 4's, suture removal kits do you use for any given procedure? What capital equipment does the average otolaryngologist utilize for each CPT code? Each of these responses must fall within certain established guidelines.

Finally, there needs to be consistency among similar codes (code families) and between different codes. To that end the Academy has sponsored 2 workshops with members of each of the specialty societies working together to accomplish this monumental task. The American Rhinologic Society has established a new committee to address the CPT process. It is vital for our membership as well as that of the entire Academy to be willing to become involved. If we do not examine and fairly value our services, the will certainly become undervalued with subsequent decrease in reimbursement.

Revised 6/2011
©American Rhinologic Society