CRITICAL CARE NEWS
The Newsletter of the Section on Critical Care of the American Academy of Pediatrics

Volume 5Number 3October, 1998

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Critical Care Newsis the newsletter of the
Section on Critical Care of the American
Academy of Pediatrics. We hope to keep you
abreast of activities and opportunities in Pediatric
Critical Care. We plan to run current news,
advertisements for positions, and other articles of
interest to you. Please let us know how we are
doing.

Submissions to Critical Care News

Members of the Critical Care Section may submit
announcements and articles to Critical Care
News. Priority will go to articles of current
interest to pediatric critical care practitioners. We
hope to run announcements for available critical
care staff positions in future issues.

American Academy of Pediatrics 141 Northwest Point Boulevard Post Office Box 927 Elk Grove Village, Illinois60009-0927 1-800-433-9016 or (847) 228-5005 Fax:(847) 228-5097

With the trend towards declining physician
residency and fellowship training programs
nationwide, how intensive care units will
provide physician staffing in the next
decade is often discussed. The time may be
right to begin to look to another profession
to enter and make an impact upon this work
force.

For over thirty years physician assistants in
the United States have practiced medicine
with physician supervision. From the first
four graduates in 1967, the profession has
grown to over 32,000 in 1997. There are
now 106 accredited PA programs that
graduate more than 3500 students annually.
Between 1991and 1996, the number of new
PA graduates produced each year increased
83 percent, the cumulative number of PAs
increased 38 percent, and the estimated
number of PAs in clinical practice increased
41 percent. Physician Assistants practice in
all practice settings, in communities of all
sizes and provide a wide range of medical
services.

In the 1997 census survey conducted by the
American Academy of Physician Assistants,
37.8 percent of respondents report that they
spend more of their work time in the
hospital than outpatient setting. In another
question, 28 percent of the respondents
report that they are employed by a hospital.
2.4 percent report that they work full time in
an intensive care unit.
Continued on page 2

http://www.aap.org

Critical Care News

Volume 5 * Number 3

October, 1998

The reimbursement is paid to the employing
physician or institution, not the physician
assistant.

There will always be a need for physician
presence in the intensive care unit.
They will remain the "captain of the ship" in
regards to decisions on patient care. But who
supports that physician may be changing.
Residents and fellows may not be there in the
numbers they once were, thereby leaving a gap in
patient care. The physician assistant profession
has been growing at a brisk rate for the past seven
years. No shortage of employment opportunities
has been seen. Physician assistants may be the
answer to many physicians and hospitals when
faced with the dilemma of medical staffing of the
ICU.

For more information on the education, licensure
and employment of physician assistants please
contact the American Academy of Physician
Assistants 950 North Washington Street,
Alexandria, VA22314. Telephone:(703) 836-
2272 E-mail:http://www.aapa.org.

Physician Assistants are qualified by
training and experience to perform many of
the procedures that are commonly required
in the intensive care setting. They are well
trained in history taking and physical
examinations. Their education in the
medical model provides the background for
the critical thinking and problem solving
which faces the medical providers in this
setting. One advantage to the full time
presence of a physician assistant in the unit
is the provision of continuity of care to the
many chronically ill patients that are there
for extended periods of time or readmitted
on a frequent basis. As the fellows and
residents rotate in and out of a unit on a
weekly or monthly basis, a PA on staff is
there providing medical care on an ongoing
basis from year to year. The nursing staff
relies on their presence and familiarity with
patient care routines to facilitate care of the
patient.

Physician Assistants believe strongly in the
team concept of practice. This model works
well in the ICU where patient care is
complex and requires many different types
of services. They practice in a dependent
role with physician supervision. The

supervising physician need not be physically
present at all times, but must be
immediately available by phone when
necessary.

The recent trends seen in workforce
composition reveal increasing numbers of
nonphysician providers, both nurse
practitioners and physician assistants. The
NPs and PAs are available to begin work
sooner than physician graduates. The 1997
Balanced Budget Act passed by Congress
realized the value of care provided by
Physician Assistants and provides for a
Medicare reimbursement rate of 85 percent
of the physician fee in all practice settings.

I. INTRODUCTION

A rephrasing of an old light-bulb joke could result
in the following: "How many intensivists would it
take to perform a hypoplastic left heart repair?"
The potential answers may not be as potentially
humorous as before since there currently exists a
measurement tool that equates the work activities
of physicians across specialty boundaries.

Over the past 15 years, HCFA in collaboration
with the Harvard School of Public Health and
various medical societies developed the
Resource-Based Relative Value System
(RBRVS).
Continued on page 4

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October, 1998

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October, 1998

which physicians can bill for their services. Each
CPT-4 code has a specifically assigned Relative
Value Unit (RVU) which is a numerical value
with 2 decimal places.

Each RVU is actually made up of three
components: a work RVU (RVUw), a practice
RVU (RVUp), and a malpractice RVU (RVUm).
Each of these components has been specifically
assigned to each CPT-4 based upon the past 15
years of study and review. As initially proposed,
an uncomplicated office visit for evaluation of an
upper respiratory illness to a primary physician
office would be assigned a RVU of 1.00. All
other procedures and evaluations have been
assigned an RVU value in relation to that number
depending upon the effort, cost, and risk
associated with the delivery of a specific service.

The RVUw represents physician work (salary
expense). The RVUw is a quantification of
physician time, technical skill and physical
strength, mental effort and judgement, physician
stress, and total work. The RVUp is a
quantification of the practice expense (non-
physician salary) required and allotted to each
CPT-4, included in this expense allotment is
overhead expense. The RVUp represents rent,
support staff, and supplies, which may vary by
practice location (within a hospital or independent
of a hospital). The RVUm represents the degree
of liability risk with the performance of each
CPT-4. Because areas of the country vary in
terms of cost of living expenses and malpractice
"climate", each of the three components should be
adjusted by a specific geographic adjustment
factor (GAF).

Since the initial publication of the specific
Relative Value Units (RVUs) in 1992,
modifications have occurred to individual
RVU assigned values. The resulting
RBRVS system, initiating on 1/1/98 and
mandated by Federal law, is the basis upon
how HCFA reimburses physicians for work
performed with Medicare patients.

The RBRVS system was initially developed
utilizing time and cost studies of the adult
primary and specialty services. There has
been input from the American Academy of
Pediatrics and some modifications to adjust
for pediatric patient care. There is also a
recognition by HCFA that further
modifications to accommodate pediatrics
"may" (but not necessarily) occur is there is
adequate and quantifiable justification for
the alteration. While the Medicare
percentage of patients in any pediatric
practice is minimal, all primary care and
specialty pediatricians should become
knowledgeable of the RBRVS methodology.
Over 90% of Blue Shield plans and 30% of
other private payers utilize the RBRVS
system as the basis for all physician
reimbursement (American Medical News,
12/1/97) and these percentages are
increasing yearly. In addition, the RBRVS
system is the primarily methodology utilized
as a productivity and efficiency assessment
tool both within a division and across
specialties.

What follows is a brief primer of the
RBRVS system and an example of its
potential application to a Pediatric Critical
Care division.

II. RBRVS METHODOLOGY

There are over 12,000 CPT-4 codes for

Continued on page 5

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October, 1998

The trend in RVU valuation has been a
progressive increase in value for those services
that involve "evaluation and management" (E/M)
and a devaluation of those services which are
"procedure-oriented". Though a particular CPT-4
code may have a relatively high RVU assignment,
it is also the number of times that CPT-4 is billed
which results in the major reimbursement impact.
In the pediatric ICU at the Alfred I. DuPont
Hospital for Children in Wilmington, Delaware,
the breakdown of RVUs from E/M activity is
94% versus only 6% from procedure related
activity.

Determining the total RVUs produced by an
individual or a group simply involves applying
the following formula:

Total RVU = ((Total RVU value of a CPT-4
Code) * (Number of times CPT-4 billed))

The total RVU value can then be used to compare
relative productivity of physicians (RVU/FTE),
relative cost behavior (patient care cost/RVU), or
in determination of reimbursement, and
development of pro formas for divisional activity
and budgeting.

III. CONVERTING THE RVU TO ACTUAL
REIMBURSEMENT

There is a simple formula which converts

Continued on next page

Since first published in 1992, there have
been various updates to the RVU valuation
process both in number of CPT-4 codes
assigned an RVU and in the specific value
of each component. The following table
lists the proposed 1999 RVU values for
CPT-4 codes utilized by a typical pediatric
intensivist:

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October, 1998

IV. PRACTICAL EXAMPLE:

A Critical Care division of 4 intensivists
generates 30,000 RVUs/year (50% are RVUw,
40% are RVUp, and 10% are RVUm). Their
divisional operational budget is $900,000 (70% of
this expense covers physician salaries and
benefits) and their overhead expense is $250,000.
The geographic adjustments are GAFw = 1.003,
GAFp = 1.005, and the GAFm = 0.786. Their
practice plan has negotiated a reimbursement rate
of 110% of Medicare. Their divisional revenue
should be $1,188,773, and their net revenue
(revenue - all expenses) is $38,773. This
divisional relative productivity would be 7,500
RVU/FTE. This compares to a desired goal of
7,000 RVU/FTE for their entire group of practice
specialists. The next year the reimbursement rate
decreases to 90% of Medicare but their clinical
activity increased by 10%. The divisional net
income changes to ($80,104). Their practice
administrator threatens to decrease divisional
salaries because "productivity has obviously
decreased!"How can the intensivists respond?

The RBRVS calculations (and a little cost
accounting) can assist this division in their time of
need. Productivity has activity has actually
increased to 8,250/FTE. If the reimbursement
rate had stayed at the previous year level, overall
net income would have been $157,650. In
addition, the RVU summation also gives an
indication of whether certain expenses are
proportionally too high from what would have
been predicted based on the actual RVU
breakdown. The percent of total expenses
allocated to physician salaries is about right (50%
as predicted by the RVU results compared to an
actual 55%). The non-physician total expenses
are about 45% of total expenses, again not far off
from the RVU predicted of 40%. Perhaps the
problem is with the contracting department!

V. CONCLUSION

The RBRVS system has become the standard by

the RVUs produced into potential
reimbursement. In order to perform this, the
concept of the Cost Factor (Cf) enters into
the equation. This Cf is the dollar amount
that every RVU is worth. Prior to 1998, the
Cf for Medicare varied by specialty
(primary care, specialist, or surgeon). As a
result of the Balanced Budget Amendment,
a single cost converter for the Medicare
system has been implemented. This value is
$36.68/RVU.

Other than Medicare, there is no obligation
for any payer to reimburse either the
$36.68/RVU or to have a uniform Cf for
specific RVU values. For example, a
commercial insurer may reimburse some
CPT-4 codes at $40/RVU and other at
$30/RVU depending upon negotiations with
specific physician practices. However, the
Medicare $36.68/RVU can be used as a
guide to relative reimbursement of physician
activity. In addition, some practices may or
may not negotiate for inclusion of the GAF
into the RVU dollar conversion. Individual
practices must decide whether this extra
"manipulation" is actually beneficial.

The specific formula for converting
produced RVUs to potential dollars is:

Dollars = Cf *((RVUw * GAFw) + (RVUp
* GAFp) + (RVUm * GAFm))

If not already in place, hospital information
systems should be upgraded to track
accurate RVU activity by specialty. Simple
spreadsheets can also be designed to
perform these calculations and track the
impact of various market changes on
physician perceived performance as the next
section illustrates.

Continued on last page

Critical Care News

Volume 5 * Number 3

October, 1998

JOIN US!!

1998 AAP Annual Meeting

October 17-21, 1998

Moscone Convention Center

San Francisco, Marriott

What's new this year at the 1998 Annual

Meeting!

Final note: the answer to the initial riddle is,
"it depends on the assigned value of the
RVU!"

1997-98 Executive Committee

The Audience Response System (ARS) is unique
in that it allows audience participation through the
use of individual keypads. This format affords

the opportunity for faculty/attendee interaction
through a series of questions with multiple choice
answers where attendees can anonymously
indicate their choices. Results are tabulated and
explanations about the correct answer will follow.

The Case Studies format allows the audience to
set the agenda through discussion of cases and

problems brought from the attendees' practices.

Benefits of attending the 1998 Annual Meeting:
1.Earn valuable CME credits.
2.Update your skills and techniques
3.Network with your colleagues, from the US
and abroad.
4.Hear the latest from experts in the field of
pediatrics.
5.Discover why San Francisco is one of the best
locations in the world.

We are expecting one of our largest meetings ever
so to avoid long lines on-site, please return your
Registration and housing forms now, to ensure
your best selection of courses and to lock in your
hotel reservation.

If you have questions, please contact the AAP
Division of Convention & Meeting Services at
1-800-433-9016, ext. MEET (6338).

Joseph R. Zanga, M.D.
(President)
23 Mariners Cove, West
New Orleans, LA70124
(504) 568-4567
Fax:(504) 568-6330
Jzanga@aap.org

Joe M. Sanders, Jr., M.D.
(Executive Director)
American Academy of Pediatrics
141 Northwest Point Boulevard
Post Office Box 927
Elk Grove Village, IL60009-0927
(847) 228-5005

Fax:(847) 228-5097

Jsanders@aap.org