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Sources for Fair Market Value for Physician Reimbursement

The fair market value for any service is primarily subjective, as it relies on the relative worth consumers give to it. The Medicare Payment Advisory Commission along with HMOs and insurance companies serve as reliable sources for fair market values for physician reimbursements, however, and annually review, calculate and quantify the relative value of medical procedures and physician reimbursements by various means.

  1. U.S. Department of Health and Human Services

    • The U.S. Department of Health and Human Services works to make health care costs readily available to the general public. The Centers for Medicare and Medicaid, or CMM, makes available for the general public a list of common procedure fees. The categories include "physician payments for 72 common procedures performed in a non-office setting across all specialties," usually performed in hospitals or outpatient clinics. The "physician payments for 19 common procedures performed in an office facility" lists the prices of common procedures performed in a doctor's office. Both of these comprehensive lists use recent data, and should be accurate and usable as a standard to determine fair market value of common procedures performed by physicians. The CMM also provides other texts, including a list of common surgeon fees.

    Medicare

    • Medicare uses a highly technical and universal approach for determining the fair market value of physician reimbursement -- the Resource-Based Relative Value Scale. The scale's calculations based on three considerations: the value of service, geographic practice cost indices (GPCI) and dollar-conversion factors. Over half the scale comes from determining the value of the service, which considers the time and skills required to complete a particular procedure, the costs of the practice (including rent and faculty wages), and the cost of malpractice insurance required for the procedure. The indices intend to account for geography-based fluctuations in the cost of medicine by using 90 GPCI locations in the U.S., while the conversion factor converts the numerical value of service into a specific dollar amount.

    Medicaid

    • Medicaid -- another reliable source for the fair market value of physician reimbursement -- uses methods similar to Medicare's RBRVS method. It includes preventive medicine along with other health care coverage not calculated with Medicare's method, and also uses different conversion factors, placing more emphasis on the location and the patient's age. To keep up with the ever-changing economy and RBRVS, Medicaid updates its fair market values every January, during which time it also reviews and updates its relative value units, conversion factors, GPCI values and overall policies.

    HMOs and PPOs

    • HMOs and preferred provider organizations, or PPOs, also serve as credible sources for researching the fair market value for physician reimbursement. Like Medicaid, most private insurance companies have adopted their own forms of RBRVS. Each organization has its own methods, technical approaches, derivatives and calculation factors, but the overall values of service generally correspond to Medicare and Medicaid. Unfortunately, this information isn't readily accessible or easy to find.

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