Reimbursement and costs of pediatric ambulatory diabetes care by using the resource-based relative value scale: is multidisciplinary care financially viable?

BACKGROUND

The ambulatory care for children with diabetes mellitus (DM) within an endocrinology specialty practice typically includes services provided by a multidisciplinary team. The resource-based relative value scale (RBRVS) is increasingly used to determine payments for ambulatory services in pediatrics. It is not known to what extent resource-based practice expenses and physician work values as allocated through the RBRVS for physician and non-physician practice expenses cover the actual costs of multidisciplinary ambulatory care for children with DM.

STUDY SETTING

A pediatric endocrinology and diabetes clinic staffed by faculty physicians and hospital support staff in a children's hospital.

METHODS

Data from a faculty practice plan billing records and income and expense reports during the period from 1 July 2000 to 30 June 2001 were used to determine endocrinologist physician ambulatory productivity, revenue collection, and direct expenses (salary, benefits, billing, and professional liability (PLI)). Using the RBRVS, ambulatory care revenue was allocated between physician, PLI, and practice expenses. Applying the activity-based costing (ABC) method, activity logs were used to determine non-physician and facility practice expenses associated with endocrine (ENDO) or diabetes visits.

RESULTS

Of the 4735 ambulatory endocrinology visits, 1420 (30%) were for DM care. Physicians generated $866,582 in gross charges. Cash collections of 52% of gross charges provided revenue of $96 per visit. Using the actual Current Procedural Terminology (CPT)-4 codes reported for these services and the RBRVS system, the revenue associated with the 13,007 total relative value units (TRVUs) produced was allocated, with 58% going to cover physician work expenses and 42% to cover non-physician practice salary, facility, and PLI costs. Allocated revenue of $40.60 per visit covered 16 and 31% of non-physician and facility practice expenses per DM and general ENDO visit, respectively. RBRVS payments ($35/RVU) covered 46% of all expenses ($76.74/RVU), including 132% of physician expenses for the time worked in the clinic ($27/RVU), and only 23% of actual incurred practice expenses ($152/TRVU).

CONCLUSIONS

Clinical revenues in a pediatric endocrinology practice, allocated by using the RBRVS system, do cover physician expenses for the time spent working in a hospital ENDO and DM clinic, but do not closely approximate non-physician and facility practice expenses while delivering multidisciplinary care to children with DM. Using payment based on the RBRVS system, and without additional payments to compensate for increased practice expenses incurred in the delivery of multidisciplinary care, this care model may not be financially viable.