Milliman RBRVSfor hospitals Will Fox, FSA, MAAAEd Jhu, FSA, MAAACharlie Mills, FSA, MAAADavid LewisKevin Frodsham,FSA, MAAA Developing RBRVS forhospitals RVUs What is RBRVS forhospitals? All inpatient and outpatient procedures are assigned RVUs.Procedures requiring the same level of resources have the sameRVUs. Both the inpatient and outpatient RVUs are developedusing Medicare payment rates, which are then converted toRVUs using Medicare’s RBRVS conversion factor. Therefore,inpatient and outpatient RVUs are directly comparable. The Milliman RBRVS for Hospitals™ Fee Schedule provides asimple solution for comparing hospital contractual allowedamounts, billed charge master levels, relative efficiency, andpatient mix differences. The feeschedule is based on RelativeValue Units (RVUs). The RVUs are the same for procedures thatrequire the same relative resources. Inpatient RVU developmentand adjudication Advantages of RBRVS forhospitals? RVUs have been developed for all hospital services(inpatient and outpatient), so they reflect the relativeresources required to perform the care. The concept is similar to Medicare’s RBRVS physician feeschedule, in that a conversion factor provides a validcomparison even for widely different provider types andpatient populations.A singleconversion factor can be used to benchmark ahospital contract. Lengthy summaries of hospital contractswith medical/ surgical per diems, maternity case rates, ICUper diems, outlier arrangements, and miscellaneous outpatientreimbursement structures areno longer necessary.Allows insurers and hospitals to benchmark and comparecontractual reimbursement levels, efficiency, billed chargemaster levels, and benchmark patient mix differences. Inpatient RVUs are developed at the most detailed level possibleusing data commonly available in administrative claims, resultingin a veryrefined patient severity adjustment. RVUs are assigned per day, rather than per case. TheRBRVS for Hospitals RVUs are comprised of DiagnosisRelated Group (DRG) specific First Day and Additional DayRVUs. The First Day RVUs are an estimate of the resourcesrequired for the first day of each admission. DRG-specificAdditional Day RVUs are assigned for each additional day ofacute care. The Additional Day RVUs are an estimate of theresources required for each subsequent day of acute care. The Additional Day RVUs are lower than the First DayRVUs, reflecting lower resource use on the additional days.Thus, the RVU fee schedule adjusts for differences in lengthof stay and patient mix among hospitals. As a result,hospital-specific average inpatient conversion factorsdeveloped using the RVUs provide a direct comparison ofhistoric or projected fee levels for different hospitals, even ifthe fee schedule for each hospital is structured differently. consumption for a given APR-DRG may differ betweencommercial and Medicare populations, or potentially betweenpopulations in differentgeographic areas based on LOSmanagement. Milliman develops population-specific case-basedRVUs by setting average LOS assumptions using client and/orbenchmark data combined with actuarial judgment. Using Medicare’s average length of stay, the Milliman RVUsand the Medicare RBRVS conversion factor will producepayments that are similar to Medicare’s case rates, asdemonstrated in Table A. For more refined risk adjustment, Milliman developed RVUsforinpatient services based on APR-DRGs at each severitylevel within the APR-DRG system (1,330DRGs/severitylevels versus767MS DRGs). In Table B, we provide acomparison of the MS-DRG RVUs to the APR-DRG RVUs. With RVUs assigned on both a per-day and per-case basis,aRVU-weighted LOS relativity measure can be calculated as: RVUs on a per-day basis The RVUs for any inpatient admission are calculated as: First Day RVUs + (Additional Days x Additional Day RVUs) RVUs on a per-case basis Note that “Additional Days” includes all days after Day 1. Using this method of comparison, a ratio of 1.0 indicates averageLOS efficiency. Values lower than 1.0 indicate better-than-average LOS efficiency, as the hospital required fewer RVUsthan average to deliver its mix of services. Inpatient RVUs can be assigned to claims on either a per-case ora per-day basis. The formula above illustrates the calculation ofRVUs using a per-day approach and incorporates the LOS inestimating the resources used to treat a patient. Alternatively,case RVUs represent the average resources used for the givenservice independent of LOS. Table C shows an example of the RVU-weighted LOSrelativity for a sample discharge using APR-DRG 047 andSeverity Level 1. By summing the RVUs and case RVUs foreach discharge, we estimate the overall efficiency factor foreach facility. Case RVUs are created to be consistent with the characteristicsof the population to be measured. For example, resource Tables D-1 and D-2 illustrate the resource differences by HCPCSfor two sample Medicare APCs. Table D-1 shows an APC whe