Payment for a procedure identified by a HCPCS/CPT code shall not
exceed the amount derived by multiplying the relative values for that
procedure by the geographic indices for services in that area and by the
dollar amount assigned to one unit in that category of service.
(a) The ``locality'' which serves as a basis for the determination
of average cost is defined by the Bureau of Census Metropolitan
Statistical Areas. The Director shall base the determination of the
relative per capita cost of medical care in a locality using information
about enrollment and medical cost per county, provided by the Health
Care Financing Administration (HCFA).
(b) The Director shall assign the relative value units (RVUs)
published by HCFA to all services for which HCFA has made assignments,
using the most recent revision. Where there are no RVUs assigned to a
procedure, the Director may develop and assign any RVUs that he or she
considers appropriate. The geographic adjustment factor shall be that
designated by Geographic Practice Cost Indices for Metropolitan
Statistical Areas as devised for HCFA and as updated or revised by HCFA
from time to time. The Director will devise conversion factors for each
category of service, and in doing so may adapt HCFA conversion factors
as appropriate using OWCP's processing experience and internal data.
(c) For example, if the unit values for a particular surgical
procedure are 2.48 for physician's work (W), 3.63 for practice expense
(PE), and 0.48 for malpractice insurance (M), and the dollar value
assigned to one unit in that category of service (surgery) is $61.20,
then the maximum allowable charge for one performance of that procedure
is the product of the three RVUs times the corresponding geographical
indices for the locality times the conversion factor. If the geographic
indices for the locality are 0.988(W), 0.948 (PE), and 1.174 (M), then
the maximum payment calculation is:
[(2.48)(0.988) + (3.63)(0.948) + (0.48)(1.174)] x $61.20
[2.45 + 3.44 + .56] x $61.20
6.45 x $61.20 = $394.74
