This is the different total reimbursement, including both the Professional fees paid the the Physician and a separate payment paid to the facility (ASC, hospital outpatient, or inpatient hospital). It is described with RVU’s, explained in more detail here.
Some 90-day surgeries do not have a Site of Service Differential when performed in the office. This is the Physician Expense (PE) RVU. It is the facility fee or overhead for the office space, supplies, personnel, administrative costs and risk. Another way to phrase this is that
In our carpal tunnel release example, the open procedure has a separate “facility rate” versus the “non-facility rate”. However for endoscopic carpal tunnel release the “facility rate” versus the “non-facility rate” are the same: therefore there is no Site of Service Differential and Medicare considers this procedure to be “facility-only” (Ambulatory Surgery Center, hospital outpatient or hospital-only procedures).
If a “facility-only” surgical procedure, such as neurolysis, cataract surgery or endoscopic carpal tunnel release, is performed in the office it may be denied as “incorrect Place of Service (office=11) or reimbursed at the facility rate (aka FAC PE RVUs) and subsequently there is no facility reimbursement.
Note that the surgeon would be paid exactly the same amount whether the procedure was performed in the ASC or the office–it’s not less reimbursement to the Surgeon. However there is no compensation for equipment, supplies, overhead, personnel, administrative costs, and the risk of establishing an office-based surgery suite.
The question is how can an office-based surgical suite receive fair facility (overhead) reimbursement for the operating suite, supplies, personnel, administrative costs and risk? Unless Medicare includes a Non-facility PE, the alternative is negotiating with each individual carrier for a fair office-based “facility” reimbursement.
The original Practice Expense (PE) RVUs were based on specialty-specific information on hours worked and total practice expense spending from the American Medical Association’s Socioeconomic Monitoring System (SMS) and estimates of non-physician resources required for individual services made by Clinical Practice Expert Panels.
Some of the SMS data have been updated by physician specialty societies through member surveys that met certain specifications, as allowed by law. CMS also relies on advice and recommendations from the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC). The 31 RUC members, most of whom are appointed by a major physician specialty society, and others who provide input to CMS understand that increasing the RVUs for any service will result in a commensurate decrease in fees for other physician services, which is widely believed to help ensure that a specialty does not try to inappropriately boost the resources associated with the services it tends to provide.