Wednesday, August 9, 2023

CMS Indirect Costs

Someone asked me about the fact that, in the annual lab gapfill process, Novitas MAC assigns direct and indirect expenses in a 63:37 ratio - e.g. for every 63 cents of direct expense they add 37 cents of indirect expense and pay $1.

This is likely related to pathology/laboratory indirect expenses as surveyed by CMS for the purposes of assigning indirect expenses to RVUs.   (For example, if a physician service has $63 of direct expenses, in this hypothetical, CMS would true-up the RVUs by $37 worth, to make a payment of $100).

There's a 1995 article online at CMS, the basic ideas are likely similar today.

 https://www.cms.gov/files/document/hcfr-16-3-197pdf

CMS commissioned a 150 page report in 2021:

https://www.cms.gov/files/document/cy-2021-pfs-practice-expense-methodology-and-data-collection-research-and-analysis-report.pdf

And there's a Town Hall transcript too:

https://www.cms.gov/Medicare/Health-Plans/HealthPlansGenInfo/Downloads/testfile.pdf

AMA has a 27 page document online:

https://www.ama-assn.org/system/files/practice-expense-component.pdf



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