Imaging centers commonly bill for services globally and negotiate compensation rates with radiologists as a percentage of collections or net revenues. The Fair Market Value of compensation rates for professional radiology services can vary substantially from market to market.
Differences in market compensation for radiologist professional services under global billing arrangements is heavily influenced by the fact that most commercial insurers simply piggyback on Medicare reimbursement. While the markups on Medicare vary from payor to payor (e.g., 120% of Medicare, 130% of Medicare), it is merely an arithmetic exercise to calculate the underlying ratio of work-to-total RVUs for each of the 112 geographic practice cost indices under the Resource-Based Relative Value System (RBRVS) that Medicare and commercial payors use.
The bar chart below illustrates the importance of adjusting for radiology professional compensation for specific markets. The ratio of professional to non-professional RVUs is heavily influenced by the geographic cost indices in the RBRVS system. For example, Alaska has a 50% higher cost-of-living index than the national base level, while the New York City suburban index has relatively higher Malpractice and Practice Expense adjustments. The effects of these various adjustments are reflected in the subsequent line graph.
When the exact same radiologist utilization billing data is adjusted for six (6) different markets, the ratio of work-to-total RVUs (professional-to-total compensation) varies from 18.6% to 27.4% just at the median. This is a substantial difference in radiologist compensation, and this illustrates the importance of always making adjustments for specific market geographies.
Do not pick an arbitrary percentage rate when setting professional compensation rates under global radiology billing arrangements. Lookup the work-to-total radiology RVU rates for your specific geographic market.