2006 proposed fee schedule - American Society of Clinical Oncology

as a whole. Indirect costs include rent, utilities, office
equipment and supplies, and accounting and legal fees.
There is not a single, universally accepted approach for
allocating indirect practice costs to individual procedure
codes. Rather allocation involves judgment in identifying
the base or bases that are the best measures of a practice’s
indirect costs.
To allocate the indirect PEs to a specific service, we
use the following methodology:
● The scaled direct expenses and the converted work
RVU (the work RVU for the service is multiplied by $34.5030,
the 1995 CF) are added together, and then multiplied by the
number of services provided by the specialty to Medicare
patients;
● The total indirect PEs per specialty are calculated
by summing the indirect expenses for all other procedures
provided by that specialty.
In the Table 4, the physician work RVU for procedure
00001 is 2.36. Multiplying the work RVU by the 1995 CF of
$34.5030 equals $81.43. The physician work value is added
to the scaled total direct expense from Step 3 ($234.04).
The total of $314.47 is a proxy for the indirect PE for the
specialty attributed to this procedure. The total indirect
expenses are then multiplied by the number of services
provided by the specialty (418,602), to calculate total
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