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CMS-1403-FC crosswalked to 2009 services. To arrive at the indirect PE costs-- ● We apply a specialty-specific indirect percentage factor to the direct expenses to recognize the varying proportion that indirect costs represent of total costs by specialty. For a given service, the specific indirect percentage factor to apply to the direct costs for the purpose of the indirect allocation is calculated as the weighted average of the ratio of the indirect to direct costs (based on the survey data) for the specialties that furnish the service. For example, if a service is furnished by a single specialty with indirect PEs that were 75 percent of total PEs, the indirect percentage factor to apply to the direct costs for the purposes of the indirect allocation would be (0.75 / 0.25) = 3.0. The indirect percentage factor is then applied to the service level adjusted indirect PE allocators. ● We use the specialty-specific PE/HR from the SMS survey data, as well as the supplemental surveys for cardiothoracic surgery, vascular surgery, physical and occupational therapy, independent laboratories, allergy/immunology, cardiology, dermatology, radiology, gastroenterology, IDTFs, radiation oncology, and urology. (Note: For radiation oncology, the data represent the 46

CMS-1403-FC combined survey data from the American Society for Therapeutic Radiology and Oncology (ASTRO) and the Association of Freestanding Radiation Oncology Centers (AFROC)). As discussed in the CY 2008 PFS final rule with comment period (72 FR 66233), the PE/HR survey data for radiology is weighted by practice size. We incorporate this PE/HR into the calculation of indirect costs using an index which reflects the relationship between each specialty’s indirect scaling factor and the overall indirect scaling factor for the entire PFS. For example, if a specialty had an indirect practice cost index of 2.00, this specialty would have an indirect scaling factor that was twice the overall average indirect scaling factor. If a specialty had an indirect practice cost index of 0.50, this specialty would have an indirect scaling factor that was half the overall average indirect scaling factor. ● When the clinical labor portion of the direct PE RVU is greater than the physician work RVU for a particular service, the indirect costs are allocated based upon the direct costs and the clinical labor costs. For example, if a service has no physician work and 1.10 direct PE RVUs, and the clinical labor portion of the direct PE RVUs is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65 47

<strong>CMS</strong>-1403-FC<br />

combined survey data from the American Society for<br />

Therapeutic Radiology and Oncology (ASTRO) and the<br />

Association of Freestanding Radiation Oncology Centers<br />

(AFROC)). As discussed in the CY 2008 PFS final rule with<br />

comment period (72 FR 66233), the PE/HR survey data for<br />

radiology is weighted by practice size. We incorporate this<br />

PE/HR into the calculation of indirect costs using an index<br />

which reflects the relationship between each specialty’s<br />

indirect scaling factor and the overall indirect scaling<br />

factor for the entire PFS. For example, if a specialty had<br />

an indirect practice cost index of 2.00, this specialty<br />

would have an indirect scaling factor that was twice the<br />

overall average indirect scaling factor. If a specialty had<br />

an indirect practice cost index of 0.50, this specialty<br />

would have an indirect scaling factor that was half the<br />

overall average indirect scaling factor.<br />

● When the clinical labor portion of the direct PE RVU<br />

is greater than the physician work RVU for a particular<br />

service, the indirect costs are allocated based upon the<br />

direct costs and the clinical labor costs. For example, if<br />

a service <strong>has</strong> no physician work and 1.10 direct PE RVUs, and<br />

the clinical labor portion of the direct PE RVUs is<br />

0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65<br />

47

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