In this Article
By: Kendall Upton
Professional insights: Amy Jenkins
Whether you’re a medical coding student or an established professional, you’re bound to come across two distinct types of coding: professional fee (ProFee) and facility coding. While ProFee coding is often the more familiar type of coding to most, facility coding is equally as important to ensure that healthcare providers receive proper reimbursement for their services. Throughout your medical coding career, you may perform both types of coding or you may choose to specialize in one or the other. Let’s dive into what these terms mean and how they could impact your career.
What is professional fee (ProFee) coding?
ProFee coding is the assignment of medical codes to physicians’ services for billing purposes. When you think of medical coding in its most basic form, it’s usually ProFee coding that comes to mind.
“Think about professional fee (ProFee) as the work that provider does. Any medical decision making, the risk to perform this procedure for this patient—those are all captured in those ProFee codes,” said Amy Jenkins, Clinical Assistant Professor in Health Systems and Population Health at the University of Washington School of Public Health.
What is facility coding?
Facility coding is another type of medical coding which deals with assigning codes to represent the overhead costs of running a healthcare facility.
“In the facility setting, what we’re really doing is capturing the resource intensity, what resources were used to care for the patient. Nursing is a resource, the bed is a resource, the supplies are resources,” Jenkins said. “We’re really trying to capture what it costs for the facility to provide care to that patient, whereas with ProFee, we’re really trying to reimburse the provider for their work and what it costs them to take care of the patient.”
Reimbursement methodologies for ProFee and facility coding
ProFee and facility coding utilize different reimbursement methodologies: relative value units (RVUs) and ambulatory payment classifications (APCs).
Relative value units (RVUs)
“RVUs are how we value procedure codes,” Jenkins said. “For example, if I’m a provider and I do a whole bunch of hysterectomies, the things that I’m looking at from a provider perspective are that this one’s more complex than this one, or there’s more work involved than this one, or this one’s riskier than this one. I already know that as a provider, but the payer doesn’t know how to value that.”
Jenkins’ example highlights an important reality about ProFee coding—the value of a procedure can’t possibly be the exact same for every provider, everywhere, all the time. Enter the Resource-Based Relative Value Scale (RBRVS), which the Centers for Medicare & Medicaid Services (CMS) introduced in 1992.
“Some services require a considerable investment of physician time and effort, clinical staff and specialized equipment. Other services require very little time and resources. To implement a fee schedule built on the principle that payments for medical procedures and services should reflect the costs of providing them, CMS adopted the RBRVS, which calculates fees for each service and procedure based on a single measure—the RVUs,” says the AAPC (formerly known as the American Academy of Professional Coders). “In other words, the RVUs assigned to a procedure or service compares its value relative to other procedures or services.”
Types of RVUs
According to the AAPC, there are three types of RVUs that determine the total RVUs when accounted for together:
- Work RVUs account for the effort, stress, risk and length of the procedure.
- Practice expense RVUs reflect the cost of labor and practice expenses.
- Malpractice RVUs account for the cost of professional liability insurance.
Ambulatory payment classifications (APCs)
Ambulatory payment classifications (APCs), on the other hand, are an essential component of facility coding.
“APCs are groupers. We use those in the facility setting to capture that resource intensity for the things that were done for that patient in the outpatient setting during that particular encounter.”
In Jenkins’ class, she said that she teaches her students to think of APCs like a brown paper grocery bag. You go the store, and you grab your apples, your rice and whatever else you’re buying that day.
“All of those things get put into a bag and the grocer asks you to pay a bill equaling whatever your total comes out too. The bag is an APC. And sometimes they’re going to say there’s a buy-one-get-one free, so you only really pay for one, but you have two in your bag. Those concepts apply in an APC grouping too, because we’re going to pay for this procedure, and these things are bundled into it.”
ProFee vs. facility coding jobs
Now that we’ve established what ProFee and facility coding both accomplish, it may seem like your standard medical coder would be responsible for performing both types of coding. In reality, ProFee and facility coding are usually handled by two different people or departments.
“I’ve only worked in one organization in my life where both the ProFee and facility fees were captured together under one office. Normally, it’s completely separate,” Jenkins said.
In fact, Jenkins said that sometimes two different organizations handle each type of coding. “There are people who contract out there their facility coding, and there are people who contract out their ProFee coding.”
Parting words
ProFee coding and facility coding represent two distinct yet complementary sides of the medical billing process. ProFee coding captures the provider’s work, medical decision-making and associated risks, while facility coding accounts for the resources and overhead needed to deliver care. Each relies on different reimbursement systems—RVUs for ProFee and APCs for facility coding—that demonstrate the unique way each ensures accurate payment. For medical coders, understanding both systems is crucial for executing accurate billing and overcoming some of the industry’s current challenges.
“We’re always dealing with the insurance companies changing regulations, they’re always outpacing us with the AI processing of claims, we’re seeing an increase in denials ever since COVID-19 happened. The percentage of denials is continuing to increase simultaneously. So is the cost of care and supplies. We’re in this sort of pressure cooker environment all the time,” Jenkins said, emphasizing that multiple factors are contributing to the rising cost of healthcare.
“I think that it’s more necessary than ever for us to find cost saving measures and to do our jobs accurately as billers and coders.”
