Which payment system is based on the physician's work, practice expenses, and malpractice insurance expenses?

The correct choice is based on the Resource-Based Relative Value Scale (RBRVS) system, which is specifically designed to account for three main components: the physician's work, the practice expenses, and the cost of malpractice insurance. This system enables a more accurate reflection of the resources required to provide various medical services and procedures.

The RBRVS assigns relative value units (RVUs) to different services, which are then adjusted by geographic factors and converted into a payment amount. This structure aims to fairly compensate physicians based on the complexity and resource intensity of their work, rather than solely on the services rendered or the number of patients treated.

In contrast, the other options serve different purposes. The per diem payment system is typically used for inpatient care, indicating a daily rate rather than a service-based approach. Ambulatory payment classifications (APCs) are utilized for outpatient services and categorize these procedures for payment, but they do not center around the comprehensive breakdown that RBRVS provides. Lastly, diagnosis-related groups (DRGs) are used mainly for inpatient hospital billing, categorizing hospital cases to determine reimbursement based on the diagnosis, rather than the specific nuances of a physician's practice costs and work. This distinction highlights why RBRVS is the relevant system when