RELATIVE VALUE UNITS
Relative value units (RVUs) are a measure of value used in the United States Medicare reimbursement formula for physician services. RVUs are a part of the resource-based relative value scale (RBRVS).calculate the work RVUs (wRVUs) associated (by group or individual) by multiplying the frequency associated with each CPT code billed during the period of time by the wRVU for each CPT code.To understand this more fully, the calculations can be broken into three components – RVUs, the geographical adjustment and the conversion factor.Practice Expense RVU (PE) – these are the expenses that go into running the practice aside from the physician time. They include things such as rent, equipment, supplies, and staff other than physicians
RVUs are the basic component of the Resource-Based Relative Value Scale (RBRVS), which is a methodology used by the Centers for Medicare & Medicaid Services (CMS) and private payers to determine physician payment.
RVUs, or relative value units, do not directly define physician compensation in dollar amounts. Rather, RVUs define the value of a service or procedure relative to all services and procedures. This measure of value is based on the extent of physician work, clinical and nonclinical resources, and expertise required to deliver the healthcare service to patients. RVUs ultimately determine physician compensation when the conversion factor (CF), dollars per RVU, is applied to the total RVU.
Under the RBRVS, physician payment for services are determined by:
- Total RVUs
- Geographic Practice Cost Indices (GPCIs)
- Conversion Factor (CF)
Physician services, which are described by Current Procedural Terminology (CPT) codes and Healthcare Common Procedure Coding System (HCPCS) codes, range from those that require considerable amounts of physician time and effort, clinical staff, and specialized
equipment, to those that require little if any physician time and minimal other resources. For each service, Medicare determines RVUs for three types of resources. Physician work RVUs account for the time, technical skill and effort, mental effort and judgment, and stress to provide a service. Practice expense RVUs account for the non physician clinical and nonclinical labor of the practice, as well as expenses for building space, equipment, and office supplies. Professional liability insurance RVUs account for the cost of malpractice insurance premiums.2 Although the actual percentages vary from service to service, physician work and practice expenses comprise 52 and 44 percent of total Medicare expenditures on physician services, respectively.
The work RVUs for a diagnostic colonoscopy are more than twice the work RVUs for an intermediate office visit because the colonoscopy requires more physician time and effort than the visit. A diagnostic colonoscopy is estimated to require 75 minutes of physician time, which includes 30 minutes to prepare for the procedure and 15 minutes after the procedure. The time actually performing the colonoscopy—termed the intra-service time—is estimated to be 30 minutes. In contrast, an intermediate office visit is estimated to take about 40 minutes of physician time. This is comprised of 5 minutes before and 10 minutes after seeing the patient, and 25 minutes of intraservice time. The intra-service time for the colonoscopy is weighted more heavily than the intra-service time for the office visit to reflect the higher skill and effort and associated stress of providing the procedure
TYPES OF URV'S
To accurately capture the consumption of time, effort, and money involved in providing a service to patients, the RBRVS model utilizes three specific components, or types of RVUs, that, when totaled, determine payment. These RVU types measure the following:
- Work RVUs account for the provider’s work when performing a procedure or service. Variables factored into this value include technical skills, physical effort, mental effort and judgement, stress related to patient risk, and the amount of time required to perform the service or procedure. Work RVUs account for 50.866% of the total RVU for a code.
- Practice expense (PE) RVUs reflect the cost of clinical and nonclinical labor and expenses of the practice. These include medical supplies, office supplies, clinical and administrative staff, and pro rata costs of building space, utilities, medical equipment, and office equipment. Practice expense RVUs account for 44.839% of the total RVU for a given service.
- Malpractice (MP) RVUs reflect the cost of professional liability insurance based on an estimate of the relative risk associated with each CPT® code. Malpractice RVUs account for 4.295% of a service’s total RVUs.
- Medicare pays physicians for services based on submission of a claim using one or more specific CPT® codes. Each CPT® code has a Relative Value Unit (RVU) assigned to it which, when multiplied by the conversion factor (CF) and a geographical adjustment (GPCI), creates the compensation level for a particular service.
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