That study led to the introduction of the RBRVS system in 1992. In 1988, the Centers for Medicare and Medicaid Services commissioned a study from the Harvard School of Public Health to look at the resources and costs associated with the services that doctors provide. Until then, Medicare based its reimbursements on what it determined were the “uniform, customary, and reasonable” fees for a service in a given market. Christopher Zaenger, principal of Z Management Group in Barrington, Illinois, and a Medical Economics editorial consultant. The RVU/RBRVS system was created as a way of bringing more uniformity to Medicare’s reimbursement systems while also trying to rein in spiraling medical spending, explains H.
#RVU CALCULATION TOOL UPDATE#
The values in the RBRVS scale are reviewed periodically by a panel of physicians, known as the Relative Value Scale Update Committee (RUC), representing every sector of medicine. The RVUs themselves are determined as part of what’s known as the Resource-based Relative Value Scale (RBRVS), a system for describing, quantifying, and reimbursing physician services relative to one another. The dollar amount of the conversion factor is established each year by Congress. The three components are added together, and the resulting sum is then multiplied by a dollar amount known as the conversion factor to arrive at the reimbursement dollar figure: Then, to account for variations in living and business costs across the country, each of the three components is multiplied by a factor known as the Geographic Practice Cost Index, or GPCI. (Physician’s work, in turn, is divided into four subcomponents: the time it takes to perform the service, the technical skill and/or physical effort required to perform the service, the amount of mental effort and judgment required, and the stress arising from any potential risk to the patient from performing the service.)Įach of these three components is assigned an RVU.
The dollar amount for each service is determined by three components: physician’s work, practice expenses, and malpractice insurance.
#RVU CALCULATION TOOL CODE#
RVUs are part of the system Medicare uses to decide how much it will reimburse physicians for each of the 9,000-plus services and procedures covered under its Physician Fee Schedule, and which are assigned current procedural terminology (CPT) code numbers.
RVUs can be used for everything from helping to determine compensation in a multi-physician practice to deciding whether to take a buyout offer from a hospital system. When it comes to managing practice finances, physicians have few better tools at their disposal than the Relative Value Unit (RVU).
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