With the help of RVU, it becomes easier to compensate doctors based on their productivity. In a way, the relative value units are used to define the volume of work performed by the doctor while providing medical care to patients.
It is important to note that the RVU varies from doctor to doctor depending on their specialization. For example, the relative value unit for a surgeon performing a complicated procedure like Coronary Artery Bypass Grafting CABG is likely to remain high. The relative value units for various doctors are determined on the three key components listed below:.
The more services you provided, the more you earned. Other factors such as acuity and skills required to perform the service have risen to the forefront.
In theory, a physician who performs 3 complex surgeries would have a higher RVU than a primary care physician who sees 3 patients for wellness visits. In this example, the surgeon would receive more reimbursement. GPCI is used to differentiate reimbursement based upon geography.
For example, the GPCI could be higher for a metropolitan city than it would for a rural area. RVUs are additionally calculated differently depending upon whether the service is facility or non-facility based. Facilities can include settings such as inpatient, outpatient, and emergency rooms.
Non-facilities are generally free-standing physician practices. Is all of the complexity surrounding RVUs and physician compensation making your head spin? BHM Healthcare Solutions has assisted many clients with their transition from traditional salary based physician compensation to a more robust compensation model based upon productivity and outcome.
Realigning physician compensation creates a culture which is profitable both to the organization as well as the physicians. This alignment sets the scene for the organization and the individuals to achieve common goals and produce synergy.
Physicians in Anchorage pay twice as much for non-clinical staff as physicians in Oklahoma City. A kilowatt hour of electricity costs 3 times more in Hawaii than in Louisiana. Office space in San Francisco is 5 times higher than in Albuquerque.
These adjustments are updated every 3 years by CMS and account for differences in the cost of furnishing physician services across regions of the U. The degree of fee variance among the Medicare localities can be inferred from the following sample of GPCI adjustments:.
For example, Medicare assigns In simplest terms, the conversion factor converts the value expressed in RVUs to dollars. It represents a constant monetary amount, meaning the annual CF is universally applied to all services and procedures for a given payment year aside from anesthesia services , for which CMS applies a separate fee schedule methodology and CF.
While CMS assigns a national average of The determinants in these calculations are the 3 GPCI adjustment factors. The procedure code is assigned one total RVU value and receives a single payment encompassing all care associated with the procedure during the global period.
But sometimes a physician will perform only part of the global package. When reporting partial services, the total RVUs for most procedures are divided into pre-operative, intra-operative, and post-operative care. For example, Radical resection of tumor, shaft or distal humerus is valued at A physician who provides only the intra-operative service will be reimbursed for When a provider performs multiple procedures during the same surgical session, payment may be adjusted for some services.
Some payment adjustments, though, involve procedure-specific rules. If a procedure coincides with an endoscopic procedure with the same base code, the value of the base code is subtracted from the value of the second code reported.
For example, codes Hysteroscopy remove myoma and Hysteroscopy remove leiomyomata both have Hysteroscopy diagnostic as their base code.
If and are performed in a facility during the same surgical session, the RVUs determining reimbursement are calculated as:. Another payment adjustment pertains to imaging rules. When an imaging procedure is performed on the same day as another imaging procedure in the same family i.
Therefore, if and Ultrasound, transvaginal are performed during the same office visit, the reimbursement is determined by:.
The last payment rule applies to procedures performed bilaterally. Many codes are considered both unilateral and bilateral, meaning that RVUs assigned to the medical code remain the same whether the service is performed on 1 side or 2. When a unilateral procedure is performed bilaterally , RVUs increase according to the rules of its bilateral indicator.
The monetary value of an RVU is determined by the annual conversion factor. The dollar amount assigned to the CF is calculated annually to achieve budget neutrality. In the absence of statutorily required updates to the conversion factor, the new annual rate will reflect a budget neutrality adjustment based on changes to RVUs.
In , a 0. Facility fees cover services provided to inpatients or in a hospital outpatient clinic setting or similar places of service. Non-facility fees cover services generally provided in a physician office or other freestanding setting e. Medical practices and healthcare organizations that understand how the relative values of medical services translate into fee schedule payment amounts can better forecast and preemptively address annual changes that will impact their bottom line.
RVU amounts factor heavily into reimbursement, and changes in RVU assignments affect practices differently, depending on the mix of services and volume of procedures they furnish. But the price rate impacted labs differently, depending on the labs most frequently perform codes, as you can imagine from viewing MPFS payment changes.
Remember—budget neutrality means that rate increases in one area require rate decreases in other areas to offset Medicare spending. Practices that frequently code higher level established patient visits will probably benefit, as those codes saw the highest rescaling.
A change of this magnitude requires planning. Providers and practice managers with a solid grasp of RVUs will be equipped to safeguard their profit margin.
Medical coders who understand relative value units have another indicator to help them ensure they select proper codes, and accurate medical coding is paramount to accurate RVU-based reimbursement. Relative value units have also proven statistically valid as key performance indicators, serving a vital role in budgeting, expense allocation, cost benchmarking, and productivity measurements.
Medical coders should remain aware of the RVUs associated with their reported procedure codes to ensure their claims align with state and national norms. Because recovery audit contractors RACs and private payers keep tabs on code utilization by RVUs, your practice could be audited if costs for providing your services prove higher than your peers.
Work RVUs define the relative value in number of units of the physician work involved with performing a service or procedure. Work RVUs represent only Every service and procedure code with a work RVU has been assigned an estimate of time required to perform the service or procedure.
So, if your provider sees 10 new patients a day coded with , that equates to a minimum of 1, hours per year based on a five-day workweek and 48 weeks a year. Medical billers who understand RVUs are prepared to identify and address inconsistencies between billing and payments received. RVUs offer critical data to achieve practice growth. Physicians and practice managers who know how to use RVU data can track work, patient population, productivity, cost accounting, gross charges, net collections, and areas of revenue loss—all of which illuminate actions needed to hone practice efficiency and optimize financial gains.
RVUs allow practice managers to assess the effects of patient cancellations and which no shows are most damaging to their bottom line. RVU analysis can identify which services have higher than average cost-to-revenue ratios.
RVUs help to determine physician salaries, as well as deciding whether to take an acquisition offer from a hospital system. If the cost to provide a service to patients is higher than what Medicare or commercial insurances pay, the practice will incur revenue loss each time they perform that service.
Cost per RVU, then, is vital to establishing a healthy budget. Because relative value units measure the overall consumption of resources to deliver a medical service, they provide the foundation for cost analysis. To determine the cost per RVU for your practice, the formula is:. This knowledge can help you understand what portion of the patient copay you need to break even.
It should also inform your budgeting decisions, as well as your contract negotiations with payers. Cost per RVU is the foundation of RVU cost analyses, and physicians and practice managers negotiating payer contracts should perform cost analysis prior to negotiations, reviewing their most commonly performed services and procedures to ensure payer-assigned RVUs cover their overhead expenses. Before entering negotiations, run your numbers and come to the table aware of your financial needs, able to answer questions like:.
Physician employment agreements may structure compensation as salary only, salary plus RVU-based bonuses, or RVUs only. In the latter arrangement, a physician earns a dollar amount for each RVU performed. When subject to an RVU-based compensation formula, knowledge of your RVU production is imperative and can become leverage when negotiating your employment agreement.
Consider negotiating for a bonus for excess RVU production. If the proposed agreement already contains an RVU-based bonus, consider negotiating for a lower bonus threshold or a higher dollar per RVU incentive pay.
Also, remain aware of the RVUs assigned to services you provide. Does the employment agreement specify office visits and procedures for which you will be responsible? The fee for major surgeries, such as knee replacement, encompasses the estimated physician resources used during the global period.
The global period refers to the amount of time that encompasses the day of the surgery and post-surgical physician follow up. The physician work RVUs for the surgery include the time and effort in performing the procedure, as well as expected post-operative follow-up office visits.
It does not include the costs incurred by the facility. In the National Physician Fee Schedule Relative Value File, Medicare uses 4 bilateral service indicators 0, 1, 2, 3, and 9 to clarify coding requirements and reimbursement for procedures performed bilaterally in the same surgical session. If procedure is reported with modifier or with modifiers RT and LT, the payment for the two sides is the lower of:.
If the code is billed with the bilateral modifier or is reported twice on the same day by any other means e. RVUs are already based on the procedure being performed as a bilateral procedure. If the procedure is reported with modifier or is reported twice on the same day by any other means e.
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