Do you want to know what the relative value unit (RVU) is? It is a primary component of the resource-based relative value scale (RBRVS).
For context, the Centers for Medicare & Medicaid (CMS) and other commercial payers use it to determine payment against physician services.
This guide will explore RVU in medical billing in detail, from its factors to its types, and the method for calculation. So, if this is something that interests you, continue reading!
Factors Impacting RVU in Medical Billing
Some of the factors that impact the RVU in medical billing are discussed below:
Geographic Location
One of the most significant factors that impacts the total RVU is the geographic practice cost index (GPCI).
For instance, high-cost areas like New York City have higher GPCIs, which increases the national RVU.
Conversely, low-cost rural areas have lower GPCIs. Thus, it lowers the total RVU compared to the national average.
Service Setting
The practice expense RVU varies significantly based on the place of service. That is, non-facility RVUs are higher because the physician pays the overhead. On the other hand, facility RVUs are lower because physicians only bill for their professional work.
Modifier Usage
Some payment/pricing modifiers directly impact the total RVU for a medical claim. These include:
- Modifier 22: It indicates increased procedural services and can boost the RVU if documentation supports additional work.
- Modifier 50: It represents bilateral service. It results in a 150% reimbursement rate.
- Modifier 80: It highlights that an assistant surgeon is billing for the service. As a result, work RVU reduces.
Annual CMS Updates
Each year, the Relative Value Scale Update Committee (RUC) reviews the procedural codes and updates the RVUs. Listed below are some of the factors that come into play here:
- Technological Advances: When surgeries become easier or faster to perform due to technological advancements, the Work RVU reduces.
- Budget Neutrality: According to the law, when CMS increases the RVU for one set of procedural codes, such as primary care, it must lower it elsewhere to balance the budget.
Clinical Documentation
Yes, procedural codes have a set RVU. However, the work RVU is linked to the physician’s documented effort.
That is, if a case is medically complex, you should choose a high-level code rather than a low-level code (e.g., select 99215 instead of 99213). It directly increases the RVU value.
Similarly, in many evaluation and management (E/M) visits, the total time spent can determine the code selection.
Types of Relative Value Units (RVUs)
Discussed below are the main types of RVUs in medical billing that you should know about:
Work Relative Value Unit (WRVU)
It is the type of RVU that accounts for the healthcare provider’s work involved while performing a care service or procedure.
It includes physical effort, technical skills, judgement, mental effort, and stress related to patient risk. Besides, it involves the time needed to complete the procedure.
That’s not all! WRVU is the most common metric for calculating a provider’s productivity and bonuses.
Practice Expense Relative Value Unit (PERVU)
This RVU encompasses both the clinical and non-clinical expenses of a healthcare practice. These costs range from office to medical supplies, and from administrative staff to clinical personnel.
Moreover, the PERVU involves the costs of leasing building space, utilities, office equipment, and medical equipment.
Malpractice Relative Value Unit (MPRVU)
This RVU represents the cost of professional liability insurance associated with a specific procedural code.
Facility RVU
This RVU applies in medical billing when the care service is performed in a hospital setting, an ambulatory surgical center, or a skilled nursing facility. The reason? The facility provides the staff and equipment.
Note that the place of service impacts payment when CMS and private payers determine that practice expenses for a specific procedural code are less when delivered at a healthcare facility.
Non-Facility RVU
It applies when the procedure is performed in a clinic or a private office. Since the physician pays for the medical assistants, electricity, and rent, the practice expense payment is significantly higher.
The table below offers an at-a-glance view of the different RVUs in healthcare:
| Type of RVU | What Does It Cover? | Who Uses It? |
|---|---|---|
| Work RVU | Time, skill, stress. | Physician compensation models. |
| Practice Expense RVU | Rent, staff, supplies. | Practice managers for overhead. |
| Malpractice RVU | Insurance premiums. | Actuaries and risk managers. |
| Facility RVU | Hospital-based costs. | Surgeons and hospitalists. |
| Non-facility RVU | Office-based costs. | Private providers. |
How to Calculate Relative Value Units?
The formula for calculating the total RVU in medical billing is listed below:
Total RVU = Work RVU + Practice Expense RVU + Malpractice RVU
Once you have the total RVU, you multiply it by the annual conversion factor (CF) set by CMS. It is a fixed dollar amount that changes every year.
Payment = Total RVU × Conversion Factor
Example
Suppose the following:
- Work RVU = 3.5
- Practice Expense RVU = 3
- Malpractice RVU = 0.5
- Conversion Factor = $33.57
Now, the total RVU = 3.5 + 3 + 0.5 = 7.0
Final Payment = 7.0 × $33.57 = $234.99
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With that said, it is time to conclude. We discussed that RVU is a basic component of the RBRVS, which helps determine physician payment.
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