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. RVU Relative value unit is a method the United States Medicare system uses to value reimbursement for physician services.
There are advantages and disadvantages to each system. Skip to content Miscellaneous. It gets more complex, however, when broken down into its component structure, which is the basis of this post. The work RVU is perhaps the best known and most-often utilized component. It is calculated based on an estimate of time and effort expended by a provider in performing the procedure or delivering the service associated to the specific procedure code to which the RVU values are assigned. A , the same level for a new office visit, has a work RVU value of 1.
It is important to note that not every procedure has a work RVU and that is because those procedures may not involve the direct work effort of a physician or other provider.
The practice expense RVU is made up of six different cost centers, including nonphysician salaries, lease and rent, consulting and professional services, etc. Interestingly, because this is a true resource-based model, it also uses the same time metrics that are used to assign work RVUs, with the addition of assigned expenses.
The third component is the malpractice expense RVU and as it only accounts for 3 percent of the total, it rarely is accounted for on its own. How are RVUs calculated?
They include things such as rent, equipment, supplies, and staff other than physicians. Physician compensation formulas can be very complex. One of the best ways to achieve physician buy-in is with a formula that is simple, straight forward and easy to understand.
In general, calculate the dollar amount associated with each Work RVU. Set a threshold or minimum for each physician to attain. Base bonuses on RVUs above the threshold. Align physician goals with hospital goals. Aligning goals between the hospital and the physician will create an atmosphere of synergy, loyalty, and ultimately profitability.
In , 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.
It has been in use ever since, although not without controversy. The reimbursement impact of the RVU system is not limited to Medicare. The percentage of the Medicare fee schedule a commercial insurer will pay often is a function of the supply of, and demand for, the type of service a practice provides.
That would give you a lot of leverage with the insurance company, which means it will pay much more than Medicare. Along the same lines, RVUs are a useful way of comparing how well payers reimburse for the same service or procedure, says Frank Cohen, principal of the Frank Cohen Group, a medical consulting firm in Clearwater, Florida and a Medical Economics editorial consultant.
Knowing the costs and revenues associated with specific procedures and payers can yield an additional benefit, Cohen notes.
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