Relative Value Units
Encyclopedia
Relative value units are a measure of value used in the Medicare
reimbursement formula for physician
services. RVUs are a part of the resource-based relative value scale
(RBRVS).
enacted a Medicare fee schedule, and as of 2010 about 7,000 distinct physician services were listed. The services are "classified under a nomenclature based on the Current Procedural Terminology
to which the American Medical Association
holds jealously guarded intellectual property rights". Each service in the fee schedule is scored under the resource-based relative value scale
(RBRVS) to determine a payment.
's Specialty Society Relative Value Scale Update Committee
(RUC)—have largely determined Medicare's RVU physician work values.
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
reimbursement formula for physician
Physician
A physician is a health care provider who practices the profession of medicine, which is concerned with promoting, maintaining or restoring human health through the study, diagnosis, and treatment of disease, injury and other physical and mental impairments...
services. RVUs are a part of the resource-based relative value scale
Resource-Based Relative Value Scale
Resource-based relative value scale is a schema used to determine how much money medical providers should be paid. It is partially used by Medicare in the United States and by nearly all Health maintenance organizations ....
(RBRVS).
Background
Before RVUs were used, Medicare paid for physician services using "usual, customary and reasonable" rate-setting which led to payment variability. The Consolidated Omnibus Budget Reconciliation Act of 1985Consolidated Omnibus Budget Reconciliation Act of 1985
The Consolidated Omnibus Budget Reconciliation Act of 1985 is a law passed by the U.S. Congress on a reconciliation basis and signed by President Reagan that, among other things, mandates an insurance program giving some employees the ability to continue health insurance coverage after leaving...
enacted a Medicare fee schedule, and as of 2010 about 7,000 distinct physician services were listed. The services are "classified under a nomenclature based on the Current Procedural Terminology
Current Procedural Terminology
The Current Procedural Terminology code set is maintained by the American Medical Association through the CPT Editorial Panel. The CPT code set describes medical, surgical, and diagnostic services and is designed to communicate uniform information about medical services and procedures among...
to which the American Medical Association
American Medical Association
The American Medical Association , founded in 1847 and incorporated in 1897, is the largest association of medical doctors and medical students in the United States.-Scope and operations:...
holds jealously guarded intellectual property rights". Each service in the fee schedule is scored under the resource-based relative value scale
Resource-Based Relative Value Scale
Resource-based relative value scale is a schema used to determine how much money medical providers should be paid. It is partially used by Medicare in the United States and by nearly all Health maintenance organizations ....
(RBRVS) to determine a payment.
Use
For each service, a payment formula contains three RVUs, one for physician work, one for practice expense, and one for malpractice expense. On average, the proportion of costs for Medicare are 52%, 44% and 4%, respectively. The three RVUs for a given service are each multiplied by a unique geographic practice cost index. The sum of the three geographically weighted RVU values is then multiplied by the Medicare conversion factor to obtain a final price. Historically, a private group of 29 (mostly specialist) physicians—the American Medical AssociationAmerican Medical Association
The American Medical Association , founded in 1847 and incorporated in 1897, is the largest association of medical doctors and medical students in the United States.-Scope and operations:...
's Specialty Society Relative Value Scale Update Committee
Specialty Society Relative Value Scale Update Committee
The Specialty Society Relative Value Scale Update Committee or Relative Value Update Committee, is a private group of 29 mostly specialist physicians who have made highly influential recommendations on how to value a physician's work when computing health care prices in the United States' public...
(RUC)—have largely determined Medicare's RVU physician work values.