Resource-Based Relative Value Scale
Encyclopedia
Resource-based relative value scale (RBRVS) 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 organization
s (HMOs).
RBRVS assigns procedure
s performed by a physician
or other medical provider a relative value
which is adjusted by geographic region (so a procedure performed in Manhattan
is worth
more than a procedure performed in El Paso
). This value is then multiplied by a fixed conversion factor
, which changes annually, to determine the amount of payment.
RBRVS determines prices based on three separate factors: physician work (52%), practice expense (44%), and malpractice expense (4%).
(CPT) code was worth 1.39 Relative Value Units
, or RVUs. Adjusted for North Jersey
, it was worth 1.57 RVUs. Using the 2005 Conversion Factor of $37.90, Medicare paid 1.57 * $37.90 for each 99213 performed, or $59.50. Most specialties
charge 200–400% of Medicare rates for their procedures and collect between 50–80% of those charges, after contractual adjustments and write-off
s.
in their national RBRVS study from December 1985 and published on September 29, 1988. William Hsiao
was the principal investigator who organized a multi-disciplinary team of researchers, which included statisticians, physicians, economists and measurement specialists, to develop the RBRVS.
In 1988 the results were submitted to the Health Care Financing Administration (today CMS) to be used in the American Medicare system. In December of the following year, President George H. W. Bush
signed into law the Omnibus Budget Reconciliation Act of 1989, switching Medicare to an RBRVS payment schedule. This took effect on January 1, 1992. Starting in 1991, the AMA has updated RBRVS continually. As of May 2003, over 3500 corrections have been submitted to CMS.
their services using procedure codes
developed by a seventeen member committee known as the CPT Editorial Panel. The AMA nominates eleven of the members while the remaining seats are nominated by the Blue Cross and Blue Shield Association
, the Health Insurance Association of America, CMS, and the American Hospital Association
. The CPT Committee issues new codes twice each year.
A separate committee, the Specialty Society Relative Value Scale Update Committee (RUC), meets three times a year to set new values, determines the Relative Value Units (RVUs) for each new code, and revalues all existing codes at least once every five years. The RUC has 29 members, 23 of whom are appointed by major national medical societies. The six remaining seats are held by the Chair (an AMA appointee), an AMA representative, a representative from the CPT Editorial Panel, a representative from the American Osteopathic Association
, a representative from the Health Care Professions Advisory Committee and a representative from the Practice Expense Review Committee. Anyone who attends its meetings must sign a confidentiality agreement.
expense.
The average relative weights of these are: physician work (52%), practice expense (44%), malpractice expense (4%).
A method to determine the physician work value was the primary contribution made by the Hsiao study. The RUC examines each new code to determine a relative value by comparing the physician work of the new code to the physician work involved in existing codes.
The practice expense, determined by the Practice Expense Review Committee, consists of the direct expenses related to supplies and non-physician labor used in providing the service, and the pro rata cost of the equipment
used. In addition, there is an amount included for the indirect expenses.
In the development of the RBRVS, the physician work (including the physician's time, mental effort, technical skill, judgment, stress and an amortization of the physician's education
), the practice expense and the malpractice expense are factored into the result. The calculation of the fee includes a geographic adjustment. The RBRVS does not include adjustments for outcomes, quality of service, severity, or demand.
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...
in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and by nearly all Health maintenance organization
Health maintenance organization
A health maintenance organization is an organization that provides managed care for health insurance contracts in the United States as a liaison with health care providers...
s (HMOs).
RBRVS assigns procedure
Medical procedure
A medical procedure is a course of action intended to achieve a result in the care of persons with health problems.A medical procedure with the intention of determining, measuring or diagnosing a patient condition or parameter is also called a medical test...
s performed by a 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...
or other medical provider a relative value
Relative value
Relative value is the attractiveness measured in terms of risk, liquidity, and return of one instrument relative to another, or for a given instrument, of one maturity relative to another...
which is adjusted by geographic region (so a procedure performed in Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
is worth
Value (economics)
An economic value is the worth of a good or service as determined by the market.The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods...
more than a procedure performed in El Paso
El Paso, Texas
El Paso, is a city in and the county seat of El Paso County, Texas, United States, and lies in far West Texas. In the 2010 census, the city had a population of 649,121. It is the sixth largest city in Texas and the 19th largest city in the United States...
). This value is then multiplied by a fixed conversion factor
Conversion of units
Conversion of units is the conversion between different units of measurement for the same quantity, typically through multiplicative conversion factors.- Process :...
, which changes annually, to determine the amount of payment.
RBRVS determines prices based on three separate factors: physician work (52%), practice expense (44%), and malpractice expense (4%).
Example
For example, in 2005, a generic 99213 Current Procedural TerminologyCurrent 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...
(CPT) code was worth 1.39 Relative Value Units
Relative Value Units
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 .-Background:...
, or RVUs. Adjusted for North Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
, it was worth 1.57 RVUs. Using the 2005 Conversion Factor of $37.90, Medicare paid 1.57 * $37.90 for each 99213 performed, or $59.50. Most specialties
Specialty (medicine)
A specialty in medicine is a branch of medical science. After completing medical school, physicians or surgeons usually further their medical education in a specific specialty of medicine by completing a multiple year residency to become a medical specialist.-History of medical specialization:To...
charge 200–400% of Medicare rates for their procedures and collect between 50–80% of those charges, after contractual adjustments and write-off
Write-off
The term write-off describes a reduction in recognized value. In accounting terminology, it refers to recognition of the reduced or zero value of an asset. In income tax statements, it refers to a reduction of taxable income as recognition of certain expenses required to produce the income...
s.
Criticism
The RBRVS system has been criticized on a number of grounds:- Paying based on effort rather than effect skews incentives, leading to overuse of complicated procedures without consideration for outcomes. Contrast with evidence-based medicineEvidence-based medicineEvidence-based medicine or evidence-based practice aims to apply the best available evidence gained from the scientific method to clinical decision making. It seeks to assess the strength of evidence of the risks and benefits of treatments and diagnostic tests...
(EBM), which is based on outcomes.- According to this critique, RBRVS misaligns incentives: because the medical value to the patient of a service is not included in how much is paid for the service, there is no financial incentive to help the patient, nor to minimize costs. Rather, payment is partly based on difficulty of the service (the "physician work" component), and thus a profit-maximizing physician is incentivized to provide maximally complicated services, with no consideration for effectiveness.
- One effect attributed to RBRVS is a lack of primary care physicianPrimary care physicianA primary care physician, or PCP, is a physician/medical doctor who provides both the first contact for a person with an undiagnosed health concern as well as continuing care of varied medical conditions, not limited by cause, organ system, or diagnosis....
s (PCPs) at the expense of specialists – because specialist services require more effort and specialized training, they are paid more highly, incentivizing physicians to specialize, leading to a lack of PCPs.
- The Specialty Society Relative Value Scale Update CommitteeSpecialty Society Relative Value Scale Update CommitteeThe 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) is largely privately run, an example of regulatory captureRegulatory captureIn economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as...
. - RUC is secretive, with the meetings being closed to the public and uninvited observers.
- The data are effectively copyrighted by the AMA, but its use is required by statute.
- Although the RBRVS system is mandated by the Centers for Medicare and Medicaid ServicesCenters for Medicare and Medicaid ServicesThe Centers for Medicare & Medicaid Services , previously known as the Health Care Financing Administration , is a federal agency within the United States Department of Health and Human Services that administers the Medicare program and works in partnership with state governments to administer...
(CMS) and the data for it appears in the Federal RegisterFederal RegisterThe Federal Register , abbreviated FR, or sometimes Fed. Reg.) is the official journal of the federal government of the United States that contains most routine publications and public notices of government agencies...
, the American Medical AssociationAmerican Medical AssociationThe 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:...
(AMA) maintains that their copyright of the CPTCurrent Procedural TerminologyThe 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...
allows them to charge a license fee to anyone who wishes to associate RVU values with CPT codes. The AMA receives approximately $70 million annually from these fees, making them reluctant to allow the free distribution of tools and data that might help physicians calculate their fees accurately and fairly.
- Although the RBRVS system is mandated by the Centers for Medicare and Medicaid Services
History
RBRVS was created at Harvard UniversityHarvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
in their national RBRVS study from December 1985 and published on September 29, 1988. William Hsiao
William Hsiao
William C. Hsiao an American economist, is the K.T. Li Professor of Economics at the Harvard School of Public Health in Boston, Massachusetts...
was the principal investigator who organized a multi-disciplinary team of researchers, which included statisticians, physicians, economists and measurement specialists, to develop the RBRVS.
In 1988 the results were submitted to the Health Care Financing Administration (today CMS) to be used in the American Medicare system. In December of the following year, President George H. W. Bush
George H. W. Bush
George Herbert Walker Bush is an American politician who served as the 41st President of the United States . He had previously served as the 43rd Vice President of the United States , a congressman, an ambassador, and Director of Central Intelligence.Bush was born in Milton, Massachusetts, to...
signed into law the Omnibus Budget Reconciliation Act of 1989, switching Medicare to an RBRVS payment schedule. This took effect on January 1, 1992. Starting in 1991, the AMA has updated RBRVS continually. As of May 2003, over 3500 corrections have been submitted to CMS.
Committees
Physicians billMedical billing (United States)
Medical billing & coding is the process of submitting and following up on claims to insurance companies in order to receive payment for services rendered by a healthcare provider. The same process is used for most insurance companies, whether they are private companies or government-owned...
their services using procedure codes
Procedure codes
Procedure codes are numbers or alphanumeric codes used to identify specific health interventions taken by medical professionals.-International:...
developed by a seventeen member committee known as the CPT Editorial Panel. The AMA nominates eleven of the members while the remaining seats are nominated by the Blue Cross and Blue Shield Association
Blue Cross and Blue Shield Association
The Blue Cross Blue Shield Association is a federation of 39 separate health insurance organizations and companies in the United States. Combined, they directly or indirectly provide health insurance to over 100 million Americans. The history of Blue Cross dates back to 1929, while the history of...
, the Health Insurance Association of America, CMS, and the American Hospital Association
American Hospital Association
The American Hospital Association is an organization that promotes the quality provision of health care by hospitals and health care networks through such efforts as promoting effective public policy and providing information related to health care and health administration to health care...
. The CPT Committee issues new codes twice each year.
A separate committee, the Specialty Society Relative Value Scale Update Committee (RUC), meets three times a year to set new values, determines the Relative Value Units (RVUs) for each new code, and revalues all existing codes at least once every five years. The RUC has 29 members, 23 of whom are appointed by major national medical societies. The six remaining seats are held by the Chair (an AMA appointee), an AMA representative, a representative from the CPT Editorial Panel, a representative from the American Osteopathic Association
American Osteopathic Association
The American Osteopathic Association is the representative member organization for the over 78,000 osteopathic medical physicians in the United States...
, a representative from the Health Care Professions Advisory Committee and a representative from the Practice Expense Review Committee. Anyone who attends its meetings must sign a confidentiality agreement.
Price setting
The RBRVS for each CPT code is determined using three separate factors: physician work, practice expense, and malpracticeMedical malpractice
Medical malpractice is professional negligence by act or omission by a health care provider in which the treatment provided falls below the accepted standard of practice in the medical community and causes injury or death to the patient, with most cases involving medical error. Standards and...
expense.
The average relative weights of these are: physician work (52%), practice expense (44%), malpractice expense (4%).
A method to determine the physician work value was the primary contribution made by the Hsiao study. The RUC examines each new code to determine a relative value by comparing the physician work of the new code to the physician work involved in existing codes.
The practice expense, determined by the Practice Expense Review Committee, consists of the direct expenses related to supplies and non-physician labor used in providing the service, and the pro rata cost of the equipment
Medical equipment
Medical equipment is designed to aid in the diagnosis, monitoring or treatment of medical conditions.-Types:There are several basic types:* Diagnostic equipment includes medical imaging machines, used to aid in diagnosis...
used. In addition, there is an amount included for the indirect expenses.
In the development of the RBRVS, the physician work (including the physician's time, mental effort, technical skill, judgment, stress and an amortization of the physician's education
Medical education
Medical education is education related to the practice of being a medical practitioner, either the initial training to become a doctor or additional training thereafter ....
), the practice expense and the malpractice expense are factored into the result. The calculation of the fee includes a geographic adjustment. The RBRVS does not include adjustments for outcomes, quality of service, severity, or demand.
External links
- RBRVS entry in glossary of terms on the hrsa.gov website (broken)
- Physician Fee Schedule Calculations from Center for Medicaid and Medicare Services website (broken)
- Medicare RBRVS: The Physicians' Guide - a print publication giving details on Medicare's use of RBRVS (broken)
- "Physician Panel Prescribes the Fees Paid by Medicare," The Wall Street Journal, October 26, 2010