How Doctors Are Paid Today: Understanding Relative Value Units
(RVUs) c. 2013 Manage My Practice 1 Mary Pat Whaley, FACMPE, CPC
Manage My Practice, LLC www.managemypractice.com
c. 2013 Manage My Practice 2 There was, however, a need to find
a better way of paying for medical services due to: Wide geographic
region-related variations in fees. A rapid rise in payments.
Payments not reflecting the resources used. The disparity between
physicians in different specialties receiving different payments
for the same service. In The Beginningit was typical for insurance
companies to pay physicians what each payer considered usual and
customary or market-rate.
c. 2013 Manage My Practice 3 December 1985 The Harvard National
RBRVS Study is initiated. RBRVS was created at Harvard University
School of Public Health 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.
c. 2013 Manage My Practice 4 December 1985 The Harvard National
RBRVS Study is initiated. RBRVS stands for: Resource-Based Relative
Value Scale
c. 2013 Manage My Practice 5 September 1988 Harvard submits
Phase I of the RBRVS Final Report to the Health Care Financing
Administration (HCFA) now called CMS (Centers for Medicare and
Medicaid Services.) December 1989 President George Bush signs the
Omnibus Budget Reconciliation Act of 1989, enacting a physician
payment schedule based on an RBRVS.
c. 2013 Manage My Practice 6 November 1991 Initial Meeting of
the AMA/Specialty Society RVS Update Committee (RUC) takes place:
RUC Charter documents are created; RUC is approved for the
formation of the Research Subcommittee, RUC Advisory Committee, and
Health Care Professionals Advisory Committee. January 1992 The
Medicare RBRVS is implemented.
c. 2013 Manage My Practice 7 The relative value for each
medical service provided by a physician is composed of three
distinct parts: A physician work component that measures the time,
skill, and intensity associated with the service provided - this
component accounts for 54.5% of a service's relative value. Digging
Down Into the Relative Value Unit (RVU) 1
c. 2013 Manage My Practice 8 Digging Down Into the Relative
Value Unit (RVU) 2 A practice-related expense component that
measures average practice expenses such as office rents and
employee wages and that varies on a code-by-code basis depending on
whether the service is performed in a facility or non-facility
setting - this accounts for 42.3% of a service's relative
value.
c. 2013 Manage My Practice 9 Digging Down Into the Relative
Value Unit (RVU) A malpractice expense component that reflects
average malpractice insurance cost - this accounts for 3.2% of a
service's relative value 3
c. 2013 Manage My Practice 10 Physician services are reported
using the Current Procedural Terminology (CPT) coding system. Each
CPT code has the three components and each component has an RVU.
The sum is the total RVU for that CPT code. CPT codes, descriptions
and other data are copyright 2012 American Medical Association. All
rights reserved. CPT is a registered trademark of the American
Medical Association (AMA). Digging Down Into the Relative Value
Unit (RVU)
c. 2013 Manage My Practice 11 Adding the three portions
together equals the Total RVU. Work RVU wRVU +Practice Expense RVU
+ PE RVU +Malpractice Expense RVU + ME RVU Total RVU Total RVU
Digging Down Into the Relative Value Unit (RVU)
c. 2013 Manage My Practice 12 Digging Down Into the Relative
Value Unit (RVU) For example: 99213 = Established patient office
visit, level 3 wRVU = .97 PE RVU = 1.10 ME RVU = .07 TOTAL RVU =
2.14
c. 2013 Manage My Practice 13 Digging Down Into the Relative
Value Unit (RVU) Q: How do RVUs translate into the physician
payment? A: The Total RVU is multiplied by a conversion factor.
Medicare has one conversion factor and other payers use different
conversion factors. For example, 99213 is 2.14 Total RVUs x 2013
Medicare conversion factor of $34.0320 = Medicare payment of
~$72.83. Note that this payment will vary slightly based on
locality.
c. 2013 Manage My Practice 14 A History of the Medicare
Conversion Factor 1992 $31.00 1993 $31.96 1994 $33.71 1995 $36.38
1996 $35.41 1997 $35.76 1998 $36.68 1999 $34.73 2000 $36.61 2001
$38.25 2002 $36.19 2003 $36.78 2004 $37.33 2005 $37.89 2006 $37.89
2007 $37.897 2008 $38.087 2009 $36.06 2010 $36.87 $33.97 $34.03
2013 $34.0320
A Recap of Payments to Physicians Through the Years:
1980s....Usual & Customary 1990s RBRVS
Intermittently..Capitation 2000s Concierge 2013.. Pay for
Performance Value-based Payments Direct Pay Models Tomorrow.??????
c. 2013 Manage My Practice 15
Questions? Please contact: Mary Pat Whaley, FACMPE, CPC
Practice Management Consultant Manage My Practice, LLC (919)
370-0504 [email protected] c. 2013 Manage My Practice
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