RVUs Simplified
Probability would indicate that this article will the most boring in the history of The Pager. The Relative Value Unit (RVU) is a mundane topic; but one about which are most often asked and a topic physicians cannot ignore. More residency programs are integrating the teaching of productivity and billing, however “multiple studies have shown that trainees are un-satisfied with the quantity and quality of education they are receiving in these areas” (Baadh A, 2015). RVUs are in widespread use to measure physician productivity and, therefore, compensation. Here we provide a quick primer on the RVU.
The Resource Based Relative Value Scale (RBRVS) was developed at Harvard in 1985 and published in JAMA later that year. The idea was to crate a measure of the: time; mental and technical effort; complexity and other factors that are required by the physician (and her or his practice) to care for the patient. There are, in essence, three types of RVUs: the Work RVU (wRVU); the Practice Expense RVU (peRVU); and Malpractice Expense (mpRVU). The measurement for physician productivity relates only to the wRVU; or the time, mental and technical effort and complexity of the physicians effort to perform the office visit or procedure. For example for a level one primary care visit, the wRVU is 0.45, while a colonoscopy’s RVU is 6.04. Many have debated the reliability of the wRVUs and the sometimes inherent unfairness of more cognitive versus technical activities. We won’t address this debate here. The wRVU often sets payment for physicians by multiplying the wRVU by a conversion factor. For example, an Orthopedic surgeon in Chicago is paid $70 per wRVU and produces 7,000 wRVUs for the year. She would make make $490,000 per year based on her group’s plan. Based on national datasets, standards are set for percentile productivity expectations and the correlated payment per RVU; which vary by specialty. At AlfredMD, we use datasets in attempt to bring symmetry to the recruitment process so that physicians are paid fairly based on objective data.
The total RVU is expressed as:
Total RVU = (wRVU x GPCI) + (peRVU x GPCI) + (mpRVU x GPCI)
The Medicare Geographic Practice Cost Index (GPCI) is an adjustment factor that allows an adjustment to help physicians in higher cost areas. Let’s use a hypothetical primary care physician’s office visit for a 99214 base visit in Los Angeles. The physican’s total is expressed as: (0.45 x 1.06) + (0.25 x 1.06) + (0.2 x 1.06) = 0.96 total RVUs. The peRVU helps cover supplies and staffing for the clinic while the mpRVU helps to cover a portion of the malpractice expense incurred by the physician. The GPCI in Los Angeles is higher than Kansas City, for example, to account for variation in practice cost. Medicare’s base conversion rate in 2020 is $36.09, so our primary care physician in the example above would receive $34.64 for a 99214 visit.
We understand that the physician compensation process can be a complex piece to understand. We’ll be hosting a webinar in the near future on the Future of Physician Payments and Contracts. Check out the link here to sign up.
In Health,
Ryan