It’s hard to quantify clinicians’ work, but to get paid, everything must have a price. The current solution is the Relative Value Unit (RVU) model of physician compensation. RVUs compensate based on productivity, signifying the relative amount of work and resources required to service a patient.
What's in an RVU?
RVUs are made up of three components, each with a different amount of impact on total RVU and reimbursement.
Physician Work (wRVU):
Equates to the required time (e.g., billing, coding, and documentation) and intensity (e.g., technical skill, mental effort, and judgment) it takes to perform a given procedure. Accounts for the largest portion of total RVU with the greatest impact on reimbursement
Practice Expense:
Costs such as rent, equipment and supplies, consulting and professional services, and staff salaries.
Malpractice Expense:
Professional liability insurance for the provider. Accounts for the smallest portion of total RVU.
Determining Payment
Medicare updates its Physician Fee Schedule each year, assigning RVU totals to each of the 10,000+ CPT codes. The amount paid for each service is determined from:
The RVU assigned
The annual RVU payment
A conversion factor set by Congress
($$ per RVU)
Geographic Adjustments
Practical Use
RVUs can be calculated per visit, per hour, or per provider cost relative to the RVUs.
RVUs can be used as a part of physician compensation – it is up to the hospital how much pay is attributed to RVUs.
Benefits of RVUs
Allow hospitals to compare clinicians with their peers
Identify when extra clinicians are needed
Make determinations about provider compensation and bonus structures
Promote transparency, accountability, and management efficiency
Hospitals using RVUs must always ensure that productivity and efficiency do not come at the cost of quality patient care.
