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Understand RVUs

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Understand RVUs

  1. 1. How Doctors Are Paid Today: UnderstandingRelative Value Units (RVUs) Mary Pat Whaley, FACMPE, CPC Manage My Practice, LLC www.managemypractice.com c. 2013 Manage My Practice 1
  2. 2. In The Beginning…it was typical for insurance companies to pay physicians what each payer considered “usual and customary” or market-rate.There was, however, a need to find a “better” way of payingfor 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 specialtiesreceiving different payments for the same service. c. 2013 Manage My Practice 2
  3. 3. December 1985The Harvard National RBRVS Studyis initiated.RBRVS was created at HarvardUniversity School of Public Healthin their national RBRVS study from December 1985and published on September 29, 1988. WilliamHsiao was the principal investigator who organizeda multi-disciplinary team of researchers, whichincluded statisticians, physicians, economists andmeasurement specialists, to develop the RBRVS. c. 2013 Manage My Practice 3
  4. 4. December 1985The Harvard National RBRVS Studyis initiated.RBRVS stands for: • Resource-Based • Relative • Value • Scale c. 2013 Manage My Practice 4
  5. 5. September 1988Harvard submits Phase I of the RBRVS FinalReport to the Health Care FinancingAdministration (HCFA) – now called CMS(Centers for Medicare andMedicaid Services.)December 1989President George Bush signs the OmnibusBudget Reconciliation Act of 1989, enacting aphysician payment schedule based on an RBRVS. c. 2013 Manage My Practice 5
  6. 6. November 1991Initial Meeting of the AMA/Specialty Society RVSUpdate Committee (RUC) takes place: RUCCharter documents are created; RUC isapproved for the formation of the ResearchSubcommittee, RUC Advisory Committee, andHealth Care Professionals Advisory Committee.January 1992The Medicare RBRVS is implemented. c. 2013 Manage My Practice 6
  7. 7. Digging Down Into theRelative Value Unit (RVU) 1The relative value for each medical service providedby a physician is composed of three distinct parts:A physician work component that measures thetime, skill, and intensity associated with the serviceprovided - this component accounts for 54.5% of aservices relative value. c. 2013 Manage My Practice 7
  8. 8. Digging Down Into theRelative 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 services relative value. c. 2013 Manage My Practice 8
  9. 9. Digging Down Into theRelative Value Unit (RVU) 3A malpractice expense component that reflects average malpractice insurance cost - this accounts for 3.2% of a services relative value c. 2013 Manage My Practice 9
  10. 10. Digging Down Into theRelative Value Unit (RVU)Physician services are reported using the CurrentProcedural Terminology (CPT) coding system. Each CPTcode has the three components and each componenthas an RVU. The sum is the total RVU for that CPTcode.CPT codes, descriptions and other data are copyright2012 American Medical Association. All rightsreserved. CPT is a registered trademark of theAmerican Medical Association (AMA). c. 2013 Manage My Practice 10
  11. 11. Digging Down Into theRelative Value Unit (RVU)Adding the three portions together equals theTotal RVU. Work RVU wRVU+Practice Expense RVU + PE RVU+Malpractice Expense RVU + ME RVUTotal RVU Total RVU c. 2013 Manage My Practice 11
  12. 12. Digging Down Into theRelative 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 12
  13. 13. Digging Down Into theRelative 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 13
  14. 14. A History of the MedicareConversion Factor 1992....$31.00 2003….$36.78 1993…. $31.96 2004….$37.33 1994....$33.71 2005….$37.89 1995....$36.38 2006….$37.89 1996....$35.41 2007….$37.897 1997....$35.76 2008….$38.087 1998…. $36.68 2009….$36.06 1999…. $34.73 2010….$36.87 2000…. $36.61 2011….$33.97 2001…. $38.25 2012….$34.03 2002…. $36.19 2013….$34.0320 c. 2013 Manage My Practice 14
  15. 15. A Recap of Payments to Physicians Through the Years:1980s…………….... Usual & Customary1990s……………… RBRVSIntermittently…….. Capitation2000s……………… Concierge2013……………….. Pay for Performance Value-based Payments Direct Pay ModelsTomorrow………….?????? c. 2013 Manage My Practice 15
  16. 16. Questions? Please contact:Mary Pat Whaley, FACMPE, CPCPractice Management Consultant Manage My Practice, LLC (919) 370-0504marypat@managemypractice.com c. 2013 Manage My Practice 16

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