RVUs 101: What Independent
Physicians Need to Know
MONEY MATTERS
in independent private practices should have a general idea of
the number of RVUs they generate, says Swanson.
RVUs and Payment Reform
In a value-based payment model, payers are less interested
in individual productivity and more interested in population
health management. Yet RVUs will remain important because
they are a “metric that everyone can wrap their arms around,”
says Swanson.
“RVUs are important. I think we’ve over-emphasized
their importance over the past 10 years because of their
alignment with compensation, but that doesn’t mean that
it’s not an important metric to examine your productivity and
how effective you are in delivering patient care,” he says.
“They hold a purpose even if they diminish in compensation
alignment due to population health management and riskbased
payment models.” DMJ
References
1. https://gopractice.kareo.com/article/rvus-101-whatindependent
physicians-need-know
2. https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-Payment/PhysicianFeeSched/PFS-Relative-Value-
Files.html
Th is article is reprinted with permission from gopractice.kareo.com.
Lisa A. Eramo, BA, MA is a freelance writer specializing
in health information management, medical coding, and
regulatory topics. Her focus areas are medical coding, and
ICD-10 in particular, clinical documentation improvement, and
healthcare quality/efficiency. She can be reached at leramo@
hotmail.com or https://lisaeramo.com/.
by Lisa Eramo
When calculating a Relative Value Unit (RVU), it’s easy to
become overwhelmed by the math. However, if you can
look beyond the calculations, you’ll find that the RVU
is actually a good barometer of practice efficiency and
patient complexity—and it can provide helpful insights
into performance, says Andy Swanson, vice president of
consulting services at the Medical Group Management
Association (MGMA).
In this article originally published by Kareo.com1, we’ll
explain how to calculate an RVU and describe how RVUs can
benefit physicians working in independent private practice.
Calculating an RVU
An RVU represents the total of three component RVUs, each
of which is adjusted based on the geographic location in
which a physician practices. The three component RVUs are:
1. Physician work RVU, including the time and clinical
skill necessary to treat a patient during an encounter.
2. Practice expense RVU, including labor costs as well as
expenses for building space, equipment, and office supplies.
3. Professional liability insurance expense RVU, including
the cost of malpractice insurance premiums.
The Centers for Medicare & Medicaid Services (CMS) adds
each geographically-adjusted component RVU to arrive at
a total RVU for every CPT code. The agency then multiplies
the total RVU by the Medicare Conversion Factor, a national
value that converts the RVU into a dollar amount. In 2018, the
conversion factor is 35.99.2 Consider the following example
that compares RVUs for codes 99211 and 99214 for a
physician practicing in Dallas.
To calculate his or her total RVU for code 99211, add the
following geographically-adjusted component RVUs together:
(Work RVU 0.18 x 1.012) + (Practice expense RVU 0.38 x
1.014) + (Malpractice RVU 0.01 x .768)
Thus, the total RVU for code 99211 is .5752.
To calculate his or her total RVU for code 99214, add the
following geographically-adjusted component RVUs together:
(Work RVU 1.50 x 1.012) + (Practice expense RVU 1.43 x
1.014) + (Malpractice RVU 0.10 x .768).
Thus, the total RVU for code 99214 is 3.045, which
makes sense given the fact that code 99214 denotes a more
complex patient.
Unfortunately, it’s a tedious process to calculate RVUs for
every code that a physician bills. Instead, Swanson says to
focus on your top 10 high-volume codes. Determine the RVU
for each code, and use your total RVUs as an approximation for
your performance as compared with national benchmarks.
Why RVUs Matter for Independent Physicians
Independent physicians may not pay too much attention to
RVUs because they’re usually more relevant in arrangements
where physicians are employed directly by hospitals, health
systems, or groups. That’s because a physician’s base salary
usually requires a minimum number of work RVUs.
Yet there are three important reasons why physicians working
1. A physician wants to grow his or her practice. If your
RVUs are low compared to national benchmark data—but
your patient volume is high—chances are likely that you
must take a closer look at practice efficiency in an effort
to expand the practice. If your RVUs are already high, you
may need to think about hiring additional physicians or
mid-level providers who can increase the patient volume
even more.
2. A physician wants to merge his or her practice with
that of another physician. RVUs should be a part of the
discussion, says Swanson. How many RVUs does each
physician generate, and what is expected so both individuals
pull their own weight?
3. A physician wants a hospital or health system to purchase
the practice. Once a physician is employed by the
hospital, he or she will probably be paid based on RVUs,
says Swanson. In addition, the total RVUs is a metric that
helps hospitals understand the volume and level of patient
care that physicians typically provide in a day, week, or
month—information that’s helpful as hospitals decide
whether to move forward with the acquisition, he adds.
April 2019 Dallas Medical Journal 17