What does RVU mean in Medical Billing

Claim submission is a vital process in medical billing to generate reimbursement. But before generating any claim submissions hospitals are required to generate a bill charging the patient for the medical services he/she may have received from the doctor. In this bill, the medical biller enters the cost for all the medical services based on certain criteria like CPT/HCPCS codes. Once the reimbursement has been done the hospital administration is responsible to pay doctors for their services based on the RVU. RVU plays an important role in compensating the doctors for their services without any failure.

Definition of RVU

In medical billing, RVU refers to Relative Value Units—a set of standard values assigned by Medicare to determine the cost of services. With the help of RVU, it becomes easier to compensate doctors based on their productivity.

The Purpose of RVU

The purpose of RVU in medical billing is to determine the value of a doctor’s productivity. The services offered by the doctor are calculated using the RVU so as to pay him/her for the services. In a way, the relative value units are used to define the volume of work performed by the doctor while providing medical care to patients.

It is important to note that the RVU varies from doctor to doctor depending on their specialization. For example, the relative value unit for a surgeon performing a complicated procedure like Coronary Artery Bypass Grafting (CABG) is likely to remain high. This means in the case of CABG, the surgeon’s compensation is quite high due to the intensity of the procedure. On the other hand, the RVU for a general dentist may be low as compared to the CABG surgeon.

Determining the RVU

The relative value units for various doctors are determined on the three key components listed below:

• The work performed by the doctor/physician: It assesses the amount of skill, time, training and intensity that is required by the doctor to invest while performing any procedure. To maintain the RVU for each procedure, the CPT code is revised at least every five years.
• The cost of maintaining a practice: This cost is determined by calculating the cost of equipment, supplies, staff, and rent.
• The liability or malpractice expense borne by the provider: The liability/malpractice expenses tend to vary among providers. The malpractice premiums for primary care physicians are likely to remain low as compared to specialties like Obstetrics.

So, there are three types of RVUs—work RVUs, practice expense RVUs, and malpractice RVUs.

Calculating the RVU

To calculate the final RVU three factors are taken into consideration.

• Total RVUs
• Geographic Practice Cost Indices (GPCIs)- there is a pre-determined GPCI value for each type of RVU.
• Conversion Factor (CF)

So, the formula for total RVU looks something like this:

Total RVU = (Work RVU * Work GPCI) + (Practice Expense RVU * Practice Expense GPCI) + (Malpractice RVU * Malpractice GPCI)

Finally, the total RVU is multiplied by the CF that converts the RVU into a dollar amount.