Doctors and other medical specialists, from pediatricians to surgeons, are the heart of every practice, each providing unique procedures that assist patients with their concerns. But to receive adequate service reimbursement, each establishment must have a relative value unit model in their billing system. So, what is an RVU in medical billing, and how does it work?
Our PracticeForces team will break down this system and explain why your Florida practice should depend on it to increase doctor compensation and limit denials in medical billing.
How RVUs Work
During claim submissions, a care provider submits patient information (from their insurance provider and services rendered to the date of injury and medical background details). They must also use CPT/HCPCS codes to produce a patient bill.
Once the hospital receives reimbursement for services and equipment from insurance companies and other payers, the establishment uses RVUs to determine how much each doctor should receive. Overall, there are three types of RVUs that, when calculated together, give you the total RVU for your practice.
Work RVUs pin each doctor against standard values and identify the doctor’s specialty and the amount of work performed within a given timeframe. The system also determines the skill level and training the doctor must have to complete the procedure (whether remotely or in-office) while looking at how intense and time-consuming the process was.
By multiplying this work RVU by the predetermined Geographic Practice Cost Indices, you uncover 51% of your practice’s total RVUs. However, the system doesn’t calculate patient management complexities, chronic health conditions, and any issues that slow workflow into this productivity measurement equation.
Practice Expense RVUs
While work RVUs analyze each doctor’s productivity, practice expense RVUs consider all other expenses surrounding your establishment. These include anything from staff labor costs and building space rental to purchasing and maintaining medical and office supplies. Once you find your PE RVU value, multiply it by the GPCI value, giving you 45% of your total RVU.
Depending on your specialty, malpractice liability premiums vary. For instance, a primary care physician performs less invasive procedures than an OB/GYN. Still, the latter (alongside all specialists who don’t perform surgeries) have a lower risk factor than surgeons. Therefore, surgeons have a higher malpractice insurance rate, and their MP RVUs, including liability expenses, comprise over 4% of their total RVUs.
Finding Your Total RVU
Once you find your work, practice expense, and malpractice RVUs and multiply each by their respective GPCIs, add the three for your total RVU. Lastly, multiply this number by the conversion factor to receive a dollar amount for compensation in medical billing.
Centers for Medicare & Medicaid Services uses RUVs unaffected by your physician fee schedule when determining reimbursement within its Resource-Based Relative Value Scale. Therefore, when submitting claims, you want to prevent medical claim denials that could reduce compensation and increase expenses.