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How Are Relative Value (“RVUs”) Used?

How are Relative Value Units (“RVUs”) Used?  For reimbursement purposes, a fixed dollar amount called a Conversion Factor (“CF”) is multiplied times the number of RVUs assigned to a specific procedure.

Medicare establishes a Conversion Factor each year and for 2016, Medicare’s CF is $35.8279 per RVU.  Therefore, if a procedure has an RVU of 1.00, Medicare will approve $35.83 for payment.  If the RVU is 2.00, Medicare will approve 2 times $35.8279 or $71.86.

Other governmental payors and commercial payors each have their own payment rates but most payors utilize a consistent Conversion Factor applied to the applicable RVUs.  For example, for purposes of this discussion, we will assume a Medicare reimbursement of $35.83 and an average commercial payor reimbursement of $50.00.

Here are a few radiology and pathology procedures and their RVU assignments for comparison:

CPT Code Procedure Physician
Work Unit
Practice
Expense Unit
Malpractice
Unit
Totals
71020 Radiology Chest 2 View 0.22 0.08 0.01 0.31
74177 Radiology CT Abdomen/Pelvis with Contrast 1.82 0.68 0.10 2.60
88305 Pathology Tissue Exam by Pathologist 0.75 0.34 0.02 1.11
88307 Pathology Tissue Exam by Pathologist 1.59 0.81 0.04 2.44

 

As shown in the table above, the methodology of RVUs allows procedures to be weighted to account for their complexity and expenses associated with the procedure.  This immediately creates a more valid metric than a simple count of how many procedures were performed.

Based on Medicare’s CF of $35.8279 per RVU and using a hypothetical $50.00 per RVU (~140% of Medicare) as an average reimbursement by all of a practice’s commercial payors, here is how a radiologist or pathologist would be reimbursed for these procedures:

CPT Code Procedure Total RVU Medicare
Reimbursement
@ $35.8279/RVU
Commercial
Payors
@ $50.00/RVU
71020 Radiology Chest 2 View 0.31 11.11 15.50
74177 Radiology CT Abdomen/Pelvis with Contrast 2.60 93.15 130.00
88305 Pathology Tissue Exam by Pathologist 1.11 39.77 55.50
88307 Pathology Tissue Exam by Pathologist 2.44 87.42 122.00

 

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