What are RVUs and How Do They Impact Payment

June 26, 2017
Rick Gawenda

I receive many questions asking how does the Centers for Medicare and Medicaid Services (CMS) determine their payment for each CPT code. CMS utilizes the Resource Based Relative Value Scale (RBRVS) to determine payment for each CPT under the Medicare Physician Fee Schedule (MPFS). The RBRVS is a schema that assigns procedures performed by a therapist or other medical provider a relative value that is adjusted based on the providers geographic region. This geographic region adjustment is accomplished using geographic practice cost indices (GPCI). This value is then multiplied by a fixed conversion factor, which changes annually, to determine the amount of payment for each CPT code.

CMS has 112 different geographic regions located across the United States, Guam, Virgin Islands and Puerto Rico. In addition, many states have 2 or more geographic regions so it’s possible that providers of outpatient therapy services are paid a different amount for the same CPT code even though both providers are located in the same state since one provider could be located in one geographic region and the other provider is located in a different geographic region.

RBRVS determines prices based on three separate factors (relative value units (RVUs)): physician work (52%), practice expense (44%), and malpractice expense (4%). Percentages are average percentage contributions of each factor, as computed by the Government Accountability Office in 2005.

In this article, I will discuss what components are included under the physician work RVU, practice expense RVU and malpractice RVU. In addition, I will provide examples using the moderate complexity physical therapy evaluation, moderate complexity occupational therapy evaluation, therapeutic exercise and manual therapy to show you how CMS uses a specific formula plus a geographic region adjustment to determine the price for each CPT code paid under the MPFS. I will also show how physical therapists and occupational therapists are paid different amounts for the same CPT code based on where they practice in the United States.

Physician work component includes the following:

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This article is not intended to and does not serve as legal advice or as consultative services, but is for general information purposes only.

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  1. This is great information thank you. So My question is when negotiating California Work comp contracts and the fee schedule says you can charge 120% of the CMS fee schedule by your locality, and then they want to pay 75% of the Work Comp Fee Sch, what are you dealing with? How does one estimate what you can expect when W/C also does the MPPR. They take a PPO deduction and a contract reduction.

    1. You would have to estimate based on the contract you have signed with the workers comp carrier. With MPPR, it can be difficult to estimate and that is why it’s important to read your explanation of benefits and look at the MPPR and what you are actually paid for each CPT code billed that visit. This will change as you bill different CPT codes each visit and/or different combinations of CPT codes billed each visit.