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Episode 38: RVUs and CPT codes: Understanding How You Get Paid

The Private Medical Practice Academy

Episode 38: RVUs and CPT codes: Understanding How You Get Paid

June 23, 2021

Episode 38: RVUs and CPT codes: Understanding How You Get Paid

Physician compensation is often based on RVUs. But, in reality, RVUs actually have no monetary value.  So in order to understand productivity and revenue you have to know what an RVU is, how it’s determined and how to determine what it’s worth. In this episode, you'll get all this info and more.

RVU stands for relative value units and are basic component of the Resource-Based Relative Value Scale (RBRVS.) RVUs define the value of a service or procedure relative to all services and procedures. It’s based on the extent of physician work, the clinical and nonclinical resources needed and the expertise required to deliver the service to the patient.

When you are actually coding and billing for a service, you do not assign an RVU code. You assign a CPT code. And each and every CPT code has a dollar amount assigned to it by CMS. When your practice receives reimbursement from Medicare or a commercial payor, they pay you according to the CPT code. There is no direct payment for any service based on an RVU.

Key point: You need to be able to convert back and forth between CPT codes and RVUs—it’s nothing more than a formula. Here's a link that will allow you to  convert from CPT to RVU.

Under the RBRVS, payment for physician services is determined by: 

  • Total RVUs
  • Geographic Practice Cost Indices (GPCIs)
  • A conversion factor

There are actually 3 types of RVUs that go into the calculation of the total RVU. 

  • Work RVU 
  • Practice expense RVU
  • Malpractice RVU

Key Point: The place of service significantly factors into reimbursement. CMS makes a distinction and organizes all places of service into 2 categories: 

·   Non-facility- usually refers to the physician’s office 

·   Facility – inpatient hospital—even if its an outpatient clinic in an inpatient hospital, ambulatory surgery center or skilled nursing facility

If you go to the CMS physician fee schedule lookup you’ll notice that for each CPT code there’s one amount of payment if done in your office (the non-facility) and another for the facility. Essentially CMS compensates you more if you perform the service in your office because you are incurring the overhead. 

An RVU has to be multiplied by a dollar conversion factor (CF) to become a payment. The conversion factor converts the value expressed in RVUs to dollars and you can see the conversion factor on the CMS physician lookup schedule. 

The final Medicare payment for each CPT code is the sum of the 3 geographically weighted RVU types multiplied by the Medicare CF.

[(work RVU x work GPCI) + (PE RVU x PE GPCI) + (MP RVU x MP GPCI)] x CF = final payment

Have RVU, CPT and how you actually get paid questions?   I have your answers. Join me on Monday, June 28th at 8pm EST for a live Zoom Q&A. Sign up here" https://www.thepracticebuildingmd.com/06-28-2021-q-and-a

For a full searchable copy of the transcript, https://www.thepracticebuildingmd.com/podcast

If you'd like to hear more tips on how to start, run and grow your practice and related medical businesses, please sign up for my newsletterat https://www.thepracticebuildingmd.com.   

Be sure to join my FB group, The Private Medical Practice Academy to be part of a community interested in starting, running and growing their private medical practices and leveraging them into multiple revenue streams.

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