In the medical billing industry, Relative Value Units, also called RVU, are a specific classification of units used to determine the monetary value of a provided service. This system allows healthcare professionals to be fairly compensated for their work.
Hospitals or physicians tabulate the services and treatment details, conforming to industry criteria. Hospitals then must compensate doctors in accordance with RVU after being paid by the patient or insurance company. The RVU decreases the odds of discrepancies.
The Reason RVU Is Used
The RVU is used to standardize a doctor’s work to get as close to an apples-to-apples comparison as possible to ensure everyone is compensated fairly. While the pure volume of work performed by a doctor will directly increase their RVU, other factors, like how complicated the procedure is and the potential liability if things go south, also comes into play in how the RVU is calculated.
In short, RVU standards will vary based on the doctor’s practice or their field of specialization. For example, the RVU for doctors is higher when they perform complicated and challenging procedures such as brain or heart bypass surgeries. This results in a surgeon’s compensation being relatively high simply due to the procedure’s complexity.
It is important to note that RVU standards will differ according to a doctor’s practice or specialty. In complex and challenging procedures like brain or heart bypass surgeries, doctors’ RVUs are higher. The RVU depends not only on the number of procedures the doctor performs but also on the intensity of those procedures. Because of the complexity of the procedure, a surgeon’s compensation is relatively high. This explains why brain surgeons get paid more than dentists.
How RVU Is Determined
One cannot calculate the RVU without knowing what the procedure was and how long it took to complete. In addition, the RVU is determined by the type of procedure, the level of difficulty involved, and the amount of time spent performing the procedure.
Medical billers use this information to determine the appropriate RVU for each procedure. They do this by comparing the procedure to others that have been done before and calculating the average time needed to complete the procedure. Once the average time is determined, the biller can then apply the same rate to all providers who perform the same procedure.
This allows them to compare one provider’s performance to another’s and provide fair compensation to both. It also ensures that no provider gets overcompensated because they did something extra difficult or took longer than usual.
Practice expenses are also factored into the calculation of RVUs. These include the cost of equipment, supplies, and staff required to perform the procedure. Other equipment costs may include the cost of anesthesia machines, operating rooms, and so forth.
Malpractice insurance is also calculated into the equation. Malpractice insurance covers any legal action taken against a physician for negligence during the course of providing care. This generally amounts to 3% and is often counted separately.
How RVU Is Calculated
RVU is calculated by multiplying the total number of minutes spent on the procedure by the practitioner’s hourly rate. This gives you the total number of hours worked on the procedure.
For example, let’s say a doctor performs a surgery that takes two hours. He charges $100 per hour. If he does ten surgeries in a day, his total revenue would be $1,000. If he only does five surgeries in a day, he would make $500. However, more complicated scenarios may arise, resulting in a different number of hours worked. Let’s say a surgeon has 20 patients scheduled for the day. Each patient requires 30 minutes of his time. However, some patients require additional time while others need less. Some patients require multiple visits while others only require one visit. All of these things will be taken into account when calculating the RVU.
Advantages of the RVU
There are many advantages to using RVU. One advantage is that it helps to prevent fraud. Fraud occurs when a provider bills for services that were never rendered. When using RVU, there is a built-in system to help prevent fraudulent claims.
Another benefit is that it helps to reduce errors. Errors occur when a provider bills for a service that was not actually performed. Using RVU helps to eliminate this problem since the provider knows exactly how much time was spent on the procedure.
If a provider bills for a procedure that took three hours instead of two, they know that they billed incorrectly.
Using RVU also helps to keep track of the actual time spent on the procedure. This means that the provider can accurately report the time spent on the procedure to the payer.
It also helps to ensure that the provider is getting paid correctly. Since the provider knows exactly how long it took to perform the procedure, they can easily see whether they are underpaid or overpaid.
Disadvantages of the RVU
While the RVU system is very beneficial, it does have its disadvantages. One disadvantage is that it doesn’t always reflect the true value of a particular service.
When a provider bills for a particular procedure, they sometimes charge different amounts. There are many reasons for this, including the complexity of the procedure, the risk associated with the procedure, and the provider’s skill level.
Since the RVU is based on the average time it takes to perform the procedure, it doesn’t take into account the individual differences between providers. This means that a provider could spend more time on a procedure than the average but still receive the same RVU.
Another disadvantage is that it doesn’t allow for variations in the quality of care. A provider might spend more time on a complex case, but that doesn’t mean they should be paid more. Overall, the RVU system tends to favor those who specialize in simple cases.
The Next Step
The RVU is an integral part of simplifying the medical billing process, assuring all involved receive the highest level of return for their efforts, leading to far better outcomes for the patients needing care.