Those interested in the ins and outs of being a medical billing specialist may have come across a few abbreviations that are unfamiliar to them. Today, we thought we’d talk about one of them: What is an RVU in medical billing?
In medical billing, patients or insurance companies submit claims to assist in reimbursement. This reimbursement is dependent on RVUs, which stands for relative value units. It is critical to Medicare, Medicaid, and commercial health insurance reimbursements.
Total RVU-based compensation requires paying a doctor dependent on the type and amount of work they do in treating a patient. In order to determine the RVU, a number of factors must be considered.
There are a few different factors that can impact the amount of money that can be reimbursed. Each medical provider will indicate the amount that is charged for the medical services provided, but the full amount isn’t always paid.
How To Understand Relative Value Units
We determine relative value units by considering three factors and adding them up. These include:
- The work the physician performed: This factors in the amount of skill, time, and training that was required to complete the medical service or procedure. For example, physicians working on surgeries will pay more than a routine checkup. A major medical procedure requires more skill and more time, so it will generate a higher RVU.
- The cost of maintaining or operating a medical practice: These factors include rent costs in addition to the price of equipment and supplies. It also includes the costs associated with paying staff members.
- The liability expenses: Malpractice or liability expenses will range from provider to provider. In other words, doctors will have higher liability premiums due to the nature of their jobs. For example, primary care physicians won’t have as much when compared to brain surgeons or an obstetrician.
It is critical to understand how relative value units work; it will help you know how to plan for compensation and provides a basis from which practices can calculate their own fees consistent with industry standards. Your employees should also understand how this works.
The American medical system can seem confounding with fee schedules, CPT codes, geographical adjustments, physician fees, conversion factors, and more. But it’s the very exacting nature of each of these terms and more that help us all navigate the world of modern American medicine.