Relative value units (RVUs) measure provider productivity and directly correlate to revenue. They can be used to determine if it is time to bring an additional physician on board, re-evaluate the systems you currently have in place, and more. When it comes to RVUs in healthcare, complete and accurate documentation and optimal coding strategies are key. Aside from leaving your hospital or private practice vulnerable to compliance risks, deficient documentation and inaccurate coding often result in lower RVUs and, consequently, in reduced revenue. Knowing how RVUs factor into your bottom line is crucial for growing and maintaining a successful practice. Use our quick guide to learn more about RVUs and their impact on your financial outcomes.
Understanding Relative Value Units (RVUs)
In 1989, the Omnibus Budget Reconciliation Act created a new Medicare fee schedule, called the Resource-Based Relative Value Scale (RBRVS). It is used by the Centers for Medicare and Medicaid Services (CMS) and private payers to determine physician reimbursement. Under this schedule, each Current Procedural Terminology (CPT) code is assigned a specific relative value–the RVU. The RVU essentially accounts for the time typically spent with a patient, and the severity of the patient’s presenting issue. The use of RVUs eliminates considerations of payer mix.
RVUs are now the national standard for physician compensation. Independent provider groups should pay careful attention to RVUs. RVU data can help you set competitive prices, negotiate payer contracts, accurately project payments, grow your practice, and evaluate mergers and acquisitions.
How Are RVUs Calculated?
The Total RVUs are made up of three components, each adjusted by the CMS according to the geographic location.
- Physician’s Work (wRVUs) evaluate the time, training, and clinical skill necessary to treat a patient during a specific encounter. For example, the work RVU for an office visit is worth less than a full knee replacement because it requires less time, effort, and expertise on the physician’s part.
- Practice Expense (PE RVUs) calculate the costs of labor, building space, equipment, and office supplies. The value of this component often depends on whether the procedure is performed at the physician’s office or another facility.
- Professional Liability Insurance Expense RVU (MP RVUs) weigh the cost of malpractice insurance, MP RVUs are typically a smaller percentage of the total. Malpractice premiums may vary based on the provider’s specialty.
Most practices compensate their physicians using an RVU model. The level of work required varies from patient to patient. This model is based on the work performed rather than the number of patients seen.
Using RVUs to Maximize Revenue in Healthcare
Total RVUs can then be used to assess your practice’s performance and compare it against national benchmarks. It is a mistake to think that RVUs are irrelevant in a smaller practice – you may miss an important opportunity for enhancing your practice’s efficiency and profitability. They can serve as a barometer of practice efficiency and patient complexity, and provide valuable business insights, putting vital financial data at your fingertips.
RVU information can be used to your advantage in many ways:
- To check whether your fees are competitive, justifiable, and sustainable
- To assess payer fee schedules, which often include discrepancies between proposed and actual reimbursement
- To contrast payment programs from various payers, to make sure you’re being treated fairly
RVU data can be especially beneficial to smaller practices, particularly when:
Physicians want to grow their practices
If your RVUs are low compared to national benchmark data, but your patient volume is high, you should take a closer look at practice efficiency. If your RVUs are already high, you may want to think about hiring additional providers who can increase patient volume.
Physicians want to merge practices
RVUs can be used as part of the valuation process. How many RVUs does each provider generate? This is valuable information for ensuring that a consolidation is fair to everyone concerned.
Physicians want a hospital or health system to purchase their practice
Total RVUs is a metric that helps hospitals evaluate the volume and level of patient care that physicians typically provide. Assessing the practice’s track record allows providers to compare salary offers against current workload and earning power, and gives the hospital a methodology for deciding whether to move forward with an acquisition.
RVUs are an important metric for examining physician productivity, and practitioner effectiveness in delivering patient care. By analyzing your entire revenue cycle management (RCM) system and the scope of your practice, it is easier to see how each separate service contributes to your profitability so you can make sound adjustments as needed.
Here are several ways to increase RVUs in healthcare and optimize your revenue:
Document every procedure
In some practices, it’s common for routine activities to be omitted from the medical documentation. Make sure you document each procedure you provided; this will ensure you are properly reimbursed for your services.
Evaluate office efficiency
When are the most billing errors made? What obstacles are there to patient care? The more efficient you and your staff are, the easier it is for your practice to run smoothly. A well-informed, less-overwhelmed team can improve patient experiences and minimize errors.
Staying up to date on the most recent CPT codes leads to better reimbursements. Making education a part of your overall management strategy supports a healthy, productive practice.
Use RVUs to boost performance
Incentivizing RVUs can help increase productivity and the patient experience. Physicians are often paid for wRVUs, not insurance reimbursement or patient payments. This ensures that your team is focused on patient care rather than collections.
Streamline payment processes
RVUs are directly aligned with accurate and complete documentation. This, in turn, impacts revenue. Implementing robust systems with built-in coding quality controls helps ensure that payments are accurate and timely.
Compare your RVUs to the national average
A quick comparison can provide insights into how your practice measures up against others. RVU medical data can be used to gauge where you may need to expand to stay competitive in your area and provide the services that will draw patients to your practice.
To get started on using RVUs in healthcare properly and ensure the success of your practice, get expert advice from a trusted RCM partner that can help you address challenges specific to your business.
Discover Ventra Health Advisory Solutions
At Ventra Health, our team of advisors can develop customized strategies to help streamline your processes. Backed by decades of expertise, Ventra Health is well-versed in the complex healthcare landscape. Reach out to schedule a consultation today – www.ventrahealth.com.