A relative value unit based on a Current Procedural Terminology code assigns a standard work value based on a medical procedure performed by health care providers, according to Advancing the Business of Healthcare. The RVU represents the cost of a medical procedure in various locations.
Three components make up an RVU, including the actual work performed by a physician, the expense of the practice, and malpractice insurance overhead costs, notes AAPC. A geographic multiplier and a conversion factor alter the RVU to achieve a final cost billed to Medicare or Medicaid insurance plans.
The overall formula to determine the allowable costs billed to Medicare contains eight factors, says EyeNet Magazine. The work component of the RVU is multiplied by a budget neutrality adjustor and by a geographic location factor. This overall figure is added to the product of a practice expense unit and a practice expense geographic modifier. Then this total is added to two malpractice figures to achieve the overall, geographically adjusted RVU.
A doctor's office finds RVU number using the Physician Fee Schedule look-up portal on the Centers for Medicare and Medicaid Services website. . Providers can input a range of codes, a single code or a list of codes to locate the corresponding RVU. Doctors may limit the RVUs to one of four modifiers, or the practice can view all modifiers.