Looking for a way to get a handle on Relative Value Units (RVUs) tied to Medicare payments or even use of RVUs in your own practice? Here’s the formula Medicare uses to calculate payments for the services you provide*:

[ (Work RVUs x Work GPCI) + (Practice Expense RVUs x Practice Expense GPCI) + (Malpractice RVUs x Malpractice GPCI) ] = Total RVU

Total RVU x Conversion Factor = Medicare Allowable Payment

RVU – Relative Value Units – RVUs are a part of the resource-based relative value scale (RBRVS).is a schema used to determine how much money medical providers should be paid. It is partially used by Medicare in the United States and by nearly all health maintenance organizations (HMO’s).This value is then multiplied by a fixed conversion factor, which changes annually, to determine the amount of payment. RBRVS determines prices based on three separate factors: physician work (54%), practice expense (41%), and malpractice expense (5%).

Three separate RVUs are associated with calculating a payment under the Medicare PFS:
● The Work RVU reflects the relative time and intensity associated with furnishing a Medicare PFS service
● The Practice Expense (PE) RVU reflects the costs of maintaining a practice (such as renting office space, buying supplies and equipment, and staff costs)
● The Malpractice (MP) RVU reflects the costs of malpractice insurance

GPCI – Geographic Practice Cost Index – A geographic practice cost index (GPCI) has been established for every Medicare payment locality for each of the three components of a procedure’s relative value unit (i.e., the RVUs for work, practice expense, and malpractice). Each of the three RVUs are adjusted to account for geographic variations in the costs of practicing medicine in different areas within the country. These adjustments are called GPCIs, and each kind of RVU component has a corresponding GPCI adjustment.

Conversion Factor (CF)
To determine the payment rate for a particular service, the sum of the geographically adjusted RVUs is multiplied by a CF in dollars. The statute specifies the formula by which the CF is updated on an annual basis.

 

Now First, let’s get the data you’ll need.

For the red data, the RVUS, you’ll need to go to CMS’ website and download the 2015 RVU data, compiled in a zip file. Please note that you’ll have to agree to proper use of CPT codes, which are a copyright of the AMA.

Once you download the data, open the file titled “PPRYY_V1223.xlsx.” This is a Microsoft Excel document. A list of CPT codes runs down Column A and to the right is the RVU data you’ll need:

** YY Refers to Year

Work RVUs – Column F
Practice Expense (PE) RVUs – Column I
Malpractice RVUs – Column K
Conversion Factor – Column Y

Now the blue data. In the zip file, open CYYYYY_GCPIs.xlsx, another Excel file.
** YYYY Refers to Year

This one’s a bit easier to use. Find your location and then look to the right to find:

Work GPCI – Column D
Practice Expense GPCI – Column E
Malpractice GPCI – Column F

You now have everything you need to calculate Medicare payments, based on RVUs, for the whole series of CPT codes.

Here are a couple of resources you can use to move a little more quickly through the process:

• The AMA does provide its own CPT search / RVU calculator, but again, you must agree to use the codes properly.