Evidence based insights into physician compensation, RVUs, contracts, investing, leadership, and the economics of healthcare.
Life and Business in Medicine.
What Is This About?
Every medical professional that I met in this 25 year career knows their salary. But very few know where that number came from.
RVUs affect your contract, your productivity, your bonuses, your career satisfaction, and eventually your family’s well-being.
The problem is medical professional are being paid based on a system that we were never taught in school.
About 32,000 medical students graduate from medical school and more than 40,000 residents enter the work force, each year in the United States. And most of them do not know the basic information about RVUs. This is much necessary training. Whether you receive a salary, or you get paid by production; you work in an academic institution or a small rural hospital; you are a seasoned practitioner or a new graduate; your compensation is influenced by RVUs.
What is an RVU?
RVU stands for Relative Value Unit. It is a way for the government to regulate the amount of money that your institution and you get for services that you provide to your patients.
There are codes for each of our interactions with patients. For example, non-surgical interactions in office or in the hospital get a code called, E/M for “Evaluation and Management”. Procedure or surgical interactions (i.e. office procedures or surgeries in the operating room) receive a different code called CPT.
Some of the most used E/M codes are 99212, 99213, 99214 and 99215. Let’s choose one, 99212 for example. It reflects a very simple encounter, probably just interacting with a patient for 10 minutes. And 99215 reflects addressing more severe clinical problems in a 40 minute office encounter. The government assigned code 99212 a value of 0.7 RVUs and 99215 gets 2.80 RVUs (based on 2026 data).
If we give a hypothetical $40 value to one RVU (which is not far from reality), a medical professional just made $28 when they spent a 10-minute office encounter with a patient, and $112 for a 40-minute office encounter.
Each portion of your interaction with patients has a code, that in turn has an RVU value assigned to it. For example, if you see a patient for a routine visit, but you also address another issue, let’s say, abdominal pain, then the routine visit gets one E/M code and the abdominal pain gets another one. And each of them gets a different RVU value. Or in case of surgeons, if you perform two different procedures during the same surgery in the operating room, each of them gets a different CPT code. In my case, for example, a hysterectomy and a cystoscopy, each get their own CPT code.
Why Should Medical Professionals Care?
Your income, regardless of your type of practice, is affected by RVUs. It doesn’t matter if you work for a salary, or by production, or perhaps a mix of both; regardless of your specialty, surgical or clinical, RVUs were used to determine your compensation. Furthermore, as providers, our decisions on relocation, specialty and subspeciality training are also affected by RVUs. RVUs affect a big portion of your professional life. You just don’t know about it.
So, who decides all this? RVUs are published by the Center for Medicare and Medicaid Services or CMS. But CMS does not work alone. There’s another powerful group involved. A special committee managed by the American Medical Association. The name of this committee is the Specialty Society Relative Value Scale Update Committee or more easily the RUC. CMS receives recommendations provided by the RUC committee and creates a list called the Medicare Physician Fee Schedule. This is a list with the value of each RVU for each portion of your encounters, with each of your patients.
We will talk about the RUC and the Medicare Physician Fee Schedule (MPFS) in our next blog.
The Bottom Line
Every interaction with a patient gets a code. Whether this is an office evaluation, a surgery, an X-ray reading or weight-loss counseling; each of these interactions gets a code called (i.e. E/M and CPT). Each code gets an RVU value. And each RVU gets a dollar amount assigned to it.
Key Takeaways
· RVUs measure physician’s work.
· RVUs influence compensation.
· Understanding RVUs is paramount to increase your compensation.
“You cannot get a fair compensation if you don’t understand how your work is measured.”
MD&D Quote of the Day
What’s Next?
Next: Why RVUs Were Created and Why They Still Control Medicine.
A short history of the RVU
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Bruno Casanova, MD
Founder & Host
Medicine, Dollars & Decisions
Life and Business in Medicine.