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RVU Calculator: How It Works, How to Use It and What Medical Billers Should Know

An RVU Calculator is a tool for medical coders, billers, physicians, practice managers and other health professionals. It helps them estimate the value and possible Medicare payment, for a medical service.

RVUs or Relative Value Units are used in the U.S. Healthcare system to show the resources needed for physician services. Than focusing only on the dollar amount of a procedure RVUs explain the relative work, practice costs and professional liability expenses that come with that service.

Using an RVU Calculator can simplify these calculations. Still it is vital to understand what the numbers mean and what they do not mean before relying on them for billing or financial decisions.

What Is an RVU Calculator?

RVU Calculator is an application which makes use of data in RVUs and Medicare conversion factor to compute the payment for a particular medical procedure or service.

Some of the data values used in a common calculator include:

• Work RVU
• Practice Expense RVU
• Malpractice RVU
• Total RVU
• Units
• Conversion factor
• Geographic Practice Cost Index (GPCI)
• Medicare Locality
• Place of Service

The concept is very simple because the RVU values are used to show the relative value of the resources for the medical services while the conversion factor will provide a way of estimating the dollar value.

For instance, a medical coding specialist would want to know the relative value of one medical coding service to another.

What Does RVU Mean in Medical Billing?

Relative Value Unit is abbreviated as RVU.

The Medicare Physician Fee Schedule includes relative value units as a component of its pricing system. Medical services have distinct RVUs because each of them takes different amounts of physician effort, resources, and costs of professional liability.

Usually, RVUs consist of the following three main parts:

Work RVU

Work RVU or wRVU is a component that takes into account physician's efforts in delivering medical services.

This unit is based on such aspects as:

• Time
• Technical skills
• Brain effort
• Judgment
• Risk associated with the service

Work RVUs are crucial for evaluation of physician productivity in healthcare organizations.

Practice Expense RVU

Practice Expense RVU or PE RVU is a component that includes expenses of a practice.

They may include the following expenses:

• Clinical staff
• Medical equipment
• Medical supplies
• Other office expenses
• Administrative expenses

Practice expense values may vary depending on whether the service is delivered in facility or non-facility setting.

Malpractice RVU

Malpractice RVU or MP RVU, which is also called the professional liability insurance component, includes costs of professional liability associated with delivery of a service.

How Does an RVU Calculator Work?

The basic formula can be presented in a straightforward manner.

First, all three RVUs are added up:

Total RVUs = Work RVUs + Practice Expense RVUs + Malpractice RVUs

And the result can be multiplied by the relevant Medicare conversion factor in order to get the approximate payment amount.

The formula will look like this:

Payment Estimate = Total RVUs x Conversion Factor

But the actual Medicare payments calculation can sometimes be more difficult because various geographic adjustments, locality, place of service, payment rules, modifiers and other factors can influence the final amount.

This is why an RVU calculator can be seen as a useful estimating tool, but not as a guarantee of the exact amount that will be reimbursed by the payer.

How to Use an RVU Calculator

Using the RVU Calculator is normally easy.

Step 1: Input the CPT Code

Begin by inputting the CPT code related to the service being analyzed.

For instance, in case you are analyzing a particular evaluation and management service, you could input codes such as 99213.

It is always imperative to ensure that the CPT code is accurate before computing RVUs.

Step 2: Input the RVU Value

Depending on the particular RVU calculator being used, you will need to input the:

• Work RVU
• Practice Expense RVU
• Malpractice RVU

These are automatically populated in case your RVU calculator has the CPT/RVU database.

Step 3: Input the Number of Units

Input the units that relate to the service being examined.

For a service carried out once, the number of units may be one.

Multiple units will increase the RVU totals.

Step 4: Input the Conversion Factor

Conversion factor of Medicare is utilized in converting RVUs into a payment figure.

Since this payment information changes from time to time, ensure that the right conversion factor is applied.

Step 5: Examine the Output

Your RVU calculator output will consist of:

• Work RVU
• PE RVU
• MP RVU
• Total RVU
• Total units
• Estimated payment

What Is the Difference Between RVU and wRVU?

There is a relationship between RVU and wRVU, but the two are not one and the same.

RVU stands for the general value that is given to the service provided. The wRVU is specific to the physician work RVU.

For instance, an institution in the health sector would calculate physician productivity using wRVUs since they concentrate on the physician work portion only.

This becomes vital in the study of physician compensation or physician productivity.

Why Are RVUs Important in Medical Billing and Coding?

The importance of RVUs is that they give a uniform method of assessing the resource utilization of various medical procedures.

Some ways that medical billers and coders may use information regarding RVUs to:

• Reimburse patients
• Study CPT codes
• Determine payments
• Analyze physician performance
• Manage revenue cycle
• Plan finances in a medical practice
• Compare various services

For physicians and medical practitioners, RVUs are critical for assessing productivity and reimbursements of various services.