Dear Resident, Do you Understand Relative Value Units (RVUs)?

Measuring physician productivity with work Relative Value Units (RVUs)

News flash! Physicians are more interested in medicine than coding.

No doctor undertook the rigors of medical school in order to be an expert coder. But, when residency ends, some physicians will find themselves looking at employment contracts in which their compensation will be determined in part by productivity.  Often, the first two years will be  salary-based but will transition in all or part based to compensation based on productivity in the later years.

• Physicians who work in health care organizations may find that their “work productivity” is measured in work Relative Value Units.
• For physicians with these types of contracts, here is an explanation of RVUs.
• And in larger organizations with risk contract, compensation may factor in complexity.

 

How is productivity measured?  Work RVUs.

Skip this section if you understand RVUs.  Everyone else, read on.

Physician services are paid based on the fee associated with a CPT^® code.

The CPT^® code (developed by the American Medical Association) describes what was done, such as a new patient visit, a well child check or an appendectomy.

The diagnosis establishes the medical necessity for the service and can be the reason for a denial based on medical necessity, particularly for diagnostic tests or procedures.

In risk-based or value-based contracts, the diagnosis coding for a panel of patients can affect end of year settlements with insurance companies. Download CodingIntel’s Risk Adjustment Coding Guide and watch the webinar.

CMS assigns RVUs to CPT^® codes and updates the values annually. The AMA’s RUC committee recommends values, but they are finalized by CMS.

Each CPT^® code has three values.

1. work RVU,
2. practice expense RVU and
3. malpractice expense RVU.

The practice expense varies by whether the service is performed in a non-facility setting, an office or in a facility setting, such as a hospital or nursing home.

wRVU = work RVU,

pe RVU = practice expense RVU and

mp RVU = malpractice expense RVU.

Here’s the basic formula before we factor in facility versus non-facility and geography.

(Work RVU +Practice Expense RVU + Malpractice Expense RVU) * conversion factor = fee

Some services can be performed in both a non-facility setting (office) and facility (hospital, nursing home) setting and the payment varies by location.  The work RVUs are the same, but the practice expenses is different.

[(Work RVU * Work GPCI) + (Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor (CF) = Non-Facility fee

[(Work RVU * Work GPCI) + (Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor = Facility fee

Here’s an example of how that translates into payment for wound debridement.  The work RVUs are the same, but the practice expense value changes.  The payment is higher for the service done in the office, because the practice has the expense of the staff, equipment and office space.  The RVUs can change annually, but here is an illustration of the concept using 2025 RVUs.

2025 Non-facility RVUs and Payment		2025 Facility RVUs and Payment
11042 Debridement		11042 Debridement
wRVU	1.01	wRVU	1.01
PE RVU	2.73	PE RVU	0.68
MP RVU	0.13	MP RVU	0.13
Total RVUs	3.87	Total RVUs	1.82
Fee	$125.18	Fee	$58.87

Practices are paid based on the total RVUs but physician compensation is calculated based on the work RVUs. 

Geography makes a difference, too.  There are geographic practice cost indices (GPCIs) that vary by location, making the formula a bit more complicated.

[(Work RVU * Work GPCI) + (Non-Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor (CF) = Non-Facility fee

[(Work RVU * Work GPCI) + (Facility PE RVU * PE GPCI) + (MP RVU * MP GPCI)] * Conversion Factor = Facility fee

The fee varies based on location. The work RVU stays the same.

Let’s get back to compensation.

If physician compensation is based on productivity, it is the sum of work RVUs produced during a time period.

The practice management system counts the frequency of each CPT^® code and multiples the frequency by the work RVUs billed each month.  Usually, the physician receives a monthly report with budgeted RVUs to actual for the month and year to date.

The Medical Group Management Association (MGMA) publishes RVU data by specialty.

This is survey data, not data compiled for all physicians or all insurances.  Because it is survey data, the number of practices reporting can be small for some specialties. Also, only those practices with a professional manager who is likely an MGMA member reports their data for the survey. Keep this in mind of your administrator tells you that you are producing at the 25^th percentile of the MGMA norm for your specialty.

There it is.  When I started working in medical practices, productivity wasn’t a word we used for physician work.  But, today, employed physicians typically have part or all of their compensation based on the productivity, as defined by work RVUs.

You can download the CMS file with work RVUs here. Select the file RVU26A. It opens to a zip download. It’s a little more complicated this year, because there are two conversion factors, but the wRVUs don’t change. Select PPRVU2026_Jan_QPP.xlsx.  The first lines of codes start 0001F and then anesthesia codes start 00100.  But, you can search for RVUs for services you’ll perform. Work RVUs are in column F.