RVU Analysis
Analyze relative value unit components of Medicare physician payments
Understanding RVUs
How Medicare payments are calculated using Relative Value Units
Medicare payments for physician services are calculated using a formula based on Relative Value Units (RVUs). The payment formula consists of three main components:
Work Component
Represents the physician's work effort, time, skill, and stress related to providing the service. Typically accounts for 50-60% of the total payment.
Practice Expense
Covers the overhead costs of providing the service, including staff, supplies, equipment, and office expenses. Usually 30-40% of the total payment.
Malpractice
Accounts for the cost of malpractice insurance for the service. The smallest component, typically 3-5% of the total payment.
The Medicare Fee Formula:
Each RVU component is adjusted by a Geographic Practice Cost Index (GPCI) to account for regional cost differences, then multiplied by a national Conversion Factor (CF) to calculate the final payment.
RVU Breakdown for 99214
Office visit, established patient (moderate)