Relative value unit

Before RVUs were used, Medicare paid for physician services using "usual, customary and reasonable" rate-setting which led to payment variability. Each service in the fee schedule is scored under the resource-based relative value scale (RBRVS) to determine a payment. ==Use==

For each service, a payment formula contains three RVUs, one for physician work, one for practice expense, and one for malpractice expense. On average, the proportion of costs for Medicare are 52%, 44% and 4%, respectively. The three RVUs for a given service are each multiplied by a unique geographic practice cost index, referred to as the GPCI adjustment. The GPCI adjustment has been implemented to account for differences in wages and overhead costs across regions of the country. The sum of the three geographically weighted RVU values is then multiplied by the Medicare conversion factor to obtain a final price. Historically, a private group of 29 (mostly specialist) physicians—the American Medical Association's Specialty Society Relative Value Scale Update Committee (RUC)—have largely determined Medicare's RVU physician work values. ==See also==