Relative Value Units (RVUs) to Measure Success in Your Medical Field

RVU’s is a copyrighted scale and resource-based methodology which has been in
wide use throughout the industry since 1988. The relative value units (RVUs) for
professional and technical component splits are the same as the global service RVU.
Medical Procedure Charges (MPCs) are created for the component splits by changing
the conversion factor, not by splitting the RVUs by a percentage. The conversion factor
used is more accurate because it takes into account all CPT codes performed by the
physician, along with the frequency (count) of each service.

URS Billing Services has developed fee schedules using Relative Values, Conversion
Factors and zip code specific criteria. The Relative Values (RVs) are used to develop
fees specific to the medical practice’s geographical area. RVs weigh medical
procedures relative to one another on a scale linked to difficulty, work, risk and the
material cost of the procedure. The second factor can be characterized as simple
statistical profiling of charges in the geographical areas.

Percentiles are frequently misunderstood and inaccurately utilized. URS Billing Services
bases its findings, methodology and current databases, on fees in the 75th percentile,
not necessarily 75% of the highest range. If the fee for a given service is at the 75 th
percentile, then it means that 75% of the submitted charges for that fee is higher than
your fee.

In calculating fees, we used two percentiles (75.0% & 80.0%) because of current fee
structures and patient demographics. URS Billing Services does not advise using the
95th percentile because of the current political atmosphere of cost containment.

Moreover, consistent high-level billing could be harmful to the financial well-being
of the medical practice. As managed care networks become more prevalent, high
priced physicians may find themselves without an invitation to be involved with some
healthcare organizations. Equally painful, physicians may find themselves losing
patients who are increasingly unable or unwilling to tolerate high out-of–pocket medical
expenses.

Also, keep in mind, Insurance Adjustments indicated on the ‘explanation of benefits’
show what your practice agreed to accept in your contractual agreement with that
provider. Adjustments are based upon a variety of reasons, including such factors as
who was the primary physician, location of service, equipment ownership and the role of
the physician in the overall treatment of the patient. In cases where adjustments appear
unusually high compared to reimbursement amounts, it generally reflects any one or
combination of the above reasons. It does not necessarily mean that charges should be
lowered or raised.