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Economics: Assigning a Value to a Code
What is the RUC?
The RUC (Relative Value Scale Update Committee) is the primary method by
which a specialty society may provide input into the Medicare Physician
Fee Schedule. The RUC was formed in 1991 as a way for medical specialty
societies to provide CMS with values that should be assigned to new or
revised CPT® codes. The RUC re-evaluates the entire RVU system every 5
years to correct overvalued or undervalued codes.
What is an RVU?
The relative values are the way in which a service or procedure is
valued and payment made to the physician. The RVU (relative value unit)
is a unit of measure for physician services based on a ranking of the
resources needed to provide a particular service. The total value for a
service is the sum of the RVUs for physician work, practice expense and
professional liability insurance. The more RVUs, the more the procedure
is valued. Considerations in assigning an RVU include 1) the time
required to perform the service, 2) technical skill and physical effort,
3) mental effort and judgment, and 4) physiological stress associated
with the physicians concern of an adverse outcome and intensity
How is the RVU set?
The RVU valuation is based on extensive survey data collected directly
by specialty organizations like the ACR. After collecting this data,
the ACR representative to the RUC presents a recommendation. This can
be a contentious step, since the overall Medicare budget is governed by
"budget neutrality" – in other words, if a new CPT code will drive up
Medicare spending, then overall reimbursement rates (as determined by
the Conversion Factor) will drop. This is a key thing to understand:
other specialty organizations realize that approving RVUs for a
procedure in radiology or radiation oncology will indirectly result in
lower reimbursement for their own codes, because overall spending is
maintained at a constant level.
What are RVUs for common radiology and radiation oncology procedures?
The RVUs for particular procedure can be found in the Federal Register Final Rule
2005 (Useful Links).
How are Practice Expenses determined?
The Practice Expense Advisory Committee was formed as a subcommittee of
the RUC to evaluate practice expenses using a resource based system.
These expenses are factored into the RVUs associated with each procedure
and include non-physician work, supplies, and equipment. As with RVUs,
the Practice Expense inputs for each procedure code are carefully
scrutinized by the RUC, since approving inflated values will result in
decreased reimbursement for all other codes thanks to budget neutrality.
Getting dizzy yet? Aren't you glad that the ACR is watching out for all of this stuff? Keep reading to find out more.
Author:
Sanjay K Shetty, M.D.
Chair and Councilor
Continue reading to learn about the details of the process.
Learn more:
- Creating a CPT® Code
- Assigning a Value to the Code
- Reimbursement
Other links:
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