The world of medical billing, procedures and medical coding is rife with terminology that seems to change all the time. This includes abbreviations that you might not be familiar with like RVU.
What Is Medical Billing RVU?
In the world of medical billing, RVU stands for Relative Value Units. Total RVU-based compensation requires paying a physician base on the type of work they administer in the process of treating a patient.
If you aren’t familiar with the term, RVU is a term that’s found most often in the jargon of Medicare and Medicaid reimbursements. Though there are certainly a lot of commercial health insurance companies that have started to use it as well. So, it’s certainly going to start becoming more and more prevalent as time goes on. Especially with things like escalating public health concerns.
Accurately assess RVU involves several key factors. Each influences the final amount of reimbursement the physician receives from the payer. Whether that payer is Medicare, Medicaid, or a commercial insurance provider.
What Are The Main Factors Used To Determine RVU?
Several key factors can affect the overall amount of money that a physician can be reimbursed. Each medical provider typically indicates the amount that is charged for the medical services administered. Though it’s worth noting that the full amount isn’t always paid, or payment is sometimes delayed due to medical billing coding errors.
To accurately assess the Relative Value Units the following factors need to be carefully considered and accurately coded.
The Type Of Work The Physician Performs
This is one of the most important factors in assessing RVU. It needs to take into account not only the amount of time, but also the skill level, credentials, and the training that was necessary to complete the medical service or procedure. This includes diagnostics.
For example, a physician who performs minor outpatient surgery will typically be paid more and have higher valued services than performing a routine checkup. Of course, this escalates for major medical procedures where advanced training and a sophisticated ability to interpret diagnostics is required, which will nonetheless generate a higher RVU.
The Basic Cost Of Maintain The Medical Practice
This is an umbrella consideration that takes into account a lot of smaller, yet not insignificant factors. This includes some of the nuts and bolts things like the cost of paying rent, as well as paying your administrative and clinical staff. When it comes to accurately calculate RVU for the basic cost of maintaining your medical practice, then you also need to consider the costs associated with both purchasing and maintaining equipment, as well as essential supplies.
As you can imagine this aspect of accurately calculating RVU requires an in-depth meticulous approach. Even something as seemingly simple as latex gloves, disinfectant, and exam supplies can all add up over the course of a fiscal quarter or a year. If possible, it helps to apply comprehensive analytics to make sure all the important details are being taken into account for figuring out the cost to maintain your medical practice and how to apply it to RVU.
Your Medical Practice’s Liability Costs & Insurance Expenses
It’s an unfortunate reality of maintaining a medical practice and medical license that you need to carry malpractice insurance as well as taking into account the liability expenses that might range from one provider to the next.
This means that physicians with certain specialties, like surgeons and obstetricians are likely to have higher malpractice insurance premiums and liability costs than say a primary care physician who provides general care at a clinic.
How Do Relative Value Units Affect Fees & Reimbursement?
It is very important to understand how relative value units work as they will essentially help you assess how to plan for the appropriate level of compensation. In many ways, RVUs provide an essential basis from which practices of all sizes can calculate their own fees in a way that is accurate, and consistent with industry standards.
Though relative value units don’t just apply to physicians, and small practices with just a solo practitioner providing essential care to patients. It’s also important for your employees and administrative staff to understand how RVU works.
The current medical billing system in the United States is admittedly complex and can seem confusing at times. It is rife with complicated fee schedules, constantly evolving CPT codes, and other factors like geographical adjustments, conversion factors, modifiers, and sliding scales for physician’s fees. Providing your in-house clinical and administrative staff with information about the nuts and bolts of how you assess your small medical practice’s relative value units, helps them understand the need to optimize performance from the smallest of details to the largest.
The Benefits Of Outsourcing Your Medical Billing Needs To A Third Party
When you get right down to it, your relative value units are also a reflection of your medical practice’s overall cost efficiency. While things like higher malpractice insurance and liability costs might be outside of your immediate control, there are other things like the cost to maintain the medical practice that you can strongly influence.
One of the biggest areas where solo and small medical practices struggle to maintain financial efficiency is in their medical billing practices. Things like coding errors, data entry errors, or missing information that is accidentally submitted to the payer can lead to claim rejections or claim denials. Not only can these issues lead to interruptions in your practice’s revenue stream, but they will also take up a significant amount of your administrative staff’s time. This ultimately increases your long-term operating costs in manhours paid out without any compensation for those manhours coming in.
By outsourcing to a third-party medical billing specialist like Operant Billing Solutions, you can rest assured that experienced professionals are tending to your medical billing process with a keen, and discerning eye. This helps to medical billing errors before they are entered into the system. The net effect is an overall reduction in your administrative costs, which will be reflected in a more cost-efficient RVU.