RVUs and Why They Matter

Insurance bundling often undervalues CMT with exams. Dr. Evan Gwilliam explains RVUs, Medicare’s pricing model, and why understanding the RBRVS system is key to fair chiropractic reimbursement.

Referenced Link:

E/M and CMT Bundling Prevention Toolkit

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Transcript:

Marc:
Dr. Evan Gwilliam and I have been talking quite a bit about this issue that we run into with insurance companies bundling in the CMT along with the examinations or the EM codes. In fact, he recently has put together a full toolkit. We encourage you to really look at it closely. You want to read it all. It’s super important. But one of the key components in this whole conversation, Dr. Evan is, is centered around the RBRVS system, or RVUs, or relative value units, and all of those different things. So let’s do a quick dive. We’re going to do a couple of part series here. And let’s first talk about the RVUs, the RVRS system, and all of those things. Talk to us a little bit about this and what it is.

Dr. Gwilliam:
So, if you have a CPT code book and you flip it open, there are 1000s of codes in there, every one of them has a value, you know, because some of them are more intense than others, and some require more work, and some require less. And so there is a system that has been devised to determine the value of each of those codes, that are relied upon primarily by Medicare. And then by extension, others will other private payers and other entities will look at what Medicare says is the value of a service in order to figure out what their pricing.

So the system is called the resource-based relative value scale. And so if you kind of break it down, they look at what resources are required to perform this service, or the CPT code. And what they do is they assign a numerical relative value unit to each CPT code. So we talked about RVUs or relative value units, and they’re relative to each other. So if something has a relative value of two and the other one is one, then the one that said two is worth twice as much as the one. And if we were to look at it logically, we’d go, well, that service takes twice as much work, it’s twice as hard, it’s twice as risky, that sort of thing. So, for Medicare, they take that, that RVU, and they multiply it by a geographic factor, and their kind of, their conversion factor, which is their budget for the year, which is around 34 bucks, give or take. And that’s how Medicare determines how much they’re going to pay for a service. But again, other private payers will also look at those RVUs to help them understand a value, but it goes deeper. Would you like me to go deeper?

Marc:
Yeah, let’s dig in and what? Okay, and I think this is kind of part of it, right? So Medicare has this one key dollar amount that they base on their budget, right? And then, in theory, that $1 amount, then is kind of the multiplier, right? So it’s the first in the calculation, and they multiply it times the RVU for each one of the codes. So in your example, you gave the two versus the one. If the R, if Medicare is numbers $30, then the one is worth $30, and the two is worth $60, and 100 would be worth $3,000, right? Or whatever. So that’s how all of those things are built out, right?

Dr. Gwilliam:
Right! And, you know, they review this, they look at these values from time to time, and ideally they’re updated to reflect the cost of doing business and things like that. So they actually break it into three components. There are three components that feed the RV there’s the physician work, RVU, which is the relative time, skill, and intensity that is required for a clinician to perform a service. So, how much physician work? You know, how intense is it? How much? How laborious is it for the physician? Then there’s the practice expense. RVU, which is the non-physician costs of doing a service. This would be the cost of providing the staff, the equipment, the supplies, the facility, the place where you do your work, you know, keeping the lights on, and that sort of thing. And then there’s the malpractice cost, which is, how much does it cost to insure you? Because this thing is risky. So the malpractice RVU is very significant for things like surgeries, which are very risky, relative to things like chiropractic manipulative treatment. So it’s going to have a low malpractice RVU.

And so they take these three things: the amount of work, the cost of having a practice, and the malpractice or risk associated with it, and the cost of ensuring it against the risk. They lump those together to determine these numbers, they talk to the experts, they talk to these associations in these different specialties, so they can come up with these numbers for every specialty out there. And so, you know, they talk to the ACA and the ICA and others, I believe, and they get the information, and they come up with the relative value units for the services that we provide, and then for all the others in the CPT code book.

Marc:
Yeah, so that’s how all of these things are put together; that’s an important component to understand how some of the pricing works. Now, insurance companies they don’t always use these, although they will sometimes use them to defend their own figures, right? But they don’t always use them as an exact multiplier. In fact, some states, there’s a lot of states, are actually working on some fair pay legislation that ultimately leans into the RVUs and says, “Hey, this is a, this is a an unbiased way and an unbiased methodology to ensure that that there’s at least some level of fair pay,” although there’s some question in that too. We’ll cover that in one of the next videos. But all of these factors do come into play, and it’s important to help us understand how some of these payment mechanisms work. Anything else you want to throw in, in regards to RVUs and this system?

Dr. Gwilliam:
Just as a segue, we’re going to explain to you why this matters with E/M codes and CMT. Okay, you got to understand the RVUs, and you’re going to see how this makes it clear that we need to get paid fairly for what we do and why it’s not working the way that the system often goes. So we’ll show you that in the next one.

Marc:
Catch you next week.