Exploring the history and mechanics of relative value units (RVUs) to demystify and support constructive use.

Photo of a calculator, stethoscope, and finances

“Why is clinician compensation often tied to wRVUs, and what exactly are they?”

“What is a reasonable range for wRVUs for inpatient teams? For community-based teams?”

“What program design features impact our wRVUs, and what can we do to optimize?”

These are common questions among physicians, advanced practice providers, and program managers. In this piece, we will attempt to shed light on the “why” behind physician work RVU (wRVU) compensation targets, and provide some ideas to help you manage expectations and improve your wRVU output.

RVUs: What are they and how do they get calculated?

Relative Value Units (or RVUs) are the weights given by the Centers for Medicare and Medicaid Services (CMS) under the Medicare Resource-Based Relative Value System, which was authorized for use in 1989 federal legislation when the Medicare Physician Fee Schedule was introduced, and implemented in 1992. There are three types of RVUs: 1) physician work RVUs (wRVUs); 2) practice expense RVUs; and 3) professional liability insurance RVUs. The combination of all three is intended to cover the expenses of each clinical service. wRVUs are the largest component, and account for the time, skill, and effort needed to deliver each specific service. You can look up RVUs associated with specific codes for 2023.

The data for developing the original wRVUs came from a 1988 Harvard study that gathered a panel of physicians to conduct time studies and estimate the work involved in a wide variety of patient care services. Since then, CMS has updated and refined the RVU assignments—and is required by law to review them at least every five years, as well as when new service codes are developed. For these updates, CMS relies heavily on recommendations from the American Medical Association’s Specialty Society Relative Value Scale Update Committee (aka “the RUC,” pronounced “ruck”). There is controversy in RUC recommendations, and critics have noted that the RUC may have historically over-valued physical procedures and under-valued cognitive services.

Regardless of its flaws, wRVUs will tell a story of productivity to many of your leaders and stakeholders.

Regardless of the controversy, RUC recommendations influence the final Medicare physician fee schedule, which is then used as a benchmark for payment by most private payers as well. With this near-universal system, over the years, health care administrators have come to consider wRVUs as a proxy measure of clinician productivity and often use it as a performance factor when calculating compensation. Therefore, regardless of its flaws, wRVUs will tell a story of productivity to many of your leaders and stakeholders.

The positives of this system are worth noting. Before 1992, CMS largely paid for services based on billed charges, which varied widely and had little correlation to resource intensity. There were significant opportunities to “game the system,” and there was no consistency of methodology across payers, making it difficult for providers to plan and budget. In the context of this history, the Diagnosis Related Groups (DRG) system for inpatient Part A services and the billing codes with weighted RVUs for professional services (Part B) have brought much-needed consistency and rationality to health care payment, albeit with limitations.

The 2023 CMS revisions to RVU weighting factors and methodology include positive changes related to Evaluation and Management visits, allowing either time or medical decision-making as factors in visit level.

The 2023 CMS revisions to RVU weighting factors and methodology include positive changes related to Evaluation and Management visits, allowing either time or medical decision-making as factors in visit level. In addition, under the 2023 changes, many prolonged service codes were added, deleted, or modified. CAPC launched new tools and webinars with experts on these topics in late December 2022, to assist palliative care teams in understanding the changes and incorporating them into their workflows and documentation.

When wRVUs are used as performance measures, what is reasonable for palliative care clinicians?

There are many factors that influence a reasonable target, including team composition, practice norms, setting and facility size, electronic health record (EHR) capabilities, and patient mix, to name just a few. Still, aggregated numbers do exist. For example, in 2021 the Medical Group Management Association (MGMA) reported palliative care wRVUs of about 2,100 per provider per year, and a 2010 AAHPM survey (with only 29 respondents to the RVU question) reported a mean of about 2,400 per year. Of course, given the diversity of care settings and responsibilities across palliative care delivery, such numbers must be considered cautiously.

One quick “sniff test” for reasonableness is to define the variables below, then do some simple modeling of a likely range of outcomes:

  1. Average weeks on clinical service for a full-time clinician in your setting, adjusted for vacation, holidays, admin time, etc. (Likely range is 35-45 weeks)
  2. Average new patient and subsequent visit volumes per week. (Look for recent results; a likely range may be 2 new patients and 4-6 f/u visits per day x 5 days per week).
  3. Actual or expected patterns in how new and f/u visits are coded.

Appropriate documentation and coding matters

The 2023 wRVU for the highest new and subsequent care codes is at least double the value of the lowest code. Here are 2 example scenarios:

  • Scenario One (Inpatient): Assume 40 weeks on service with 2 new patient visits and 5 subsequent visits per day per inpatient provider, and assume coding using the “middle” CPT codes 99222 and 99232. At this patient volume, total wRVUs per year equal 2,630. The same volume at the higher codes (99223 and 99233) generates 3,800 wRVUs. This gives you some working examples to compare to your results and to think about which variables (weeks worked, daily averages, coding mix) influence your results, so you can use appropriate ranges in your annual wRVU projections.
  • Scenario Two (Home-based): Also assume 40 weeks on service and 1 new patient, and 4 subsequent visits per day, given windshield time. At this patient volume and using codes 99344 and 99349, the total wRVUs per year equal 2,526. The same volume at the highest codes generates 3,656 wRVUs.

Use this worksheet for additional modeling with these codes—and with assumptions regarding weeks worked and visit volumes. These are simple scenarios based on the 2023 CMS fee schedule. They do not include extended time codes or other possible and appropriate documentation. On the other hand, programs routinely find slippage between their estimated patients per day/week/year and actual. Variations in team composition, electronic health record capabilities, logistics, and patient mix will also impact what is realistic or appropriate.

Given the relative scarcity of good comparative data, organizations that use wRVUs in their compensation plans may find it useful to start with internal baseline data “What is the range of results now for our program?”). They can use that information to set targets for full-time equivalent roles.

These examples can help you design data requests and drill down into your own historical data. This process can help you develop future targets that reflect the realities and priorities of your setting.

We strongly encourage programs to periodically do quality improvement work by reviewing the consistency of schedules, team workflow, and documentation. This can anchor staffing plans and streamline workflow to improve effectiveness and increase the time available for patient care. The busy team is often unaware of the extent of operational variation and opportunities to improve flow, process, and consistency.

What should be considered in calculating wRVU targets, and what can be done to optimize wRVUs?

The mutual goals of the palliative care program and its parent organization are to: 1) ensure good use of clinical time; 2) ensure responsiveness to patient needs; and 3) advance specific strategies where care priorities and incentives align. How can you work together to set targets that appropriately reward good stewardship of resources and billing accuracy, while also encouraging the collaborative, high-impact work of palliative care? Palliative care leaders should consider...

1) What is an appropriate team schedule to balance all the goals?

Timeliness of response to referrals, schedule flexibility to assist with very complex patient crises, and time to help other specialists improve care must all be artfully balanced. And don’t forget the impact of setting and scope—do you cover a single 200-bed hospital with good parking, or a 1,000-bed behemoth together with a cancer clinic across the road and a heart failure clinic a few blocks away? For home visit models, is one person covering 3 counties and trying to document in multiple health records, or do you have more scale and support?

2) How much adjustment should be made for leadership responsibilities and other commitments, including non-billable but high-value activities?

As you frame up the goals for the next year, define quality projects that will require non-billable time, such as building co-management relationships with new services. Specificity can help garner support for the time used for these projects. However, keep in mind that such commitments must be balanced with a need for good stewardship of available clinical resources.

3) Where can you find efficiencies?

Efficiency does not equal effectiveness—but it does matter. Screening for appropriate patients, using EHR templates, deploying non-billable team members to triage and manage daily volumes, and other strategies can not only improve clinician productivity but can also help with team morale and with collegial respect from other specialists.

Brainstorming, testing theories, pulling more data, and discussing specific case examples carefully with billing experts can help to appropriately document care and optimize your wRVUs.

Lastly, we strongly recommend having discussions with your billing team. Brainstorming, testing theories, pulling more data, and discussing specific case examples carefully with billing experts can help to appropriately document care and optimize your wRVUs. For example, in a conversation between the biller and a palliative care clinician who spent a great deal of time writing copious notes, the biller explained, “It doesn’t matter how much you wrote in the chart about the patient. If you do not use these two keywords, I cannot bill that code!” That good-natured exchange turned things around. The physician learned a useful shortcut and the importance of precise language, which saved time in documentation and improved results. The relationship with the biller improved, reducing rework and frustration.

CAPC’s billing and coding toolkit has been revised to reflect significant Medicare fee schedule changes that took effect January 1, 2023.

Efficiency does not equal effectiveness—but it does matter.

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Edited by Melissa Baron. Clinical review by Andrew Esch, MD, MBA.

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