Resource-based relative value scale (RBRVS) is a method used to determine how much money physicians should be paid. It is partially used by Medicare in the United States and by nearly all Health Management Organizations (HMOs).
This article explains the history of Resource-based relative value scale and how it works.
In 1992, Medicare significantly changed the way it pays for physician services. Instead of basing physician payments on charges, the Federal government established a standardized physician payment schedule based on RBRVS.
In this new system, payments are determined by the resource costs needed to provide them, with each service divided into three components:
1) Physician Work Component
The physician work component accounts for an average of 54% of the total relative value for each service. The factors used to determine physician work include the time it takes to perform the service, the technical skill and physical effort, the required mental effort and judgment and stress due to the potential risk to the patient. The physician work relative values are updated each year to account for changes in medical practice. The whole scale is also reviewed at least every 5 years.
2) Practice Expense Component
The practice expense component accounts for an average of 41% of the total relative value for each service. The values were based on a formula using average Medicare-approved charges and the proportion of each specialty’s revenues which are attributable to practice expenses.
3) Professional Liability Insurance (PLI)
In 2000, the CMS implemented the PLI relative value units. The PLI component of the RBRVS accounts for an average of 5% of the total relative value for each service.
The Resource-based relative value scale (RBRVS) Payments are calculated by multiplying the combined costs of a service times a conversion factor (this is a monetary amount determined by CMS) and adjusting for geographical differences in resource costs. The RBRVS does not include adjustments for outcomes, quality of service, severity, or demand.
