A Primer on wRVUs – Work Relative Value Units
Intro to RVUs and wRVUs
Relative Value Units or RVUs are an important concept in medical billing and revenue cycle management. RVUs help determine reimbursement rates for medicare and insurance. In addition, RVUs play a crucial role when evaluating new software. wRVUs or work RVUs is the relative time and work associated with completing a procedure or appointment. In this primer, we will define the different types of RVUs with a focus on wRVUs and how to improve them!
Three Types of RVUs
There are three main types of healthcare RVUs: Work RVU (wRVU), Practice Expense RVU (PE RVU), and Malpractice RVU (MP RVU). Medicare includes these three RVUs in their Medicare PFS Payment Rates formula.
Work Relative Value Units (wRVUs)
WRVUs are “the relative level of time, skill, training and intensity to provide a given service”. WRVUs seem overwhelming because, like most things government, they are dressed in acronyms and gibberish :). Put a simpler way, for a physician or provider, how much work and how valuable is it to perform a certain appointment type or procedure. Put a simplest way: how valuable is it? The wRVU for an Office/outpatient visit new (99201) is .48 while a Magnetic image bone marrow is 1.6. The work relative value unit is almost 4x for a Magnetic image bone marrow vs an initial office visit.
WRVUs and The Labor Theory of Value
As a physician reading these, you may be upset! A new patient visit requires lots of work. It may take an hour and is the key point of care coordination. WRVUs are not just how much work something requires, in the same way that prices for anything are not just how much work is required to make something. There is a famous economic example of a hole that shows why prices are not just a function of work put into something. If I dig a hole and put hundreds of hours into it and you dig a hole in one hour, my hole is not 100 times more valuable than yours. My hole may be bigger, but if your hole is in a key location, then yours is probably more valuable.
Practice Expense Relative Value Units (PE RVUs)
PE RVUs or Practice Expense RVUs reflect how expensive it is to run a practice. Medicare lays out the exact criteria it takes into account if you search for CY 2019 PFS Final Rule Calculation of PE RVUs under Methodology for Selected Codes [ZIP, 19KB] at that hyperlink. Mainly there is the labor cost (for example, the cost of front office staff), supply cost (Qtips anyone?), and equipment cost. It depends on the specific appointment type/provider, but labor cost usually makes up 75% of the PE RVUs.
Malpractice Relative Value Units (MP RVUs)
Malpractice RVUs represent the amount that medicare will reimburse providers for their malpractice insurance. They are calculated based on the malpractice insurance premium current and forecasted rates. These malpractice insurance premium rates are “driven primarily by physician specialty and the level of surgical involvement”. Obviously put, malpractice rates will be higher for a Neurosurgeon than a Primary Care Physician.
A Note on GPCI
In the Medicare PFS Payment Rates Formula you will notice the acronym, GPCI, what is that!?? GPCI means Geographic Practice Cost Indices. It’s a cost of doing business adjustment. Everything is more expensive in certain geographic locations than others. As a result, the government reimbursements reflect the fact that life is more expensive in San Jose/San Francisco (which behind Alaska has the highest wRVU adjustment) than in Wyoming. If rent is higher for your front office staff in San Francisco, then you need to pay them more. That is then passed on to the patient.
wRVUs Importance in Slot Utilization
Slot Utilization is making sure that 100% of a physician’s slots are filled with patient appointments. Factors that bring slot utilization below 100% are patient cancellations, patient no-shows, provider cancellations, and poorly setup appointment types. These factors help determine the number of missing filled slots, while WRVUs determine the cost. For example, let’s say your patient no-shows on office visits are 8% and your patient no-shows on Magnetic Image Bone Marrows are 3%. You may be more worried about office visit no-shows. However, since MIBM are 3.3x more valuable, you should be focused on the MIBM patient no-shows. PS – If you’re thinking Slot Utilization is a perfect topic for QueueDr to cover, you’re a genius. We have a guide coming soon!
Software Vendor ROI Analysis and wRVUs
When evaluating software vendors, one of the final steps in our recommended process is a Return on Investment (ROI) Analysis. In order to prioritize which problems to solve and which vendors to solve those problems, you need to know RVUs. Looking at the example above of Office Visits vs. Magnetic Image Bone Marrows, health systems often make the mistake of prioritizing the most frequently occurring problem over the largest problem. This is something we talk about with our customers when they are calculating their QueueDr return on investment. One additional filled MIBM cancellation is worth at least 3x that of an Office Visit. It’s why we make sure that customers turn QueueDr on for high RVU appointment types and procedures, not just the most frequently used appointment types.
Conclusion: wRVUs are the Measuring Blocks
RVUs are the measuring blocks on which healthcare business is based. Whether choose software vendors, templating provider schedules, or hiring physicians, it is vital to know RVUs. WRVUs are the most important factor, making up more than 50% of the total RVU calculation. They represent the value of time in a schedule. You cannot create more time, but you can be more effective with it. I shall leave you with a quote by famous writer, Rudyard Kipling who once said, “If you can fill the unforgiving minute/With sixty seconds’ worth of distance run/Yours is the Earth and everything that’s in it/And—which is more—you’ll be a Man, my son!”