Social Security Act (the Act) requires CMS to establish payments under the PFS based on national uniform relative value units (RVUs) that account for the relative resources used in furnishing a service. 
​The statute requires that RVUs be established for three categories of resources:
  • Work, Practice Expense (PE); and Malpractice (MP) expense
  • CMS establish by regulation each year’s payment amounts for all physicians’ services paid under the PFS, incorporating geographic adjustments to reflect the variations in the costs of furnishing services in different geographic areas.
Medicare Physician Payment System Integrates Three Components:
     1. "Resource-based" Relative Value Scale (RVU)
     2.  Geographic Practice Cost Indices (GPCI)
     3. Conversion Factor (CF)
Other issues that affect Medicare physician payment rates include the service's global period, the service's site-of-service, and budget neutrality.
​WHG Helps Clients Evaluate the Annual CMS Medicare Physician Fee Schedule (MPFS) Proposed Rule
  • Calculate the potential impact
  • Develop strategies to maximize enterprise value
  • Orchestrate public comment campaigns
  • Assess public comments
  • Direct Government relations advocacy if necessary
  • Analyze Final Rule CMS comments and potential impact

Relative Value Units (RVU) - Core components used by the Centers for Medicare & Medicaid Services (CMS) to determine physician payment rates under the Medicare Physician Fee Schedule.

Note CMS does not assign fixed dollar amounts for every procedure. CMS does assign relative values based (RVU) on the resources required to perform a service. 
  • First - each RVU component is multiplied by the providers specific GPCI. 
  • Geographic Practice Cost Indices (GPCIs):  Each of the three RVUs are adjusted to account for geographic variations in the costs of practicing medicine in different areas within the country. These adjustments are called GPCIs, and each kind of
    RVU component has a corresponding GPCI adjustment.
  • Conversion Factor (CF):  To determine the payment rate for a particular service, the sum of the geographically adjusted RVUs is multiplied by a CF in dollars. The statute specifies the formula by which the CF is updated on an annual basis.
Core Components of an RVU - Each medical service (identified by a CPT/HCPCS code) is assigned three distinct RVU types that reflect different costs: 
  • Work RVU (wRVU): Represents the time, technical skill, physical effort, and mental judgment required by the clinician.
  • Practice Expense (PE) RVU: Covers the overhead costs of running a practice, such as rent, medical supplies, equipment, and administrative staff wages.
  • Malpractice (MP) RVU: Accounts for the cost of professional liability insurance premiums.