Understanding the RVU: What’s in it, and how does it impact your compensation?

Given my role here at Urology Job Search and at UrologyLocums.com, I spend a lot of time speaking with urologists from around the country as well as those just about to enter the urology workforce. The topic of contracts and compensation comes up a lot. There are various strategies around compensation, but many of them revolve around Relative Value Units or RVUs.

You have no doubt heard about RVUs in some context. But what are they and do they matter?

There are 3 sub-components of the RVU that add together to give a total RVU.

Here is the RVU Formula:

WorkRVU x WorkGCPI
+ Practice Expense RVU x Practice Expense GPCI
+ Malpractice (PLI) RVU x PLI GPCI
= Total RVU

* Work RVU: represents the provider’s work when performing a procedure or service. Work RVUs account for 50.866% of the total RVU for a CPT^® code (definition below).
* GPCI: Geographic Practice Cost Index…this is a geographical modifier so RVUs are paid at different rates depending on practice location
* Practice Expense RVU: represents the cost of clinical and nonclinical labor and expenses of the practice. Practice expense RVUs account for 44.839% of the total RVU for a CPT code.
* Malpractice RVU: accounts for the cost of professional liability associated with each CPT^® code. Malpractice RVUs account for 4.295% of the total RVU for a CPT code. ⁴

How do RVUs impact how much $ a physician is compensated?

Back in 1989, the Omnibus Budget Reconciliation Act of 1989 established the Medicare Conversion Factor, which is the amount of money that is paid by Medicare to a physician per RVU. It was originally set at $31.01 when first implemented in 1992.

Total RVU x Medicare Conversion Factor = $ Medicare Payment to Doctor

Each year the Conversion Factor is modified:

CY1992 Conversion Factor: $31.001
CY2022 Conversion Factor: $34.6062 ²

$31.00 in 1992 would be worth $63.88 in 2022
Inflation has given us a 51.47 % pay cut ¹

The 2022 Conversion Factor of $34.6062 represents a 0.82% reduction from the 2021 conversion factor of $34.8931.

Each CPT code is assigned a RVU value, determined by Medicare, but advised by a board of physicians, known as the RUC (https://www.ama-assn.org/about/rvs-update-committee-ruc/rvs-update-committee-ruc)

CPT refers to Current Procedural Terminology code. It is a procedural code set that was developed by the American Medical Association and is maintained by the CPT Editorial Panel. The CPT code set describes medical, surgical, and diagnostic services and is designed to communicate uniform information about medical services and procedures among physicians, coders, patients, accreditation organizations, and payers for administrative, financial, and analytical purposes. The AMA holds the copyright to the CPT code set and it represents largest single source of income for the AMA.⁵

What do RVUs look like in practice?

When it comes to physician compensation, most contracts that tie compensation to RVUs will refer to work RVUs (wRVUs) and not total RVUs. One thing I often recommend to the residents I work with is to measure their RVU production for several days or a week. Alternatively, they may want to do the same for one of their attendings. By doing so, this will help them correlate a RVU #/period of time with a given amount of work in which they participate. I think this is important to help get a concept of “amount of work” = X dollars. To do this, one only needs to keep track of their procedures, consults, clinic visits and assign the appropriate CPT code. Then, plug them into the following RVU calculator to get total number wRVUs…then multiply by the Medicare conversion factor for a conservative estimate or, alternatively, by the $/RVU multiple from an employment contract they may be considering.

wRVU calculator: https://www.aapc.com/practice-management/rvu-calculator.aspx ³

wRVUs for common Urology CPT codes:

52356, Ureteroscopy w/ laser lithotripsy: 8.00
99204, Level 4 new patient visit: 2.60
99214, Level 4 f/u visit: 1.92
99222, New Inpatient Consult: 2.61
55866, RALP: 26.80

What factors affect a physician’s ability to produce RVUs?

There are varying degrees of efficiency or inefficiency within clinical practices. When I was in academics, it was not uncommon to have 1.5-2 hour OR turnovers at the University Hospital. If you do more of your cases in an ASC setting, for instance, you will most likely be able to produce more RVUs in a given day than you could in the average hospital OR.

Similarly, the number of exam rooms and medical assistants you have available to you in clinic can significantly affect your RVU production ability. Add these elements to your next contract negotiation.

I recently hired two urologists to our locums company that had been employed by a hospital, which staffed their clinic with only ONE staff member. Imagine how many RVUs you could produce with only ONE staff person in clinic….not many!

In essence, there are scenarios where a physician making $50/RVU could earn more money than a physician making $60/RVU at the end of the year.

Important Note

There is more to life than dollars in your bank account or RVUs earned/year. Think about your “personal RVUs” for drop off/pick up from school, having dinner at home with your family, or getting to the gym to work out. Use the information I provided in this post to help you determine how the wRVUs outlined in your contract will impact your financial, personal, and family goals.

Call to Action

Don’t forget to help yourself and your fellow urologists, strengthening your position in contract negotiations through better data. If you are a practicing US Urologist, please complete our compensation survey by clicking here.

How do RVUs impact how much $ a physician is compensated?