RBRVS FAQ

In 1988, the Centers for Medicare and Medicaid Services (CMS) funded a study by William C. Hsiao from the Harvard School of Public Health that evaluated the resources and costs associated with delivery of physician services. The results of this study led to the introduction in 1992 of the Resource-based Relative Value Scale (RBRVS), which is a system for describing, quantifying, and reimbursing physician services relative to one another. The RBRVS incorporates three components of physician services - physician work, practice expense, and professional liability insurance (PLI).

A relative value unit (RVU) is assigned to each of the work, practice expense (PE) and professional liability insurance (aka malpractice) (PLI) components. The RBRVS system uses the definitions and procedure codes developed by the American Medical Association in their Current Procedural Terminology (CPT). This coding system is currently used by Medicare, Medicaid and many private payers to reimburse physician services.

An RVU is an abbreviation for Relative Value Unit. Physician services are reported using the Current Procedural Terminology (CPT) coding system. For each CPT code, each of the three components of physician service (physician work, practice expense, and professional liability insurance) is assigned an RVU. The sum is the total RVU for that CPT code. For example: Work RVU + practice expense RVU + professional liability insurance RVU = Total RVU. The total RVU is multiplied by the conversion factor to obtain the reimbursement for that CPT code.

When a new code is approved through the CPT process, it is sent to the American Medical Association (AMA) Relative Value Scale Update Committee (RUC) for valuation. ACEP has members as representatives on this committee to advocate for emergency medicine’s interests.  Data from practicing physician surveys is provided to the RUC to help members assign an appropriate relative value to the service. This is a difficult process requiring the consideration of the interests of many stakeholders. The RUC then forwards its recommendations to CMS which accepts or rejects that value. This process is budget neutral requiring that for every additional dollar allocated to a given service, there must be a dollar equivalent reduction in the reimbursement of other services.

CMS is required by statute to review the valuation of codes every five years. This process begins with interested parties submitting specific codes for review, which they believe are inappropriately valued. Groups supporting these changes must provide compelling evidence for the changes they seek. ACEP’s representatives participate in this process.  When codes reported by emergency medicine are identified for reconsideration, ACEP sends a detailed survey to randomly selected members, asking them to describe the work defined by intensity over time, involved with specific codes under review by comparing them with other codes whose relative values are known and widely considered to be accurate. This data is subsequently used to develop recommendations toward revising a code value. The RUC reviews the data and submits its recommendations to CMS for appropriate action. The last RUC review for emergency department evaluation and management codes occurred in April 2018 for the 2020 Medicare Physician Fee Schedule.

The Conversion Factor (CF) is the dollar amount by which each CPT code’s total RVU value is multiplied to obtain the payment for a given service. A change in the CF impacts all CPT codes proportionally. The CF is updated annually by CMS. The conversion factor for 2024 is $32.7476. This is down from $33.8872 from 2023, yielding a 3.9% decrease from 2023.  

The reimbursement for a given CPT code is determined by taking the total RVU’s for the service and multiplying by the conversion factor. In addition, a geographic adjustment factor (GAF) known as the Geographic Practice Cost Index (GPCI) is applied to account for locality cost differences for work, practice expense and liability coverage (aka Malpractice) around the nation. An example is given below for E/M code 99284 in 2024 furnished in Michigan (outside of Detroit):

[(Work RVU X Work GPCI) + (Practice Expense RVU X PE GPCI) + (PLI or Malpractice) RVU X PLI GPCI)] = Total RVU X Conversion Factor = Medicare payment 

(2.74)(0.975) + (0.56)(0.911) + (0.29)(1.173) = 3.52

(Total RVUs)  (Conversion Factor) = Medicare Payment  

(3.52) ($32.75) = $115.28

For 2024, the relative value units for the ED E/M codes are as follows:

As of November 2, 2023, the 2 percent Medicare sequester cuts that started for dates of service after April 1, 2013 are set to go back into place on January 1, 2024 after being temporarily halted during the COVID-19 public health emergency. The reductions will show up on the EOB form as adjustment code 223 (Adjustment code for mandated federal, state, or local law/regulation that is not already covered by another code and is mandated before a new code can be created).  Medicare has waived the PAYGO Sequestration cuts of an additional 4 percent sequester through 2024 to offset the significant projected increase to the deficit caused by the American Rescue Plan as part of a “pay as you go” budget neutrality reduction. Congress may act to eliminate part or all of the scheduled upcoming sequester cuts. 

ACEP continues to lobby Congress to step in with new funding to prevent or lessen these cuts. HR 2474 the Strengthening Medicare for Patients and Providers Act would provide an annual update the conversion factor equal to the increase in the Medicare Economic Index (MEI), but the cost of this legislation may be too high for broad support under our current national fiscal situation.