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RVU costing in a medical group practice
M F Berlin1, B P Faber, L M Berlin
1D.J. Sullivan and Associates, Ann Arbor, MI, USA.
Summary
Medical groups should use cost accounting with the resource-based relative value scale (RBRVS) to track physician service costs. Combining relative value units (RVUs) and component RVUs provides a cost range for adequate reimbursement.
Area of Science:
- Healthcare Management
- Medical Economics
- Health Services Research
Background:
- Risk-and-reward reimbursement models are increasingly common in healthcare.
- Accurate cost assessment is crucial for medical group practices to navigate these new payment structures.
- The resource-based relative value scale (RBRVS) is a standard for determining physician fees based on resource utilization.
Purpose of the Study:
- To evaluate cost accounting methods for medical group practices within the RBRVS framework.
- To determine how different cost-per-procedure methods impact the calculation of physician service costs.
- To provide a method for ensuring adequate reimbursement for services rendered by physicians.
Main Methods:
- Utilized two distinct cost-per-procedure accounting methods within the RBRVS system.
- Method 1: Employed standard relative value units (RVUs).
- Method 2: Utilized component RVUs, breaking down costs into work, practice, and malpractice expenses.
Main Results:
- The two cost-per-procedure methods yielded different calculated costs for physician services.
- Integrating both RVU and component RVU methods generated a cost range.
- This cost range can assist administrators in verifying adequate reimbursement levels.
Conclusions:
- Cost accounting is essential for medical practices operating under RBRVS.
- Employing both RVU and component RVU methods offers a comprehensive approach to cost analysis.
- A dual-method approach ensures medical practices can adequately cover the costs of physician-delivered services.