Toward developing a relative value scale for medical and surgical services

A methodology has been developed to determine the relative values of surgical procedures and medical office visits on the basis of resource costs. The time taken to perform the service and the complexity of that service are the most critical variables. Inter-specialty differences in the opportunity costs of training and overhead expenses are also considered. Results indicate some important differences between the relative values based on resource costs and existing standards, prevailing Medicare charges, and California Relative Value Study values. Most dramatic are discrepancies between existing reimbursement levels and resource cost values for office visits compared to surgical procedures. These vary from procedure to procedure and specialty to specialty but indicate that, on the average, office visits are undervalued (or surgical procedures overvalued) four- to five-fold. After standardizing the variations in the complexity of different procedures, the hourly reimbursement rate in 1978 ranged from $40 for a general practitioner to $200 for surgical specialists.