CPT Codes and Medicare's Relative Value Unit

by  Find-A-Code™
Dec 13th, 2022

A recently published study looking to explain income differences between male and female plastic surgeons suggests that billing and coding practices may be part of the equation. The study focused primarily on Medicare's relative value units (RVU) as applied to surgeon pay. But what exactly is an RVU?

The Current Procedural Terminology (CPT) codes that healthcare providers use to identify services for billing represent a standard national coding set for physicians and other providers choosing to bill Medicare. In order to quantify the value of a provider's actual work in relation to services rendered, Medicare has established RVUs.

An RVU is essentially a measurement of an asset that tends to be intangible. Because healthcare providers do not work by the hour, the value of their work – as a service provided – needs to be valued in some other way. That is what the RVU does.

The Work Relative Value Unit

For purposes of determining reimbursement, Medicare doesn't look exclusively at RVUs. Instead, they are interested in work RVUs (wRVUs). The wRVU is seen as a more neutral factoring tool because it eliminates variables and focuses only on the amount of work the provider brings to the table.

Without getting into all the complex details of how wRVUs are calculated, providers are reimbursed based on a formula that combines the price of an RVU by the number of wRVUs a doctor provides in relation to a given service.

For example, let us say a physician provides 5,000 wRVUs of service with an RVU value of $50. His total compensation for that particular service is $250,000. Unfortunately, the reality of reimbursement isn't as simple as this easy-to-understand formula.

Billing and Coding Make a Difference

Medical billing and coding both play a role in how healthcare providers are reimbursed. Inaccurate codes can affect reimbursement by applying the wrong RVU. It is possible to bill for an inaccurate number of wRVUs. And because health insurance companies tend to follow Medicare's lead in everything from CTP codes to RVUs, the issue also impacts reimbursements from private payers.

This could explain the discrepancies uncovered by the study mentioned at the start of this post. That study, out of Rhode Island's Brown University, analyzed data from more than 1,000 plastic surgeons providing service from 2014 through 2018.

Research data showed noticeable differences in wRVUs billed by male and female plastic surgeons. There were also significant differences in the number of wRVUs billed per case and the value of the cases themselves, based on the complexity of the work being performed.

Male Surgeons Earned More

Researchers quickly learned from the data that male plastic surgeons were earning more than their female counterparts. But the data also pointed to higher average wRVUs billed by the males. How much higher? Just over 19%.

The average RVU value during the study period was $65.45. Using that number, the researchers did a calculation based on nine months of work. They determined that the average female plastic surgeon would have earned $171,747 while the average male would have earned $212,922.

The study does not suggest that male plastic surgeons are making more per wRVU than females. Rather, it suggests that billing and coding practices result in male plastic surgeons billing more wRVUs. What that means is not exactly clear. But it does suggest that coding and billing practices play a role in the gender pay gap.

Perhaps future research will add more light on this particular issue. Until then, it is still abundantly clear that CPT codes, RVUs, and coding and billing practices all help to determine how much clinicians are paid. It is all quite complicated.