In my last post discussing nurse practitioner payment based on productivity, I explained the RVU (Relative Value Unit). If you are a nurse practitioner paid based on your productivity, the RVU is the number used by your employer to determine exactly how much you will be paid. Now, I will take you through the steps of how an RVU translates into payment for a healthcare provider.
1. A Patient Chart is Coded With a CPT Number
After you complete your documentation for a patient’s visit, either you or your company’s billing and coding team assigns CPT codes based on the complexity of the visit (you may be familiar with the office visit codes 99213 and 99214) and any procedures preformed. For example, an intermediate level office visit is assigned a code of 99214 and a simple laceration repair is assigned a code of 12001.
2. Your Practice Sends Medicare or a Private Insurer a Bill for Services Provided
One your chart is complete and coded, your practice will submit a bill to the patient’s insurer such as Medicare. Medicare looks at the CPT codes that you have submitted and assigns RVU’s to each.
3. The Conversion Factor
To determine how much it will pay you for your services, Medicare then enters the RVU‘s for the patient visit into a conversion factor equation to calculate a dollar amount for reimbursement. The equation is complicated (and looks like a college SAT question) as it takes into account the three different aspects of the RVU (physician work, practice expense and malpractice) as well as a geographical location adjustment. The two part equation is as follows:
Each year, Medicare adjusts the conversion factor directly affecting how much healthcare providers are paid. For 2012, the conversion factor is $34.04, an increase of 6 cents over 2011 but a decrease of $2.83 compared to 2010.
4. Medicare Pays You or Your Practice for Your Services
Finally, after these complex calculations, Medicare has determined how much it will reimburse you or your employer and sends payment.
If you are employed by a physician practice, clinic or hospital that pays you based on productivity, your employer will not go through such painstaking calculation when putting together your paycheck each pay period. Employers paying based on productivity will typically put into your employment contract a dollar amount they will compensate you for each RVU earned. For example, I am payed $3.00 per RVU (I am also payed an additional flat hourly rate) while a physician might be paid around $20 per RVU (they are not paid a flat hourly rate by my employer). Each month when I receive my paycheck, it lists how many RVU’s I have earned that month.
The pay for production system is very complicated. If you have any questions, feel free to ask and I will look for answers! The billing and coding team at your workplace may also be a good resource for any questions that arise.