I agree with the others, it's fine to understand how RBVU's are calculated and applied, especially in regards to setting fee schedules. Here is JUST an overview. If you research Relative Based Value Units you will find a lot of information, but just be aware that like the others said, your provider has to bill according to what was done AND documented, not what is paid or non-payable.
The Calculations
The basic, most-often used calculation in a Relative-Value Scale is the determination of a fee or allowable payment by multiplying the unit-value times a conversion factor. In this calculation, the number of units assigned to a medical or surgical service (represented by CPT code) is multiplied times a dollar amount (the conversion-factor) to derive a fee (when used by a providor e.g., a physician) or an allowable payment level (when used by an insurer). The formula is simple:
UV X CF = Fee/Allowable Payment
Advanced Features - As in any algebraic relationship, having any two of the components allows calculation of the third. That is, if you have the conversion-factor and the fee for a CPT code, you can derive the unit value. Similarly, if you have the unit value and the fee, you can derive the conversion-factor.
How Payers use RBVSs
While it may seem that managed care plans choose their payment levels based on the lowest level they can ³get away with², it is still valuable to understand haw they develop their allowable payment levels. The managed care plans generally develop their fee schedule using one of two methods.
They will generally develop their fee schedule either by choosing a relative value scale and a conversion factor(s), or, will pay at some multiple of the Medicare Fee Schedule (e.g., 110% of Medicare, 90% of Medicare, etc.).
An important distinction to remember is the difference between the Medicare Fee Schedule and RBRVS. We often hear ³that PPO is paying RBRVS plus 10%² (or ³110% of RBRVS²). That is a meaningless statement. There are two ways to state a payment level when RBRVS or the Medicare Fee Schedule is used as the basis. They are:
³Medicare Fee Schedule plus 10%² (or ³110% of the Medicare Fee Schedule²), or
³RBRVS at a conversion factor of $40 per unit²
