The Resource-Based Relative Value Scale

In 1992, Medicare changed the way it pays for physicians' services. Instead of basing payments on usual and customary charges, the federal government established a standardized physician payment schedule based on a Resource-Based Relative Value Scale (RBRVS). In the RBRVS system, payments for physician services are determined by the resource costs needed to provide them. The cost of providing each service is divided into three components: physician work, practice expense and professional liability insurance, each of which is resource-based. These factors are translated into relative value units (RVU) and payments are calculated by multiplying the combined RVUs of a service by a conversion factor (a monetary amount that is determined by the Centers for Medicare and Medicaid Services). Payments are also adjusted for geographical differences in resource costs.

Use the links below to learn more about the RBRVS and the AMA’s role in updating it.