Medicare's resource-based relative value scale, a de facto national fee schedule: Its implications and uses for neurologists
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Medicare's resource-based relative value scale (RBRVS) was intended to be a rational methodology for reimbursing medical services provided to Medicare recipients. The fundamental principal was that the units representing the service-the relative value units or RVUs-were to reflect the relative value of the resources needed to provide that service. Since its inception, the RBRVS has become a de facto national fee schedule, a methodology of implementing social policy and a methodology for determining productivity in managed care organizations. As with any system developed by government, the RBRVS is constantly being modified. Understanding the RBRVS is necessary to successfully compete in a managed care environment. The following examines the origin, operation, various uses, and likely modifications of the RBRVS.
History. During the 1980s, the growth of payments for Medicare services notably outpaced inflation.1 Much of the excess resulted from growth in physician payments. The physician reimbursement at that time was based on the CPR system (customary, reasonable, and prevailing). Initially, the physician's billed amount determined the profile and resultant reimbursement. Congress attempted many fixes, first freezing the payment amounts. Later, even more complex methodologies were introduced to control growth. Although those interventions did constrain total physician payments, there remained substantial geographical, specialty, and even physician-to-physician differences in payments. The medical community and legislative leaders recognized that the distortions were both unreasonable and unsustainable. The most prominent disparity was the relatively poor recognition of cognitive services as compared with procedures, particularly surgical services.
The increasing complexity of the CPR payment system is reflected in the changing methodologies by which Congress attempted to control the growth in expenditures for physician services. In the late 1980s, Congress first implemented a maximum allowable charge (MAAC), a maximum charge that was different for each physician. The amount was based on the physician's customary charge for …
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