Relative value unit (RVU)
A relative value unit (RVU) measures the relative work, practice expense, and liability of a service, and is the basis for Medicare's physician fee schedule rates.
Updated
A relative value unit (RVU) is a weighted measure of the resources required to furnish a service. Medicare's Physician Fee Schedule assigns each CPT/HCPCS code a total RVU built from three components — physician work, practice expense, and professional liability insurance — that reflect the relative effort, overhead, and risk of that service compared with others.
A code's payment rate is calculated by multiplying its total RVUs by geographic adjustment factors and by a conversion factor that CMS updates annually. The same code can therefore pay differently by location and by year, even before any contractual or patient cost-sharing adjustment.
In practice
Because RVUs make physician work and expense comparable across services, they are used beyond fee-schedule pricing — for productivity measurement, compensation models, and contract analysis. A change to a code's RVUs, or to the conversion factor, can shift payment meaningfully, so annual Medicare rulemaking is watched closely by practices and commercial payers that benchmark against it.
Commonly confused with
- Fee schedule: RVUs are the relative weights that go into the fee schedule; the fee schedule converts RVUs into dollar amounts using geographic factors and a conversion factor.