RVU Relative Value Unit
The measure Medicare uses under the Physician Fee Schedule to value services, combining work, practice expense and malpractice components.
Relative value units (RVUs) are the building blocks of the Medicare Physician Fee Schedule (MPFS). Each payable service has three RVU components:
- Work RVU — the provider's time, skill, effort and judgment
- Practice expense (PE) RVU — staff, equipment, supplies and overhead; differs for facility and non-facility settings
- Malpractice (MP) RVU — professional liability insurance cost
How payment is calculated
Each component is multiplied by a Geographic Practice Cost Index (GPCI) for the locality, the adjusted components are added together, and the total is multiplied by the annual conversion factor:
Payment ≈ [(Work RVU × Work GPCI) + (PE RVU × PE GPCI) + (MP RVU × MP GPCI)] × Conversion Factor
Modifiers, multiple-procedure rules, and other policies can then adjust the amount.
Why RVUs matter
RVUs drive physician payment, productivity measurement (work RVUs are common in compensation plans) and budgeting. CMS publishes RVUs and the conversion factor each year in the MPFS final rule.