The Resource-Based Relative Value Scale (RBRVS) is the backbone of the Medicare Physician Fee Schedule and is often referred to as the RBRVS fee schedule.
It dictates reimbursement for physician and advanced practice provider reimbursements, and is therefore, a critical driver of revenue and strategic operating practices for healthcare facilities.
This guide provides facility administrators with the knowledge to differentiate between RBRVS vs RVUs, calculate the RBRVS formula, apply RVUs to productivity and staffing, and follow best practices.
What is the Resource-Based Relative Value Scale?
The RBRVS system is a standardized payment structure that calculates physician service costs by assigning a relative value for each service based on the resource cost, the type of care delivered, and the geographic location (i.e., the cost of providing hospital care in Connecticut vs. Kansas). That relative value is then converted into a dollar amount for reimbursement.
This type of scaling allows for the consideration of the cost of resources necessary to provide a service. The cost of resources varies widely, influenced by technology, geographic location (i.e., rural, suburban, urban), specialty, and clinical practice.
Why was the RBRVS created?
In the 70s and 80s, Medicare used the customary, prevailing, and reasonable (CPR) system for price control and payments of physician services.
The CPR system gained fierce physician opposition as it implemented price controls to reduce program costs. These controls effectively prevented increases (and decreases) of physician compensation for services despite significant changes in innovative clinical practice, demographics, and technology.
In the mid-1980s, proposals for a new system were submitted. Among them, the method of utilizing a relative value scale (RVS) emerged as a favorite.
Supporters agreed that an RVS system would be adaptable to fluctuations in resource costs over time and across specialties and geographic locations.
The Centers for Medicare & Medicaid Services (CMS) funded an in-depth study conducted by Harvard, led by researcher William Hsiao, from 1985 to 1991. In 1992, implementation of the RBRVS payment system began and was finalized in 1996.
While the system was created for Medicare, it also became the principal CMS payment system used by Medicaid and private insurance companies.
How does the RBRVS work?
In the RBRVS, the key metric is the relative value unit (RVU). RVUs measure and monitor physician and provider productivity. However, they are not monetary amounts.
Physician services are identified by their own 5-digit codes, Current Procedural Terminology (CPT®). Each CPT has 3 separate relative value unit categories:
Current RVU and Physician Fee Schedule (PFS)
How often is the RBRVS updated?
CMS updates the PFS every year. You can find the 2026 PFS here.
How do you use the Medicare Physician Fee Schedule lookup?
The PFS Look Up Tool allows users to search for RVUs, service pricing, and payment policies by Healthcare Common Procedure Coding System (HCPCS) code. The tool can be accessed here.
How to calculate RBRVS for hospital services
How is an RBRVS payment actually calculated?
To calculate the RBRVS formula, you’ll need the geographic practice cost index (GPCI).
The GPCI is bound to your corresponding Medicare locality. In broad terms, the GPCI considers the geographical variations in cost of living, operating costs, labor costs, and PLI. Find your locality here.
To adjust the numbers appropriately for your geographic location, your Medicare locality provides 3 corresponding GPCI categories:
- Work GPCI (wGPCI)
- Practice expense GPCI (peGPCI)
- Malpractice GPCI (mGPCI)
The formula for your adjusted RVUs is as follows:
(wRVUs x work GPCI) + ( peRVUs x peGPCI) + (mRVUs x mGPCI) = total adjusted RVUs
Remember, RVUs themselves are not monetary amounts. A conversion factor (CF) must be applied, as follows:
total adjusted RVUs x CF = physician compensation amount in dollars
New CMS conversion factor values for 2026
The CF is updated annually by CMS. Effective 2026, the values for the 2 conversion factors are as follows:
- +0.75: Alternative payment model (APM) qualifying participants (QPs)
- +0.25: Non-QPs (physicians and practitioners)
How does the RBRVS affect facility reimbursements?
The CMS also indicates that practice expenses may vary by place of service (POS).
When physicians perform services in a hospital or facility setting, CMS pays the physician a lower practice expense RVU because it separately pays the facility a facility fee.
As such, there are 2 separate RVU values in this component: facility and non-facility RVUs.
Facility peRVUs
Facility peRVUs apply to services administered in skilled nursing facilities, hospitals, and outpatient surgery centers.
Facility peRVUs are typically lower because the physician does not assume the overhead costs of staffing, equipment, and supplies.
In summary, the physician billing under the facility rate receives less, but the facility captures a separate payment. Administrators should ensure the "facility fee" collected is sufficient to offset rising costs for clinical support staff and supplies.
Non-facility peRVUs
Non-facility peRVUs apply to services administered in the patient’s home, a physician’s practice, or any other non-hospital setting.
Non-facility peRVUs are generally higher because in these settings, the physician is responsible for the overhead costs of staffing, equipment, and supplies.
Reimbursements for advanced practice providers (APPs)
Does RBRVS apply to nurse practitioners and physician assistants?
Yes. Nurse practitioner (NP) and physician assistant (PA) reimbursements are calculated under the RBRVS system at a discounted rate.
NPs and PAs can bill for their services in 2 ways.
In post-acute and rural settings, leveraging NPs and PAs is a critical strategy for maintaining access while managing labor costs. Facility administrators should consider the following:
- The 85% reimbursement reality: When NPs or PAs bill Medicare directly under their own NPI, the reimbursement is typically 85% of the physician rate. Weigh this 15% discount against the lower salary costs of APPs compared to physicians.
- Indirect "incident-to" billing: In certain circumstances, facilities can capture 100% of the physician rate through "incident-to" billing, provided the service meets strict CMS supervision and plan-of-care requirements.
- Solving inpatient gaps: In inpatient and post-acute care settings where physician presence may be limited, APPs provide essential coverage. Using the RBRVS to track APP productivity (wRVUs) allows administrators to justify these staffing models to stakeholders.
How are RVUs used outside of reimbursement?
RVUs provide facility leaders with a way to measure clinical effort, independent of fluctuating payer rates or dollar amounts.
- Productivity benchmarking: Administrators use wRVUs to establish performance benchmarks for clinical staff. This allows a DON to compare the "effort" of a wound care specialist with that of a rounding practitioner on a standardized scale.
- Strategic staffing decisions: By analyzing total RVU generation per unit or shift, administrators can identify where they are over- or understaffed. For example, if a high-acuity wing is generating significant wRVUs but patient outcomes are dipping, it may signal a need for more burnout relief through supplemental per diem staffing.
- Calculating labor cost variance: RVUs help leaders determine the true cost of care. By applying the GPCI, an administrator in a high-cost area like Connecticut can justify higher operating budgets compared to a peer in a lower-cost state like Kansas.
Common limitations and critiques of the RBRVS system
While the RBRVS brought standardization to the reimbursement payment system, it has faced long-standing criticism for how it influences provider behavior and facility revenue.
What are the biggest criticisms of the RBRVS system?
The volume vs. value conflict
One of the loudest criticisms of our current healthcare system is that the payment-for-service structure encourages healthcare providers (consciously or unconsciously) to see more patients and perform more services. This creates a financial incentive for quantity over quality.
The idea of value-based care is to tie compensation to results, thereby prioritizing quality.
So how can the CMS’s fee-for-service payment system function within a value-based care structure?
While the payment system and value-based care models seem to have opposing incentives, they do share common ground in a few ways.
- They both seek to reduce overall medical care costs.
- They both look to measure value.
Arguably, one of the best traits of the RBRVS is its ability to accept changes and updates. The 3 RVU components are annually updated by the CMS, as are the CPT codes and the CFs.
It is therefore reasonable to believe that the RBRVS could be adapted in the future to account for quality and/or results. Could that mean another RVU component or index adjustment added to the formula?
Procedural bias and specialist influence
The system is frequently criticized for rewarding complexity and procedural intensity rather than long-term patient results.
Much of this bias is attributed to the composition of the Relative Value Scale Update Committee (RUC), which is composed mostly of procedural specialists.
As a result, the RBRVS tends to favor high-intensity interventions over the cognitive, preventative care that is foundational to primary and post-acute settings.
Budget neutrality and revenue erosion
The "budget neutrality" requirement is a significant administrative pain point because it forces CMS to suppress RVU values for certain services to offset increases in others.
Historically, this has resulted in:
- Evaluation and management (E&M) suppression: Primary care and post-acute providers rely heavily on E&M and have seen their relative values suppressed to remain within budget limits (see the previously mentioned RUC bias).
- Conversion factor reductions: CMS frequently reduces the conversion factor year over year. This means that a facility may provide the same volume and quality of services as the previous year but generate less total revenue.
RBRVS best practices for facility administrators
Implement the following best practices to help your facility maximize reimbursements and optimize your operational efficiency.
1. Regularly audit your facility's CPT coding accuracy
Under the RBRVS, undercoding or miscoding claims is a major source of lost revenue.
Administrators should conduct regular audits of CPT coding accuracy to ensure the facility captures the full value of the resources expended during care.
2. Monitor the annual CMS Physician Fee Schedule, Final Rule
The final rule is released each November for the upcoming year, so set an annual reminder to check it. Administrators should closely monitor these annual CF fluctuations, as even a small drop can significantly affect the net revenue of high-volume service lines.
3. Evaluate your staffing mix
Not just in terms of nursing staff. Evaluate your staffing mix with physicians and APPs. Examine how billing differentials impact revenue, particularly for high-volume service lines.
4. Engage in advocacy
Are you part of an organization that represents your type of facility? Sign up for newsletters and attend conferences to keep yourself informed.
Engage with the organization’s advocacy channels if the services your facility provides appear undervalued in the RVU schedule. This can affect future PFS rules.
We all want better patient outcomes
Are you using RVUs to measure staffing in your facility? Nursa’s shift marketplace provides access to vetted, acute nursing clinicians ready when you need them. Sign up as a facility on Nursa to post a shift to the Nursa Shift Marketplace.
Sources:
- AMA: RBRVS Overview
- What Are Relative Value Units (RVUs)?
- Development of the Resource-Based Relative Value Scale | AMA
- Drivers of Cost Differences Between Nurse Practitioner and Physician Attributed to Medicare Beneficiaries - PMC
- Calendar Year (CY) 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F)
.png)
.png)
