Medicare reimburses physicians using which metric?

Medicare reimburses physicians using which metric?

• A. Salaries
• B. Relative Value Units (RVUs)
• C. Fixed amounts per visit
• D. Capitation

Answer: (B)

Medicare reimburses physicians using Relative Value Units (RVUs), which quantify the value of a service based on the effort, skill, time, and risk involved. The system breaks RVUs into three parts: work RVU ( physician labor ), practice expense RVU (costs to deliver the service like staff and equipment), and malpractice RVU (professional liability costs). The total RVU for a service is then adjusted by geographic cost indices and multiplied by a conversion factor to determine payment. This setup lets Medicare standardize payments across specialties and regions while accounting for regional differences in costs. Other models don’t apply here: salaries reflect a fixed employer-based pay rather than per-service reimbursement; fixed amounts per visit don’t capture the broader cost and effort differences across services; capitation is a per-patient prepayment model used in some managed care contexts, not the Medicare Physician Fee Schedule.

Medicare reimburses physicians using Relative Value Units (RVUs), which quantify the value of a service based on the effort, skill, time, and risk involved. The system breaks RVUs into three parts: work RVU ( physician labor ), practice expense RVU (costs to deliver the service like staff and equipment), and malpractice RVU (professional liability costs). The total RVU for a service is then adjusted by geographic cost indices and multiplied by a conversion factor to determine payment. This setup lets Medicare standardize payments across specialties and regions while accounting for regional differences in costs.

Other models don’t apply here: salaries reflect a fixed employer-based pay rather than per-service reimbursement; fixed amounts per visit don’t capture the broader cost and effort differences across services; capitation is a per-patient prepayment model used in some managed care contexts, not the Medicare Physician Fee Schedule.