Often pediatricians question why they should use the Medicare Resource-Based Relative Value Scale (RBRVS) methodology in fee schedule development. Clearly this has taken center stage in light of the complaint filed with the Health Care Financing Administration (HCFA) to address inadequate Medicaid reimbursement. Furthermore, many commercial insurance carriers have abandoned the old “usual and customary” or “customary, prevailing, and reasonable” methodology of developing fee schedules. In addition, many groups evaluate physician performance using the physician work component of the relative value units (RVUs). Therefore, it is imperative that pediatricians understand the basis of RBRVS. A more detailed description of the development of the practice expense component of the RVUs will follow.

The RVUs assigned to any Current Procedural Terminology (CPT) procedure code reflect three elements of the fee schedule payment amounts: physician work, practice expense, and malpractice expense. Total RVUs are weighed as follows: physician work is 54.5%, practice expense...

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