Pediatricians often question why they should use the Medicare Resource-Based Relative Value Scale (RBRVS) methodology in fee schedule development. This methodology incorporates sound business principles by addressing the costs incurred in delivering the services (eg, practice expense) as well as malpractice expense and physician work. In addition, many Medicaid and commercial insurance carriers have abandoned the old “usual and customary” or “customary, prevailing, and reasonable” methodologies of developing fee schedules. In fact, more than 74% of public and private payers, including Medicaid programs, have adopted components of the Medicare RBRVS to reimburse physicians. Furthermore, many groups evaluate physician performance using the physician work component of 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 RVUs follows.

The RVUs assigned to any Physicians’ Current Procedural Terminology (CPT®) procedure code reflect...

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