This is from an example I copied to show how to calculate the RVU:
Using the formula below, first plug in the three Relative Value Unit (RVU) values that have been assigned to the CPT code and the three Geographic Practice Cost Index (GPCI) values that have been assigned to the locality where you are practicing; next plug in the Budget Neutrality Adjustor (which is 0.8994) and Conversion Factor (37.8975); and then it’s a simple matter of multiplication and addition.
[ ((Work RVU x Budget Neutrality Adjustor)* x Work GPCI)
+ (Practice Expense RVU x Practice Expense GPCI)
+ (Malpractice RVU x Malpractice GPCI) ] = Geographically Adjusted RVU Total
x Conversion Factor
= Allowable Amount
Example: If a Manhattan practice performs an eye exam on a new patient (CPT code 92004), what would the allowable be?
((1.67 Work RVU x 0.8994 Adjustor)* x 1.065 Work GPCI)
1.595
+ (1.67 PE RVU x 1.300 PE GPCI)
+ 2.1710
+ (0.04 MP RVU x 1.480 MP GPCI)
+ 0.0592
= Geographically Adjusted RVU Total
3.8277
x Conversion Factor
x 37.8975
= Allowable Amount
$ 145.06
*After multiplying the Work RVU by the Adjustor, you must round off the product to two decimal places before multiplying by the Work GPCI.
Each CPT code has three RVU values. The work RVU value is designed to reflect the work effort and intensity required of the physician in providing the service, the practice expense RVU value represents the expenses the practice incurs in providing the service, and the malpractice expense RVU value varies depending on the relative malpractice exposure of the CPT code. For example, an eye exam (CPT code 92004) has a work RVU value of 1.67, a practice expense RVU value of 1.67 and a malpractice expense RVU value of 0.04, for a total of 3.38 RVUs. For cataract surgery with an IOL (CPT code 66984), the three corresponding values would be 10.36, 7.24 and 0.39, for a total of 17.99 RVUs. Thus, Medicare pays more than five times more for a cataract surgery than it does for an eye exam.
