The concept of physician payment relies on a standardized system to translate healthcare services into a numerical value for reimbursement. Current Procedural Terminology (CPT) codes define the service provided, and the Relative Value Unit (RVU) is the mechanism used in the United States to assign a resource-based value to that code. The Centers for Medicare & Medicaid Services (CMS) uses the RVU to determine physician payment under the Medicare Physician Fee Schedule (MPFS). CPT code 99213, representing a common office visit for an established patient, serves as an example of how this valuation system works.
Defining CPT Code 99213
CPT code 99213 is designated for an Evaluation and Management (E/M) service provided in an office or other outpatient setting to a patient the provider has seen before. This code, often referred to as a Level 3 established patient visit, is frequently used in outpatient medicine. The service requires documentation to support a low level of medical decision-making (MDM) or a specific amount of time spent on the encounter. MDM involves weighing the number and complexity of problems addressed, the amount and complexity of data reviewed, and the risk of complications associated with management options.
When using time as the basis for code selection, the provider must document a total time of 20 to 29 minutes spent on the patient’s care on the date of the encounter. This total time includes both face-to-face contact and non-face-to-face activities like reviewing records, ordering tests, and communicating with other healthcare professionals. For instance, a patient seen for a stable chronic condition or a new, uncomplicated problem fits the low MDM criteria for this code. Selection of 99213 requires the clinician’s documentation to reflect either the low complexity of the MDM or the time spent in the specified range.
The Three Pillars of Relative Value Units
The foundation of the RVU system is built upon three distinct components mandated by CMS. This structure ensures that the total value reflects the resources consumed in providing the service. The total Relative Value Unit for any given service is the sum of these three national uniform component RVUs. Each component measures a different type of resource cost associated with the medical service.
The first component is the Physician Work RVU (W-RVU), which quantifies the physician’s effort, skill, and time. This value is assigned based on the technical skill, physical effort, mental effort and judgment, and the stress related to the potential risk to the patient. For an office visit like 99213, the W-RVU measures the cognitive labor involved in the evaluation and management of the patient’s condition. This component remains the same regardless of where the service is performed.
The second component is the Practice Expense RVU (PE-RVU), which accounts for the non-physician costs of running a medical practice. These costs include clinical and non-clinical staff wages, office rent, medical supplies, equipment, and utilities. The PE-RVU distinguishes between services performed in a non-facility (e.g., a private physician’s office) versus a facility (e.g., a hospital outpatient department), resulting in two different total RVU values. The third component is the Malpractice RVU (MP-RVU), which covers the expense of professional liability insurance. This value reflects the relative risk and cost of malpractice coverage associated with performing the service.
RVU Values Assigned to CPT 99213
The national Relative Value Unit figures for CPT 99213 are established annually by CMS through the Medicare Physician Fee Schedule (MPFS). The Physician Work RVU (W-RVU) for 99213 is set at 1.30, reflecting the low-complexity cognitive work involved. The Malpractice RVU (MP-RVU) is a fixed value of 0.06, consistent for office-based evaluation and management services at this level. These two components are constant across all geographic areas before adjustment.
The Practice Expense RVU (PE-RVU) varies depending on the setting where the service takes place, resulting in two distinct total RVU values. For a non-facility setting, such as a physician’s private office, the PE-RVU is 1.37, leading to a total unadjusted RVU of 2.73 (1.30 + 1.37 + 0.06). For a facility setting, like a hospital outpatient clinic, the PE-RVU is reduced to 0.60 because the hospital bears many overhead costs. This results in a lower total unadjusted RVU of 1.96 (1.30 + 0.60 + 0.06).
Translating RVUs into Payment
The total RVU figure, such as 2.73 for CPT 99213 in a non-facility setting, is not a dollar amount but a measure of relative resource cost. To convert this value into a concrete payment amount, two final factors are applied using the Medicare reimbursement formula. The formula is: Payment equals (RVU multiplied by the Geographic Practice Cost Index) multiplied by the Conversion Factor. This process ensures the final payment reflects local economic conditions and the current national reimbursement rate.
The Geographic Practice Cost Index (GPCI) is a set of adjustment factors used to account for regional differences in the cost of practicing medicine. A specific GPCI is applied to each of the three RVU components (work, practice expense, and malpractice) to reflect the local cost of labor, office overhead, and liability insurance. For example, a physician practicing in an expensive metropolitan area will have higher GPCIs, resulting in a higher adjusted total RVU compared to a physician in a rural area.
The final step involves multiplying the geographically adjusted total RVU by the Conversion Factor (CF), which is a single dollar amount set annually by Congress and CMS. This factor acts as the national multiplier, converting the adjusted RVU into the final Medicare payment amount. The variability in the GPCI means that the payment for the same CPT code, 99213, will differ based solely on the location where the service is rendered.