Evidence based insights into physician compensation, RVUs, contracts, investing, leadership, and the economics of healthcare.

Life and Finances, in Medicine.

Prefer video? Watch my full explanation of RVUs above.

It is a shame that most medical professionals have no idea how to work with RVUs because we were never trained for this. It took me years to learn how to work with RVUs. Unfortunately, RVUs have been used by many people in the industry in ways that were not intended at the beginning. And because of that, they have developed a reputation as a way for the industry to take advantage of medical professionals.

The truth is, if you learn how to work with RVUs, you can make substantially more money than if you don’t. I like working with RVUs. It has been very beneficial in my case.

So, what exactly is an RVU? RVU stands for Relative Value Unit.

One easy way to think about RVUs is as the currency of modern medicine. I like to think about them like casino chips. They don’t have any inherent value. A dollar value is later attached to them. Let me explain. 

Every day, we evaluate patients. We perform consultations, surgeries, procedures, or imaging interpretations, for example. Each of those interactions with patients must get a code that we choose. Those are called CPT codes, or Current Procedural Terminology codes. One group within those CPT codes, is called Evaluation and Management services, or E/M codes. E/M codes are used for cognitive encounters, like office visits, hospital rounding, emergency room evaluations and consultations. Not for procedures.  

Your choice of code depends on how complex your patient encounter was (we will also teach you how to code later). The code you choose has a certain number of RVUs attached to it, from a long list called the Medicare Physician Fee Schedule, created by the Centers for Medicare & Medicaid Services, or CMS.

Let’s use an example from my specialty to make this explanation easier. A hysteroscopy with Dilation & Curettage (D&C) has a CPT code of 58558. And that code has an RVU assigned to it by CMS, of a little bit more than 4 RVUs. Like I mentioned above, it’s like holding 4 casino chips.

Now, how do RVUs become money? Every year, CMS also publishes something called the Conversion Factor or CF. That is basically the value CMS assigns to each RVU. For, simplicity let’s use $33, which is close to 2026’s work RVU value, the portion of the RVU system used to pay you.

So, by doing a procedure like a D&C hysteroscopy that has about 4 RVUs, in theory, I made about:  $33 × 4 = $132

I know this is an oversimplification, but it is essential to understand other factors that we will discuss later that affect the dollar amount you actually get for an encounter or procedure, like my D&C hysteroscopy example. Today we are learning the basics. We will talk about those factors next.

So, going back to my example, if you think about it, the most important thing is not just how many dollars you get per RVU, but the code that you choose when you see a patient.

If you see a patient with a highly complex condition and, by mistake or simply because you don’t know, you use a code for a condition or procedure of lower complexity, then you just left a whole bunch of money on the table.

Let’s use an office example now. Some of the most used E/M codes include:

A 99212 represents a relatively straightforward established-patient encounter. A 99215 represents a much more complex encounter.

In the 2026 Physician Fee Schedule, 99212 carries 0.70 work RVUs, while 99215 carries 2.80 work RVUs.

If I have a complex encounter with a patient and I use a 99212 or 99213 E/M code, when the complexity and my documentation support a 99214 or 99215 code then, regardless of the dollar value of 1 RVU, I didn’t get the dollar amount my work deserved, just because I under-documented and/or under-coded.

What Is the Difference Between an RVU and a wRVU?

This is where terminology becomes important. People frequently use RVU and wRVU as though they mean the same thing. They do not.

Medicare's Physician Fee Schedule has 3 major RVU components: Work RVUs, Practice Expense RVUs and Malpractice RVUs. Together, these components help determine the total relative value of a medical service.

We will expand on each of these later. For medical professionals, however, work RVUs are the number that matters most, because employers use wRVUs to measure productivity.

This is why you may hear someone say, “I produced 8,000 RVUs last year,” when they really mean, “I produced 8,000 work RVUs.” That distinction is important.

How Do RVUs Become Physician Compensation?

Now we get to the part most physicians care about. I mentioned that the Conversion Factor for CMS in 2026 is a little more than $33. Well, this is just a reference. The actual amount you get depends primarily on your employer. Your employer separately uses a completely different number (i.e. $40, $45 or any other amount per wRVU) to calculate your compensation, after adjusting for different factors (we will also talk about these factors). CMS’ Conversion Factor is just a baseline used by employers to adjust their own RVU dollar value internally. Let’s use the examples above.

Suppose your employer pays you $40 per work RVU.

That is a simple example of a physician productivity compensation formula based on how much your employer pays you.

Why Does Choosing the Correct Code Matter?

Like I mentioned above, if you work hard caring for a complicated patient but you don’t document and/or code correctly, you may generate fewer RVUs than you should and your work does not get the reimbursement it deserves. Over one patient, that difference seems small. Multiply it by thousands of encounters over a year, and it becomes substantial.

This is one of the reasons understanding coding and RVUs together is so important. Accurate coding is not about trying to make every encounter as expensive as possible. It is about accurately describing the work you actually performed. And once that service is correctly documented and coded, the RVU system assigns the correct relative value to that work.

Furthermore, your institution is also directly affected by your choice of CPT code, because each CPT code triggers payment for each of the three types of RVUs. Not only the work RVUs used to pay you, but the malpractice RVUs and the practice expense RVUs.

·      RVUs are not perfect, and they do not measure everything that physicians contribute to patient care. But they are deeply embedded in the American healthcare system

·      Whether you are salaried, productivity-based, or somewhere in between, understanding how RVUs work will help you understand how your work is measured, and how your compensation is determined

Bruno Casanova, MD

Sources

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Life and Finances, in Medicine.