Healthcare Revenue Cycle & Medical Economics
Medicare Physician RVU, GPCI & Payment Formula
Calculate CMS Resource-Based Relative Value Scale (RBRVS) Unadjusted RVUs, Geographic Practice Cost Index (GPCI) Adjusted RVUs, Medicare Allowed Fee-Schedule Payment, and 80% Part B Plan Reimbursement.
Weight Work, Practice Expense, and Malpractice RVUs by their separate GPCIs before multiplying!
Under the CMS Medicare Physician Fee Schedule (MPFS) Resource-Based Relative Value Scale (Hsiao et al., 1988), every CPT/HCPCS clinical procedure splits into three distinct Relative Value Units—Physician Work (wRVU), Practice Expense (PE_RVU, which differs sharply between Non-Facility clinic vs Facility hospital-outpatient settings!), and Professional Liability Malpractice (MP_RVU). The #1 medical-group budgeting mistake is multiplying Total Unadjusted RVUs (wRVU + PE_RVU + MP_RVU) by a single blended locality index! CMS applies three separate Geographic Practice Cost Indices (GPCI): Adjusted_RVU = wRVU * GPCI_work + PE_RVU * GPCI_pe + MP_RVU * GPCI_mp, then multiplies by the annual statutory Conversion Factor CF ($/RVU) to determine Allowed Payment (split 80% Medicare Part B trust fund / 20% patient coinsurance after deductible)!
Start with a hand-verifiable CPT evaluation visit in a shared clinic contracting workbook—Work_RVU = 2.50 (B2), Non_Facility_PE_RVU = 2.00 (B3), Malpractice_MP_RVU = 0.30 (B4 -> Unadjusted Total = 4.80 RVU in E2), Locality_Work_GPCI = 1.06 (B5), Locality_PE_GPCI = 1.20 (B6), Locality_MP_GPCI = 0.80 (B7), and CMS_Conversion_Factor = $33.00/RVU (B8): GPCI-Adjusted Total RVU equals 2.50*1.06 + 2.00*1.20 + 0.30*0.80 = 2.65 + 2.40 + 0.24 = 5.29 RVU (E3); Medicare Allowed Payment is 5.29 * $33.00 = $174.57 (E4); and 80% Part B Plan Share is $139.66 (E5, with $34.91 patient coinsurance)!
| CMS MPFS Metric (wRVU=2.50, PE=2.00, MP=0.30; GPCIs 1.06/1.20/0.80; CF=$33) | Formula | Verified Output |
|---|---|---|
| Unadjusted Total RVU | wRVU + PE_RVU + MP_RVU | 4.80 RVU |
| GPCI-Adjusted Total RVU | wRVU*GPCI_w + PE*GPCI_pe + MP*GPCI_mp | 5.29 RVU (3.85 Facility PE=0.80) |
| Medicare Allowed Payment ($) | GPCI_Adjusted_RVU * Conversion_Factor | $174.57 ($158.40 @ National 1.00) |
| Medicare 80% Plan Payment ($) | 0.80 * Allowed_Payment | $139.66 ($34.91 Coinsurance) |
CMS RBRVS Geographic-Adjusted Allowed Payment Formula
Validate non-negative component RVUs (with wRVU + PE_RVU + MP_RVU > 0), positive locality GPCIs, and Conversion_Factor > 0!
=LET(rv_w, B2, rv_p, B3, rv_m, B4, gp_w, B5, gp_p, B6, gp_m, B7, cf_d, B8, IF(OR(rv_w < 0, rv_p < 0, rv_m < 0, rv_w + rv_p + rv_m <= 0, gp_w <= 0, gp_p <= 0, gp_m <= 0, cf_d <= 0), "Invalid MPFS Input", LET(ad_r, rv_w * gp_w + rv_p * gp_p + rv_m * gp_m, ROUND(ad_r * cf_d, 2))))Site-of-Service Neutrality Check (Non-Facility vs Hospital Facility PE)
Test shifting the procedure from physician-owned clinic (PE_RVU = 2.00) to hospital outpatient department (PE_RVU = 0.80 in cell B3): Allowed Payment drops from $174.57 to $127.05 because the hospital bills a separate OPPS facility fee!
=IF(ISTEXT(E4), E4, ROUND(0.8 * E4, 2))Try the example
Use the original values or change them to test your understanding.