Results and Policy Implications of the Resource-based Relative-value Study

The resource-based relative-value scale (RBRVS) is a measure of relative levels of resource input expended when physicians produce services and procedures. It is a function of the physician's work input, the opportunity cost of specialty training, and the relative practice costs for each specialty. This paper presents resource-based relative values (RBRVs) for selected procedures of four major specialties--family practice, internal medicine, general surgery, and thoracic and cardiovascular surgery. We compare RBRVs with current charges and find several general patterns. Invasive procedures are typically compensated at more than double the rate of evaluation-and-management services, when both consume the same resource inputs. Imaging and laboratory procedures fall between invasive and evaluation-and-management services. We analyze the financial implications of the RBRVS by developing a simple model and simulating the effects of an RBRVS-based fee schedule on physicians' revenues in various specialties. We use Medicare data to perform the simulation under the "budget-neutral" assumption. Results show that an RBRVS-based fee schedule affects specialties differently. The average family practitioner could receive 60 percent more revenue from Medicare, whereas the average ophthalmologist could lose 40 percent of current revenues. The effects on other specialties fall between these two.