Which system is used to determine how much providers should be paid for services rendered and is used by Medicare and many other health insurance companies?

• A. Hospital Outpatient Prospective Payment System
• B. Medicare Administrative Contractors
• C. Resource Based Relative Value Scale
• D. Durable Medical Equipment Coding

Answer: (C)

This question focuses on how payments to providers for services are determined under Medicare and by many other health insurers. The system that does this is the Resource Based Relative Value Scale, or RBRVS.

RBRVS assigns relative value units to each service in three components: physician work, practice expense, and malpractice costs. These components reflect the resources required to deliver the service. The relative values are adjusted for geography to account for regional cost differences. The total RVU for a service is then multiplied by a conversion factor to produce the dollar payment. Under Medicare Part B, this is the primary method for paying physicians, and many private payers adopt or align with this approach.

For example, a service might have RVUs totaling 3.2 when adjusted for geography; with a conversion factor of $36, the payment would be about $115.20. This framework specifically targets physician services rather than hospital outpatient services or equipment coding, which are governed by separate systems or processes.