Medical Practice Management
Jun 22

Determining cost of service

Use this effective shortcut to determine cost of service:

  1. First, using a spreadsheet program, for your most recent fiscal year, list all the procedure codes that you bill along with the associated relative value units (RVUs) from the Center for Medicare and Medicaid Services.
  2. Then, multiply each RVU by the volume of each procedure code billed. You can obtain the RVU schedule online from www.cms.gov. This gives you total RVUs for each code. Total that number, and you have the total number of RVUs your practice produces during a fiscal year.
  3. Finally, divide that number into your total operational expenses to derive an average cost per RVU.
About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →