Before RVUs were used, Medicare paid for physician services using "usual, customary and reasonable" rate-setting which led to payment variability.
[2] The Omnibus Budget Reconciliation Act of 1989 enacted a Medicare fee schedule, and as of 2010 about 7,000 distinct physician services were listed.
[2] The services are classified under a nomenclature based on the Current Procedural Terminology (CPT) to which the American Medical Association holds intellectual property rights.
[2] Each service in the fee schedule is scored under the resource-based relative value scale (RBRVS) to determine a payment.
[1] The sum of the three geographically weighted RVU values is then multiplied by the Medicare conversion factor to obtain a final price.