Relative-Value Units in Arthroplasty: Past, Present, and Future

Abstract

Relative value units (RVUs) were first introduced by the Omnibus Budget Reconciliation Act of 1989 to standardize physician compensation based on the effort, skill, and resources required for medical services. This methodology replaced the "usual, customary, and reasonable" standard, which reduced variability in payments across providers. RVUs are comprised of physician work, practice expenses, and malpractice costs. In arthroplasty, declining inflation-adjusted reimbursements for total hip and knee replacements are primarily due to a lack of inflation adjustments, rather than nominal decreases values of RVUs values or the Medicare Conversion Factor. While value-based care models like the Comprehensive Care for Joint Replacement initiative and the Merit-Based Incentive Payment System aim to link RVU-based payments with quality and cost metrics, compensation remains largely tied to fee-for-service models. Major challenges include inadequate compensation for revision arthroplasty and the administrative burden of RVU management. Despite its limitations, the RVU system has enhanced transparency in physician reimbursement, though improvements are needed to better align financial incentives with value-based care principles in orthopaedics.

Keywords: economics; relative value units; total hip arthroplasty; total joint arthroplasty; value-based care.