In 1992, the system was implemented to replace physicians' Medicare fee system

Resource-Based Relative Value Scale (RBRVS).

Explanation:

The creation of the Resource-Based Relative Value Scale (RBRVS) started in 1985 at Harvard University. It was finally developed in 1988 by a team of researchers headed by William Hsiao.

On the 1st of January 1992, the Resource-Based Relative Value Scale (RBRVS) system was implemented to replace physicians' Medicare fee system and for each Relative Value Unit (RVU), a conversion factor of $31 was utilized.

Under the Resource-Based Relative Value Scale (RBRVS), each of the Current Procedural Terminology (CPT) code are determined by the resource costs needed to provide them, with each factor categorized into three (3) components, namely;

1. Physician work, which takes 51%.

2. Practice expense, which takes 45%.

3. Malpractice expense or Professional Liability Insurance (PLI), which takes 4%

Basically, Resource-Based Relative Value Scale (RBRVS) ensures that payment for any service rendered by the physician varies with the resource costs for the service rendered.

Hence, the RBRVS has helped to significantly improve and stabilize the payment system in the United States of America.

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