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April 28, 1989

The Resource-Based Relative Value Scale

Author Affiliations

Greenwich, Conn

Greenwich, Conn

JAMA. 1989;261(16):2327. doi:10.1001/jama.1989.03420160051012

To the Editor.—  Hsiao et al1 concluded that redistribution of 1986 Medicare physician payments according to their Resource-Based Relative Value Scale would have led to 56% increased payments for evaluation and management services and 42% reduced payments for invasive services. A physician with predominantly invasive work would assume a 42% reduction in fees and revenue; with a steady overhead (about 50% of current revenue), however, this would represent an 84% loss of income after expenses. The authors incorrectly assume that relative practice income, or overhead/revenues, would remain constant in any redistribution of fees and revenue. In fact, with a constant overhead, the relative practice income is inversely proportional to revenue. The change in fees would be less than is stated.