Traditionally, healthcare providers, such as hospitals and clinic, are supposed to compete in free market. Therefore, service price determines by supply and demand. As Americans believes that free market is essential for efficiency and wellbeing, any manipulation in healthcare industry is not tolerate at all. When patients coved by medical insurance, and patients hold no will to bargain, manipulation of healthcare price and made price-escalating emerging. New way to compensate doctors must defined and curb price escalating for healthcare service.
RBRVS introduced to academia and politics for the purpose of control healthcare expenditure. Simply speaking RBRVS is method to define price of healthcare service of doctors. Hypothesis behind that is only if doctors pay fair there would be no manipulation of service price and can from start to control healthcare expenditure. Enforced by law, doctor’s compensation must not determine by inspection and pharmaceuticals. Together with law informant and RBRVS, the escalation of Medicare expenditure is remission.
The price set for public utilities must not manipulated and must cover fix cost of producing, so as healthcare industry. RBRVS is price-setting mechanism, as public utilities, the price set for healthcare can only reflect resource doctors used in service, such as inspection and surgery. Different service its relative value is different, some difficulty surgery is more valuable than the easy one and must pay more. Therefore, RBRVS is system to determine healthcare service price by two factors resource and is relative value.
RBRVS is foundation of healthcare reform, without it, illegitimate economic interest of healthcare industry worker involved in the service, and jeopardize healthcare expenditures control process and healthcare reform.