How to Keep Your Income Up as RVUs Transition Away

Deborah Walker Keegan, PhD


January 03, 2013

In This Article

Efforts to Adapt or Save the RVU

Some medical practices have tried to extend the useful life of the RVU system through creative accounting by developing RVU equivalencies for every type of work that does not have an RVU-assigned value. For example, RVU proxies are created for secure email messaging, travel time to a satellite site, committee work, quality improvement projects, and every other non-RVU-associated activity of the physician.

Such a fantasy world is difficult to sustain over the long-term. Each and every nuance of a physician's practice is dissected to its nth degree when a medical practice elects to turn its world into a virtual RVU reality. It can be done, but the staff resources required to manage this scheme are great, and a practice can be led down a path that obscures a focus on value.

Compensation Layering

Other medical practices have taken a different route and have turned their compensation plans into "add-on" systems that also will be difficult to sustain. For example, they have continued to pay physicians for volume, such as paying physicians a dollar value per work RVU (either a flat fee or an incremental amount based on thresholds), while also supplementing this payment with a direct pass-through of the additional revenue received through the various experiments or contracts that are in place.

Thus, a compensation plan that seems to be productivity-driven may also be laden with additional revenue that is parsed out for each program, with physicians receiving their cut of a bundled payment; a pay-for-performance payment; and other government add-on payments, such as the Physician Quality Reporting System.

This strategy becomes unwieldy, given the amount and type of add-on programs and the growing dollar amounts associated with each. Compensation layering involving parsing out revenue on the basis of each type of revenue stream is probably unsustainable as an end-state strategy to transition from a volume-driven to a value-driven world.

How to Prepare for the Future, Now

Here are some steps you can take to shift your practice away from a dependence on RVUs.

Understand Your Costs

Understand the cost of your practice interventions. Go beyond cost per RVU and cost per visit; gain a fundamental understating of your cost per diagnosis and cost per episode of care. This shifts the focus from the volume and cost of each service provided to an understanding of your costs associated with a particular diagnosis or episode of care. This positions your practice to effectively negotiate your share of a bundled payment or portion of a pay-for-performance contract.

Measure and Market Your Value

Start measuring the impact you have on patient outcomes of care in terms of quality and costs. Select specific outcomes measures that are important for your specialty and analyze the value -- defined as high quality at low cost -- that you provide to patients in comparison. This gives you the data you need to market your value proposition to payers, employers, and patients.

Innovate Your Delivery System

Improve patient access and expand your care delivery model beyond the face-to-face visit with the patient. Implement secure email messaging, telehealth, and video health with your patients, and invest in clinical staff to conduct triage, care extension, and patient education. In essence, transform your delivery system now, in new and exciting ways that take patient care out of the physical constraints of your office.

Prepare for ICD-10 and Value-Based Modifiers

The International Classification of Diseases, Tenth Edition (ICD-10), and value-based modifiers will probably change the landscape of physician practice. Highly specific diagnosis codes will begin the algorithm for differential reimbursement based on cost and quality outcomes. Don't delay until the ICD-10 is upon us. While you have the time, require your coders to become certified and leverage technology so that your practice can effectively participate in the new documentation and coding requirements associated with the ICD-10 and value-based modifiers.

Transition Physician Compensation Plans to Productivity Plus Value

Transition from productivity-based compensation plan architectures, such as dollars per work RVU or a percentage of net collections, to value-based architectures, such as a base-plus-incentive plan. In a base-plus-incentive plan, a base salary is paid to physicians who meet explicit performance expectations and targets, with the incentive or variable portion of compensation focused on quality, service, and cost of practice.

The value you provide to your patients will be the driver of future reimbursement methods. Aligning the funds flow model of reimbursement with the distribution model of physician compensation will ensure your practice continues to evolve as a value-driven provider in the market.

We are at a clear juncture in healthcare reform, reimbursement reform, and delivery system innovation. We may not know the end state, but we do know that value is replacing volume at an ever-increasing rate. Don't be caught unprepared. Begin the shift now from an RVU-driven world to a value-driven world for your practice, and your patients.