Understanding how RVUs benefit independent physicians

The transition to value-based payments raises an important question: What role, if any, will relative value units (RVUs) play in physician reimbursement in the future? After all, aren’t quality-based payment models designed to reward teamwork and care coordination rather than the efforts of any one individual? 

Care coordination is important, but it doesn’t negate the need to measure objectively a physician’s work effort and practice and malpractice expenses-all of which are captured in the RVU, says Douglas Leahy, MD, an internist at Summit Medical Group, a physician-owned network of practices in eastern Tennessee. But that’s not their only benefit. 

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In the future, payers likely will layer quality-based payments on top of traditional RVU-based reimbursement, says Leahy, who serves on the Relative Value Scale Update Committee (RUC), a multi-specialty, physician-led panel that develops the RVUs associated with the American Medical
Association’s Current Procedural Terminology  (CPT) codes.

Physicians who provide quality care ultimately will earn more than those who don’t. Independent physicians who understand how RVUs are calculated can also better prepare doctors for the potential revenue impact of Medicare payment reform and the transition to value-based reimbursement. In addition, RVUs offer a great deal of insight into practice performance if physicians are willing to take the time to dig into the data.

Using RVUs to gain insights

Payers will continue to look closely at RVUs-and so should independent physicians, says Andy Swanson, vice president of consulting services at the Medical Group Management Association (MGMA). 

“Independent physicians have said over time that RVUs are a metric that aren’t important,” says Swanson. “But I would argue that they should be important-not from a purely compensation standpoint as it is with system-employed docs-but as a measure of the efficiency of the practice.” They can be a real eye-opener for physicians who feel overworked, he adds. 

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Often, an analysis reveals that a physician’s total work RVUs are actually below the national or regional annual median for his or her specialty, says Swanson. In the MGMA 2016 Provider Compensation and Production Report, internists report a median number of work RVUs of 4,698 annually. Internists that fall below this median should try to understand why, says Swanson.

Sometimes the answer might be readily apparent. For example, a physician who works only part-time might generate lower-than-average RVUs. More often than not, though, the answer isn’t as straightforward.

Next: The first question to ask

The first question physicians need to ask is whether they’re documenting and coding appropriately, says Swanson. Documentation drives coding, which, in turn, drives RVUs. 

If coded data is inaccurate (i.e., procedures and services are omitted or reported inappropriately), then RVUs will be inaccurate as well, he says. Many practices fail to bill for certain procedures, which means they may lose out on RVUs-and reimbursement-to which they’re entitled, he adds.

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“You want to try to make sure that all the things you do are captured by RVUs to the greatest extent possible given the limitations of our current coding structure,” says William Fox, MD, FACP, an internist at Fox & Brantley Internal Medicine in Charlottesville, Virginia. Fox monitors his own work RVUs monthly.

These RVUs translate directly into dollars, says Leahy. He provides the example of advanced care planning, a service for which physicians didn’t generate any RVUs or receive additional compensation prior to the creation of these two CPT codes in 2016:

CPT code 99497 (advanced care planning, first 30 minutes): 1.5 work RVUs yield a national average Medicare payment for non-facility services of $82.90.

CPT code 99498 (advanced care planning, additional 30 minutes): 1.4 work RVUs yield a national average Medicare payment for non-facility services of $72.50.

However, maximizing RVUs requires physicians to stay up-to-date on coding. “I worry that a lot of physicians are so busy in their day-to-day lives and practices that they can’t keep up with all the coding changes and new opportunities to capture the work they’re doing,” says Fox, who also serves on the coding and payment policy subcommittee of the American College of Physicians. 

Another question is whether the practice employs too many physicians or non-physician practitioners (NPPs). Though a surplus of providers can help fuel practice growth, it could also be a problem if an RVU analysis reveals that patient acuity doesn’t justify the number of current employees, says Swanson. 

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Practices also need to examine whether a physician’s schedule is “RVU maximized,” meaning whether it includes less time for lower-RVU services (e.g., routine follow-up visits) and more time for new patient visits or visits to address changing symptoms, both of which generate higher RVUs, says Swanson. Using NPPs for lower-severity patients is key, he adds. Medical assistants may also be able to help with patient education about chronic conditions, freeing up the physician to focus on high-RVU services.

But be sure to account for the geographic adjustment that CMS makes to each RVU, says Tommy Bohannon, senior executive at Merritt Hawkins, a physician recruiting company. These adjustments mean that physicians practicing in urban areas could generate higher total RVUs for the same service provided by their rural-based counterparts (unless their overall patient volume is lower). Physicians using RVUs as a basis for productivity comparison need to account for the differences in practice location. 

Next: Using RVUs to make strategic decisions

Using RVUs to make strategic decisions

In addition to gaining insight into practice efficiency, RVUs can help independent physicians with strategic planning decisions, such as whether another practice is a good merger partner. 

RVUs are especially important if the merged practices intend to share costs related to administrative services such as information technology support. A 50/50 split makes sense when both practices generate similar RVUs. But when one practice generates significantly more RVUs, that becomes important in determining whether the more productive practice also relies more heavily on administrative and IT support and thus should contribute more for those services, says Bohannon.

Hospitals may also look at this data when deciding whether to purchase a practice or determine the amount of a physician buyout offer, says Bohannon.

In addition, RVUs can help physicians negotiate compensation within an accountable care organization (ACO), says Peter K. Smith, MD, RUC chairperson and chief of the division of thoracic and cardiovascular surgery at Duke University Medical Center. “The physician could make the case to an ACO that their work is more valuable than the work of somebody else [in their specialty] or even a physician in another specialty,” he adds. The thinking is that physicians who perform high-RVU services will bring significant revenue to the ACO, provided they also render a substantial volume of services.

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RVUs are also helpful in determining bonus payments, says Bohannon. Physicians who generate more RVUs throughout the year could receive a percentage of a practice’s profits based on their RVU production.

Even if physicians don’t use RVUs for strategic decisions, they should at least understand them and try to capture as many as possible. “I think it allows physicians to work smarter and not necessarily harder,” Fox says.