As hospitals continue to focus on the business side of healthcare, improving provider productivity moves closer to the center of the cost-cutting, revenue-producing bullseye for one simple reason: the more doctors increase their productivity, the more patients they can see, and the more patients they see, the more hospitals benefit financially. If doctors could also profit, the added incentive would make productivity gains a virtual lock.
As many hospital administrators know, there is an established way to spur provider productivity — by using Relative Value Units (RVUs) compensation.
What are RVUs?
RVUs are a national standard set by CMS in 1992 to determine how much to pay doctors based on the volume of work or effort they spend treating patients for the services and procedures covered under the Physician Fee Schedule. RVUs are a barometer of practice efficiency and patient complexity that offers insights into provider performance.
RVU compensation combines several variables — the time it takes to perform a given service, the skill that service requires, the necessary mental effort and judgment, and the liability risk associated with the service — into a single unit.
Any hospital that puts all or part of a doctor's income under an RVU plan inspires productivity and creates the opportunity for physicians to earn more while sharing part of the financial risks.
Reasons to Use RVUs for Measurement
Before introducing RVUs, CMS and most private payers based their payments on the historical charges physicians billed for their services, which payers refer to as usual, customary, and reasonable (UCR). The problem with that method was that there was no uniform standard; each payer interpreted UCR differently.
Also, before RVUs, there was no quantitative means of tracking provider productivity other than by counting the number of procedures performed and patients seen. However, this method offered little more than simple volume measurements.
Benefits of RVUs as a Measurement Standard
The reason for using RVUs —to standardize productivity — is also one of the chief benefits: The work generates the same amount of RVUs regardless of who carries out the service. Any provider —physicians, NPs, and PAs alike — are all credited the same when they use an RVU (and its corresponding CPT code) for measurement irrespective of the patient’s insurance.
RVUs also reflect the fact that not all encounters or hours spent in patient care are the same. An ER visit for treating tinea pedis, for example, would generate different RVUs than evaluating and managing a patient complaining of chest pain, assuming the visits reflect different CPT codes.
In addition, RVUs help hospitals identify when change may be needed regarding the utilization of clinical services and staff work efforts. RVUs provide a baseline metric to gauge what work is taking place and who is performing it.
RVUs allow hospitals to:
- Compare clinicians with their peers;
- Identify when extra clinical staff is needed;
- Make determinations about provider compensation and bonus structures;
- Promote transparency, accountability, and management efficiency.
Take a closer look at the benefits of using RVUs as a measurement standard. [DOWNLOAD]
How to Get More RVUs
According to Dr. Phil Parker, Group Medical Officer for SCP, there are three primary ways doctors can generate the most RVUs: See patients quickly, do all the appropriate procedures possible, and document explicitly.
From his standpoint, that means reducing LWOTs, not turning over procedures to specialists unless absolutely necessary, and not omitting essential pieces of information out of the chart, which could result in down-coding and fewer RVUs.
Regarding his last point, appropriate procedure documentation can be a game-changer in determining the number of RVUs and the physician's compensation. When it comes to RVU-related compensation, proper documentation is a physician’s best friend.
Therefore, it pays doctors (literally) to know what is required at every billing level to prevent up- or down-coding and then bill at the highest level ethically and legally supported.
While properly documenting procedures requires that doctors stay up to date on the latest CPT codes — a tall order given the busy schedules most EM and HM physicians keep — the risk of lack of knowledge can lead to unintentional miscoding.
To cite another example, from an article in ACEPNow, “An emergency physician would expect to be compensated less for seeing a patient with a simple bee sting than for seeing a patient with severe chest pain. However, the physician who does not adequately document the chest pain case may find it downcoded. A level 5 down-coded to a level 3 represents a loss of 64 percent of the RVUs and is roughly equivalent to providing a level 4 service for free.”
Doctors should keep in mind that insurance companies will not see the patient’s chart, get the patient’s perspective on their treatment, or speak with the attending physician. All they receive is a series of five-digit codes. To maximize the value of RVUs, physicians must empower coders with adequate documentation to report the appropriate code for services provided.
RVUs provide a defensible income in an age when rising expenses and reduced reimbursement are always in conflict. Therefore, it’s in the hospital’s best interest to ensure doctors stay educated on the latest CPT codes, set up the appropriate amount of coverage for patient volume and acuity, pay physicians appropriately to remain competitive, and incentivize them adequately to be highly efficient using RVUs.