Basing a physician’s compensation on wRVU production isn’t necessarily a bad thing. Compensation methodologies based on wRVU production can be a reasonable way to assure that higher producing physicians are being appropriately rewarded. However, there are three major wRVU compensation traps for physicians that must be examined in any physician employment agreement containing compensation based wholly or partially on wRVU production.
wRVU Compensation Traps for Physicians #1 – Inability to Confirm Calculations of wRVU Production
The first of the major wRVU compensation traps for physicians is an inability to confirm the employer’s calculations of productivity. The concept of compensating physicians based on productivity is based on the fundamental assumption that productivity is being appropriately captured. It is logical to assume that the employer will capture all of a physician’s work, in order to collect from the appropriate payor. Unfortunately, all too often this is not the case. I have seen far too many situations where the employer does not capture all (or, in some instances, even a major portion of) the work done by the physician.
In one particularly egregious case, a physician was counseled on his lack of productivity, and sternly informed that his compensation would be drastically reduced. The hospital billing records indicated that he was seeing an average of three patients per day. This was a full-time specialist seeing patients five days a week, eight hours a day. The physician began to keep a log of patients seen, and also kept all copies of his schedule, reflecting all the patients he was actually seeing. We arranged a meeting with the administration of the hospital, where the evidence of his work was presented. It was clear that the billing department, rather than the physician, was the problem.
Importantly, this physician had negotiated his own employment agreement, which did not give him any right to confirm or challenge the hospital’s calculation of compensation. We eventually persuaded the administration not to reduce the physician’s compensation, because he was clearly being productive. Since he was in an overworked department, concessions were made to convince him to stay. However, in the absence of good billing records, a negotiation resulted concerning appropriate compensation. I doubt he received everything he was entitled to, but at least he wasn’t terminated.
It is vitally important to avoid the wRVU compensation trap of not being able to confirm and dispute calculations of productivity compensation. A physician’s compensation should not be at the mercy of a hospital’s lackadaisical billing department.
wRVU Compensation Traps for Physicians #2 – Adjustments to Calculations of wRVU Production Based on Reimbursement Modifiers
The second of the major wRVU compensation traps for physicians results when wRVU productivity is adjusted to reflect compensation modifiers. This trap results from subtle language in the physician employment agreement that provides that wRVU production will be adjusted to reflect CMS modifiers. Many physicians erroneously read this language as meaningless boilerplate. After all, CMS promulgates wRVU values, so it seems natural that wRVU production would be adjusted in accordance with CMS methodology.
To understand the significance of this trap, physicians must realize that the determination of wRVU production is separate and distinct from reimbursement modifiers. A classic example of this can be seen when a surgeon performs a bilateral procedure, or multiple procedures on the same patient. A bilateral procedure, quite naturally, represents twice the wRVU production of a single procedure. CMS methodology recognizes this. However, the reimbursement for a bilateral procedure is only 150% of that for a single procedure. This adjustment probably is reasonable for reimbursement purposes. The patient has already been prepped, the OR has been cleaned, the anesthesiology has already been administered, etc. However, none of these considerations alters the fact that the surgeon performing a bilateral procedure has done twice the work of a single procedure. Similarly, a surgeon operating on multiple hammer toes of the same patient has done multiple times the work of operating on just one toe. There is no adjustment in CMS methodology to reduce the wRVUs in this situation.
Unfortunately, many hospitals use reimbursement methodology to reduce the calculation of a physician’s wRVU production. This can result in significant reductions in physician productivity compensation. The second of the major wRVU compensation traps for physicians can be avoided by assuring that physician wRVU production is determined by using the current CMS wRVU table without regard to reimbursement modifiers.
wRVU Compensation Traps for Physicians #3 – Adjustments to Calculations of wRVU Production Based on Posting Date
The third of the major wRVU compensation traps for physicians relates to when wRVU production is credited. Most wRVU compensation mechanisms properly credit a physician for wRVU production when the wRVUs are generated. Unfortunately, some health systems take the position that a wRVU is not “generated” until it is posted in the system. In a well-run organization you would expect that wRVU production would be promptly posted into the system, so that the appropriate payor can be promptly billed. However, I have seen instances where a poorly run billing department took in excess of a month to post wRVU production. This poor practice results in more than a timing difference for the physician. Physicians who are working hard can fail to meet minimum production levels if the staff hasn’t posted it yet. At a minimum this can lead to a decreased bonus. In extreme cases, this can result in a reduction in compensation for the physician who “isn’t productive.”
This issue is a problem for physicians at all stages of their careers. A physician who is starting out (or is starting over at a new employer) can appear to be non-productive for the first several months – which can reduce bonuses and potentially result in a reduction of income. For physicians who have served at an employer for years, a lag in production can result in “lost” wRVU production, since employers don’t pay for wRVU production after a physician’s employment has been terminated.
To avoid this major wRVU compensation trap for physicians, it is important to confirm that the physician employment agreement credits wRVU production at the time it is generated.
You might also be interested in my article on the dangers of physician productivity compensation.