How to Increase Provider Productivity Using RVUs

How to Increase Provider Productivity Using RVUs

Increasing provider productivity continues to be a critical factor in achieving the Institute for Healthcare Improvement’s Triple Aim: 1) To improve the patient experience of care, 2) To improve the health of populations and 3) To reduce the per capita cost of healthcare.

In 1992, Centers for Medicare and Medicaid Services (CMS) implemented the Resource-Based Relative Value Scale (RBRVS) as the  a national standard for payment under Medicare Part B. Within the RBRVS system, payments to physicians were broken out into three components: the time a physician takes to perform a given service or treatment; the practice expense associated with providing treatment (i.e. rent, equipment, utilities, etc.); and the malpractice insurance required to perform the service or treatment.  

For each of those components, CMS assigned a Relative Value Unit (RVU), to determine how much to compensate physicians based on the value of work or effort they spend treating patients. Each CPT code, therefore, has three RVU values, one each for labor, practice expense and malpractice insurance. RVUs are also adjusted for regional cost differences, so for example, a physician practicing in Manhattan would have an upward adjustment relative to a physician practicing in rural Iowa.   

Beforerelative value units were introduced, most payers based payments on charges physicians filed for their services that were referred to as usual, customary and reasonable (UCR). UCRs were interpreted by different payers differently, so a provider could be compensated differently by different payers for the exact same charge. UCRs also didn’t provide a way to track provider productivity that wasn’t solely volume-based.

With the advent of RVUs, there was a standard measure of productivity. If physician A performed procedure X on patient Y, she would generate the same RVUs as physician B who performed procedure X on patient Y.

In their blog post, “Using RVUs to Measure Provider Productivity,” Schumacher Clinical Partners note some of the larger-scale advantages to using RVUs as a measure of provider productivity. RVUs allow for easier comparison of productivity between providers, even providers at different healthcare organizations. RVUs help organizations determine how to best use clinical staff because they make it easier to see which procedures and treatments require more work effort.  In addition, RVUs can help determine how to compensate providers and provide a level playing field on which to structure bonuses. Schumacher Clinical Partners also argue that RVUs “promote transparency, accountability and management efficiency.”

While many agree that RVUs provide a helpful, standardized method for measuring provider productivity, can using RVUs actually incentivize providers to be more productive?

Yes, especially when a provider’s compensation is tied to their productivity. In a scenario where a physician’s compensation is, in part, based on the number of RVUs he generates, it’s likely he will do everything he can to generate the most number of relative value units. In theory, if he is generating more RVUs, he is being more productive.  

In the “Physicians Practice” article, “Using RVUs to Measure Physician Performance,” author Frank Cohen shares an example of how RVUs might be used to determine physician compensation.

In a 10-physician practice, Cohen says, with all else being equal such as experience, patient characteristics and payer mix, we would expect each physician in the practice to account for about 10 percent of the practice’s total revenue as well as 10 percent of the practice’s total expenses. If this was the case, Cohen says, each provider would have a productivity ratio of 1. Realistically, 10 providers in a practice are unlikely to be equally as productive.

Cohen suggests one way that compensation can be tied to productivity is by using the following equation: % provider revenue / % provider RVU = productivity ratio. Those with higher productivity ratios should be compensated more than those with lower productivity ratios, he says.

While RVU generation is tied to some historical measures of productivity like volume (the more patients a physician sees the more “productive” she is considered), it is also highly dependent on the physician’s ability to clearly communicate the type and level-of-service performed at each patient encounter in the patient’s chart. Because insurance companies never see the patient’s chart–they just see the CPT codes– it’s essential that the documentation the physician provides can be accurately interpreted and coded by whoever is coding the patient encounter.

Productivity means different things to different providers. If providers are to be incentivized by tying RVU production to compensation, they not only need to fully understand how RVUs are calculated but also how to ensure they get credit for their productivity through complete and accurate documentation.