RBRVS: The Best Rx for Treating Physician Compensation

February 10, 2008

According to the American Medical Group Association’s 2006 Medical Group Compensation & Financial Survey, physician compensation increased for most specialties – even as medical groups posted an average loss of $1,264 per physician. Financial managers face a tough choice: get out of the group medical business or make their practices profitable – without shifting focus away from patient care. The best way to keep physician compensation in line with reimbursements is to base doctors’ pay on the same metric that Medicare and most insurance carriers rely on: the Resource-Based Relative Value Scale (RBRVS).

Many experts agree that using and analyzing RVUs is a fairer way of accounting for physician revenue and expenses than many of the less-scientific methods many practices rely on, such as:

Compensation survey data leads doctors to expect compensation that is close to the national average for their specialties, even though these benchmarks may not accurately reflect the revenues these specialties deliver today.

Charges are especially problematic, because the practice’s published prices have no bearing on what insurance carriers actually pay.

Patient volume is not sufficient, because it does not account for the differences in effort between an office visit and a major procedure.

Revenue is not completely fair, because some patients have poor insurance payors. Should a doctor who treats indigent AIDS patients be punished for the good deed?

Setting bonus compensation without RBRVS can be equally arbitrary. Some practices simply split whatever profit the group produces – essentially shifting profits from high performers to the less hard-working. Another common bonus program is simply deducting a percentage of each provider’s receivables for overhead and adding the rest to base pay – even though actual expenses may be higher than the agreed-upon percentage.

For these reasons, many experts now advocate RBRVS as the most equitable way to divide up revenues and expenses, so physician compensation makes business sense.

In the past, it was impractical for most practice managers to report on RVUs. Analyzing RBRVS is not brain surgery, but without automation in place, it can certainly be time-consuming. Administrators can easily spend hours every week looking up billing data and manually compiling spreadsheets, with associated opportunities for errors. For example, using a manual process, it takes several calculations to answer the question, “Which providers actually billed enough work RVUs to cover their own costs?

Until recently, only the very largest medical groups have had the IT resources and have been able to justify the expense of high-end billing applications that conduct in-depth RVU analyses. However, a cost-effective alternative has emerged for medical practices: Web-based applications.

Web-based medical practice optimization solutions, such as PortBlue’s PracticeSense™ (www.practicesense.com ), enable financial managers and practice administrators with limited computer savvy or resources to login to a website where they can upload billing and procedural data from their existing PM, billing, and accounting systems without having to download software or build expenses interfaces. Once data is uploaded into PracticeSense, the web-based solutions will interpret your data, perform all calculations and generate detailed analysis, charts, graphs and reports within minutes that summarize each physician’s RVU output in relation to their compensation and costs as well as allow administrators to compare payor contract performance and reimbursement rates.

Conclusion

The best way to build equitable physician compensation plans is to tie incentives to RBRVS, the only universally accepted metric that determines how medical procedures get paid. Financial managers now have access to Web-based tools that can arm them with the right data, so they can correlate physician pay with RVU-based productivity.

Previous post:

Next post: