For many hospitals and healthcare systems, the tracking and measurement of productivity is an essential process that informs numerous aspects of providers’ employment. In general, productivity is a measure of a provider’s output that is typically based upon the number and type of patient encounters furnished by the provider over a defined period of time. For many hospital-employed providers, productivity is a key component of their compensation arrangement. Accordingly, hospitals and healthcare systems should have policies and procedures in place to ensure productivity is tracked in an accurate and timely manner.
Productivity is often measured by the work relative value units (wRVUs) generated by a particular provider or provider group. wRVUs are a component of the Resource-Based Relative Value Scale (RBRVS), which is used by Medicare as well as many third-party payers for determining reimbursement. Each CPT[1] code is assigned a wRVU, which is intended to reflect the amount of time, technical skill, work effort, and psychological stress related to patient outcome associated with performing the service.[2]
Five Common Pitfalls and Ways to Avoid Them
Through PYA’s work with providers and healthcare organizations across the country, we often encounter small mistakes related to tracking and measuring provider productivity that can have a material impact when left unresolved. Some common pitfalls and ways to avoid them include the following:
- Personally Performed Services – When measuring a provider’s productivity, begin with utilization data reflective of services personally performed by the provider. If a provider is inadvertently compensated for services they did not personally perform, or in some instances oversee, compliance risks may be present. One method for isolating personally performed services is to rely upon utilization data reporting that distinguishes between “billing provider” and “rendering provider,” with rendering provider identifying who performed the service. Further, common billing conventions make it difficult to separate services performed by a physician or a non-physician provider in a globally billed service. Additional care should be taken to ensure compliance with the compensation agreement. Learn more about using productivity methodologies for physician/advanced practice providers arrangements in PYA’s related white paper.
- Modifier Usage and Adjustments – Modifiers may be appended to CPT codes to provide additional information about the service. Modifiers can add specificity to a CPT code, such as identifying the specific body area in which a procedure was performed, or they may be used to adjust the value (professional reimbursement amount and wRVU credit) associated with the services (e.g., discontinued procedure, bilateral service). Accordingly, organizations should account for impactful modifiers when calculating wRVU productivity and routinely evaluate the adjustment amounts attributed to impactful modifiers to ensure consistency with Medicare and other third-party payers. Failure to properly adjust for impactful modifiers may result in over- or understating a provider’s productivity.
- Multiple Procedure Payment Reduction (MPPR) – MPPR is a set of rules by which Medicare reduces reimbursement for the second and subsequent procedures performed during the same encounter (i.e., same patient, same provider, same date of service). In PYA’s experience, commercial payers apply a similar methodology and in some cases use more aggressive reductions than Medicare. Under MPPR rules, the highest-valued procedural CPT code on the encounter is reimbursed at 100%, and the second and subsequent CPT codes may be subject to a payment reduction of 50% (or in some cases more). Additional reductions may apply when multiple endoscopic procedures (e.g., colonoscopy, EGD, joint arthroscopy) are performed during the same patient encounter. Like adjusting for modifiers, adjusting for MPPR impact can help ensure provider productivity is not overstated.
- Internal/Unlisted Services – Many physician practices use “internal” codes to document and track services that are not represented by an established CPT code. Services such as completing patient-requested forms or specialized examinations (e.g., worker’s compensation, disability claim) require a physician’s time and training but may not have an assigned wRVU. In such instances, organizations should consider developing internal or “proxy” wRVUs to credit physicians for furnishing these services. The relevant facts and circumstances surrounding all proxy wRVU amounts should be maintained and reviewed annually.
- IT/Reporting Updates – Organizations should understand the data reporting capabilities and limitations of their electronic medical record (EMR) and/or billing platforms to identify which adjustments, such as those described in this article, may need to be incorporated separately. Also, it is imperative to test that productivity metrics are being calculated as expected after any major system updates or conversions.
Provider productivity and compensation are routinely analyzed using a vast array of benchmark surveys and industry best practices. Aligning adjustments with these types of industry resources and Medicare guidelines is important for accurate productivity capture.
Employment Agreements
When evaluating productivity or compensation, organizations should also consider the provider’s individual employment agreement. The employment agreement may contain terms and provisions that dictate which adjustments may or may not be applied. Periodic routine audits of any practice management and/or EMR system-driven calculations can help with the identification and quick remediation of errors. Doing so will save the organization time and assist with maintaining strong provider relationships.
PYA helps organizations accurately track and measure provider productivity. We also assist with calculating proxy wRVUs. For assistance with measuring productivity, compensation design, compliance, or any other issue, PYA’s executives are happy to help.
[1] Current Procedural Terminology (CPT) and Healthcare Common Procedure Coding System (HCPCS) are registered trademarks of the American Medical Association.
[2] https://www.ama-assn.org/about/rvs-update-committee-ruc/rbrvs-overview
