Pay-for-Performance, Accountable Care Organizations, Patient-Centered Medical Homes, Value-Based Reimbursement…These are some of the latest buzzwords floating around the US healthcare industry as we find ourselves in the midst of an extensive experiment to revise and revamp reimbursement models that will achieve quality as the end result.
No one is setting odds on which model will prevail, but there are four models that are emerging as promising replacements to the current volume-based approach to payment for services:
- Bundled payment
- Shared savings
- Fixed fee
If we acknowledge that some sort of change is imminent, then we have to consider what that change will do to ob-gyn compensation models as we know them. The old adage is true: “If you’ve seen one ob-gyn practice-compensation model, you’ve seen one ob-gyn compensation model.” While many practices share some common characteristics in their compensation arrangements, we find that there are always nuances that are unique because each practice is unique.
One characteristic that many practices do share is that they divide some portion of income based on production as measured by Relative Value Units (RVUs) from the Resource Based Relative Value Scale (RBRVS). Since the practice of obstetrics is collaborative by nature, this allocation is usually made on gynecologic services only. Production is measured by RVUs for each individual physician and the RVUs serve as the individual’s numerator of production divided by the total group’s production as denominator. This then determines the percent of the production pool that will be allocated to the individual.
In hospital-owned practices, RVUs are still frequently used as a measure of production, but usually a fixed dollar amount is paid on a per-RVU basis. (Based on the Physician Compensation and Production Survey; 2012 Report Based on 2011 Data as published by the Medical Group Management Association, the median compensation per total RVU paid to ob-gyns by hospitals and integrated delivery systems is $23.06.)
As the system moves into the alternative-reimbursement arrangements mentioned above, the shortcomings of using RVUs becomes apparent. There are no RVUs for virtual consults, e-visits, patient consultation and education using secure email messaging, or for patient-supported, self-directed care. In ACOG’s Medical Home Tool Kit, there are numerous mentions of the coordination of patient care among the ob-gyn practice staff-- the care team, if you will. However, there are no CPT codes, and therefore no RVUs, by which to measure this preferred level of care.
Given the evolving state of reimbursement, we have identified three reasons why ob-gyns should start reconsidering compensation arrangements that are based all or in part on RVU measurements as a key metric by which to assess a physician’s performance and to distribute revenue to physicians. These are: (1) value-based reimbursement; (2) the changing delivery system; and (3) physician compensation alignment.
Prepare for the Change
There are specific actions that you can take now to prepare for the evolving change in reimbursement arrangements.
- Understand Your Costs
- Measure and Market Your Value
- Innovate Your Delivery System
- Prepare for ICD-10 and Value-Based Modifiers
- Transition Physician Compensation Plans to Productivity Plus Value
The value you provide to your ob-gyn patients, as it will be measured by the payors, will be the driver of future reimbursement methods. Aligning these five elements with the changing reimbursement models will ensure that your practice continues to evolve as a value-driven provider in the market.
In the future editions of this newsletter, we will explore each of these actions, what they mean in the reimbursement evolution, and how to implement them in your practice.
L. Michael Fleischman