Career and Life Planning Guidebook for Medical Residents

R E A D : Production Models The proverbial other side of the compensation coin is productivity. At some point in your medical career, whether part of a private medical practice or employed by a hospital/health system, youwill find yourself measured on your production. Let’s review a few common types of production measurement for associated compensation plans. Work Relative Value Units (“wRVUs”) – Without getting too deep into the weeds, a wRVU is simply a component of a Total RVU as determined by The Centers for Medicare & Medicaid Services (“CMS”). A wRVU serves as a practical, transparent, payer-neutral, standard measurement of physician effort. For example, an office/outpatient visit for the evaluation and management of a new patient (CPT code 99203) has a value of 1.42 wRVUs according to the 2019 National Physician Fee Schedule Relative Value File. If you were paid $50.00 per- wRVU according to your compensation model, that patient visit would yield $71.00 of compensation. CAUTION – Be mindful of receiving zero wRVU credit for unlisted procedure services or nonbillable services. Gross Charges – The full, non-discounted fees charged for all services provided before any contractual, charitable, courtesy, bad debt, or other adjustments are applied is referred to as gross charges. This financial metric considers patient and procedure volumes before considerations of actual payments received, which mitigates concerns among physicians regarding payer mix or other adjustments that might otherwise lead to inequality in distributed compensation. The common practice is to distribute net practice earnings (or a defined compensation pool) based on each physicians’ percentage of gross charges. Reasonable “if in the absence of referrals, the arrangement would make commercial sense if entered into by a reasonable entity of similar type and size and a reasonable physician or a family member or group practice of similar scope and specialty even if there were no DHS referral.” [69 Federal Register 16093 – March 26, 2004] Also, the compensation arrangement must appear “to be a sensible, prudent business arrangement, from the perspective of the particular parties involved, even in the absence of any potential referrals.” [63 Federal Register 1659, 1700 January 9, 1998] That’s a lot of legal jargon and you’re thinking to yourself that you’re a doctor not a lawyer - but it’s critical to understand the ramifications of not adhering to the regulatory guidance for physician relationships. There is significant financial penalty and people have gone to jail for engaging in arrangements that are not legally defensible and involve kickbacks or incentivize referrals. It’s incumbent on you to at least have a basic understanding of FMV and CR standards. You should also have competent legal counsel in your corner to help you navigate these regulatorywaters. Valuators of FMV and CR will consider the pertinent facts and circumstances of a services arrangement and utilize published market survey data like those surveys discussed in this chapter as support for FMV and CR ranges of physician services compensation. In deriving such ranges, valuators will consider a variety of benchmark metrics, most commonly including compensation-per-wRVU rate. Other metrics will include compensation-per- FTE, wRVUs-per-FTE, net professional collections- per-FTE, and compensation to collections ratio. SECTION II: T MINUS TWO YEARS CAREER AND LIFE PLANNING GUIDEBOOK FOR MEDICAL RESIDENTS 232