PCP Compensation, Part 3

In Part 2 of this series on PCP Compensation, I concluded by saying that it is possible, maybe even likely, that growing your panel size will further endanger your health. When you share this concern with your boss, based purely on economic principles, he or she should answer, “How about charging more per visit?” However, your boss knows that third-party payers are going to look askance at that simple strategy. He or she may then suggest that you make each visit worth more to justify the increased charge.

Here is where the topic of Relative Value Units (RVUs) raises its ugly head.

Before the invention of “health insurance,” when the patient paid for his or her own office visits, it was an unspoken negotiation between patient and physician that decided the value of the care.

When third-party payers first came on the scene, the value of the visit was based roughly on the time spent with the patient. Coupling time spent with value gave no credit to more experienced or skilled physicians who were more efficient at managing their patients. If, on average, it took me 10 minutes to effectively manage an ear infection and my younger associate 20 minutes, should he or she be paid twice as much as I’m paid?

But, value spent on a crude estimate of time spent was a system ripe for abuse.

I have no way of knowing what other physicians were doing, but I suspect I was not alone in factoring my own assessment of “complexity” into the calculation when deciding what to bill for a visit, giving only a passing glance at the recommended time-based definitions of short, standard, and complex visits. The payers then began demanding a more definable method of determining complexity. The result was the RVU, the labor-intensive, but no more accurate, system in which the provider must build a case to defend his or her charges.

Unfortunately, the institution of the RVU system was a major contributor to the death of the short visit. The extra work required to submit and defend the coding of any visit meant that, from a strictly clerical point of view, the short visit became as costly to the business to process as a more complex visit. The result was that every astute business consultant worth his or her salt would begin with the recommendation to “Code up!” Do whatever it takes to build your case for a more complex visit even though it may be a stretch. (It would certainly mean a lot more time-gobbling documenting.) Stop doing short visits. They are your loss leaders.

Before there were RVUs, there was a way physicians could be profitable and include short visits in their schedule. But it meant the provider had to be efficient. But patients generally don’t like going to follow-up visits they see as needless. And, more often than not, the patients are correct. However, patients love the same-day availability that an abundance of short visits in a primary care provider’s schedule can offer. The patient who knows that he or she won’t have to wait weeks or months to see the provider is far less likely to show up at a visit with a laundry list as long as their arm of problems and questions they have saved up while they were waiting to get an appointment. It used to be possible to provide efficient and profitable care by including short visits in a PCP’s schedule. Whether it can still be done under the current RVU system is unclear and probably doubtful.

In the last and final Letter in this series, we will begin with a brief look at efficiency and a PCP’s contribution to overhead before exploring the more difficult subject of defining the quality of a provider’s care and how this could relate to compensation.
 

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics, including “How to Say No to Your Toddler.” Other than a Littman stethoscope he accepted as a first-year medical student in 1966, Dr. Wilkoff reports having nothing to disclose. Email him at [email protected].

In Part 2 of this series on PCP Compensation, I concluded by saying that it is possible, maybe even likely, that growing your panel size will further endanger your health. When you share this concern with your boss, based purely on economic principles, he or she should answer, “How about charging more per visit?” However, your boss knows that third-party payers are going to look askance at that simple strategy. He or she may then suggest that you make each visit worth more to justify the increased charge.

Here is where the topic of Relative Value Units (RVUs) raises its ugly head.

Before the invention of “health insurance,” when the patient paid for his or her own office visits, it was an unspoken negotiation between patient and physician that decided the value of the care.

When third-party payers first came on the scene, the value of the visit was based roughly on the time spent with the patient. Coupling time spent with value gave no credit to more experienced or skilled physicians who were more efficient at managing their patients. If, on average, it took me 10 minutes to effectively manage an ear infection and my younger associate 20 minutes, should he or she be paid twice as much as I’m paid?

But, value spent on a crude estimate of time spent was a system ripe for abuse.

I have no way of knowing what other physicians were doing, but I suspect I was not alone in factoring my own assessment of “complexity” into the calculation when deciding what to bill for a visit, giving only a passing glance at the recommended time-based definitions of short, standard, and complex visits. The payers then began demanding a more definable method of determining complexity. The result was the RVU, the labor-intensive, but no more accurate, system in which the provider must build a case to defend his or her charges.

Unfortunately, the institution of the RVU system was a major contributor to the death of the short visit. The extra work required to submit and defend the coding of any visit meant that, from a strictly clerical point of view, the short visit became as costly to the business to process as a more complex visit. The result was that every astute business consultant worth his or her salt would begin with the recommendation to “Code up!” Do whatever it takes to build your case for a more complex visit even though it may be a stretch. (It would certainly mean a lot more time-gobbling documenting.) Stop doing short visits. They are your loss leaders.

Before there were RVUs, there was a way physicians could be profitable and include short visits in their schedule. But it meant the provider had to be efficient. But patients generally don’t like going to follow-up visits they see as needless. And, more often than not, the patients are correct. However, patients love the same-day availability that an abundance of short visits in a primary care provider’s schedule can offer. The patient who knows that he or she won’t have to wait weeks or months to see the provider is far less likely to show up at a visit with a laundry list as long as their arm of problems and questions they have saved up while they were waiting to get an appointment. It used to be possible to provide efficient and profitable care by including short visits in a PCP’s schedule. Whether it can still be done under the current RVU system is unclear and probably doubtful.

In the last and final Letter in this series, we will begin with a brief look at efficiency and a PCP’s contribution to overhead before exploring the more difficult subject of defining the quality of a provider’s care and how this could relate to compensation.
 

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics, including “How to Say No to Your Toddler.” Other than a Littman stethoscope he accepted as a first-year medical student in 1966, Dr. Wilkoff reports having nothing to disclose. Email him at [email protected].

In Part 2 of this series on PCP Compensation, I concluded by saying that it is possible, maybe even likely, that growing your panel size will further endanger your health. When you share this concern with your boss, based purely on economic principles, he or she should answer, “How about charging more per visit?” However, your boss knows that third-party payers are going to look askance at that simple strategy. He or she may then suggest that you make each visit worth more to justify the increased charge.

Here is where the topic of Relative Value Units (RVUs) raises its ugly head.

Before the invention of “health insurance,” when the patient paid for his or her own office visits, it was an unspoken negotiation between patient and physician that decided the value of the care.

When third-party payers first came on the scene, the value of the visit was based roughly on the time spent with the patient. Coupling time spent with value gave no credit to more experienced or skilled physicians who were more efficient at managing their patients. If, on average, it took me 10 minutes to effectively manage an ear infection and my younger associate 20 minutes, should he or she be paid twice as much as I’m paid?

But, value spent on a crude estimate of time spent was a system ripe for abuse.

I have no way of knowing what other physicians were doing, but I suspect I was not alone in factoring my own assessment of “complexity” into the calculation when deciding what to bill for a visit, giving only a passing glance at the recommended time-based definitions of short, standard, and complex visits. The payers then began demanding a more definable method of determining complexity. The result was the RVU, the labor-intensive, but no more accurate, system in which the provider must build a case to defend his or her charges.

Unfortunately, the institution of the RVU system was a major contributor to the death of the short visit. The extra work required to submit and defend the coding of any visit meant that, from a strictly clerical point of view, the short visit became as costly to the business to process as a more complex visit. The result was that every astute business consultant worth his or her salt would begin with the recommendation to “Code up!” Do whatever it takes to build your case for a more complex visit even though it may be a stretch. (It would certainly mean a lot more time-gobbling documenting.) Stop doing short visits. They are your loss leaders.

Before there were RVUs, there was a way physicians could be profitable and include short visits in their schedule. But it meant the provider had to be efficient. But patients generally don’t like going to follow-up visits they see as needless. And, more often than not, the patients are correct. However, patients love the same-day availability that an abundance of short visits in a primary care provider’s schedule can offer. The patient who knows that he or she won’t have to wait weeks or months to see the provider is far less likely to show up at a visit with a laundry list as long as their arm of problems and questions they have saved up while they were waiting to get an appointment. It used to be possible to provide efficient and profitable care by including short visits in a PCP’s schedule. Whether it can still be done under the current RVU system is unclear and probably doubtful.

In the last and final Letter in this series, we will begin with a brief look at efficiency and a PCP’s contribution to overhead before exploring the more difficult subject of defining the quality of a provider’s care and how this could relate to compensation.
 

Dr. Wilkoff practiced primary care pediatrics in Brunswick, Maine, for nearly 40 years. He has authored several books on behavioral pediatrics, including “How to Say No to Your Toddler.” Other than a Littman stethoscope he accepted as a first-year medical student in 1966, Dr. Wilkoff reports having nothing to disclose. Email him at [email protected].