Every July, my inbox gets flooded with announcements that the Centers for Medicare & Medicaid Services has released the proposed fee schedule for next year. These usually include a list of key changes to conversion factors and relative unit values.
After I read these, I inevitably wonder how much these changes will financially affect my practice next year. When I run into physicians, they ask for a quick answer on how the changes will affect their revenue. To answer that question, you have to understand the relative value unit structure.
RVUs have been in use by CMS since 1992. Are they still relative?
Yes. With the exception of the vision plans, virtually every contract we have in the practice is somehow based on an RVU schedule and conversion factor. Because of that, a small movement in conversion factor or a revaluation of a key CPT code can have a big effect on next year’s receipts.
Now that we are moving to MIPS or alternative payment models for Medicare revenue, will RVUs become less important?
I don’t think so. The Quality Payment Program is designed to bonus or penalize us through a percentage adjustment to our conversion factor. All the unit values remain in place and still serve as the basis for how much CMS pays us for one service versus another. As with the old penalties under the Physician Quality Reporting System, MIPS bonuses or penalties will apply toward the allowable for each code.
Since Medicare is motivating the move to APMs, I’ve heard more talk about ACOs and networks taking on responsibility for the full spectrum of care. If that happens in my town, how do I know what number I should negotiate for our services?
You have to know your costs. No one has the staff to directly allocate all of the practice’s costs to individual services, but we can fall back on the relative value system to help us.
If RVUs serve as the basis for most of our revenue, what do I need to look for in contract offerings?
Look for three things:
- What year of RVU schedule is being used;
- Whether different plans use different conversion factors; and
- Whether the Geographic Practice Cost Indexes are being applied.
Some practices use RVUs as a basis for their physician compensation plans. Is that better?
It isn’t necessarily better, but it can be more consistent. It’s always challenging for practice administrators to support the physician-compensation discussion. Relative work units provide an objective set of data that can serve as a basis for the discussion.
Using RVUs for compensation has some challenges, such as learning how to adjust work and practice-expense units for multiple procedures or for cash-pay services that do not currently have a relative value assigned to them.
This is a lot of detail, but the 2018 conversion factor is slated to go up 0.31 percent -- remain flat, for all intents and purposes. If our conversion factor is flat and we know that every year CMS will review a certain number of codes, which it rarely adjusts upward, understanding the system is important. Listen to the recorded webinar "Use RVUs to Quantify the Value of Your Clinic’s Services" for more details.
About the Author
Ann Hulett is the CEO of EyeHealth Northwest in Portland, Ore., comprised of 26 ophthalmologists, 10 ODs, two ASCs and over 350 employees. She has 25 years’ experience as a medical practice administrator, 14 in ophthalmology. She is currently a board member of the American Academy of Ophthalmic Executives, the practice management affiliate of the Academy.