Pulling Your Weight? Prove It

September 1, 2005

Is there anything worse than working your tail off, only to be told you aren't doing enough? We examine four widely-used methods to quantify what you do.

Is there anything worse than working your tail off, only to be told you aren’t doing enough? Or to feel like you’re working harder than everyone else, yet no one seems to notice? If productivity is a topic of frequent discussion - or argument - in your practice, you’re hardly alone.

It’s one thing to feel like you are working hard; it’s another thing entirely to be able to prove it or know where you stand relative to your peers and partners. That’s why you need to settle these arguments with hard data.

There are some methods commonly used in healthcare to measure productivity. Understanding the pros and cons of each will give you a better sense of how fair productivity measures are and the best way to quantify your practice.

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Here are four methods to consider:

Gross charges

Gross charges refers to the total volume of services billed during a defined reporting period (i.e., monthly, quarterly, annually); it is typically easily tracked using information system reports.

For comparative purposes, all services should be reported using a consistent fee schedule, meaning that services are billed at the same rates for all physicians and payers. Within a single practice, this is easily accomplished, but it makes the gross charges method less effective for assessing how you compare with your nonpartner peers. You just can’t know if they are charging much more or much less than you are - and that makes comparison impossible.

Another difficulty with this method is the fact that changes in the fee schedule can skew results from year to year, and will need to be taken into consideration.

Some practices skew gross charges by billing specific plans using their allowed reimbursement rates (e.g., Medicare, workers’ compensation), but using a higher fee for all other insurance plans. We advise against this approach for several reasons (except when a physician does not participate with Medicare, or the workers’ compensation plan mandates it), including the fact that it gives physicians varying credit, although the same service was provided.

Using gross charges as a productivity measurement method is most effective when fees are set using a relative weighting system, rather than using random rates that may not reflect realistic reimbursement experience. In one practice we visited, a physician performed a high volume of services with fees set at twice the market reimbursement level, while his partner specialized in a procedure that was priced at five times the market reimbursement rate. Both services were paid at approximately the same amounts by insurance carriers, but one physician earned greater credit for his gross charges.

Net collections

Many groups use net collections as a primary productivity measure because it’s the figure that makes a difference when paying overhead expenses and physician compensation. What matters, really, is what you’ve been able to bring in to the practice: what actually got collected.

If you use net collections as a productivity measurement, physicians may feel a greater incentive to submit charges in a timely manner, because they must be paid to get credit for their work. Similarly, physicians using this method are often more motivated to pay attention to billing details, such as whether referrals are secured before visits, and whether patients pay their copays at the time of service, because these factors make a difference in total collections.

The greatest drawback when using net collections as a primary benchmark is the fact that payer mix variations can skew comparisons within a group. If one physician sees more low-paying insurance plans, or has a lower-paying service mix, that individual’s productivity may appear lower than his or her peers.

For example, pediatric subspecialists experience a larger volume of Medicaid patients than their peers treating adults. Similarly, in one practice we visited, a contracted insurance plan paid most orthopedic codes at 150 percent of the Medicare allowable, but set rates for hand surgery at 95 percent of Medicare. If net collections were used as the sole productivity measure in that group, the hand surgeon would find it difficult to appear as productive as her colleagues.

Relative value units

Although several relative value systems are recognized and used nationally, the most identifiable system is the Resource-Based Relative Value Scale, or RBRVS. The RBRVS system was adopted in 1992 by CMS as a method for setting Medicare reimbursement levels. Under the RBRVS methodology, services are assigned a numerical value or weight, which is relative to all other codes. The numerical value, or relative value unit (RVU), is actually made up of three component units - designated for work, practice expenses, and malpractice expenses.

To set the Medicare allowable rate, the component units are factored by corresponding geographic indices, summed, and then multiplied by a standard conversion factor. Each year, CMS makes changes to the RBRVS component units, based upon the introduction of new CPT codes, changes to code values by the American Medical Association (AMA) and specialty societies’ RUC (Relative Value Update Committees), and government budget constraints and indices.

Published annually in the Federal Register, physicians can obtain the RBRVS data file from the CMS Web site at no charge.

Two other well-known relative value systems are St. Anthony’s Relative Values for Physicians (RVP) and the California Relative Value Study (CRVS). Keep in mind that these relative value systems are not interchangeable with RBRVS or one another, and use different methodologies.

Many physician organizations prefer the RBRVS system for measuring productivity because it addresses the drawbacks of the gross charges and net collections methods; fee schedule, payer mix, and contractual rate variations are removed from the productivity comparison.

When using the RBRVS system, consider whether you’ll use the physician work RVU component alone, or the total RVU; decide on one index, or evaluate them concurrently. If using the total RVU as the measurement method, agree before you begin whether RVUs will be adjusted for a facility or nonfacility setting. When services can be performed in both a facility (such as a hospital) or nonfacility (office) setting, the service is paid at a lower rate in the facility setting, because the physician does not incur the same practice expenses that are incurred in the physician’s office.

Additionally, surgical practices should agree in advance how to handle discounting for modified services. For example, a code billed with bilateral service modifier -50 will typically be paid at 150 percent of the plan’s allowable for the unilateral service. Some groups credit the physician for 150 percent of the RVU as well, while others give the physician credit for 200 percent of the RVUs, because the service is billed as two claim items (one base code, and one with modifier -50).

Patient visits

Patient visits are not typically used as a primary productivity benchmark, but can be important in understanding operational factors that contribute to generating gross charges, net collections, and relative value units. In particular, patient visits can provide critical indicators of whether physicians are using office resources and schedules reasonably, and require careful scrutiny.

Consider this practice: A physician reports very high gross charges, net collections, and patient visits. Review of the schedule shows that he sees all of his patients on one day each week, while other physicians spread the same number of patients over two or three days. By comparison, this physician’s patients reported higher levels of patient dissatisfaction and staff stress, due to the process overload. The lesson? It’s not always worth it to encourage physicians to see more patients a day.

Assessing patient visit volumes can also reveal how staff may contribute in limiting physician productivity, by not managing the appointment schedule appropriately. Too often we find examples of physicians who are willing to see additional patients, but staff may not add them to the schedule "because it is full." If a physician estimates he’s working at 80 percent capacity in the office, and patient visit data shows he’s seeing a consistent number of patients each day, he could subsequently adjust his schedule template to accept a higher number.

To quantify visit counts, first access your information system documentation to find whether a scheduling statistics report is available. If not, staff may need to manually tabulate the number of patients seen each day.

An alternate method for nonprocedural groups is to generate the information system’s service frequency report, and to tally the various E&M codes (9921X, 9920X, 9924X, etc.) reported there. In a procedural practice, counting only E&M services would not give the physicians full credit for their office services, as patients may be seen periodically for a procedure alone.

Develop a practice snapshot

To keep your finger on the "productivity pulse" of your practice, and to understand how patient visits, gross charges, net collections, and relative value units relate to one another as productivity measures, develop a monthly or quarterly practice snapshot.

Use a spreadsheet program like Microsoft Excel to analyze the data that is available within your monthly information system reports, and integrate analytical formulas such as the gross collection and net collection percentages to ensure collection rates are consistent within the group. Below are some of the data fields and analysis formulas we suggest:

In specialty practices, we often find that one physician in a group has lower charges and collections than his partners because he sees post-operative patients more frequently, or because the physician continues to treat established patients that could instead be followed by their primary-care physician. This factor would be underscored by measuring the number of post-operative visits per surgical case, as highlighted in the analysis section above.

By correlating RVUs and visit counts, groups may also identify coding or standard-of-care variations that drive productivity differences. For example, if a physician orders ancillary tests more frequently than her partners for the same clinical problem, that practice pattern will increase her relative productivity (but may detrimentally impact how insurance carriers interpret the group’s utilization patterns).

Each of the productivity measurement methods outlined here highlights important information about your practice; taken together, these data reveal a clearer picture of productivity factors and trends.

Sarah Wiskerchen, MBA, CPC, is a consultant with KarenZupko & Associates, Inc., a Chicago-based practice management consulting firm. She can be reached at swisk@karenzupko.com or editor@physicianspractice.com.

This article originally appeared in the September 2005 issue of Physicians Practice.