Considerations for Production-Based Compensation Plans
Originally published by the American Association of Provider Compensation Professionals
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BACKGROUND
The Centers for Medicare and Medicaid Services (CMS) implemented sweeping changes to the Physician Fee Schedule (PFS) in 2021. This included modifications to the office-based Evaluation and Management (E&M) Current Procedural Terminology (CPT) code documentation requirements and Work Relative Value Units (wRVUs) – which had the effect of impacting reimbursement and wRVU production values for nearly every physician specialty. Experience in navigating the impact of these changes to compensation plans, particularly production-based plans, is particularly relevant as CMS embarks upon another set of PFS revisions in 2023.
UNDERSTANDING THE NEXT WAVE
CMS published the Final Rule for the 2023 PFS in the Federal Register on November 18, 2022. This includes the next set of revisions to E&M coding guidelines that are intended to reduce administrative burden, primarily in inpatient settings and skilled nursing facilities. These changes, like those implemented in 2021, will further impact:
- E&M CPT code documentation requirements
- wRVU values
- Reimbursement
- Resulting wRVU production levels for physicians and advanced practice providers (APPs) providing these services in inpatient and skilled nursing facility settings
There are also changes beyond E&M coding and reimbursement which will impact some specialties more than others – such as the increase in reimbursement and wRVU values for immunization administration. This particular change will impact pediatric physicians and APPs due to the high volume of immunizations administered to their patients.
As physician compensation professionals and health systems evaluate modifications to the 2023 Physician Fee Schedule, they must be aware of the impact on Medicare reimbursement and reported wRVUs while also addressing the scope of the changes on provider compensation plans for specialties most likely to be affected.
