A Caution For Doctors Entering Into A RVU Based Contract
Doctors’ paychecks are often structured in one of three ways. Salary only, salary plus incentive bonuses, or production only. RVU (Relative value unit) is a method the United States Medicare system uses to value reimbursement for physician services. Some physician contracts, such as my contract, is 100% based on production, or how many RVU’s I bill for.
There are advantages and disadvantages to each system. A production based system can be a frightening contract to sign since there are few guarantees for the doctor. Before signing a RVU only contract, make sure you have a good understanding of the pros and cons.
Fun fact about the main picture of this article: While flying my drone in my hometown I caught my brother is in the orange shirt picking up a pizza from my hometown bar/restaurant .
Get In Writing How RVU’s Will Be Reimbursed
The devil is in the details. The question of how you will be getting paid for each RVU may sound simple, but there are many caveats to signing this kind of contact. Below are some basic questions to ask if taking a production based, or RVU only contract.
- What is the rate I will be reimbursed per RVU?
- Will the reimbursement rate be a flat rate, or variable depending on metrics. Is the rate also different based on insurance provider, or other guidelines set forth by the group?
- Will I get paid for uninsured patients?
- How long until I get paid?
Reimbursement Rate Per RVU
Medicare, Medicaid, and private insurances have varying amounts they pay for each bill submitted by a doctor. Most of the time, a company who hires a doctor will set a flat rate for RVU reimbursement to each provider. Flat rates are easier to pay providers rather than calculating RVU’s what each various insurance pays. Be sure to have an understanding of how the RVU’s are calculated and paid out for work performed.
Will uninsured patients be also paid out at the same RVU rate?
My group practice has several different locations that we care for patients. The way our group is structured is that there is a blended average for what will be paid by our company. Regardless of insurance, each provider will be paid X amount per RVU. This is because some locations have an almost 0 amount of uninsured patients. Other hospitals have many more uninsured patients. The hospital I work in has about 10-20% patients admitted to our service that are uninsured at any given time. If I would not be getting paid for those patients, I would immediately be taking up to a 20% pay cut. I don’t know many people who would sign a contract like this.
How Long Till You Get Paid
Bills to insurance companies can not be submitted until the patient is discharged from the hospital. After the patient leaves the hospital, these bills are then submitted to insurance companies. Most insurance companies have about 30 days to pay or give you reason for not paying out.
This type of practice led to my emergency fund running out when I started my first job. I did not realize that my pay was delayed 6 weeks from when the patient was admitted to the hospital to when I would get paid. This rule with my group is an effect of the delay of how long it often takes insurance companies to pay our group.
If signing an RVU only contract, be sure you are aware how long it will take from time you bill until the time that money hits your bank account. In my case, it is often 6 weeks, but can be as long as 3 months.
Mortgage Companies Might Not Grant You A Loan
When going to buy a house, I ran across an interesting problem. Some mortgage companies became wary of my unpredictable income compared to salary-based doctors. Many of the banks that billed themselves as providing “doctor mortgages” refused to work with me and my production based contract. Despite the fact that I’m an employee and not an independent contractor, some banks refused to give me a mortgage due to fluctuating income.
Each bank that refused to pre-approve me for a doctor mortgage told me the same thing. They want 2 years of tax returns with an RVU only contract before they would consider giving me a mortgage. I ended up finding several banks who would work with me, but they were the smaller ones. The large banks (Wells Fargo, Chase, etc.) all told me no unless I would put more than 5% down.
Audit: Make Sure You Have Access To The Books
At any given time, you need to ensure that you have access to the accounting books for your bills. Any company that does not provide this is an immediate “Not interested in working for you” in my book.
I personally have done an audit on my RVU’s 4 times so far (each quarter). Each time I do an audit, I find some very eye-opening results.
For example, I have been billing for prolonged services with some cases (CPT: 99354). I’ve billed for this code when I have spent on the rare occasion, an hour longer than normal for select level of care. Turns out that when I ran an audit, the billing agency did not reimburse for a single RVU billed at this code. I sat down with the coders and reviewed the guidelines for medicare. Turns out that medicare has such strict rules that it takes more time and effort by the coders than is received by insurance payout. For this reason, they opted to stop even submitting these codes and paying providers for this particular code submitted. In effect, I was wasting my time by using this code.
- Medicare PDF about all the rules needed in order to bill 99354
Auditing Helped Me Become Better At Billing
Doing an audit also made me realize that when I picked up extra shifts at another hospital run by the same group, that none of these RVU’s were ever paid to me. The person in charge of billing didn’t cross check to ensure that I did not have any RVU’s at any other hospital. The money obtained from those bills had been sitting in an account gaining no interest for me for the past year until I recently realized this.
I know it sounds like I’m bashing on my employer, but I’m not trying to be harsh. To be fair, the mistakes have only been about 1% of total RVU’s billed. However, when that 1% adds up to thousands of dollars, it’s money that I am willing to go hunt down.
If you are production based, consider doing an audit. I bet you’ll be surprised at the results.
Those Who Don’t Document Correctly Will Suffer The Most
Documenting correctly serves 3 purposes. Communication to other providers, medical legal, and providing a document that can be billed for.
Incorrect documentation by doctors will be met with either down codes (less money paid out) or write-offs (no money paid out).
Learn to code and document correctly if taking a production based job. Your paycheck will drastically change if you are not billing correctly. Insurance companies will not pay out if your documentation does not support your level of billing.
My Thoughts On An RVU Only Contract
I happen to enjoy the RVU method of reimbursement with my group. The harder I work, the more money I make. The flip side is that if things were to ever slow down, I could potentially make less money. So far, there has been no shortage of work and this has not even come close to being a problem.
The other risk with signing this type of job is that there will be no paycheck coming in if you are not working. Paychecks can fluctuate, meaning that doctors who sign this type of contact need to be vigilant about budgeting. Some months my paychecks can vary by more than $10,000 depending on if I pick up extra shifts or not.
Most new graduates are hesitant to sign RVU only contracts since they have loans to pay. However, joining a busy practice with an RVU pay structure can afford many financial benefits as discussed above.
Each type of reimbursement structure as discussed above can have its benefits and downside. I’m overall very glad I joined my small group that has pay based on productivity. There has been no shortage of work and as a result my paycheck has benefited greatly.
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4 thoughts on “A Caution For Doctors Entering Into A RVU Based Contract”
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This was a good review, I am in RVU based contract, I ran into an interesting issue, PTO, I was told I used up my PTO, since I only get paid when I work this concept does not hold water????
This is a great article. However every one talks about Rvu’s and doing audits. I certainly don’t know where to begin or how to go about it. I’m not an accountant nor have the time. But who would do it with your interest in mind? Certainly not the hospital.
Whoever is your employer should open the books to you at your request to demand the billing information. It takes a long time to go through it, we are talking hours or days.
If you are interested I would say take a sample week, audit that yourself on weekend and if you run into errors hire an accountant to look over the numbers for a particular month to find out where things are going.
My accountant charged me about $75 an hour and it took about 8 hours or work to find many of these issues.