Doctor Pay: RVUs Determine Income

This video, presented by Dr. Eric Bricker of AHealthcareZ, provides an in-depth explanation of how physician compensation in the United States is largely determined by Work Relative Value Units (wRVUs). Building on a previous discussion about physician payment, Dr. Bricker clarifies that wRVUs are standardized units tied to specific Current Procedural Terminology (CPT) codes, which doctors use to bill for their services. These codes cover a range of activities from evaluation and management (E&M) office visits to complex surgical procedures, with the wRVU value reflecting the relative time, effort, and skill required for each service.

Dr. Bricker illustrates this system with concrete examples, noting that a 20-minute new patient office visit (CPT 99202) typically yields 0.93 wRVUs, while a colonoscopy with biopsy (CPT 45380) generates a significantly higher 3.56 wRVUs. He then translates these units into annual income, demonstrating that a gastroenterologist billing 10,500 wRVUs per year (placing them in the 75th percentile) could earn approximately $712,000, based on an average reimbursement of $68 per wRVU. This direct correlation between wRVU volume and income forms the bedrock of physician payment in a fee-for-service environment.

A central theme of the video is the stark disparity in wRVU generation across medical specialties. Dr. Bricker presents median annual wRVU data, showing that high-procedure specialties like cardiothoracic surgery (9,822 wRVUs), neurosurgery (9,333 wRVUs), and radiology (8,862 wRVUs) far outpace primary care physicians (PCPs) in internal medicine and family practice, who average only 4,900 wRVUs per year. This significant difference exists despite specialists and PCPs working nearly the same number of hours per week (52 vs. 51 hours, respectively). The speaker argues that this discrepancy stems from the fact that much of the essential care coordination work performed by PCPs—such as phone calls, emails, medical record management, and family conversations—is not reimbursable through existing CPT codes, and thus does not generate wRVUs.

The video critically examines the benefits and pitfalls of the wRVU system. For employers (hospital systems, private equity firms), the system is advantageous as it incentivizes doctors to see more patients and perform more procedures, keeping facilities busy and driving volume. However, for physicians, particularly PCPs, a major drawback is that they are not compensated for all the work they do, leading to a system that prioritizes volume over quality. Dr. Bricker highlights that while Medicare introduced CPT code 99490 in 2015 for chronic care management and coordination, commercial insurance companies largely do not reimburse for it. This lack of reimbursement for crucial care coordination activities, he concludes, is a fundamental flaw that inherently hampers adequate and effective primary care, suggesting that meaningful primary care reform will remain elusive until this payment structure is addressed.

Key Takeaways:

• Work Relative Value Units (wRVUs) are the primary determinant of physician income in the fee-for-service model. These units are assigned to specific Current Procedural Terminology (CPT) codes, reflecting the relative time, effort, and skill involved in a medical service.
• CPT codes translate directly into wRVUs, which then translate into physician compensation. For example, a 20-minute new patient office visit (CPT 99202) yields 0.93 wRVUs, while a colonoscopy with biopsy (CPT 45380) yields 3.56 wRVUs, demonstrating how procedural work often generates higher units.
• Physician income is directly proportional to the volume of wRVUs billed. A gastroenterologist in the 75th percentile, billing 10,500 wRVUs annually, is estimated to earn approximately $712,000, based on an average rate of $68 per wRVU.
• There is a significant disparity in wRVU generation between specialists and primary care physicians (PCPs). High-procedure specialties like cardiothoracic surgery and neurosurgery generate nearly double the wRVUs (e.g., 9,822 and 9,333 respectively) compared to PCPs (e.g., 4,900).
• This wRVU disparity exists despite specialists and PCPs working comparable hours per week. Surveys indicate specialists work an average of 52 hours per week, while PCPs work 51 hours, highlighting that the issue is not workload but rather billable work.
• The primary reason for lower PCP wRVUs is the lack of reimbursement for extensive care coordination activities. PCPs spend significant time on phone calls, emails, medical record management, and family conversations that are not tied to specific, reimbursable CPT codes.
• Medicare introduced CPT code 99490 in 2015 to compensate for chronic care management and coordination, but commercial insurance largely does not reimburse for it. This creates a critical gap where essential primary care services go unpaid, impacting the quality and availability of coordinated care.
• The wRVU-based system primarily benefits employers (hospital systems, private equity firms) by incentivizing volume. Doctors compete for patients and procedures to maximize wRVUs, keeping facilities busy, but this can lead to over-utilization of services.
• A major pitfall for physicians under the wRVU system is that they are not paid for all the work they do. This is particularly acute for PCPs, where a substantial portion of their effort in care coordination remains uncompensated.
• The current payment model incentivizes volume over quality. Physicians are paid based on the number of services rendered (wRVUs), not on patient outcomes or the quality of care provided, which can misalign incentives with patient well-being.
• The "what you pay for gets done" principle is a critical factor in healthcare delivery. When care coordination is not reimbursed by commercial insurers, it often means that the necessary level of coordination for patients is not provided, leading to fragmented care.
• The existing wRVU-based fee-for-service system inherently hampers adequate and effective primary care. Until this payment structure is reformed to properly compensate for comprehensive primary care activities, achieving robust primary care will remain a significant challenge.

Key Concepts:

• Work Relative Value Units (wRVUs): A standardized measure of the physician's work (time, effort, skill, and intensity) associated with providing a service. They are a key component in determining physician compensation, particularly in fee-for-service models.
• Current Procedural Terminology (CPT) Codes: A set of medical codes used by physicians, hospitals, and other healthcare providers to describe the services they provide to patients. These codes are used for billing and reimbursement purposes.
• RUC (Relative Value Scale Update Committee): A committee of the American Medical Association that makes recommendations to Medicare on the relative values (including wRVUs) assigned to CPT codes.
• Evaluation and Management (E&M) Codes: A subset of CPT codes used to bill for physician services related to patient evaluation and management, such as office visits, hospital visits, and consultations.
• Care Coordination (CPT 99490): A specific CPT code introduced by Medicare in 2015 for chronic care management services, allowing primary care physicians to bill for at least 20 minutes of non-face-to-face care coordination activities per month for patients with multiple chronic conditions.

Examples/Case Studies:

• CPT Code 99202 (New Patient Office Visit): Described as a medium-to-lower complexity visit, typically involving 20 minutes of face-to-face time, assigned 0.93 wRVUs.
• CPT Code 45380 (Colonoscopy with Biopsy): A procedural code typically performed by a gastroenterologist, taking 30-60 minutes, assigned 3.56 wRVUs. This illustrates how procedural codes generally carry higher wRVU values than E&M codes.
• Gastroenterologist Compensation Example: A gastroenterologist billing 10,500 wRVUs annually (75th percentile) is estimated to earn approximately $712,000, based on an average rate of $68 per wRVU.
• Specialty wRVU Disparity:
  • Cardiothoracic Surgeons: 9,822 wRVUs/year
  • Neurosurgeons: 9,333 wRVUs/year
  • Radiologists: 8,862 wRVUs/year
  • Ophthalmologists: 8,438 wRVUs/year
  • Orthopedic Surgeons: 8,009 wRVUs/year
  • Primary Care Physicians (Internal Medicine/Family Practice): 4,900 wRVUs/year This stark contrast highlights the systemic undervaluation of primary care within the wRVU framework, despite similar work hours compared to specialists.