RVU-based physician compensation arrangements

Keep in mind that physician employment arrangements that include production-based compensation may be affected inadvertently by changes to changes in the Medicare physician fee schedule. There are numerous employment arrangements out in the marketplace wherein a physician’s base salary and/or incentive compensation component is tied to pre-established work RVU targets. In using work RVUs to establish base and/or incentive compensation, the formulary and the parties involved generally rely on expected consistency in the work RVU "yardstick." However, as the 2008 and 2009 PFS changes have demonstrated, the yardstick can and does change, and well intentioned employment agreements can have unintended consequences (ex. A physician receiving an unexpected and unintended increase in compensation without any related increase in production).