Hospitalist Work RVU Increases in 2023
Hospitalist physicians realized major work RVU increases beginning on January 1, 2023. New changes affecting inpatient and observation services impacted hospitalists’ productivity measurement, employee compensation plans, and reimbursement during 2023.
The American Medical Association (AMA) proposed updating its CPT procedure codes for inpatient Evaluation and Management (E&M) and observation services during its February 2021 CPT Editorial Panel Meeting (2/2021 Meeting Minutes). The AMA’s RVS Update Committee (RUC) finalized the work RVU revisions to inpatient and observation E&M changes during its January 2022 meeting (1/2022 Meeting Minutes). The AMA sent its recommended changes to Medicare during the spring of 2022, and Medicare published the changes in its 2023 Medicare Physician Fee Schedule (MPFS) final rule on November 1, 2022.
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Hospitalist Work RVU Increases in 2023
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2023 Work RVU Increases Impact Real Groups
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The new inpatient E&M changes published in the 2023 MPFS final rule included both increases and decreases in work RVU values. The top three codes most commonly billed by hospitalists (99232, 99233, 99239) realized +14%, +20% , and +13% increases in work RVUs, respectively. However, any attempt to forecast the impact of all the changes also needed to consider the deletion and merging of observation E&M codes (99217-99220 and 99224-99226) into general inpatient E&M codes (99221-99223,99231-99239), increased work RVUs for nursing home visits, and the deletion and replacement of over 20 other E&M codes.
Hospitalist Compensation
When the work RVU changes are aggregated and deleted observation codes are crosswalked to replacements, hospitalists experienced 9% overall increases in work RVUs as a specialty, with large variation from physician-to-physician. Some hospitalist groups experienced 10% to 14% increases in work RVUs.
Hospitalists compensated on work RVU productivity plans should have realized increases in compensation as a result. Hospitalists hit their productivity bonus thresholds much earlier during 2023, and individuals who have not met their productivity bonus thresholds in the past met and exceeded them during 2023.
Estimated Work RVU Change Variability Among Hospitalists (n=13,529)
Hospitalist Reimbursement
Medicare is a budget-neutral program, and it could not allow overall program spending to increase without congressional approval. Therefore, Medicare enacted budget-neutrality adjustments to reimbursement rates to keep overall program reimbursement flat. The 2023 final rule included a decrease in the Medicare physician conversion factor (payment rate).
Commercial insurance carriers may not adopt the 2023 Medicare physician reimbursement changes in a timely manner. Some commercial insurance carriers are still piggybacking on Medicare’s rates from the 2020 MPFS or prior years.
Hospitalist Employers
Employers of hospitalists had a very short window of time to deal with these changes between the time Medicare issued its final rule in November and when the changes became effective on January 1, 2023. Many major employers of physicians are coding for the current CPT standards for billing purposes, BUT THEN OVERRIDING the new work RVU values for outpatient AND inpatient E&M services to keep physician productivity from increasing.
Hospitalist employers that cannot afford to pay compensation increases in the face of flat or declining reimbursement may have to implement adjustments to bonus productivity thresholds and/or productivity compensation rates ($ per work RVUs) to maintain budget neutrality. This is a heavy lift for organizations that are bureaucratic and slow to implement big changes.
IT IS TIME
Employers cannot stay on 2020 work RVU values forever. The industry compensation and productivity surveys (MGMA, AMGA, Sullivan Cotter) have all stopped reporting 2020 work RVU values. This means that some large employers are NOT setting productivity bonus thresholds or compensation rates using REAL work RVU values.
Contact Health-Contract.com below to get your physician compensation plans updated. We have heavy-duty database expertise and tools to migrate physician compensation plans to new bases, conversion factors, and thresholds.
