Organizations across the country for a decade or more have had to interpret various surveys to develop compensation methodologies for providers. The surveys are complex, highly different survey by survey, and even the government has rejected pure use of surveys when establishing fair market value compensation. One unfortunate misnomer is the use of the Total Cash Compensation and Total wRVUs in the development of compensation models as if they are statistically related. This article will focus on this concept.
What is Total Cash Compensation?
Total cash compensation is defined as the total compensation an individual receives for their services, inclusive of all income. In the surveys, this typically includes compensation for clinical, administrative, and other work. In short, it does not exclude income that is taxable. Keep in mind, in most surveys, there are twice as many respondents who submit only compensation and not production. Further, providers within this category include leaders, executives, and staff physicians.
What is Total wRVU Data?
This is simple. Each survey requests the total wRVUs attributed to an individual provider. Often though, only about half of all respondents submit wRVU data. This means 50% of the data lacks any connection to productivity of a provider. Further, the total wRVUs includes physicians and other providers on salary, not just production models.
Total Cash Compensation ≠ Total wRVUs
This would be a misinterpretation of the data within the surveys for a few reasons. First, as discussed above, the surveys do establish a relationship between total cash compensation and total wRVUs, but it is not a direct relationship. For example, only 50% of the respondents event submit wRVU data. This means that half of the data contains no relationship. Second, the data includes providers on salary models, not just production. For example, the data includes the new family physician who is on salary and the experienced family physician who has been on a production model for a decade. This means that to interpret that there is a direct relationship when much of the data includes providers not on production would be a mistake.
Finally, one of the biggest problems is that the total wRVU data includes possible manipulations of the data, discrepancies, and situations in which providers work differently. For example, if Organization A credits Physician A with 30 wRVUs even though Physician A is not generating 30 wRVUs, this is in the data. In another example, Organization B might list an individual as a 1.0 FTE but the individual actually spends 1/2 of their time on administrative tasks (thus showing someone in the data with low production). Further, there are providers within the data that might work 35 hours or 50 hours, or providers who have more or less staff. In short, the level of wRVU amount in the data is not purely because of an individual but rather the structure of the care model and team. The bottom line is that it would be a misinterpretation of the data.
What Should Organizations Do?
Organizations developing compensation models should ensure they adhere to policies and procedures that do not distort the data. As CMS stated, “Reference to multiple, objective, independently published salary surveys remains a prudent practice for evaluating fair market value. Ultimately, the appropriate method for determining fair market value for purposes of the physician self-referral law will depend on the nature of the transaction, its location, and other factors.”
