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Are relative value units hurting healthcare?

Like many other academic departments in the United States, the University of California, San Francisco is converting to a system that reimburses faculty for clinical effort based on Relative Value Units (RVUs) rather than half days of clinic or weeks on the inpatient service. This conversion leads to some predictable concerns about fairness and quality of care among providers. More importantly, though, if rolled out broadly, this system could actually worsen healthcare. The logic of RVUs seems undeniable. They are linked to actual work done and how it is valued by insurers (of course, these relative values could be more rationally set but that’s another story and a fight that neurologists have lost through the years). They also encourage better clinician behavior by aligning our incentives with those of our department chairs and chief medical officers. For example, we become motivated to fill open slots in our clinic schedules and to see more patients each hour, and we see the value of billing for that new patient evaluation on the afternoon of admission rather than waiting for rounds the following day. We see and bill more because it matters to us. Productivity goes up. There are well known problems with the RVU system. Since reimbursement is more closely tied to values, injustices in insurance payments are now borne by individual physicians. For example, two-hour visits of behavioral neurologists may be difficult to justify when they are valued the same as a visit others are finishing in 40 minutes; time-based billing can help remedy this situation somewhat, but ultimately our varied specialties require different times to see a “typical” patient that are unaccounted for by RVUs. Also, whereas revenue from critical care, EEGs and EMGs might have been used previously to subsidize departments’ cognitive-based specialists, this is harder to do when the subspecialists are now seeing the relative value of their procedures. Subspecialists might expect higher salaries while others struggle to justify spending any time in the clinic. Leadership may step in to limit changes, but now subspecialists know what they are worth, so perceived injustices can go either way. In addition, the RVU system fails to capture some highly reimbursable procedures in neurology, such as botulium toxin injections for dystonia or spasticity. In this case, a strictly RVU approach discourages clinicians from spending time on an activity that patients need and is also likely to help the bottom line and perhaps subsidize other missions of the department. Unless otherwise supported, reliance on RVUs will naturally discourage clinical teaching and other educational activities that are central to our mission. The RVU system mimics traditional fee for service models of private practice. Private practitioners bill for services rendered, understanding that a successful practice depends on efficient use of time, the right balance of new and follow-up patients, and with procedures pulling much of the weight. Payer mix is a major factor for private practitioners. Happily, this is ignored in RVU systems employed at many academic medical centers, where open access is highly valued and incentivized financially through state and federal contracts. However, with the implementation of the Affordable Care Act, this landscape is changing and more and more academic centers are beginning to pressure departments to be more mindful of payer mix, a situation that threatens this longenjoyed advantage of academic medical centers and threatens a safety net environment for our most vulnerable patients. Beyond the obvious issues of redistribution and efficiency raised by RVUs, implementing them may impact on how well the health system works from a societal perspective. True, RVUs should encourage physicians to be busy and efficient. However, studies have shown time and again that physicians will redirect effort toward activities with financial rewards. For example, when a physician owns an MRI machine, more MRIs are ordered. Similarly, self referrals for EMG and EEG would be expected to increase with the RVU system. Furthermore, RVUs may encourage one to convert an email or phone follow-up to a face-to-face visit even though the latter may not be necessary and is burdened with substantial cost. In 2005, the RAND Corporation famously predicted savings of more than $80 billion annually in