Nurse Practitioner Productivity Payment: Part 2- Translating RVU's Into a Paycheck

In my last post discussing nurse practitioner payment based on productivity, I explained the RVU (Relative Value Unit).  If you are a nurse practitioner paid based on your productivity, the RVU is the number used by your employer to determine exactly how much you will be paid.  Now, I will take you through the steps of how an RVU translates into payment for a healthcare provider.  

1. A Patient Chart is Coded With a CPT Number

After you complete your documentation for a patient's visit, either you or your company's billing and coding team assigns CPT codes based on the complexity of the visit (you may be familiar with the office visit codes 99213 and 99214) and any procedures preformed.  For example, an intermediate level office visit is assigned a code of 99214 and a simple laceration repair is assigned a code of 12001.  

2. Your Practice Sends Medicare or a Private Insurer a Bill for Services Provided

One your chart is complete and coded, your practice will submit a bill to the patient's insurer such as Medicare.  Medicare looks at the CPT codes that you have submitted and assigns RVU's to each.

3. The Conversion Factor

To determine how much it will pay you for your services, Medicare then enters the RVU's for the patient visit into a conversion factor equation to calculate a dollar amount for reimbursement.  The equation is complicated (and looks like a college SAT question) as it takes into account the three different aspects of the RVU (physician work, practice expense and malpractice) as well as a geographical location adjustment.  The two part equation is as follows:

 

Each year, Medicare adjusts the conversion factor directly affecting how much healthcare providers are paid.  For 2012, the conversion factor is $34.04, an increase of 6 cents over 2011 but a decrease of $2.83 compared to 2010.  

4. Medicare Pays You or Your Practice for Your Services

Finally, after these complex calculations, Medicare has determined how much it will reimburse you or your employer and sends payment.  

If you are employed by a physician practice, clinic or hospital that pays you based on productivity, your employer will not go through such painstaking calculation when putting together your paycheck each pay period.  Employers paying based on productivity will typically put into your employment contract a dollar amount they will compensate you for each RVU earned.  For example, I am payed $3.00 per RVU (I am also payed an additional flat hourly rate) while a physician might be paid around $20 per RVU (they are not paid a flat hourly rate by my employer).  Each month when I receive my paycheck, it lists how many RVU's I have earned that month. 

The pay for production system is very complicated.  If you have any questions, feel free to ask and I will look for answers!  The billing and coding team at your workplace may also be a good resource for any questions that arise.

Comments

Is there an average RVU for Gyn oncology practice?
My employer has not indicated a number, and would think there should be a basis for evaluation and for compensation.

Merlyn

Hi Kerri,

That is a very complex question, so I can't provide an exact answer for you. There are so many factors that weigh into billing (ex. types of procedures you do, insurance carried by your patients etc.) that without looking at the financials for your particular practice it is very difficult to estimate. 

Also, medical practices have significant overhead. For example, the revenue you generate goes not only to your salary but also to cover the costs of the building, compensate administrative and support staff etc. So, to pull your own weight in a practice you need to generate significantly more in revenue than your actual salary. 

On average, the AANP says that nurse practitioners treat about 3 patients per hour. If you know the codes you bill for, you can estimate the number of RVU's you are personally generating and may be able to calculate the amount you are billing. 

Sorry for the roundabout response...I hope this helps somewhat!

Erin Tolbert

Hi Erin,
My hospital is now tracking RVU's monthly. How many patients would one need to see per day in a speciality clinic to cover costs of an average NP salary in NY/NJ?

Kerri

Hi Jennifer,

Here's a link to a table outlining the GPCI values by location for 2015 you can use to calculate reimbursement rates for various procedures.

I believe that most employers pay just based on the strict RVU value to keep things simple. However, this may vary by employer. I would check your contract or ask your HR department or boss to be sure. I can't definitively say since each employer pays differently. 

Erin Tolbert

Thanks for this info: in your example from part 1 of the diagnostic colonoscopy being a total of 5.64 RVU. Please show us the adjusted total RVU if the GPCI region was Phoenix, AZ. If some employment contracts pay a flat amount of $3 per RVU, based on the diagnostic colonoscopy example, would the NP pay be based on the 5.64 x $3 or the Adjusted Total RVU that takes into account the GPCI multipled by the $3.00? Your insights and assistance is so appreciated.

Jennifer

Hi Bri,

The way you are paid totally depends on your employer rather than the specialty. I would find it difficult to work in psych under a productivity model. When you are paid based on how many patients you see and the number of tests you order etc. it puts pressure on you as the provider to cut patient visits short. I think it would be frustrating to have very short visits in mental health.

Erin Tolbert

Are psychiatric NP's paid in this fashion? I know the majority of their work entails diagnosing and treating mental illness, so I'm not sure how this method of payment would translate for this particular specialty.

Bri

Is there somewhere to go to find what the rvu for cardiology would be or is it the same across the board. I know it's different for md specialties

Carrie

Hi Rachel,

Would be happy to discuss! Feel free to use the contact form on the site and I can answer any specific questions you have. 

Erin

Erin Tolbert

Would LOVE to discuss this if you have time! I to am and NP in an ER and am just at a hourly rate, have been trying to understand productivity and also buying into a practice, along with other questions!Just reading these few posts have been very beneficial to me, thanks!

Rachel