As we continue to consider the implications of the Centers for Medicare & Medicaid Services’ (CMS’s) proposed rule change to split/shared billing, we must examine both the potential impact on professional revenue and inpatient operations and the downstream effect on production-based provider compensation models.
Split/shared E&M visits occur when both an advanced practice provider (APP) and a physician see a patient, and time studies show it is common for the APP to spend more time and provide most of the standard clinical responsibilities during these visits. However, under the current rule, these visits can still be billed under the physician as long as they see the patient directly and perform what CMS defines as “a substantive portion” of the encounter.
The proposed rule change aims to eliminate the poorly defined concept of “substantive” and rely instead on the more objective measure of time. If the APP spends more time on the patient visit, including previsit preparation and postvisit documentation, the rule dictates the visit must be billed under the APP, even if the physician enters the room and weighs in on medical decision-making.
This change will have material implications on the WRVU distribution among providers on care teams staffing inpatient units, hospital outpatient departments, and emergency departments, despite there being no adjustments to day-to-day workflows.
Anticipated Changes to Revenue and WRVUs
The two most immediate and broadly applicable impacts of the split/shared billing rule change will be to professional collections and the attribution of WRVUs to physicians and APPs. Both independent physicians who rely heavily on APPs within their practice and hospitals that employ physicians and APPs could see a meaningful decrease in reimbursement, which will ultimately affect the funding available to pay providers. Additionally, for employed physicians, this change could create a significant shift in WRVUs from physicians to APPs.
As such, we recommend conducting a proactive evaluation of current compensation methodologies to assess the potential impact of the policy change.
Recommendations for Medical Groups and Health Systems
For Physicians
It is likely that a material amount of WRVUs could shift from physicians to APPs under this new rule, adversely affecting physicians who are paid under production-based compensation plans (within those specialty areas expected to be impacted most by this new rule). Many hospital-based specialties are currently paid materially on time-based plans that recognize expected and incremental shifts worked, and a change in WRVU attribution would not impact them. But for providers with some or all of their compensation currently tied to WRVU production, these organizations may attempt to mitigate the impact of this change by shifting compensation to further emphasize the time-based component or by either lowering WRVU thresholds or increasing WRVU payment rates under the production-base components.
However, to align total provider compensation with group financial performance, avoid large changes to unit operations, and create cultural adhesion within the unit, organizations should consider increased emphasis on operational or quality performance incentives that recognize contributions from the entire care team and better align with the goal of ensuring all providers work at the top of their licensure while also promoting the effectiveness of the care delivered. These incentives could prompt more meaningful funding tied to specialty-specific quality measures or broader inpatient quality measures like hospital-acquired infection rates, length of stay, and potentially preventable readmission rates.
In addition, APP supervision stipends—which have gradually been phased out under extender care models as organizations recognize the net benefit to physicians who work with APPs—may come back in a meaningful way to recognize the time physicians still dedicate to these shared visits. This change could spur organizations to rethink their patient care teams and utilize higher APP-to-physician ratios as the role of physicians explicitly shifts to a more supervisory one.
Finally, clinical compensation for impacted physicians will likely plateau in the specialties impacted by the new rule, and possibly even decrease slightly, as medical groups look to align overall compensation with the reduced professional collections stemming from this new reimbursement model.
For APPs
Even before this rule change, we have witnessed more incentive-based compensation plans for APPs due to the industry’s shift away from static salary structures and toward the use of more meaningful production incentives. Historically, APPs under team-based coverage models that offer no incentive to work autonomously generate few personally performed WRVUs and are therefore not considered for production incentives—this attribution gap is part of the impetus for change. The updated rule would create a more accurate accounting of APPs’ clinical efforts and should prompt organizations to develop meaningful ways to recognize production across all providers, which we know is a major driver of provider satisfaction and engagement.
ECG is actively working with organizations to navigate the nuances of this proposed change, especially where it remains open to interpretation. CMS has afforded medical groups and health systems a longer transition period to allow for a smoother conversion. Organizations should be proactive in using this additional time to not only ensure compliance with the new rule but also to evaluate the advancement of care delivery via increasingly collaborative and interdisciplinary teams, effectively utilizing scarce clinician resources to meet progressively complex inpatient care needs.
ECG’s experts can provide strategies to help your organization proactively address and prepare for these forthcoming regulatory changes.
Visit our Center for Split/Shared Success for continuing updates and advice, and stay tuned for our next entry on operations and practice models.
Center for Split/Shared Success
Edited by: Matt Maslin
