The 2023 Medicare Physician Fee Schedule Proposed Rule was released on July 7, 2022. Highly anticipated changes to physician work RVUs for inpatient evaluation and management services were included in the 2023 proposed rule. These new work RVU changes will affect physician productivity measurement, compensation, and reimbursement on a large scale.
Webinar Duration: 27:50
This session will address:
- Which physician specialties are most impacted by new work RVUs under the 2023 proposed rule
- Separate and combined effects of 2021 and 2023 work RVU changes on each physician specialty
- The high variability of 2021 and 2023 work RVU changes among physicians in the same specialties
- Market observations of how physician employers and commercial insurers have responded to the 2021 work RVU changes to date
- Paths forward for physician compensation and productivity measurement
Speaker: Nick Newsad, MHSA, Healthcare Advisory Services
How the 2023 Proposed Rule Shakes Up Physician Work RVUs
The Centers for Medicare and Medicaid Services (CMS) released the 2023 Medicare Physician Fee Schedule Proposed Rule on July 7, 2022, introducing major changes to work relative value units (wRVUs) for inpatient evaluation and management (E/M) services. These updates will have significant implications across physician compensation, productivity tracking, and payer contracts.
Nick Newsad, MHSA, from LBMC’s Healthcare Advisory Services, breaks down what these changes mean for healthcare organizations and physicians alike.
Inpatient E/M Work RVU Increases: A Shift in the Landscape
The headline change? CMS is proposing significant increases to work RVUs for inpatient E/M services. These increases mirror the 2021 changes to outpatient and office-based E/M codes, further standardizing how physician effort is valued across care settings.
For many hospital-based specialties, this creates a potential productivity boost without an actual increase in patient volume. These adjustments also complicate compensation models that rely on historical wRVU benchmarks.
Specialties Most Affected by the 2023 Proposal
The impact of the 2023 proposed wRVU changes will vary widely across specialties. Specialties heavily involved in inpatient care, such as hospital medicine, infectious disease, and neurology, stand to benefit most from the increased work RVU values.
Nick emphasized that for some specialties, the combined effects of 2021 and 2023 wRVU updates can result in double-digit increases in total wRVUs, even if clinical volume remains constant.
Wide Variation Among Physicians in the Same Specialty
Even within the same specialty, the effects of the proposed changes will differ based on an individual provider’s coding patterns. Those who spend more time managing complex inpatients could see substantial gains, while others may see minimal change.
This variability makes it essential for organizations to model compensation and productivity changes at the individual provider level, not just by specialty.
How Employers and Payers Have Responded So Far
Since the 2021 wRVU changes took effect, provider employers and commercial payers have responded in different ways:
- Some have adjusted compensation models to reflect new productivity levels.
- Others have resisted change, leading to tension or renegotiation with employed physicians.
Nick shared observations that many commercial payers are lagging behind CMS in updating RVU-based fee schedules, further muddying the financial impact for healthcare organizations.
Planning Ahead: Options for Compensation and Benchmarking
To navigate the uncertainty, healthcare organizations should take a strategic approach:
- Re-model compensation plans based on updated RVU values.
- Segment analysis by provider type and coding behavior to identify outliers.
- Evaluate payer contracts to understand reimbursement shifts.
- Educate leadership and physicians on the implications and options.
Whether it’s revising internal benchmarks or renegotiating payer agreements, proactive planning is critical to maintaining equitable, sustainable physician compensation programs.
Conclusion
The proposed 2023 changes to physician work RVUs are not just an administrative update. They represent a significant shift in how productivity and compensation are measured. Understanding how these changes affect your organization and your providers is critical to maintaining financial sustainability and physician alignment.
If you need support modeling these changes or adjusting your compensation strategies, LBMC’s healthcare advisory team is ready to help. Contact us today to start the conversation.