Description of MGMA and AAMC Benchmarks

A brief introduction to:

• wRVUs and MGMA benchmarks
• AAMC Faculty Salary Survey Reports

An Introduction: What are wRVUs and the MGMA benchmark?

The Medicare Resource-Based Relative Value Scale (RBRVS) is the method by which Medicare sets reimbursement rates for each Current Procedural Terminology (CPT) code assigned to every physician encounter; thus physicians’ services are counted in RVU’s. For example, a level one office visit may be assigned an RVU of 1, a level three office visit might be assigned an RVU of 1.5, and a surgical procedure might be assigned an RVU of 20.

RVUs are published in the Federal Register each November. Medicare bases RVUs on the following: (i) Physician work, which takes into account the physician’s expertise, the time and technical skill spent in performing the entire service including the mental effort and judgment expended by the physician prior to, during and after the patient encounter terminates, including documentation of the service; (ii) Practice expense, which accounts for the cost to operate a medical practice; and (iii) Professional liability insurance expense, which estimates the relative risk of services/cost to insure against the risk of loss in providing the service.

Here are some of the most commonly used wRVUs for outpatient practice from the 2017 schedule:

You can see the progression of work RVUs as the complexity of the patient visit increases. Because UCSF has a compliance plan in place that does the coding for us, you can also see the importance of properly documenting the necessary elements of a visit to be appropriately reimbursed for a provider’s effort.

In these days of physician hospital integration, hospitals are using RVU’s as a measure of physician productivity in order to calculate physician compensation. The advantage of using RVUs as a measure of productivity is that the RVU is independent of the physician’s charge schedules, patients’ insurance coverage, the reimbursement fee schedules assigned by any payor for any CPT code, or the practitioner’s ability to collect reimbursement revenue for any physician encounter. In addition, the RVU method of measuring productivity reflects the reality that every patient encounter is not equal.

The wRVU lends itself to methods of setting compensation because the RVU is a reliable and objective measure of productivity. The RVU is derived by simple math, using verifiable data published by CMS, at least annually. The RVU eliminates any risk to the physician related to employer negotiated rates, capitated fees, reductions in reimbursement rates or failure or delays in collections.

There are arguments against an RVU based compensation formula, which can cause cherry-picking within a physician group for complex cases or procedures with higher RVU’s, and for day shifts that result in higher volume and therefore in higher RVU’s. Additionally, an RVU based compensation model will reward the physician who can work faster, notwithstanding results, and will penalize a methodical physician who takes more time with his patients, and may realize better results. The RVU model rewards efficiency, but not necessarily quality. Another potential drawback of the RVU method is the creation of RVUs by physicians who over-utilize tests or procedures to drive up the RVU’s. It is for this reason that RVU’s do not have to be sole basis of the compensation formula. Compensation that is primarily based on RVU’s can provide for bonuses that are tied to quality metrics and citizenship.

In order to set compensation in a new employment arrangement, the employer can tie the compensation to be paid to the physician employee to his or her historic RVU productivity, or to RVU benchmarks published in national surveys. There are nationally recognized companies that publish physician compensation surveys annually. These surveys benchmark physician compensation based on specialty and geographic location. The compensation surveys measure productivity by RVU’s, gross charges, collections and/or patient encounters. The compensation surveys benchmark physician compensation at varying levels including, 25th percentile, 50th percentile, 75th percentile and 90th percentile. Thus, an employer might pay a physician employee based on an annual salary that is tied to the 50th percentile for compensation with a commensurate expectation that the physician employee generate RVU’s benchmarked at the 50th percentile for RVU productivity. This is often the case at UCSF.

The UCSF Medical Group and DOM provide direct on-line access for DOM Managers to MGMA (Medical Group Management Association) benchmark data. Recent MGMA benchmarks are also published on the DOMBO website. MGMA is the preferred benchmark because its surveys typically have the largest sample size of any publically available data on physician compensation and wRVU productivity within a given subspecialty. In the example below, a full time 100% cFTE Rheumatology provider benchmarked at the median would be expected to generate 4,807 wRVUs.

2023 MGMA wRVUs - All Physicians (based on 2022 data)

Source: http://www.rmfpc.com/what-is-an-rvu/

Faculty Salary Survey Reports

The MGMA publishes annual Provider Compensation reports which enable users to view data on medical school faculty compensation. The source of the data is the annual MGMA.

The most recent data SOM has available is from the 2023 survey. The information is listed below (links will open a PDF):

• 2023 MGMA Total Compensation All Physicians
• 2022 MGMA Total Compensation All Physicians

Notes:

• The MGMA and AAMC benchmark is used most often by SOM and DOM when conducting global equity reviews. The division manager does not often need to refer to the MGMA/AAMC benchmark.