This episode features a conversation with Daniela Valladares. Daniela is a summer associate in 麻豆直播鈥檚 Chicago office focused on litigation. In this discussion, Daniela reflects on growing up in McAllen, TX, and earning her BA and Master鈥檚 in accounting from The University of Texas at Austin before attending Texas Tech University School of Law. Daniela reflects on her experience as a summer associate, including the assignments and various summer associate events. She also shares wonderful advice to prospective and current law schools on the importance of seeking out information proactively, using career centers, and networking to maximize opportunities.

顿补苍颈别濒补鈥檚&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: Summer Associate
• 麻豆直播 Office: Dallas
• Hometown: McAllen, TX
• College: The University of Texas at Austin
• Law School: Texas Tech University School of Law

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

This episode features a conversation with John Stillman. John is a summer associate in 麻豆直播鈥檚 Chicago office focused on litigation. In this discussion, John reflects on growing up in Oak Law, IL, and earning his BA and Masters, in business administration, from the Bradley University before attending the University of Wisconsin Law School and transferring to Notre Dame Law School. John reflects on his experience as a summer associate, including the assignments and various summer associate events. He also shares wonderful advice on the importance of seeking mentorship and the importance of embracing challenges head on.

闯辞丑苍鈥檚&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: Summer Associate
• 麻豆直播 Office: Chicago
• Hometown: Oak Lawn, IL
• College: Bradley University
• Law School: Notre Dame Law School

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

This episode features a conversation with Peyton Recer. Peyton is a summer associate in 麻豆直播鈥檚 Tampa office focused on real estate. In this discussion, Peyton reflects on growing up in Windermere, FL, and earning her BA and Master鈥檚 degree, in real estate, from the University of Florida before attending University of Miami School of Law. She shares her approach to law school, including how she studies and prepares for exams. Peyton also reflects on her experience as a summer associate, including the assignments and various summer associate events. She also shares wonderful advice on the importance of networking and relationship building.

笔别测迟辞苍鈥檚&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: Summer Associate
• 麻豆直播 Office: Tampa
• Hometown: Windermere, FL
• College: University of Florida
• Law School: University of Miami School of Law

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

This episode features a conversation with Donavon Lea. Donavon is 2L summer associate in 麻豆直播鈥檚 Los Angeles office focused on health care. In this discussion, Donovan reflects on growing up in Virginia Beach, VA, and earning his BA and MPH from the University of Virginia before attending UCLA for law school. He reflects on the variety of work experience he gained in undergrad, including serving as a CDC Public Health Law Fellow. Donavon describes his experience as a summer associate and provides advice to prospective and current law students, emphasizing the importance of openness to unexpected opportunities and the importance of maintaining a learner鈥檚 mindset. 

顿辞苍补惫辞苍鈥檚&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: Summer Associate
• 麻豆直播 Office: Los Angeles
• Hometown: Virginia Beach, VA
• College: University of Virginia
• Law School: University of California, Los Angeles

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

This episode features a conversation with Tim Casey, General Counsel of Numotion. In this discussion, Tim reflects on growing up in Lindenhurst, IL, and attending Lewis University for undergrad before earning his master鈥檚 and then J.D. from Marquette University. He reflects on the early days of being a lawyer, including clerking for a district and circuit court as well as working as an associate at 麻豆直播. Tim discusses his transition in-house and the experiences he gained at A.O Smith Corporation and GE Health before joining Numotion as GC. He also provides advice to law students and junior lawyers, emphasizing patience, openness to new experience and the importance of learning how to responsibly incorporate A.I. tools into your legal practice.

罢颈尘鈥檚&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: General Counsel
• Company: Numotion
• City: Nashville, TN
• Hometown: Lindenhurst, IL
• College: Lewis University
• Law School: Marquette University School of Law

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

In this episode, Jana Kolarik, a partner in 麻豆直播鈥檚 Health Care Practice Group, and Angie Caldwell, principal and CFO of PYA, continue their discussion on the importance of work relative value units (wRVUs) and fair market value (FMV) under the Stark Law and what this can mean for how health care organizations pay their physicians.

For more information regarding the 鈥淟et鈥檚 Talk Compliance鈥� podcast series, please click here.

Please note that the interview copy below is not verbatim. We do our best to provide you with a summary of what is covered during the show. Thank you for your consideration, and enjoy the show!

Angie Caldwell

Hello and welcome to the Let’s Talk Compliance podcast series of Health Care Law Today, presented by 麻豆直播 & Lardner and PYA. I’m your co-host, Angie Caldwell, principal with PYA.

Jana Kolarik

Hi, and I’m your other co-host, Jana Kolarik, a partner in 麻豆直播’s health care practice group. We’re excited to have you join us today. Before we begin our show, we want to remind you to subscribe to Health Care Law Today on your preferred podcast app. Please visit healthcarelawtoday.com or pyapc.com. For today’s show, Angie and I are continuing our discussion on the importance of Work Relative Value Units, or wRVUs and fair market value, which we’ll refer to as FMV under the Stark Law and what this can mean for how health care organizations pay their physicians and we’re going to focus on best practices.

Great to see you, Angie, and thanks for doing this follow-up discussion of our favorite topics.

Angie Caldwell

Always great to be here with you. Thank you.

Jana Kolarik

So in our last, this is a two-parter, so in our last discussion, we talked a lot about productivity modeling in wRVU with some recommendations related to it. We had also, just to kind of orient the audience as well, we had talked about planning issues and transparency and some of this stuff we’re going to talk about related to best practices in one of our prior podcasts, I think podcast episode 35, which was in November of 2024, time flies. So I recommend our audience, if they’re interested in a deeper dive into some of those issues, they listen back at that. But today we’re going to be talking about that best practices and some of this modeling stuff related to that.

I just want to remind folks about the Stark Law. Not that anybody really forgets that’s probably listening to this, but that is a driver of a bunch of these concerns related to FMV and the compensation modeling that we get into. So really quickly, and you know I love to wax poetic on this, Angie, but I’ll try to be quick. The Stark Law provides that a physician who has a direct or indirect financial relationship with a designated health service entity or DHS entity or who as an immediate family member with that type of relationship may not make a referral for the furnishing of that DHS for which payment otherwise may be made under Medicare unless an exception applies. Further, an entity that furnishes that DHS pursuant to that prohibited referral may not present or cause to be presented a claim or bill to Medicare or any other individual third party payer or other entity for the DHS performed pursuant to the prohibited referral again, unless an exception applies.

So this means really at its base that when a financial relationship falls under the Stark Law and a physician’s referral of the patient can’t satisfy the regulatory exception, the submission of a claim to Medicare for the service would trigger a violation of the Stark Law.

Okay. The Stark Law only applies to Medicare claims, but that’s a huge federal health care program for most of our listeners. It covers only relationships with physicians, but intent is irrelevant. So it is a strict liability statute. It’s a civil statute. There are penalties. It obviously prohibits payments based on its terms, and it also provides for civil monetary penalties, and it can lead to False Claims Act (FCA) exposure. So again, regulatory exceptions are required.

The big 鈥渢wo鈥� [exceptions] that you and I talk about a lot are the bona fide employment exception and the personal services arrangement exception. So the employment exception is obviously for employed relationships and the other one is for independent contract arrangements.

Well, we’re going to focus on FMV, which is applicable to both exceptions, as is commercial reasonableness. But that FMV issue can be and is tricky for folks and maintaining or keeping track of FMV is essential throughout the entire relationship. Again, as we have said many, many times, it’s not a set it and forget it. So we don’t just talk to you, set the compensation plan and then move on with our lives. We have to ensure that it is continuing to be FMV. Some of the things that we’ve talked in the past, and we’ll talk in more detail here and I’m very interested in information from you on that, .

But let’s talk about best practices for compensation reviews. Essentially the contract is important, right? So ensuring that at its base you have a contract that on its terms is FMV at the beginning and can maintain FMV throughout the entire term of the agreement. Transparency about the terms of the agreement is important as you’re planning with physicians and as you’re planning internally and checks of FMV throughout the term of the agreement is also important. And so we’ll talk a little bit about some of that stuff.

And then the catching problematic arrangements early is important because as we’ve discussed, reconciliation or known in other terms, 鈥渃lawbacks鈥� are uncomfortable, but necessary. I mean, it should be built into contracts, the ability to do [reconciliations] to maintain FMV. But let’s talk about with all that intro, what are some best practices for annual compensation reviews?

Angie Caldwell

That was so comprehensive in a very short period of time. So kudos to you for boiling it down. So giving and feeding off of my Gen Z children, I’m going to say it’s giving FMV vibes, right? Every year is giving FMV vibes. So let’s talk about a great policy for helping an organization determine and maintain FMV for their arrangements.

First and foremost, we need to start with a well-defined policy or process. So even that at times, because within that well-defined policy and process, we have to think about the organization’s philosophy, compensation philosophy. We have to understand the organization’s risk tolerance. We have to think about volume of arrangements and the administrative burden of maintaining this policy or process. So all of that thought goes into the calculus of determining that policy.

Then within the policy and the question that PYA often gets asked, and I’m sure that you get asked this as well, Jana, is what should the thresholds be? So we have a process for reviewing, but what are my guardrails? When do I know? How do I set guardrails or thresholds for deciding if I have a problem?

And so the policy and the process should define those thresholds. And so let’s talk about those thresholds a little bit and what they should be. So sometimes we talk about them in terms of slices or perhaps we talk about this in terms of tiers. And before I go down this path, I want to caution our listeners that one test in any tier within the determination of what you do with an arrangement and whether it requires additional review or not, probably more than one test is appropriate. So you and I on prior podcasts and likely the one that you referred to from 2024, we likely talked about bright lines around the 75th percentile or perhaps the notion that everything that’s paid at median is automatically FMV. So not to say that the 75th and the 50th aren’t great thresholds for starting a review, but adding a second element to that review is likely very important.

So let’s talk about that just in a little bit more detail. So within those tiers, what a best practice would be would be to create a mechanism such that you are looking at all of your physicians either annually or in some kind of cadence, annually best practice. I have seen some every other year when the risk tolerance within the organization or perhaps comp philosophy allowed for it, but probably an annual review. And you really want to catch, and this is something you had in your opening comments, Jana, you really want to catch the horse before it’s out of the barn. And that’s why then you’re doing these reviews on an annual basis, even if the contract doesn’t have a renewal clause or an update for two or more years. So you’re looking at this every year and making sure that everything is still good, that it’s still within FMV.

So first tier maybe is you compare the compensation, work RVUs, comp per work RVU, the differential between productivity and compensation, perhaps you use the median as a starting point and if a physician meets all of those tests within tier one, nothing is required. They’ve passed the test. If they fall out of that, they don’t hit those tests, they fail one of those tests. Then perhaps the second slice is more of an internal review and documentation. And so with that then you’re looking at, well, why did they fail the test? Is it because of location? Perhaps a physician is in a rural location. Perhaps they failed the test because within the compensation plan, there’s an experience clause that puts additional compensation because of experience. Perhaps they have unique training. Perhaps there’s a need, perhaps there’s a desperate need for the physician.

Then a third tier, going down, so you hit the second tier and you’ve decided that the second tier means that you have an internal review process or perhaps after the internal review process, it still doesn’t make sense. You’re still as an organization concerned about FMV, so then you document a third and enhanced review, which perhaps increases the benchmark thresholds from the 50th to the 75th. Again, not just one, not just one 75th percentile total compensation, total cash compensation, but perhaps you’re looking at a compensation per work RVU threshold with that. You’re looking at a productivity threshold with that and you’re looking at the differential between productivity and compensation with that in addition to what you’ve already gathered in tier one and tier two.

Your slice three or your tier three, if you still are failing, the arrangement is still failing all of those tests, then they fall into that outlier category, which would at that point probably require an external review and help from someone, an external evaluator.

So with all of that in mind, just to recap, best practices, document a policy and procedure, make sure that you have the ability to follow the policy and procedure and measure on a timely basis, annual being best practice, but then also let’s think about transparency and how much then gets disclosed to the physician as it relates to these tests on an annual basis. So again, just thinking about how uncomfortable perhaps a clawback is if this is part of the process and if the process has been communicated to a physician as part of their annual education process, it’s a much easier conversation. It’s not a surprise to the physician. So Jana, helping me think about that then as a best practice related to physician education, what are some of the key takeaways or key learning objectives that should be part of a physician education?

Jana Kolarik

Yeah. And thanks Angie, that’s super helpful background and understanding really the layers that can go into this analysis for organizations I think is super important to understand. So from an education perspective and from a transparency perspective, the discussion about the Stark Law, the discussion about kickback, the foundational legal reasons for why the organization is concerned about these issues should be part of the discussion and the need for FMV should be part of it. There should be contract provisions that obviously maintain FMV as I’ve mentioned. I think they should be at the sole discretion of the employer. So that’s because there can be some debates around the edges of these issues, but foundationally as the employer, there is a responsibility and a seen responsibility by that employer to maintain compliance with FMV. So in the end, it’s got to be at the discretion of the employer as to whether something is FMV.

But those processes that you mentioned, like what are the different steps that are gone through to analyze FMV is completely appropriate to talk about and to talk and to have that transparency, for example, and we’ll get into some of this and we’ve gotten into it in the past, but if you have a component of the compensation that deals with productivity and you’re dealing with wRVUs, having those wRVUs be transparent to the physician so they understand where they stand and understand too how they are calculated. So we’ve talked in the past about modifier adjusting and so forth and so on. So all of that and that education as to how physicians are compensated is very important so that it doesn’t end up being a surprise when they get their check or surprise at the end of the year if there is an issue with FMV, it should be a dialoguing issue.

The other piece of this that I think is important is that if it is necessary to maintain FMV, that the contract allows those reconciliations. And we can talk a little bit about what this looks like from your perspective, but from my perspective, reconciling as frequently as you can is fantastic if you can do it quarterly makes sense because then you have a sense as you go through the year, annually can be challenging just because folks don’t know where they stand at various points during the year. So those are frankly things that pop immediately to mind as I’m thinking about transparency and education.

Angie Caldwell

I think too with that communication, physicians need to understand why the organization does things the way that they do. And with that understanding, and again, not to the minutia, not to the point where specific confidential matters are disclosed across arrangement types or anything like that, but the physician having a general sense as to why the organization approaches things the way that they do and that general compensation philosophy I think is really important because the physicians, as we hope that they do, have colleagues all over the country and are likely receiving information about other organizations and the way other organizations do things. And without the context of how their organization is doing things, then I think it just becomes maybe a burr in the saddle, if you will, because they just don’t understand their organization’s philosophy and approach, which is likely very much to pay the physician for their personally performed services at FMV. It is a recruiting and retention problem if the physician is not paid at FMV . And so again, it’s really to the benefit of everyone to maintain this and communicate transparently around it.

Jana Kolarik

Agreed. And I think to the point that you just made, it plays into trust. So the transparency plays into the trust that the physicians have related to what’s happening. But I also think that there’s a lot of information that floats around amongst physicians that are in different contexts and so are compensated differently because of their context. So we’ve talked in the past about the group practice and the group practice exception and compensation through the group practice. Look, if you can meet those standards under Stark and the In-Office Ancillary Services Exception, you from a group practice perspective are not concerned about FMV because you are meeting the other nine factors that go into the group practice and the other factors that go into In-Office Ancillary Services Exception. But that world is very different than the world of the employment exception and the hospital situation where we’re living with the employment exception, which must be FMV and that has some rigor around it.

Can you talk to me a little bit, because you and I have talked about people’s understanding FMV as a number. Can you talk to me about what FMV is from a valuation perspective? What does that mean in your world?

Angie Caldwell

Yes. FMV is not algorithmic. It is not a formula, it’s not a plus, minus, divide, multiply, equals one number. FMV is a range and the range is determined by a valuator, an appraiser who is taking into account all of the individual facts and circumstances that they can gather, that they can muster around the arrangement in determining that range. So benchmark data, wonderful, and we’ve probably said this on a prior podcast, benchmark data is wonderful, but it is a starting place and in and of itself does not determine FMV. It’s a starting place for those individual facts and circumstances. And within each individual element, there is a range of compensation that within an individual market makes sense. And so when an appraiser is looking at compensation, again, it is a range and then the upper end of the range is typically where individuals focus. What is the range at which if I stick a toe over, then it becomes a problem?

And the upper end of a range, I’ve got to tell you, as an appraiser, that upper end of the range is very important because it’s the range at which we buckle down and then it’s not a dollar or more unless there is a change in fact or circumstance that would drive a new analysis or perhaps an update to that analysis. In all of your appraiser opinions that you’ve probably seen, Jana, and I’ve seen a few other appraiser opinions other than PYA, we will say, you might get a different answer if you ask someone else, and that’s because FMV is in a range, it’s not algorithmic, it’s not a formula, and someone may look at something a little different. But at the end of the day, even the high end should be within a range in and of itself to match the market dynamics and the personally performed services of the physician.

Jana Kolarik

And I think a lot of this … I think we talk about complex arrangements. So we talk about highly compensated physicians and a lot of these issues with compensation and with FMV come into play with very complicated arrangements that are at play and with physicians that are highly compensated where that art that is valuation becomes important to understand or have somebody on your speed dial. So talk to me about what happens if the annual review reveals a problem from your perspective.

Angie Caldwell

Yes. And then absolutely I want to hear your perspective too because there are a lot of tentacles to this. When you find yourself in a hole, your first step is to stop digging. So when you find a problem, stop digging and make a plan. The first thing is to check your data, make sure that what you are seeing is perhaps a problem or a test failure if we refer back to the tiering and the test within the tiering. If you get to that point, first and foremost, double check your data, make sure that what you’re looking at is accurate and that you can reperform the math in a way that still reveals an issue. That’s first and foremost.

Then it’s a matter of deciding again, do you need internal or external support related to this? Part of this is {keeping} confidentiality within your committee and within your group once a problem is identified. Again, if you have the level of transparency that we are speaking about earlier with respect to physician education, when that problem is revealed, if you have that level of transparency and education, it’s an opportunity to double down and to get really serious about the data, the information, all of the facts and assumptions determining if you need external support either from someone like me, Jana, or someone like you or perhaps both when the problem takes it to that level and we’ll come back to that in just a minute.

Then too, after you get your support gathered and you determine what you need, there is an analysis {around the} need to fix the problem that caused the arrangement to be at issue so that it doesn’t repeat itself. And so that then comes back to communication, trust, contractual arrangements, and then determining if the problem is systemic. The problem could very well be isolated to one arrangement and one physician, but if there is an underlying system issue, the way work RVUs are calculated, the way the systems are looking at those, maybe there’s something else systemic that’s happening, you want to not only fix the arrangement, but you want to fix the system around the arrangement to make sure that it doesn’t happen again.

So Jana, talk to me about your perspective on this and when there is a problem, what steps should be taken? And even in the worst of scenarios, what happens when you have the worst situation and you even might have to have a disclosure, talk to me a little bit about that.

Jana Kolarik

I think it’s the internal processes, like you had mentioned, the plan that’s in place, the process that’s in place, that should save you most of the time. So if you’re midstream with a contract and you have the ability to clawback or adjust, then you can solve for FMV issues without necessitating a repayment or a self-disclosure. So I think it’s important those provisions in the contract are not intended to be punitive to anybody. They’re really intended to be safety valves for a process that is intended to keep this [arrangement] within FMV and keep everybody compliant. So I think that is the immediate sort of reaction to we might have an issue. And if you find it early enough, that can be a saving grace.

With regard to if you find it well into the process, which happens after time has passed, again, if it’s an employee there is frequently the ability or there is the ability if that person continues to be an employee to reconcile the payments that have been overpaid and get those repaid to the entity such that it isn’t an issue and there isn’t a need for a self-disclosure. So that’s the other piece of it. Even if time is passed, you’re not midstream. If there is a relationship there and an understanding of the process and the transparency that goes along with it, some of those discussions can be had and that problem can be rectified.

In the situation where the physician has left – is no longer employed – or the physician is frankly unwilling to repay the amount of money that’s been overpaid, then you’re in a situation of thinking through the self-disclosure options with regard to Centers for Medicare & Medicaid Services (CMS).

And that process is I’ve dealt with it frequently CMS is actually a good regulatory agency to deal with. The process is relatively straightforward and the settlement is typically not for the full amount of the Medicare payments, but rather a percentage, but that process in writing up the self-disclosure and making that happen and fixing the problem, as you’ve mentioned, is important because when you do file that self-disclosure, you want to make sure and you have to attest to the fact that the problem has been fixed. So if it’s the systemic issues that you’re mentioning, if it’s the calculation of the wRVUs that’s been problematic, fix that. If it’s the contract provisions that have just become problematic, fix that. So I think no matter what it is, the fixing of it is super important.

So I think from my perspective, those are the things that I would highlight. As far as bringing you in, I love to see processes that with the more straightforward compensation arrangements allow the use of surveys and the ability for organizations to handle this internally. So that there are these safety valves that you and I help them put in place, that they’re able to pull levers and ensure compliance throughout the year for most of their arrangements. It’s for those ones that are more complicated that I frequently become involved with more closely and then we’ll bring in you, someone like you as a valuation consultant to help navigate next steps with regard to compensation planning and FMV and explaining what happened if it is unclear to the organization at that point. So that from just a resources perspective is typically how it would be ideal to handle. So what are your thoughts on that?

Angie Caldwell

I couldn’t agree more. My preference is also an internal process to know, understand, find and resolve. And then really only when there is a matter that has some stickiness to it that an external evaluator or legal then gets involved because the teams, the internal teams are talented and they often have great resources and sometimes it’s just a matter of bandwidth. And so that’s another area where you and I can help, Jana. It’s just a matter of there aren’t enough hours in the day and so they need someone else just to help from a bandwidth or possibly even from a project management perspective. But really overall, I couldn’t agree with you more as to the process and how those problems need to be resolved within the arrangement. And it all comes back to, and I know we’ve said this before in other podcasts, it all comes back to the planning. If you can start out on that right foot contractually and from a communication perspective 鈥� with education that the compensation within the original contract is designed in a way to result in FMV compensation, that’s the best starting place really for all of it.

Jana Kolarik

Yeah, amen. I wonder if we want to segue a little bit into different compensation arrangements and how they fit in with the different specialties. Do we want to talk a little bit about that, about potentially problematic provider compensation elements that should just be flagged for folks to keep in mind? I know we’ve talked in the past quite a bit about hospital-based physicians and what ended up being the best practices, I guess, as compensation planning for them. And I know we had put a slide in the annual conference that we had related to that compensation structure alignment examples. Can we talk about what are things that would be maybe aligned structures and then things that may be considerations for maybe potentially not aligned structures that if possible should be avoided? Can we talk about that a little bit?

Angie Caldwell

Absolutely. So the best designed compensation plans are those that align the way the physician works and with the way they are incentivized through their compensation. So if you think about your hospital-based specialties … And I said that like it was an absolute, so let me say there’s not a one-size-fits-all, there are circumstances where different models do work, but generally speaking, for hospital-based coverage type specialties, a productivity-based work RVU model is likely misaligned in that the physician, the provider is not … They are a catcher. They are not the ones out in the market with a clinic, having the visits and the encounters outside, they are catching what comes to the facility. So they don’t have control over the volume of patients that are coming in. Now they do have control to some extent to how many patients they perhaps see in a day or perhaps throughput within an emergency room or for perhaps, or even the number of patients that they see in a hospitalist scenario.

So generally speaking, in a hospital-based specialty, a more coverage type or shift-based model is better aligned with perhaps some incentives where it makes sense. {A shift based model} doesn’t always make sense for throughput – for surge, high surge – high volume times when you know that your provider has to go above and beyond to be able to see what has come to the facility or is on the floor or is in the emergency department on that day.

On the other end of that, thinking about a proceduralist, it makes more sense for a proceduralist or a surgeon to be on a work RVU model. It is very much as you think about those different types of physicians and how each individual patient comes in, comes out, they’re in the clinic, it is very much a measure of the personal work effort of the physician and it’s less of a coverage.

Rural-based providers, I’m just going to put them in a separate category because so much of a rural provider, so much of that compensation is based upon need in the market and you might not have the volume to be able to support what is necessary from an FMV perspective for that provider, but that is just the reality at times for rural medicine. So I’ll put them in a separate category because each individual situation needs to be looked at.

In the middle are our primary care physicians. So think about family medicine, think about rheumatology, think about endocrinology, perhaps even nephrology, where you are managing a patient panel. And so in those situations, it’s almost a hybrid model that works the best. So we’re seeing a lot of movement in primary care specialties today moving to a panel-based tiered-based model with an incentive for productivity, but {productivity} is not the main calculus for the compensation.

In all of these models, Jana, I highly recommend a quality and engagement incentive simply because there are missions and needs of the employer. Especially in a hospital employed scenario, there are needs of the employer that the employer needs the physician to help drive the mission, the clinical quality, the center of excellence and all the care management and all of the things that make that facility and that system great. And so in those scenarios, that’s how you can engage with the physician to really push those mission critical elements for the hospital and health system. Have you seen anything different?

Jana Kolarik

No, but I have seen, and I think you and I have had discussions about this, I’ve seen just a push by all physicians to be paid on some type of productivity measure by wRVU, even if hospital-based. And I think the misalignment is there, but I think from a compensation perspective, I’m not sure that it benefits them. I mean, that’s the thing that I think in the end you want, as you said, the compensation that best fits the services that are being provided by that physician and frequently that model doesn’t make sense for them, even though they believe in some part of their brain that they will be paid more from a productivity perspective.

Also, I’m interested in your comments about that, but I also really want to talk a little bit, because I know we’ve talked about this in the past too, and I just want to mention it here because it is like burning a hole in my brain right now, which is quality of the data. So we talked about systems issues. And so I think you and I have had discussions over and over about we cannot emphasize enough the importance of the data that’s driving any of these factors. So just even picking up again on the wRVU calculation. So we mentioned briefly the modifier adjusting, which is part of the billing system. And I’d love for you to address that in some comments about what does that mean and how does that affect things?

I think the other thing from my perspective as a regulatory and compliance lawyer, it’s the claims accuracy. It’s the coding accuracy that plays into the accuracy of the data and therefore the accuracy of the wRVUs that are coming out of it. So ensuring that your compliance and your audit folks and everything is aligned with regard to how things are coded, my preference is if physicians want to code their work, I think it’s fine, but I do believe that a second eye on the coding and documentation is important for claims accuracy and the coding frequency that you have, again, CMS has been very clear about proactive audits being important to them and frankly important when you look at the Overpayment Rule and other things that play into that and the need to refund amounts that have been incorrectly billed, but really getting that data accurate from the get go and again, ensuring some of those levers are in place to ensure the accuracy of the claims data because it then affects the compensation data for these physicians.

But talk to me a little bit frankly about any of that. But the modifier adjustment thing I think seems to be confusing to folks. So talk to me about that a little bit.

Angie Caldwell

The data is so important, Jana, and it goes back to we are weaving a wonderful tapestry here today because we’re linking things back to the top of the podcast, but it goes back to trust, right?

Jana Kolarik

Yes.

Angie Caldwell

So if your data is not believable, then you fall back on that trust issue. And so from a valuator perspective, and I know this is not unusual to internal valuation and assessment teams as well, but you’re really looking at the data with a level of professional skepticism always when you’re reviewing it, and you can’t assume that everything is always working perfectly.

So when we were talking earlier, so weaving back to our talking about the tiers and the thresholds, another potential test, or perhaps maybe not part of the tiers, but part of the overall policy is that there should be a process to review the coding and the wRVU calculation for certain providers that fall into, maybe it’s a thing that has to be done for all of your tier three or tier two providers. That becomes part of the rotation for your internal coding and auditing team to ensure, again, that that data is as crisp as it possibly can be coming into the determination of compensation.

Because by the time that it gets to compensation, then the likelihood of there being a problem, it just gets greater. You’re more at the end of the process at that point, but if you have frequent reviews quarterly, semi-annually, if they fall into a tier, they automatically go into a bucket for one of those reviews, I really think it’s critical and part of a really good compensation planning process and compliance program. There are things from a coding perspective that can be done easily. You can look at bell curves for the physician specialty, looking at how they fall. Are they an outlier compared to their peers and then finding out why they are an outlier compared to their peers then is important.

But all of that is just absolutely critical because things can happen as system updates, as we know, as we deal with our internal systems every day, system updates and things can happen that just turn things slightly one side or another, then that makes a calculation that was reliable six months ago, perhaps not as reliable. And so it’s just always very, very, very important to make sure that all of that is clean, both from a claims perspective as well as from all of the other parts along the way where a modifier could fall off.

I had a scenario, a situation where the medical record data was transferred into a separate system and then the separate system was computing the compensation on a productivity basis. So as that happened, the modifiers were included in the first system, but then when the transfer happened over into the compensation system, the modifiers were dropped. It was a process that worked for a very long time, but then all of a sudden something changed just ever so slightly in the underlying schematics of how that data was transferred, and then all of a sudden compensation was being computed without any modifiers. And it took a minute for the organization to find it, but they found it through a process where they were looking at their data where before they were paying bonuses on a semi-annual or quarterly basis, they were looking at the data, viewed their data with professional skepticism and said, “What is happening? This trend is unbelievable. Why is it unbelievable?” So just emphasis on that matter that the data is so very important.

Jana Kolarik

Yeah, and I think to that point, looking at not having such a this point in time view of data as well, but looking holistically as you look at things and making sure that you are looking at trends and so forth, or that one of the people on your team is tracking those things because gosh knows I get into minutiae and I think you do as well, but having somebody that has that macro view of where things are going and if it doesn’t make sense, why would this have happened and digging into those details, I think always from a compliance perspective, no matter what area you’re dealing with is important. That’s so helpful. Thank you.

We have covered the things that I wanted to cover in our podcast today and the things that I wanted to make sure that we shared that we were unable to share during the annual conference. So thank you for this time and thanks for digging into some of this again with me. You know I always enjoy it. Are there any kind of final things that you just want to mention to our listeners before we say goodbye?

Angie Caldwell

I think we have also covered everything that I wanted to cover today. Jana, it is always a pleasure to be here with you and to be able to dialogue about these issues just back and forth for a podcast and even in real time in our daily work. So I really appreciate you. Thank you.

Jana Kolarik

Likewise, likewise. Thanks so much, Angie. We want to thank our listeners for joining our Let’s Talk Compliance podcast series with Health Care Law Today, your connection to timely legal updates in the health care and life sciences industry. We encourage you to subscribe to this podcast and check out our part one of this two-part series. Visit 麻豆直播’s Health Care Law Today blog at healthcarelawtoday.com and pyapc.com. If you like the show, don’t forget to subscribe and be sure to rate us five stars. Until next time, I’m Jana Kolarik of 麻豆直播 & Lardner.

Angie Caldwell

And I’m Angie Caldwell with PYA. Thank you.

This episode features a conversation with Alexis Juergens. Alexis is a senior counsel in 麻豆直播鈥檚 Salt Lake City office and chair of the firm’s associates committee. In this discussion, Alexis reflects on life growing-up in a military family, including a number of moves, before settling in Salt Lake City as a child. She shares her decision to attend Northern Arizona University for undergrad, as a D1 swimmer, and the University of Utah S.J. Quinney College of Law. Additionally, Alexis details her journey joining an IP boutique out of law school and, five years later, joining 麻豆直播 as a lateral attorney. She also provides insight on the role of the firm鈥檚 associates committee and advice on the importance of making time for what you love.

础濒别虫颈蝉鈥�&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: Senior Counsel
• 麻豆直播 Office: Salt Lake City
• Hometown: Salt Lake City, UT
• College: Northern Arizona University
• Law School: University of Utah S.J. Quinney College of Law

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

This episode features a conversation with Ren茅 Jovel, Assistant General Counsel at Versiti Blood Health, Inc. In this discussion, Ren茅 reflects on growing up in Los Angeles, California, attending Northwestern University for undergrad and Marquette University School of Law. Ren茅 details his career progression from working in a state senator鈥檚 office as a constituent services representative, to joining Goodwill Industries of Southeastern Wisconsin as an in-house attorney and transitioning to his current role as assistant general counsel at Versiti. During the conversation, Ren茅 emphasizes the importance of mental health, adaptability, and authenticity in legal careers. He also provides advice to law students and early-career professionals regarding the importance of seeking support and embracing the unknown, while pursuing a path that align with their interests and well-being.

搁别苍茅鈥檚&苍产蝉辫;笔谤辞蹿颈濒别:

• Title: Assistant General Counsel
• Company: Versiti Blood Health, Inc.
• City: Milwaukee, WI
• Hometown: Los Angeles, CA
• College: Northwestern University
• Law School: Marquette University School of Law

Click here for full list of The Path & The Practice episodes.

You can also find, and subscribe, to this podcast on all major podcast platforms including , ,  and .

In this episode, Jana Kolarik, a partner in 麻豆直播鈥檚 Health Care Practice Group and Angie Caldwell, Principal and CFO of PYA, discuss the importance of work relative value units (WRVUs) and fair market value (FMV) under the Stark Law and what this can mean for how health care organizations pay their physicians.

For more information regarding the 鈥淟et鈥檚 Talk Compliance鈥� podcast series, please click here.

Please note that the interview copy below is not verbatim. We do our best to provide you with a summary of what is covered during the show. Thank you for your consideration, and enjoy the show!

Jana Kolarik

Hello and welcome to the Let’s Talk Compliance podcast series of Health Care Law Today, presented by 麻豆直播 & Lardner and PYA. I’m your co-host, Jana Kolarik, a partner in 麻豆直播’s health care practice group.

Angie Caldwell

And I’m your other co-host, Angie Caldwell, principal with PYA. We are excited to have you join us today. Before we begin our show, we want to remind you to subscribe to Health Care Law Today on your preferred podcast app. Please visit healthcarelawtoday.com or pyapc.com. For today’s show, Jana and I will be discussing some potentially problematic provider compensation topics.

I am excited to be podcasting with you today, Jana.

Jana Kolarik

Me too, Angie. So I think our first topic today is we’re going to talk through maybe work relative value units (wRVU) and productivity models. I think this has been a topic that you and I have spent a lot of time discussing. And I think just as a beginning structure issue, thinking through this particular issue with the lens from my perspective as a lawyer, thinking through personally performed services under the Federal Physicians Self-Referral Law, commonly known as Stark Law, and also sort of thinking through fair market value (FMV), which we’ll talk about as FMV under Stark as well. But also thinking through that personally performed aspect of WRVUs will kind of be peppered through this and is affected not only from a Stark perspective, but a kickback perspective. I mean, you and I have spoken about this in multiple different ways.

The concept as we were talking through this before the podcast of not all [w]RVUs are created equally was something that just struck me, frankly, people’s understanding and, frankly, physicians’ understanding of what work RVUs are, I think is important because it’s a component of how they are being paid by payers. And it’s again, also this component of how they’re being paid through their practices or through health systems.

But let’s talk a little bit about what we’ve seen as far as issues with inaccurate or inconsistent determinations of wRVUs. Do you want to kick us off on some things that you found and then let’s just talk through them?

Angie Caldwell

Absolutely. So if you think about the prevalence of the productivity model as a compensation model type, probably 70% of hospital employed physicians are on a productivity-based compensation model. So it is very important then to ensure that the input to the compensation model surrounding work RVUs is correct and accurate. So what most often happens when measuring the work RVUs is around ensuring that the work RVUs are modifier-adjusted and personally performed.

Systems have limitations. No system is entirely perfect, but what we’ve seen happen in several instances is a system might not be able to compute or handle modifiers. A system between the billing system and the provider compensation system, the modifiers might be dropped out of the calculus. There are many, many things that can happen related to computing those work RVUs. So it is incredibly important to ensure that they are correct.

Jana Kolarik

Right. And I think some of this is, so when we talk about modifier adjustment, those modifiers are present in the billing itself. So they’re there in how it’s billed with the Current Procedural Terminology (CPT) code. And sometimes there’s, I don’t know, a misunderstanding about whether or not to keep them or leave them off when it comes to the physician compensation. So obviously the modifier adjustments are reducing, in many cases, the wRVUs that are then attributed (or the work RVUs that are being attributed) not only from a billing context, but also from a compensation context. So by leaving them off, essentially you’re attributing more WRVUs, which is then attributing more compensation from a productivity perspective to that physician.

So thinking through the modifier adjustment issue and the systems issue that you’ve encountered, systems are obviously the best situation. So if it’s calculated through a system, through an electronic health record (EHR), through something that is not touched by human hands, it could be more accurate. But how do you verify or touch up against when you come into it, a new client, whether or not their wRVU calculations are accurate? How do you figure that out?

Angie Caldwell

Sure. And I know you and I have talked about effective compliance programs and compliance audits, and this is one of those areas that the compliance team or even the internal audit team can help an organization ensure that the work RVU computations are accurate and that the modifiers are included within that calculation. To the extent that they are not, and it does happen, then on the other end, accommodations/mitigations need to be made within the compensation plan design to ensure that the overstatement of work RVUs in one part of the mathematical formula is offset by a reduction in the compensation per work RVU in the other side of the formula so that the overall compensation then doesn’t run afoul of FMV and the applicable regulations.

One of the things here that I think often gets misunderstood/overlooked or even perhaps becomes a complication is that the multiple payment procedure reduction, of course, that is a modifier, but many payers, because of the sophistication of the billing systems and the way that the information transmits between the hospital and payer, that modifier is often not even required to be billed compliantly. And so the payer knows that a multiple procedure has been done, but perhaps the modifier has been left off internally for compensation purposes. And that’s one that frankly can have a significant impact on a work RVU determination.

But it is important, again, within the compensation design to ensure that what we are measuring from a work RVU perspective is as accurate as possible and includes all modifiers, including the multiple procedure payment reduction modifier.

Jana Kolarik

Yeah, that makes a lot of sense. To me, there’s two buckets here. There’s the systems accuracy, and then there’s the compliance overlay related to the accuracy of the data. So is your system spitting out data that is accurate with regard to the modifier inclusion, as you’ve just mentioned? And then is the base CPT or coding that’s present for that particular physician accurate based on compliance audits? So let’s touch on that really quickly, just because it can affect it. And I think sometimes is overlooked and thought of separately when it should be thought of as a combined issue.

So if you have a healthy compliance program and a healthy auditing function within that compliance program that is testing the billing and coding of claims, we’ve talked about individuals coding their own claims, belief that the work provided was very high and that the medical decision making was very complex and coding things at higher levels – level fives – which can spin off higher wRVUs. But if you have a coding and documentation expert come into that information and looking strictly at what the documentation can support, it’s possible that the coder can say, “Look, it’s not a level five, it’s a lower level code.”

So ensuring that that documentation is correct, which then documentation is reflective of what has been coded and billed is important because it then affects not only sort of accurate billing and coding, which is important from a payer perspective and from a overpayment rule perspective and False Claims Act (FCA) perspective, but is then important from a compensation perspective. And I think frequently, if you have an issue with your coding documentation, your error rates, that disconnect sometimes will happen without realizing how it is affecting physician compensation until somebody like you comes along, Angie, and those questions are asked and really pushed on to make sure that if there is a productivity model that takes into account wRVUs, are those true and accurate wRVUs?

Angie Caldwell

The old adage garbage in, garbage out.

And it really does start with the documentation in the record from which that bill is then coded and that CPT and modifier is then attached. Not every service is going to be a level five service. And that’s where effective compliance programs can help. An easy test is to compare the physician coding frequency to a normal frequency from Centers for Medicare & Medicaid Services (CMS). So CMS will show you the frequency of the CPT code by physician specialty. Comparing that frequency, comparing that bell curve from a standard bell curve to the physician in question is a really easy way to see if that billing is perhaps off. And if it is, if the bell curve is completely to the right showing all level fives and very few {level} ones, then it’s an opportunity to ask more questions and find out exactly what’s going on. But that is the first step in ensuring that the compensation model then doesn’t get awry as a result of that incorrect billing or perhaps coding irregularities that may happen.

Jana Kolarik

Absolutely. And so let’s talk a little bit about other things that may affect what is being attributed to a physician as a wRVU. So we’ve had, there’s a distinct difference between billing and what’s being attributed to a physician under their national provider identifier (NPI) from a billing context and what is considered to have been personally performed by that physician. So what comes into play there is something that you want, which is collaboration between physicians and advanced practice practitioners (APPs), including physician assistants and nurse practitioners. So in the incident to context, in the global surgery package context, in the split shared situation, you have things that may have been billed under the physician’s NPI that may have been worked by an APP.

So as you’re looking at a particular physician, and I think you and I have talked quite a bit about surgical specialties and the use of APPs and when they’re used and how they’re used, how do you take that into account when you’re trying to discern whether or not the wRVUs that are being attributed to a particular physician or physician’s NPI are truly worked or performed by that? Does that make a difference in kind of your assessment?

Angie Caldwell

It sure does. And what we’re trying to get to from evaluation perspective, of course, is measuring the physician’s personally performed work effort. The work RVUs and the way that the billing is designed may not always capture only personally performed work effort. For example, in the split shared billing that you spoke of, or perhaps in a global surgical package situation.

So first, it’s always important when collecting the population of work RVUs to apply to the compensation model is to start with work RVUs that are rendered by the physician. So most billing systems will show you the codes by a rendering provider or billing provider. First capture it by rendering provider which will strip out all of the incident-to services that are not personally performed by the physician. Then it’s a matter of assessing the use of the APP and frankly, how the physician uses the advanced practice provider. Are they using them as an extender to do those post-surgical examinations? How are they using them? Or does the APP have a separate and complete patient panel from the physician? It’s important to know how the physician is using the APP.

In those instances where the physician is using the APP as an extender, it’s then important to understand that the way the billing system works is different from how the personally performed service is being determined because the APP is part of some of those codes. And those global surgical packages, the APP’s work is part of that CPT code. So understanding that-

Jana Kolarik

Pre and post.

Angie Caldwell

Yes. And understanding that and understanding how that impacts physician compensation is important. And most often from a valuation perspective, some consideration is made either in assessing and valuing the compensation per work RVU (the conversion factor), or within looking at the total value of the work RVUs attributed to the physician themselves. So in other words, some discount is likely applied to one or the other to ensure that the compensation ultimately results in FMV and to really assess what the physician is personally performing.

Jana Kolarik

Yeah, makes a ton of sense. Talk to me about, because we’ve talked about this from time to time, a wRVU for everything. So I’m sure that that statement sends a thrill of just pain through you. But the belief that under a wRVU model or a component that if you’re performing a service, there should be some type of wRVU for that service that I’m performing, even if it’s not something that’s a true wRVU that’s been calculated, that’s been set up through the CPT and through WRVUs through CMS. So talk to me about what that looks like and some of the questions that have come up about that and what is maybe a more effective way to deal with that situation than really creating a wRVU for everything.

Angie Caldwell

Yeah. And you and I have had some conversations about this, about how work RVUs as part of the total value of the CPT code, it’s truly a reimbursement methodology and initially was not intended to be how physicians were paid and compensated. Because the work RVU, again, it’s easy to measure, it’s consistently measured, it’s agnostic as to payer, and so it has become a great measure of physician work effort. {However we} know that it was not intended to be the one and only way to compensate a physician, there is a desire by the industry to make everything a work RVU because it is consistently measured, consistently applied, agnostic into payer, all of those wonderful things, but it doesn’t always work.

So translating administrative services into work RVUs, for example, within a compensation model, in my opinion, I’ve seen that be a very dangerous approach simply because the risk and the value of that clinical and administrative time is so different. Proxy work RVUs for clinical services where perhaps CMS has not provided a work RVU value, those are other areas where I can get behind a proxy work RVU in some instances for clinical services, but there are others where it just simply does not make sense and perhaps a collections-based or a per-encounter-based compensation methodology would make more sense and frankly be easier administratively.

Jana Kolarik

Yeah, 100%. And you and I have sort of fixed modeling that dealt with that latter issue, so a 100%. So let’s talk a little bit, I want to talk a little bit about specialties and wRVU compensation models. And I’d like to talk a little bit also after that about the mismatch of compensation and productivity. So in looking at wRVU compensation models, you and I have had multiple discussions over the years related to why is that specialty or why are we trying to shoehorn a hospital-based specialty into wRVU compensation model?

So let’s talk a little bit about where that makes sense to say no, to say, let’s try this a different way because it doesn’t make sense in this particular context. So context of hospital-based physicians, can you talk to me a little bit about compensation modeling that makes more sense just based on kind of flow of patients and control of schedule, those types of things and sort of in that context?

Angie Caldwell

So if we think about hospital-based physicians, they are 鈥渃atchers.鈥� The universe is in control of who arrives in the emergency room that day, how many patients are on the floor, and how many patients are in the intensive care unit (ICU) unit. They are catchers and not immediately responsible, if you will, for driving the procedures, the visits, and the encounters. There’s so many other things at play for that hospital-based physician. So a productivity model then makes a lot of sense when the patient is in … Or I’m sorry, when the physician is in – control of that schedule, the number of procedures, the number – by reputation -the number of patients that are coming to them, all of those things, it makes a lot of sense.

In a hospital-based setting, it starts to make a little bit less sense simply because we talked a minute ago about not everything is a level five. So a physician in a more of a coverage type role, coverage, meaning coverage of the floor, coverage of the emergency department (ED), coverage of the ICU, again, if their compensation model is based upon productivity, then they are incentivized, just because of the way their compensation model is designed, to drive work RVUs. And that perhaps puts the incentive to making more level fives when there aren’t level fives. So it makes more sense in those hospital-based settings to have more of a coverage type, a shift-based model, and then perhaps consider some productivity incentive for surge times or other high volume times.

Jana Kolarik

Yeah, makes sense. And to that point, and to underline the point that you’re making as well, if you do have those types of productivity components for those particular types of specialties, then again, not the billing compliance is ever unimportant, but it makes it all the more important if you have, especially if you have physicians in some way coding their own work, to have that double check and that audit over it, just to make sure that that billing is tight and accurate.

Angie Caldwell

Absolutely. And a word on, I know you and I have talked frequently about when is a productivity incentive appropriate for a hospital-based specialty. And there are times. It’s a compensation design – it does get tricky – it’s a compensation design skill that needs to be carefully and thoughtfully applied. But the base for the physicians working in these hospital-based specialties should be the normal, the value of that base compensation should be based upon the normal environment, the normal flow, the normal census, the normal number of visits, and then understanding that that’s going to fluctuate up or down, but rewarding the physician. No one intends to create a compensation model that doesn’t reward the physician for their skill and hard work. So recognizing when perhaps a surge incentive or a productivity incentive is warranted is a good thing to add to a compensation plan.

And that could be, again, carefully designed so that you know when that surge is actually occurring within a unit. And it doesn’t even have to be based upon work RVUs and a traditional work RVUs times conversion factor kind of methodology. It could be based upon some kind of another incentive, an engagement incentive, or another incentive that’s valued a different way. So there are ways to accomplish it without the productivity being the main calculus of the compensation plan.

Jana Kolarik

Yeah, that makes total sense. And I do believe, and you and I have talked about this as well, there is kind of, I don’t know, this general pressure or belief among physicians that the productivity method of compensation is in some ways better than other ways. And I just want to say on this podcast that is not accurate, and I welcome your thoughts on that as well, because I do think there’s the pressure, internal pressure from physicians who should be paid the value of their work, and as you said, for their expertise, et cetera. But that pressure to believe that the WRVU methodology is in some way better than the others is something that just needs to be debunked. Thoughts on that?

Angie Caldwell

Absolutely. I’m with you. It’s not always the best model. I think it gets back to – it’s easy. It’s something to understand this times this equals that. And I think there’s a notion that the shift value or the salary value will be somehow be deflated because it’s not represented by the physician’s ({work RVU} work effort, but showing them and demonstrating to them that the compensation is fair, it’s FMV, it’s based upon the services provided, is important to help debunk that.

Jana Kolarik

Yeah. Fair. Thank you. So let’s talk a little bit about the mismatch of compensation and productivity and the belief and again, we’ve talked about this before, but there still is this clinging to the 75th percentile, this belief that that is really the amount that physicians in some way should be paid. And what does that look like though, this is the issue, when the productivity is not at the 75th percentile? And how do you deal with situations or how do you, as a valuation expert, deal with situations where you’re trying to educate your clients as to why the 75th percentile may not work with somebody who may is at the 25th percentile, they’re at the end of their career or they are just slower or less productive than others? How do you deal with those conversations? How do you explain that?

Angie Caldwell

Yes. And so it gets back to, number one, the myth that anything at lower than the 75th percentile is FMV. So number one, that’s just simply not true. But there are instances where the methodologies for determining FMV within an organization are based upon that threshold, that 75th percentile threshold, and nothing else.

Effective thresholds have more than one level of test, whether that be compensation per work RVU, whether it be a difference in the productivity level and the compensation level. Normally it’s a combination of those to determine if a physician’s compensation is within the range of FMV. In that testing and in determining the differential between productivity and compensation for a physician, there could be very good reasons as to why someone is compensated at the 75th, but producing at the 25th.

And I’ll give you a few of those reasons. So one is someone in a rural setting. So if you think about someone, a provider in a rural setting who may not have the volume simply because the population does not support volume for that physician, but that physician is needed desperately in a community. So to get the physician to that community to provide the service, sometimes 75th percentile compensation or more is required to provide them to the community to provide that service, but they will not have, likely, the productivity to support that level of compensation.

So again, understanding the facts and circumstances around that difference between productivity level and compensation level is extremely important.

Jana Kolarik

Yeah. So then it comes to the … And I think about this and the thing that strikes me as you’re going through the example, I think having folks internally at your practice, at your health system, at your hospital to evaluate compensation and then go out to valuation experts circumstantially. So let us rely on several different resources from a survey perspective. And then being able to know the point in time when it makes sense to then go to somebody like you to say, do we have enough behind this? We’re paying at the 75th, but their wRVUs or their productivity is much lower than that. Is there support for paying them at this level?

I mean, when you talk to clients about having those triggers in place for evaluation of compensation for their physicians, how do you talk to them about making sure that they’re careful in that analysis and when that trigger is frankly sprung for you to be brought in? How do you talk to folks about that? Because what you don’t want to obviously have happen is to not have a rule situation or not have an exception to this rule and have physicians paid at the 75th percentile, but producing at the 25th and not have the rationale around how that is still FMV for that particular physician. Talk to me about triggers.

Angie Caldwell

It is a very important conversation right now and one that PYA has advised on a lot lately because I think in the past, historically, the thought was is that every FMV opinion had to be generated by a third party valuator. And that’s simply not true. So much valuation work can be done internally by the organization created by, and that valuation work can be done through work of a compensation committee through an effective compliance program, and together then creating those thresholds that the organization can use to assess and determine a compensation valuation before sending something outside.

And so setting those parameters again, it’s organization-dependent, it’s going to be dependent upon an organization’s risk tolerance as to what they’re able to handle as an organization. And it’s going to be based upon, again, their location, their geography, their population. So we work with several organizations that have small urban facilities, but then they have very rural facilities in their system. And navigating the dynamics from an internal valuation threshold perspective of the two becomes complex. Having that active compliance program, having that active physician compensation governance committee is really important. And having more than one threshold, I think is also very important because just because it’s over the 75th doesn’t mean it’s not FMV, but being under the 75th doesn’t mean that it is. And so having multiple thresholds allows you to internally to better assess where your physicians are.

Jana Kolarik

Yeah, that makes total sense. I think that this has been a fantastic conversation just to key people into these issues with regard to these wRVU or productivity models and things that people should be thinking about. We’ll talk in another podcast about things that we can do and that we would recommend that folks do to add on to what you just said at the end of this conversation. What structures can you put in place? What are best practices with regard to compliance in this space? And I think that’ll be a nice second podcast in this series.

But I welcome final thoughts from you, Angie, on this. I mean, I think wRVU methodology, as you had mentioned, from my perspective, is something that is all over and that has come into spaces and specialties where it may not fit ideally, so has created issues from that. And from my perspective as well, the billing and coding and documentation issues can impact the compensation as can the use of physician extenders/APPs. So there’s a bunch of things in there from my perspective as a health care lawyer and from a compliance perspective that we can look at and be thoughtful about and work compliance around.

But from your perspective, what are the takeaways that you want to leave people with with regard to this particular topic?

Angie Caldwell

Absolutely. If your primary method of paying physicians is on a work RVU productivity basis, it’s imperative that the calculation process surrounding those work RVUs is excellent. It must be excellent. Notice I didn’t say perfect. I don’t know that any calculation process is going to be perfect, but it does need to be excellent to ensure that the overall compensation plan doesn’t run afoul of FMV.

Jana Kolarik

Yeah. Thank you. This has been a great conversation. Really always appreciate your thoughts and the discussion on these topics and hope that our listeners find it equally as instructive and helpful. Thank you.

Angie Caldwell

Thank you. Thank you, Jana.

Jana Kolarik

We want to thank our listeners for joining our Let’s Talk Compliance podcast series with Health Care Law Today, your connection to timely legal updates in the health care and life sciences industry. We encourage you to subscribe to this podcast and be sure to be on the lookout for part two of this series. Visit 麻豆直播’s Health Care Law Today blog at healthcarelawtoday.com and pyapc.com. If you like the show, don’t forget to subscribe and be sure to rate us five stars. Until next time, I’m Jana Kolarik of 麻豆直播 & Lardner.

Angie Caldwell

And I’m Angie Caldwell at PYA. Thanks for listening.

This episode features a conversation with Chanley Howell. Chanley is a partner and intellectual property lawyer in 麻豆直播鈥檚 Jacksonville office where his practice focuses on a broad range of technology law matters. In this discussion, he reflects on growing up in Jacksonville, FL, attending Vanderbilt University for undergrad and the University of Florida College of Law.聽Chanley shares his path to law school, including how his father being a lawyer influenced his decision to become an attorney. And, he details the different types of work that fall under the technology transactions, cybersecurity, and privacy umbrella at 麻豆直播. He also discusses the importance of law students becoming A.I. literate and how the adoption of A.I. is impacting the practice of law. Finally, Chanley provides advice on the importance of finding a firm with a culture that most aligns with who you are.

颁丑补苍濒别测鈥檚听笔谤辞蹿颈濒别:

• Title: Partner
• 麻豆直播 Office: Jacksonville
• Practice Area: Tech Transactions, Cybersecurity, and Privacy
• Hometown: Jacksonville, FL
• College: Vanderbilt University
• Law School: University of Florida College of Law

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