Adding value to relative-value units.

R units (RVUs) were developed in 1988 as a method of accounting for physicians’ work effort and hospital or clinic expenses. Because RVUs provided a uniform, formulaic metric for myriad clinical services, they quickly became the prevailing method for setting feefor-service payments for Medicare and private insurance. However, the dominance of the fee-forservice model has created strong structural impediments to physicians’ participation in valuefocused health care.1 The success of new models of care will require not only changes in the way that health systems are organized and paid but also vigorous engagement by generalists and specialists, yet RVU formulas for clinician compensation have not evolved to meet these needs. Many important physician activities — including managing systems of care, managing the health of populations, delivering individual patient care in new ways, and considering behavioral influences on health — are not measurable in the current RVU system. This limitation has led policymakers and researchers to experiment with alternative payment and incentive systems for physicians. Nonetheless, a reconfigured RVU system has many advantages and could evolve into the method best suited to accounting for physicians’ services in a variety of delivery and payment contexts. Physician-reimbursement methods can be broadly categorized as fee for service, capitation, salary, pay for performance (using measures of quality or outcomes), or some combination of these.2 Fee for service has been dominant since the advent of the medical profession. Capitation, previously a feature of large, closed-panel, prepaid group practices such as Kaiser Permanente, gained prominence in the 1990s as part of attempts to move financial risk sharing to the provider level. But when applied in the small-group context, capitation proved unpopular for a variety of reasons, including inadequate risk adjustment and public perception of potential conflicts of interest. Salariedphysician models have been proposed as a potential solution, including during the 2012 presidential campaign. However, both salary and pay-for-performance systems often incorporate feefor-service metrics such as work RVUs to account for physicians’ productivity.3 The resilience of RVUs in such alternative payment systems sends an important signal. We believe that policymakers should interpret the continued widespread use of RVUs as a sign of their usefulness and consider improvements that would both emphasize value in the current fee-for-service environment4 and account for physicians’ work in future payment systems. Ideally, physicians’ work would be reimbursed on the basis of metrics that signal whether their clinical services efficiently improve patient outcomes and that use effective clinical risk adjustment. In reality, using patient outcomes as a basis for payment can work well at the health-system level, but small samples and inadequate risk adjustment limit their use for individual physicians and many group practices. A common alternative is to identify clinical processes of care that are associated with improved outcomes and tie physicians’ salaries or bonuses to the attainment of process benchmarks. Although such methods have enjoyed great support, results have not shown that pay for performance is a viable system,2 and any success will probably depend on savvy orchestration of complex program designs. Creating a new RVU-based system that incorporates value considerations has important advantages over pay-for-performance programs, salaries that are not tied to incentives, and physicianlevel capitation. All other systems for tracking and offering incentives for physicians’ work must contend with substantial challenges that RVU-based systems have already overcome: incorporation into physicians’ clinical decision-making calculus, adoption by health systems’ financial managers, integration into software used by health systems, and creation of processes for reassessing and modifying metrics.1 Thanks to long experience with RVU-based payments, physicians and health-system administrators have become skilled at modifying systems of care to respond to imbalances in RVU weighting. For