Your Compensation Formula Has a Blank in It. A Payer Has Been Filling It In.

Somewhere in your practice there is a compensation agreement, and somewhere in that agreement is a formula built on Work Relative Value Units. It was negotiated carefully. The partners argued about the multiplier, the thresholds, the treatment of call coverage. Everyone signed it.

It almost certainly does not say what happens when the code your physician submits and the code your payer pays are not the same code.

That used to be a theoretical gap, which is why nobody wrote a clause for it. On July 1, 2026 it stopped being theoretical for a large block of commercial claims: Blue Cross and Blue Shield of Illinois began applying enhanced claim editing to office, inpatient and outpatient Evaluation and Management services for its commercial members, under which reimbursement is made at the lower level of service the payer validates where the services billed do not support the level billed. A practice that disagrees may submit medical records. The first full month of claims under that policy is now posting.

So the gap in the agreement is now a live question with a monthly answer, and here is the uncomfortable part: your practice management software has been answering it. Not the partners, not the compensation committee, not anybody who was in the room when the formula was negotiated. Whichever field the productivity report happens to read, that is your policy. The July 2026 issue of Oncology Practice Management, in an analysis provided through the Practice Management Institute, names this directly as the question most groups have never asked — and notes that where no policy exists, downcoding can compress provider compensation without anyone noticing. This is not confined to one plan. Cigna's Reimbursement Policy R49 ran from October 1, 2025 until the Maryland Insurance Administration fined the company $80,000 on March 13, 2026 and ordered it stopped, extending the prohibition to every insurer in the state by Bulletin 26-9 on April 7. The same analysis records parallel programs at Aetna from October 1, 2025 and an expansion by Humana into commercial and Medicare Advantage lines.

The Blank Has Exactly Two Answers, and You Have Already Picked One

There is no third option. Either the productivity calculation reads the level submitted or it reads the level paid, and both are defensible positions that a reasonable partnership might choose. What is not defensible is not knowing which one you are running.

If it reads the level submitted, the practice carries the difference. Your physician is compensated in full on work they performed and documented, and the shortfall lands on the partnership. That is a legitimate choice — arguably the fairer one — but it has to be funded. A practice that has chosen it without knowing has a margin quietly thinning against a line item that appears nowhere in its budget, and partners who will spend a board meeting hunting for the cause in the wrong place.

If it reads the level paid, the physician carries it. Also a legitimate choice, and the one most groups would probably land on if asked, because it keeps compensation tied to collected revenue. But it changes what the agreement means. Your physician's income now moves with a claim-editing policy set by a company they have no relationship with, revised on that company's schedule, with no notice to them and no negotiation. Nothing in the contract they signed describes that. When they eventually notice — and they will, because physicians read their own productivity reports — the conversation is not about the money. It is about having been enrolled in a change nobody told them about.

Then there is the third cost, which lands regardless of which answer you picked. A Work Relative Value Unit report is supposed to measure what your physicians produced. Once submitted and paid levels diverge across payers with different editing policies, it measures something closer to your payer mix. Two physicians with identical practice patterns can show different productivity because one carries more of a particular plan. That number sets bonuses, informs hiring, and gets used in buy-in and partnership discussions. It should not be quietly tracking an insurer's coverage policy, and once it is, nobody in the room can tell how much of a gap is real.

None of this is a billing problem. Billing is where it becomes visible, but it is a governance problem — an unwritten term in a signed agreement, being filled in monthly by a third party.

The VOSKPO Approach: Putting the Number in Front of the People Who Sign the Agreement

At VOSKPO, we work on the assumption that a revenue cycle finding is worthless if it stops at the billing department. The practice does not need to know that a gap exists in aggregate. It needs the gap attributed, by provider and by payer, in a form a compensation committee can actually put on an agenda.

• Reconciliation Reported by Rendering Provider, Not Just by Payer: VOSKPO compares the level submitted against the level reimbursed on every E/M encounter and rolls the result up per physician as well as per plan. A practice-wide figure tells the partners something is happening. A per-physician figure tells them who is affected, by how much, and whether it is concentrated in one plan — which is the only version specific enough to write a policy against.
• Trend Reporting Timed to the Compensation Cycle, Not the Billing Cycle: These decisions get made quarterly and annually, in meetings, on a calendar that has nothing to do with claims. We report the gap on that calendar, before the cycle closes, so the partnership is deciding with the number in hand rather than reconstructing it afterwards from a physician's complaint.
• A Written Answer to the Submitted-or-Paid Question: We push every practice we work with to settle the term explicitly and record it, rather than inherit whatever their software defaults to. Either answer is defensible in writing. Neither is defensible by accident, and it is the accidental version that costs a partnership its credibility with its own physicians. All of this runs inside a HIPAA Compliant environment.

VOSKPO LLC is a United States-registered revenue cycle management company, and this is the part of the work that rarely gets described in a pitch: the revenue cycle produces the numbers a practice governs itself with, and those numbers are only as honest as the reporting underneath them. At VOSKPO, we do not just process claims — we engineer revenue. The Practice Incubator exists for practices that need this standard of reporting without building a finance department to produce it.

This Is a Decision, and It Needs a Date

The instinct with a finding like this is to send it to the billing team. That is the wrong destination. Nobody in billing has the authority to decide how physicians are paid, and treating it as a billing matter is how it stays unresolved for another year.

It belongs on the agenda of whichever body actually sets compensation in your practice — the partners' meeting, the compensation committee, the managing physician — as a single item with a single question attached: when the submitted and paid levels differ, which one does our formula use, and did we choose it? Bring the per-provider numbers to that meeting, because the discussion is unmanageable without them and settles quickly with them. The answer can be the practice, the physician, or a defined split above a threshold. Write down whichever you pick, put a date on it, and then tell your physicians what was decided and why — before one of them finds the gap on their own and has to ask.

Payers will keep refining these policies, and state regulators in Maryland, California and Indiana will keep responding on their own timelines. Neither is yours to control. The term in your own compensation agreement is. It is time to stop letting a blank in a signed document be filled in monthly by somebody who is not a party to it. If your practice cannot say today whether its productivity report runs on submitted or paid levels, let our team take a look. Visit voskpo.com today and request your Free Revenue Review.