The Widget Maker's Dilemma

Imagine you take a job as a W2 employee, and your boss tells you, "We'll pay you $25 for every widget you produce."

Your first thought is probably, "Awesome! I'm going to make this operation super efficient so I can crank out as many widgets as possible!"

But then your employer says, "Hold on a minute! You're only allowed to produce 4 widgets an hour. I won't pay for more than that in an hour."

So you figure, "Okay, that's fair, I guess. I'll focus on making really amazing widgets, and if my widgets are better than everyone else's, I'll ask for a raise."

And to that, your employer replies, "Haha, nice try, but it doesn't matter how much better your widgets are. I'll pay all employees the same amount for these widgets, whether they're great or just average. In fact, I'll pay the same rate for a widget that doesn't even work as I do for a widget made of diamonds and gold.

I asked Google's Gemini to process the above passage and interpret it for me:

This post, through the analogy of widget making, seems to be a clear and relatable way to describe a common frustration in certain work environments.

To me, it highlights a situation where individual effort and quality are disincentivized. Here's why:

• Fixed Production Limits: The cap on producing only 4 widgets an hour, regardless of ability, immediately tells me that efficiency and speed are not rewarded beyond a certain basic threshold. It limits the earning potential of a highly productive employee.
• Devalued Quality: The employer's statement about paying the same for a "great or average" widget, or even one that "doesn't even work" as for one "made of diamonds and gold," really drives home the point that quality and excellence are not recognized or compensated. Why bother putting in extra effort if it makes no difference to your pay?
• Lack of Merit-Based Pay: The idea of asking for a raise for making "better widgets" being shot down illustrates a lack of meritocracy. If performance doesn't lead to better compensation, what motivates an employee to excel?

Essentially, this post paints a picture of a job where the system is designed to produce a baseline output, and any effort above and beyond that baseline is neither encouraged nor rewarded. It suggests a workplace where employees might feel like cogs in a machine, with little personal stake in the quality or quantity of their work beyond the minimum required. It might even lead to feelings of stagnation or resentment among highly capable employees.

Tony said: "This is currently how Medicare Part B treats physical therapy services. It pays for units of time in the form of 97110, 97140. 97530, etc. It does not reward quality, innovation, or efficiency. Medicare's current payment model disincentivizes everything that would improve the patient care experience. The only accountability measures are in the form of compliance with rules related to counting minutes per unit, ensuring signatures on plans of care, using the appropriate modifiers on claims, etc. A patient might get no benefit from the service or feel worse after the service and there is no accountability for this outcome. A therapist who spends thousands of dollars on education and equipment is paid the same as the therapist who delivers a minimal viable CPT code.

Gemini said: Here's a breakdown of why your observations align with common criticisms of Medicare Part B's physical therapy payment model:

• Payment for "Units of Time" (CPT codes like 97110, 97140, 97530): This is absolutely correct. Medicare Part B primarily reimburses physical therapists based on Current Procedural Terminology (CPT) codes, which are largely time-based (e.g., 15-minute units). This directly mirrors your employer paying per "widget" (unit of time) rather than per outcome.
• "Does not reward quality, innovation, or efficiency": This is the core frustration highlighted by your analogy.
• "Disincentivizes everything that would improve the patient care experience": This is a strong, but often accurate, statement. When the payment system doesn't directly link to improved outcomes, the primary driver for improvement shifts away from patient benefit to compliance and billing maximization within the existing rules.
• "Accountability measures are in the form of compliance with rules...counting minutes per unit, ensuring signatures...using appropriate modifiers": You've nailed the current focus of Medicare's oversight. Audits often center on whether the documentation supports the billed CPT codes, whether the "8-minute rule" for time-based units was followed, and if all the necessary signatures and certifications are in place. This is "accountability for rules," not "accountability for results."
• "A patient might get no benefit from the service or feel worse...and there is no accountability for this outcome": This is a critical point. While ethical therapists always strive for positive outcomes, the payment model itself doesn't penalize poor outcomes or reward exceptional ones. There are mechanisms for reviews for "medical necessity" if services go beyond certain thresholds (like the KX modifier threshold), but these are generally about preventing over-utilization, not measuring efficacy of treatment.
• "A therapist who spends thousands of dollars on education and equipment is paid the same as the therapist who delivers a minimal viable CPT code": This is another powerful and accurate observation. The investment in professional development, specialized certifications, or cutting-edge equipment (which can be very expensive) is not directly reimbursed or reflected in a higher payment rate per CPT code. The payment is for the "service," not the "provider's enhanced capability" or the "tool used."

In essence, the "widget" analogy perfectly illustrates the perceived shortcomings of Medicare Part B's fee-for-service model for physical therapy. It highlights a system that, from a provider's perspective, prioritizes administrative compliance and quantity (of billed units/time) over actual quality of care, innovation, and efficient patient outcomes

What can we do about this?

A Tiered Approach to Valuing Physical Therapy

The current system, as highlighted by our "widget" analogy, often fails to adequately reward quality, innovation, and efficiency in physical therapy. This creates a disincentive for therapists to invest in advanced skills or deliver care beyond a basic, billable minimum, ultimately impacting the patient experience.

To address this, I propose a tiered model for physical therapy practices:

• The Foundation Tier: New graduate physical therapists would begin their careers in environments primarily focused on the existing third-party payer models, including Medicare Part B. This provides essential hands-on experience, volume of exposure to diverse cases, and a strong grounding in documentation and compliance. It's a vital training ground, ensuring new professionals develop foundational clinical and practical skills.
• The Excellence Tier: As therapists gain invaluable experience, hone specialized skills, and demonstrate a commitment to superior patient outcomes, they would transition into a more autonomous, free-market environment. In this tier, compensation would directly reflect their expertise, allowing them to truly innovate, invest in advanced education and equipment, and dedicate more personalized time to patient care.

It's crucial that therapists in this "Excellence Tier" remain mindful of their ability to accept Medicare referrals as part of a diverse caseload, always adhering to current mandatory claim submission laws. This means that for covered Medicare services, those claims must still be submitted to Medicare at the set rates. However, it opens the door for a wider range of self-pay, non-covered services (like wellness, prevention, or highly specialized interventions) where their advanced skills and patient-centered approach can be directly valued and rewarded outside the limitations of the traditional fee-for-service model.

This tiered system would not only foster professional growth and fair compensation for highly skilled therapists but, most importantly, create pathways for patients to access truly outcome-driven, high-value physical therapy care.

* This article was written by me with the assistance of Google's Gemini Pro. Some elements were direct Gemini responses while other elements were written by me and edited by Gemini.