Physician Compensation -- A Deeper Dive: Does Money Make Them Happy?

Carol Peckham


April 15, 2014

In This Article

The Current and Future Effects of Healthcare Reform

New rules under the ACA are attempting to tip the income balance between primary care physicians and specialists -- especially interventionalists -- by increasing payments and bonuses for those who manage chronic diseases and lowering reimbursements for procedures. This year, a few (but not all) of the specialties involved in procedures experienced small declines in compensation. Primary care physicians showed small increases, but so did others, including surgeons and other interventionalists. The variations in compensation among all physicians between 2012 and 2013 are very small, in any case, and are probably not important yet. In addition, these small increases were not enough to compensate for inflation, which in 2013 was 1.5%. It is unlikely that income disparities between primary care physicians and specialists will reverse, but over time they should lessen.

Health Insurance Exchanges: Who's in, Who's Out?

The Medscape Physician Compensation Report found that 43% of all physicians expect their incomes to decrease under the health insurance exchanges, including about a third of primary care physicians (33% of internists and family physicians and 29% of pediatricians). Only 7% of all physicians foresee an increase.

When asked whether they were planning to participate in the exchanges, only a quarter of respondents (27%) said yes, another 20% said no, and more than half (53%) said they were not sure. Self-employed physicians were more likely to give a definitive no to the exchanges (24%) compared with the employed (17%).

Regarding the exchanges, Robert Morrow, MD, a Medscape Family Medicine advisor and Clinical Associate Professor at Albert Einstein College of Medicine in the Bronx, commented, "Several deep proprietary mysteries veil the health exchange. If I'm on, what will I get paid? Even if the payment on the exchanges is sufficient, will the insurers pay their premium? A 90-day grace period does not favor the doc."

Charles Vega, MD, Health Sciences Clinical Professor at University of California Irvine School of Medicine, and also a Medscape Family Medicine advisor, was more optimistic. "I understand why physicians are having a difficult time identifying their role in the ACA. It's not dissimilar from the confusion that every other stakeholder -- patient, third-party, and even the government -- has felt as the rollout of the program started, halted, and started again. It is very difficult for the average working physician to predict how it might affect her/his practice. That's temporary. The ACA is the law of the land and will help millions to better health over time. Physicians will have to broadly participate in the exchanges in order to care for communities and maintain their practice. But the path to that day has not been at all straightforward, and we need to do better if ACA is to live up to its promise."

Who's Dropping Out of Medicare and Medicaid?

In this year's Medscape survey, self-employed physicians are much more likely to stop taking new or current Medicare or Medicaid patients (18%) and less likely to continue with current or new ones (57%) than are employed physicians (6% and 69%, respectively). According to CMS, the number of doctors who opted out of Medicare tripled between 2009 and 2012, although those numbers were still relatively small (3700 and 9539, respectively).[7]

In a move that may discourage physicians further from taking Medicare, CMS has publicly released data about the number and type of healthcare services that individual physicians and certain other healthcare professionals delivered in 2012 and the amount that Medicare paid them for those services.[8] Medical societies and physicians are concerned that the information could be misused and misunderstood, unless the necessary safeguards are adopted. "Medicare and other payers pay fixed prices for services based on fee schedules; therefore the amount paid to physicians is generally far less than what was charged and is not an accurate portrayal of payment," the AMA said in a statement.[9] A concerned clinician responded to CMS' invitation for public comment: "Releasing physician payment data will do nothing but create an adversarial relationship between patients and their doctors and not lead to greater fraud detection. Many of our local doctors have already dropped Medicare and Medicaid as payers simply out of frustration with attacks on our profession such as this."[10] Whether repealing Medicare's generally despised use of the Sustainable Growth Rate for setting reimbursements rates will keep physicians from dropping patients is not known.[11]

Of further concern, some Medicare Advantage insurers are dropping doctors -- notably United Healthcare, which recently cut thousands of physicians across the country. They say they must shrink their physician networks because they face major government payment cuts, but there is no clear reason why specific physicians are being terminated.[12] David May, MD, chair of the American College of Cardiology board of governors, said, "This does not seem to be about quality of care or even utilization." Whatever the reason, "I would like to know what the metrics were that drove it. I'm willing to bet that it has to do with the financial side and not the performance side of the practices and providers that they are getting out of the network."[13,14,15]

As for Medicaid, fees for physicians currently average about 66% of those for Medicare, with states varying widely. The gap is greatest in primary care services (59%). Eight states -- California, Florida, Michigan, Missouri, New Hampshire, New Jersey, New York, and Rhode Island -- account for about 40% of total Medicaid enrollment and pay the least relative to Medicare. In 2013, Medicaid fees were expected to rise for primary care physicians by 73%, but whether this will have an impact on their acceptance of this program is not yet known.[16] Dr. Morrow told Medscape, "Medicaid is required to be on par with Medicare. I received one Medicaid payment for $37 for the same code that Medicare pays $82 for. By the by, my visit cost averages $80 before I get paid. As Groucho said, 'I might make some money if I don't sell too many of these.'"


Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.
Post as: