A promise fulfilled, for now

Fred Horton, MHA
_AMGA

Over the years, one of the common and nearly constant refrains in physician compensation and reimbursement has been related to the promise of increasing reimbursement, and therefore compensation, for cognitive-based specialties, particularly primary care. In fact, if one refers to the original implementation of Medicare Resource-Based Relative Value Scale, which was a move away from charge-based reimbursement, at least one intent was that the methodology would lead to more fair payment and compensation for those practicing in primary care.

Up until this past year, one would be hard pressed to reach a consensus on whether or not this change in reimbursement methodology has materialized into anything other than a different manner of paying for physician services, leaving the ranking of physician compensation by specialty virtually unchanged.This point is evident when analyzing statistics from the AMGA Medical Group Compensation and Productivity Survey, which clearly show that of the specialties we have consistently tracked, the highest and lowest paid specialties have remained relatively constant for the last 10 years.

While one year does not make a trend, the results of the 2023 AMGA Medical Group Compensation and Productivity Survey suggest that in 2022, finally, primary care physician compensation increased at a level far greater than the other specialties. Why and how did this happen?

In 2021, right on the heels of the COVID-19 pandemic, the U.S. Centers for Medicare and Medicaid Services (CMS) implemented a new coding regimen and weighting for outpatient evaluation and management (E/M) codes. This reweighting led to an increase in work Relative Value Units (wRVUs) production for any and all physicians who utilized an outpatient E/M code. The greatest increases accrued to primary care physicians, as they have the highest use of the affected and new codes. With this change, it was anticipated that cognitive specialties and primary care physicians, specifically, would see their revenue and therefore compensation increase accordingly.

Given that the change was implemented on Jan. 1, 2021, the vast majority of our nation’s medical groups were still in the throes of COVID-19, and they certainly did not have the ability to implement new physician compensation plans that would switch their plans from the pre-2021 to 2021 CMS E/M coding regimen. I think most of us have been holding our breath related to the question of if the changes finally make their way into compensation plans in 2022, which would be seen in the 2023 survey results.

And for once the answer is yes. In the 2023 survey results, we find that compensation adjusted, as is depicted in the diagrams below:

Primary care, with its 6.1% increase, received double or triple the increases seen in medical and surgical specialty average increases. Further, if we look at the changes that have occurred from 2019-2020, 2020-2021, and 2021-2022, we find that primary care has for once realized increases that are substantial and above that of other specialties.

This increase couldn’t have occurred at a more needed time. Health care organizations are struggling with the impending physician shortage. Nowhere is this more evident than in primary care. There is an extremely limited supply of primary care physicians, and new innovators/disrupters are chipping away at that supply. There are more options than ever for primary care physicians, everything from urgent care to palliative/hospice care to retail conglomerates to focused Medicare Advantage networks.

The change in reimbursement and compensation trends mentioned above may mean we are finally making good on the promises made over the years. Can we conclude that the trend will continue? No, but at least for now, let’s celebrate one year of increased growth of compensation in primary care.

Fred Horton, MHA, is president of AMGA Consulting. He has more than 20 years of experience working inside the health care industry, including serving as CEO of several large multispecialty medical groups and integrated health systems.

Tables and graphs for this article were created by AMGA Consulting.