Analysis: Docs Feel Income Cut, Study

By OLGA PIERCE

Physician incomes are dropping, especially for primary care doctors, says a new study, but proposed Medicare payment changes may ease the pain.

Between 1995 and 2003 average physician net income from the practice of medicine declined about 7 percent after adjusting for inflation, according to a study released Thursday by the Center for Studying Health System Change.

Primary care physicians were hit hardest — their income declined by more than 10 percent, in part because they spend their time talking to patients instead of performing procedures.

But new proposed guidelines from Medicare that increase the relative reimbursement rate for doctor-patient face time could help reverse that trend. Under the new rules, the relative value units, called RVUs, used to determine reimbursement for over 400 services will be adjusted to better reflect the work and time required of a physician in furnishing them, which can include not just procedures performed, but also the services involved in evaluating a patient’s condition, and determining a course of treatment.

Work RVUs account for approximately $35 billion in physician payments, representing more than 50 percent of overall Medicare payments under the fee schedule. If adopted, the RVU revisions in this proposed notice would be fully implemented for services to Medicare beneficiaries starting Jan. 1, 2007.

It’s time to increase Medicare’s payment rates for physicians to spend time with their patients, said CMS Administrator Mark McClellan. If they take effect, we expect that improved payments for evaluation and management services will result in better outcomes, because physicians will get financial support for giving patients the help they need to manage illnesses more effectively.

If changes are not made, the decrease in physician income, occurring while incomes in other professions are rising, could have a tremendous impact on the healthcare system, reducing access to family doctors and feeding an upward spiral of increased specialty procedures, said study lead author Ha Tu, a researcher at the Center for Studying Health System Change.

This is particularly significant in terms of career choices that might be made, she told United Press International.

The blow of declining income has been softened for specialists because they benefit from payment systems skewed in favor of procedures with rapidly advancing technology, but that creates its own problems, Tu said.

If the system continues as it is, with certain procedures and tests being overvalued relative to office visits, not only might we be faced with a shortage of primary care physicians, she said, but costs will continue to spiral upward in the system. It’s not fiscally sustainable.

However, changes like those proposed by CMS, could alleviate the problem, Tu added.

For primary physicians, what the study does is confirm what they know every day in the office, American Medical Association Board Chair Cecil Wilson told UPI. Most physicians are really small businessmen and their costs are increasing while their reimbursement is not.

If incomes continue to erode, it will lead to problems in access, Wilson said. "As medical students start deciding where they want to specialize, when they come out of school with $120,000 in debt, they will be choosing specialties that reimburse higher.

The ensuing shortage of primary care physicians could be particularly problematic in rural areas, he said. If you have one less general practitioner, it could mean you have none.

Medicare payment changes are a particularly important part of the equation, because they are a lynchpin on which private payers also base their payment rates, he said.

Regardless of CMS’s actions, however, the importance of marginal changes in physician income may be overblown when the profession is still relatively well-paid, Gerard Anderson, a professor of health policy and management at Johns Hopkins University’s Bloomberg School of Public Health, told UPI.

I think $200,000 is still an awful lot of money – a lot more than the average U.S. worker makes, he said. It’s also more than twice as much as doctors make in Canada, Australia and the U.K.

The assertion that salary and medical school debt may influence medical students to change their career choices is also false, Anderson said.

No correlation between debt and specialty choice has never been empirically verified, he said, and in his experience as a teacher, the relative incomes of specialties do not matter very much either.

Every year I teach economics to first-year medical students here at Johns Hopkins, he said. It’s not about money. These students are going into specialty care or not for non-monetary reasons.