Medicine’s Top Earners Are Not the M.D.s - NYTimes.com

THOUGH the recent release of Medicare’s physician payments cast a spotlight on the millions of dollars paid to some specialists, there is a startling secret behind America’s health care hierarchy: Physicians, the most highly trained members in the industry’s work force, are on average right in the middle of the compensation pack.
That is because the biggest bucks are currently earned not through the delivery of care, but from overseeing the business of medicine.
The base pay of insurance executives, hospital executives and even hospital administrators often far outstrips doctors’ salaries, according to an analysis performed for The New York Times by Compdata Surveys: $584,000 on average for an insurance chief executive officer, $386,000 for a hospital C.E.O. and $237,000 for a hospital administrator, compared with $306,000 for a surgeon and $185,000 for a general doctor.


And those numbers almost certainly understate the payment gap, since top executives frequently earn the bulk of their income in nonsalary compensation. In a deal that is not unusual in the industry, Mark T. Bertolini, the chief executive of Aetna, earned a salary of about $977,000 in 2012 but a total compensation package of over $36 million, the bulk of it from stocks vested and options he exercised that year. Likewise, Ronald J. Del Mauro, a former president of Barnabas Health, a midsize health system in New Jersey, earned a salary of just $28,000 in 2012, the year he retired, but total compensation of $21.7 million.
The proliferation of high earners in the medical business and administration ranks adds to the United States’ $2.7 trillion health care bill and stands in stark contrast with other developed countries, where top-ranked hospitals have only skeleton administrative staffs and where health care workers are generally paid less. And many experts say it’s bad value for health care dollars.

Medicine’s Top Earners Are Not the M.D.s - NYTimes.com

Sphere: Related Content

Doctors Abusing Medicare Face Fines and Expulsion - NYTimes.com

 

WASHINGTON — The Obama administration is cracking down on doctors who repeatedly overcharge Medicare patients, and for the first time in more than 30 years the government may disclose how much is paid to individual doctors treating Medicare patients.

Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services, said that “recalcitrant providers” would face civil fines and could be expelled from Medicare and other federal health programs.

In a directive that took effect on Jan. 15 but received little attention, Ms. Tavenner indicated that the agency was losing patience with habitual offenders. She ordered new steps to identify and punish such doctors.

A recalcitrant provider is defined as one who is “abusing the program and not changing inappropriate behavior even after extensive education to address these behaviors.” Cases will be referred to Daniel R. Levinson, the inspector general at the Department of Health and Human Services, who has authority to impose civil fines and exclude doctors from Medicare, Medicaid and other programs. 

Federal officials estimate that 10 percent of payments in the traditional fee-for-service Medicare program are improper. That would suggest at least $6 billion a year in improper payments under Medicare’s physician fee schedule. But Malcolm K. Sparrow, a Harvard professor and an expert on health care fraud, has said the losses could be greater because the official statistics “fail to accurately capture fraud rates” in Medicare.

A new section of the Medicare manual encourages the use of fines to penalize doctors who generate a pattern of claims for goods and services that they know or “should know” are not medically necessary. Providers can also be barred from Medicare if they bill the program for “excessive charges” or for services substantially in excess of patients’ needs.

In a new report, Mr. Levinson said Medicare officials and contractors should focus on doctors with the highest Medicare billings because they often received improper payments. He said that about 300 doctors received more than $3 million each in yearly Medicare payments and that one-third of them had been singled out for special reviews because of questionable billings.

Doctors Abusing Medicare Face Fines and Expulsion - NYTimes.com

Sphere: Related Content

Patients’ Costs Skyrocket; Specialists’ Incomes Soar - NYTimes.com

 

CONWAY, Ark. — Kim Little had not thought much about the tiny white spot on the side of her cheek until a physician’s assistant at her dermatologist’s office warned that it might be cancerous. He took a biopsy, returning 15 minutes later to confirm the diagnosis and schedule her for an outpatient procedure at the Arkansas Skin Cancer Center in Little Rock, 30 miles away.

That was the prelude to a daylong medical odyssey several weeks later, through different private offices on the manicured campus at the Baptist Health Medical Center that involved a dermatologist, an anesthesiologist and an ophthalmologist who practices plastic surgery. It generated bills of more than $25,000.

“I felt like I was a hostage,” said Ms. Little, a professor of history at the University of Central Arkansas, who had been told beforehand that she would need just a couple of stitches. “I didn’t have any clue how much they were going to bill. I had no idea it would be so much.”

Ms. Little’s seemingly minor medical problem — she had the least dangerous form of skin cancer — racked up big bills because it involved three doctors from specialties that are among the highest compensated in medicine, and it was done on the grounds of a hospital. Many specialists have become particularly adept at the business of medicine by becoming more entrepreneurial, protecting their turf through aggressive lobbying by their medical societies, and most of all, increasing revenues by offering new procedures — or doing more of lucrative ones.

Patients’ Costs Skyrocket; Specialists’ Incomes Soar - NYTimes.com

Sphere: Related Content

JAMA Network | JAMA Internal Medicine | Medicare Payment for Cognitive vs Procedural Care: Minding the Gap

 

Importance Health care costs in the United States are rising rapidly, and consensus exists that we are not achieving sufficient value for this investment. Historically, US physicians have been paid more for performing costly procedures that drive up spending and less for cognitive services that may conserve costs and promote population health.

Objective To quantify the Medicare payment gap between representative cognitive and procedural services, each requiring similar amounts of physician time.

…

Results The revenue for physician time spent on 2 common procedures (colonoscopy and cataract extraction) was 368% and 486%, respectively, of the revenue for a similar amount of physician time spent on cognitive care.

Conclusions and Relevance Our analysis indicates that Medicare reimburses physicians 3 to 5 times more for common procedural care than for cognitive care and illustrates the financial pressures that may contribute to the US health care system’s emphasis on procedural care. We demonstrate that 2 common specialty procedures can generate more revenue in 1 to 2 hours of total time than a primary care physician receives for an entire day’s work.

JAMA Network | JAMA Internal Medicine | Medicare Payment for Cognitive vs Procedural Care:  Minding the Gap

Sphere: Related Content

JAMA Network | JAMA | Views of US Physicians About Controlling Health Care Costs

 

Physicians’ views about health care costs are germane to pending policy reforms.

Objective To assess physicians’ attitudes toward and perceived role in addressing health care costs.

…

Results A total of 2556 physicians responded (response rate = 65%). Most believed that trial lawyers (60%), health insurance companies (59%), hospitals and health systems (56%), pharmaceutical and device manufacturers (56%), and patients (52%) have a “major responsibility” for reducing health care costs, whereas only 36% reported that practicing physicians have “major responsibility.” Most were “very enthusiastic” for “promoting continuity of care” (75%), “expanding access to quality and safety data” (51%), and “limiting access to expensive treatments with little net benefit” (51%) as a means of reducing health care costs. Few expressed enthusiasm for “eliminating fee-for-service payment models” (7%). Most physicians reported being “aware of the costs of the tests/treatments [they] recommend” (76%), agreed they should adhere to clinical guidelines that discourage the use of marginally beneficial care (79%), and agreed that they “should be solely devoted to individual patients’ best interests, even if that is expensive” (78%) and that “doctors need to take a more prominent role in limiting use of unnecessary tests” (89%). Most (85%) disagreed that they “should sometimes deny beneficial but costly services to certain patients because resources should go to other patients that need them more.” …

JAMA Network | JAMA | Views of US Physicians About Controlling Health Care Costs

Sphere: Related Content

Special Deal by Haley Sweetland Edwards | The Washington Monthly

Another piece on the RUC. Follow the tags to learn more…

Over the past few years, a few well-placed health care figures from both parties have spoken out—at least once they’ve left office—about how crazy this system is. “The RUC is really just a giant cabal run by the AMA,” Thomas Scully, former head of the CMS under George W. Bush, told me. “A private trade association should not have that sort of control over the biggest spending account in the government. It’s an outrageous travesty of democracy.” Bruce Vladeck, former head of the CMS under Bill Clinton, agrees, calling the RUC “a significant part of the problem.”

There have also been scathing reports issued by the Government Accountability Office, and by MedPAC, the agency that advises Congress on Medicare-related issues, as well as some hard-hitting investigative reporting by the Wall Street Journal and the Center for Public Integrity. In 2011, a bipartisan panel participated in a Senate roundtable, during which three former heads of the CMS took turns lamenting the RUC.

Yet, for the most part, the RUC continues to operate exactly as it always has—behind the scenes, without anyone, including actual doctors laboring in the clinics and hospitals across the country, even really knowing about it. (This spring, Scully told me that he went to lunch with a very high-ranking official at the CMS who had no idea how the RUC actually worked.)

The Affordable Care Act, for its part, includes a few lines that could potentially, if incrementally, limit the RUC’s power. But in general, it doesn’t much change the way the reimbursement system works. Taking on the RUC would have “started a nuclear war with the AMA,” as Scully put it, and alienated other key political allies that the administration needed to pass the law to begin with. Fixing the RUC, however, is essential to fixing health care in this country.

Special Deal by Haley Sweetland Edwards | The Washington Monthly

Sphere: Related Content

How a secretive panel uses data that distorts doctors’ pay - The Washington Post

An “expose” on the RUC and physician payment structure. Follow the tag for “RUC” at the bottom to learn more, and “Physician Income” to learn more about what a fair income is, and “IPAB” for a potential solution…

So how much does a physician make on a basic colonoscopy?

A good place to look is Pennsylvania, where the state tracks medical procedures and the profits of the doctor-owned surgery centers.

Even in an otherwise down-at-the-heels former coal town, the procedure can be big business.

At Schuylkill Endoscopy, located in a tidy green building behind the McDonald’s in Pottsville, Pa., three doctors performed thousands of colonoscopies in 2011, taking in more than $700,000, along with hundreds of thousands more for other similar procedures. On top of those physician fees, the endoscopy clinic, which is owned by two of the physicians and a management company, took in $1.5 million in operating profits in 2011, according to state records.

“I am very comfortable — very grateful,” said one of the owner-doctors, Amrit Narula, who lives in a modern-style, 5,000-square-foot house atop a ridge here.

Like other doctors interviewed for the story, Narula noted that he has no role in setting the Medicare value. He does not lobby Medicare and has never filled out one of the RUC surveys. He agreed that the time estimates in his field sound exaggerated.

By itself, the professional fee for a colonoscopy makes him about $260 an hour after his expenses. (That’s a figure that’s based on the clinics’ mix of patients and the Medicare assumptions about overhead.)

Is that too much? In the past, the loudest criticism of the point system has come from primary care physicians who think their work has been undervalued.

The median salary for a gastroenterologist was $481,000 in 2011, according to data from the Medical Group Management Association. By contrast, the median salary for a pediatrician was $204,000 and that of a general internal medicine doctor was $216,000. Those kinds of disparities are leading medical students away from primary care, critics say.

“I didn’t know they got that many RVUs [points] for a colonoscopy — that’s kind of amazing,” said Cynthia Lubinsky, a family practitioner in the next county over from Narula. “Do I believe that the payment system is fair? I would have to say no.”

How a secretive panel uses data that distorts doctors’ pay - The Washington Post

Sphere: Related Content

“Seismic shift” lifts primary care's impact on hospital revenues - amednews.com

“Seismic shift” lifts primary care's impact on hospital revenues - amednews.com

For the first time, primary care physicians are driving more revenue on a per-doctor basis to hospitals than are specialists, according to a survey of hospital chief financial officers by physician recruiting firm Merritt Hawkins. It's expected that this result is not a fluke, but a reflection of the growing emphasis on primary care by hospitals and the health care system in general.

Sphere: Related Content

Uwe E. Reinhardt: Debating Doctors' Compensation - NYTimes.com

 

Debating Doctors’ Compensation

By UWE E. REINHARDT

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

Two themes run through the comments on previous blog posts that touched on the payment of the providers of health care. The first is that American doctors are paid too much. The second is that they are paid too little.

Could both propositions be right? Let us explore the issue by looking at some numbers.

A nice discussion of physician compensation with some rather eye opening graphs for the uninitiated!

Uwe E. Reinhardt: Debating Doctors' Compensation - NYTimes.com

Sphere: Related Content

Primary care still waiting on ACA Medicaid pay raise - amednews.com

If the states manage to screw this up, and prevent pay improvement for primary care, it could jeopardize the success of the ACA…

Washington Primary care physicians who qualify for higher Medicaid payments under the Affordable Care Act might not see these rate increases as quickly as anticipated this year.

The Medicaid program has had a long-standing reputation for paying doctors at rates far below what Medicare pays for the same services. The ACA aimed to address this problem by directing states to bump rates for primary care services provided by primary care doctors up to 100% of Medicare rates for calendar years 2013 and 2014. Because the final rule on the provision was issued in late 2012 with an effective date of Jan. 1, many family doctors were hoping to see an immediate boost in their claims payments. However, “there could be a lag of several months even from now” for the enhanced Medicaid rates to take effect, said Jeffrey Cain, MD, president of the American Academy of Family Physicians.

Some physician organizations are concerned that states are missing the opportunity to prop up primary care because they aren't moving quickly enough to pay these higher fees.

Several administrative steps are needed first at the state and federal levels, said Neil Kirschner, senior associate of regulatory and insurer affairs for the American College of Physicians. States have until March 31 to modify their Medicaid plans accordingly and submit those changes to the federal government, which then has an additional 90 days to approve the plans. “It's unclear how many states have done that,” he said.

In recent letters to the National Governors Assn. and the National Assn. of Medicaid Directors, the American Medical Association and other organizations representing primary care doctors called on states to enact the pay bump expeditiously and engage in active communication with physicians to notify them about the timing of the pay increase.

With the ACA provision in effect for only two years, any implementation delays will make it harder for the government to collect data to see if patient access is improving by raising Medicaid payments, Kirschner said. The longer states take, the longer physicians must wait for these enhanced payments, which could affect decisions whether to take new Medicaid patients, he said.

Primary care still waiting on ACA Medicaid pay raise - amednews.com

Sphere: Related Content

What influences specialty choice?

The income gap between primary care and subspecialists has an impressively negative impact on choice of primary care specialties and of practicing in rural or underserved settings. At the high end of the range, radiologist and orthopedic surgeon incomes are nearly three times that of a primary care physician. Over  a 35-40 year career, this payment disparity produces a $3.5 million gap in return on investment between primary care physicians and the midpoint of income for subspecialist physicians. 

Phillips RL Jr, et al.; Robert Graham Center. Specialty and geographic distribution of the physician workforce: what influences medical student and resident choices? March 2009. http://www.graham-center.org/online/graham/home/publications/monographs-books/2009/rgcmo-specialty-geographic.html. 

Sphere: Related Content

Do Medicare And Medicaid Payment Rates Really Threaten Physicians with Bankruptcy? – Health Affairs Blog

 

Orthopedists. A 2011 survey revealed that orthopedists enjoy a median salary of $514,000.  This is the net physician income after office overhead has been paid.  Overhead costs averaged 46.3 percent for orthopedic surgeons in 2000  and accounted for 45 percent of revenue in 2012.   (This is slightly better than the 50 percent overhead that my practice averages.)  Therefore, the gross practice revenue per orthopedist currently is just over $934,000 with an average overhead cost of $420,000. According to data provided by the American Academy of Orthopaedic Surgeons, orthopedic patients by payer are as follows:  Medicare/Medicaid—31 percent; the uninsured—17 percent; commercial insurance—34 percent; and other sources, such as worker’s compensation—18 percent.  Essentially, half of the average orthopedist’s payment sources are commercial insurance of some type, one third are Medicare or Medicaid, and one sixth is self-pay; this last category—patients paying for their own care—typically contributes only a small amount to practice revenue.

We can test the claim that physicians lose money on their treatment of Medicare patients or make only $8 an hour treating such patients by substituting Medicare reimbursement for the commercial reimbursements to a doctor’s practice.  Would orthopedists truly make $8 an hour or would their practices be bankrupt if all payers used Medicare’s reimbursement schedule?  Remember, this is the articulated position of much of the orthopedic community and a common defense against reimbursement reductions.

According to a comprehensive analysis by the consulting firm, Milliman, in 2008, on average, commercial insurance paid 130 percent of Medicare’s reimbursement, or, seen a different way, Medicare paid 78 cents for every dollar of commercial reimbursement for physicians’ work.   If we reduce the $467,000 in commercial insurance payments to a typical orthopedist’s practice by 22 percent to reflect lower Medicare payments, we obtain $364,000.  Adding this back to the Medicare/Medicaid and self-pay portion of practice incomes yields a new gross revenue figure of $831,000.  This would be the average orthopedist’s practice income if Medicare’s pay scale were universally used.

Taking out $420,000 in overhead, we see that an orthopedist surviving solely on Medicare reimbursements would receive $411,000 in take-home pay, or approximately $100,000 less than we actually enjoy with the current mix of insurance payers.  While I agree that this is a steep reduction, it is abundantly clear that such reimbursement would by no means bankrupt a practice or yield an hourly wage anywhere close to $8 per hour.  Therefore, such statements are gross hyperbole.

Do Medicare And Medicaid Payment Rates Really Threaten Physicians with Bankruptcy? – Health Affairs Blog

Sphere: Related Content

Medicare SGR sticker shock adds urgency to pay reform campaign - amednews.com

Medicare SGR sticker shock adds urgency to pay reform campaign - amednews.com

Medicare SGR sticker shock adds urgency to pay reform campaign

The price tag of a one-year Medicare payment patch rises to $25 billion as calls continue for a permanent measure to overhaul the program’s pay system.

Sphere: Related Content

Orthopedic Group in Philly lays down big bet for Romney

PhillyDeals: Small-business owners plan to delay hiring process until after election

Rothman for Romney

Doctors who staff the Philadelphia-based Rothman Institute chain of orthopedic clinics were, as a group, the "top contributors to Mitt Romney's Republican campaign for the third quarter of 2012," the Washington Post reports, citing Federal Election Commission data.

Contributions to a pro-Romney fund from 65 Rothman doctors on Sept. 17 totaled $751,000. The second-largest Romney-donor employer group for that period worked for private-equity investors Kohlberg Kravis Roberts, which gave $480,000.

Why do these bone men want to dump President Obama? Rothman spokesman Richard Cushman declined to comment when my colleague Harold Brubaker asked.

I know, I know! They have huge incomes and don't want them to change one little bit.

Sphere: Related Content

Disparity in pay divides doctors - The Washington Post

Disparity in pay divides doctors - The Washington Post

A nice summary of pay disparity in medicine.

Recently, a medical student confided in me a thought that few in our profession would dare say aloud: “We may have come to medical school to help people, but we choose our specialty careers based on potential salaries.”

This in part explains why the most-prized residencies are in fields such as dermatology and radiology, whose procedures generate high fees. According to a physician survey by the Medical Group Management Association, the median income of specialists is nearly twice that of primary-care physicians — $384,000 vs. $212,000. The highest-paid gastroenterologists make about $846,000 a year; the highest-paid internists make about $352,000.

As in most professions, it has long been true in medicine that specialists earn more than generalists. They train longer and in many cases pay higher insurance rates, but these factors don’t fully explain the chasm. We’ve now reached a critical point where the income disparity is harming the general population.

Sphere: Related Content

JAMA- AIM | Physicians' Opinions About Reforming ReimbursementResults of a National SurveyReforming Reimbursement

Physicians' Opinions About Reforming Reimbursement Results of a National SurveyReforming Reimbursement

Results

The response rate was 48.5% (n = 1222). Four of 5 physicians (78.4%) indicated that under Medicare, some procedures are compensated too highly and others are compensated at rates insufficient to cover costs. Incentives were the most frequently supported reform option (49.1%), followed by shifting payments (41.6%) and bundling (17.2%). Shifting payments and bundling were more commonly supported by generalists than by other specialists. There was broad support for increasing pay for generalists (79.8%), but a proposal to offset the increase with a 3% reduction in specialist reimbursement was supported by only 39.1% of physicians.

Conclusions

Physicians are dissatisfied with Medicare reimbursement and show little consensus for major proposals to reform reimbursement. The successful adoption of payment reform proposals may require a better understanding of physicians' concerns and their willingness to make tradeoffs.

Sphere: Related Content

Medicaid payments to primary-care doctors will rise under new regulation - The Washington Post

Medicaid payments to primary-care doctors will rise under new regulation - The Washington Post: Primary care doctors could get a pay raise next year for treating Medicaid patients, under a rule announced by the Obama administration Wednesday.

The proposed regulation implements a two-year pay increase included in the 2010 health-care law. The increase, effective in 2013 and 2014, brings primary care fees for Medicaid, which covers indigent patients, in line with those for Medicare, which insures the elderly and some disabled patients.

Although Medicaid is jointly funded by states and the federal government, the pay boost would be covered entirely with federal dollars totaling more than $11 billion over the two years it would be in effect.

Congress automatically appropriated those funds when it adopted the health-care law, so it will not need to act now.

However, the provision is among hundreds that could be instantly nullified if the Supreme Court decides to overturn the law in its entirety when it rules on the constitutional challenge. The court heard arguments on the case in March, and a decision is expected late next month.

The pay raise is one of several attempts in the law to address a fundamental challenge in U.S. health-care: Because primary care doctors focus on preventive care, they offer the best hope of curbing the nation’s health spending. Yet they are paid far less than specialists, contributing to a shortage of primary care doctors that is projected to grow with the aging of baby boomers, the retirement of physicians and an expected influx of more than 30 million Americans who will gain insurance through the health-care law beginning in 2014.

- Sent using Google Toolbar

Sphere: Related Content

Canadian doctors say fee cuts, pay inequalities will spur exodus | News | National Post

Canadian doctors say fee cuts, pay inequalities will spur exodus | News | National Post:

Despite repeated, expensive attempts to more logically divvy up fees, ophthalmologists earn almost 70% more on average than brain surgeons, who take in almost double the income of psychiatrists, according to Canadian Institute for Health Information (CIHI) figures.

“There are terrible inequities within medicine,” said Michael Rachlis, a Toronto physician and health policy analyst. “And this has really almost nothing to do with the actual value of services. It’s just that some services … often because of technological change, end up being relatively overpaid.”

Comparisons with other industrialized countries suggest that, on average, Canada is among the most generous in remunerating its doctors, though the U.S. continues to out-pay in some specialities. Statistics and recruitment agencies report a net migration of physicians into Canada lately.

- Sent using Google Toolbar

Sphere: Related Content

Physician Salaries Vary Widely Among Academics

Physician Salaries Vary Widely Among Academics:

Go West, academic urologist. You may earn more than $455,000 annually there, compared to $300,000 in the Midwest.

(If you are an academic dermatologist, the Midwest is the place to be, not the West, if you want optimum income.)

Whatever you do in academic circles, if you seek a very nice, comfortable salary, be a department chair and a specialist. Then again, if you are engaged in academia, it isn't all about the money is it? There's more money in private practice, of course, but we'll get to that later.

There's a wide variation in physician-related academic salaries, often dependent on geography and rank within academic settings, says the Academic Practice Compensation and Production Survey for Faculty and Management of 2012. The Medical Group Management Association report, based on 2011 data, contains information on more than 20,000 faculty physicians and non-physician providers categorized by specialty, and more than 2,000 managers.

- Sent using Google Toolbar

Sphere: Related Content

Guest column: End is near for independent oncology, cardiology practices | Green Bay Press Gazette | greenbaypressgazette.com

Guest column: End is near for independent oncology, cardiology practices | Green Bay Press Gazette | greenbaypressgazette.com:

Cardiologists and oncologists now struggle to generate enough medical revenue to cover their costs to run the practice and pay physician salaries. "Pay the physicians less," you say? Well, the problem is that the shortage of physicians is so severe that the price to bring a cardiologist or oncologist in is set at a market rate. If you underpay your own physicians, they leave to go to someone who will pay them the market rate; then you have no one to treat your patients.

It is estimated that by the end of 2012, 80 percent of all cardiologists will be employed by or leased to hospitals. Yes, it's the end of the small independent cardiology and oncology practice and it's happening right before our eyes.

- Sent using Google Toolbar

Sphere: Related Content