How to solve the shortage of primary care doctors? Compensation is key

Money talks.

The United States faces a severe shortage of primary care physicians for many reasons, but one in particular is inevitable: compensation.

Substantial differences between what primary care physicians earn versus specialists such as orthopedists and cardiologists can weigh into medical students’ decisions about which field to choose. Plus, the system that Medicare and other health plans use to pay doctors generally places more emphasis on performing procedures like replacing a knee or inserting a stent than on providing the whole-person, long-term health care that primary care physicians provide.

As a result of these pay disparities and the punishing workload that primary care physicians typically face, more new physicians are becoming specialists, often leaving patients with fewer primary care options.

“There is a public out there that is unhappy with the lack of access to a routine source of care,” said Christopher Koller, president of the Milbank Memorial Fund, a foundation focused on improving population health and equity. “It won’t be fixed until we pay for it.”

Primary care is the foundation of our health care system, the only area where the provision of multiple services — such as childhood vaccines and regular blood pressure screenings — is associated with better population health and more equitable outcomes, according to the National Academies of Sciences, Engineering and Medicine, in a recently published report on how to rebuild primary care. Without it, the National Academies wrote, “minor health problems can develop into chronic disease,” with poor disease management, emergency room overuse and unsustainable costs. Yet for decades, the United States has underinvested in primary care. It accounted for less than 5% of health spending in 2020 — significantly less than the average spending for countries that are members of the Organization for Economic Co-operation and Development, according to the report.

ONE $26 billion bipartisan legislation proposed last month by Sen. Bernie Sanders (I-Vt.), chairman of the Senate Health, Education, Labor and Pensions Committee, and Sen. Roger Marshall (R-Kan.) would strengthen primary care by increasing educational opportunities for physicians and nurses and expanding access to local health centres. Policy experts say the bill will provide important support, but it is not enough. It does not touch compensation.

“We need primary care to be paid differently and paid more, and that starts with Medicare,” Koller said.

How Medicare Drives Payment

Medicare, which covers 65 million people who are 65 and older or who have certain long-term disabilities, finance more than one fifth of all health expenditure — gives it considerable muscle on the healthcare market. Private health plans typically base their payment amounts on the Medicare system, so what Medicare pays is crucial.

Under the Medicare payment system, the amount the program pays for a physician’s service is determined by three geographically weighted components: a physician’s work, including time and intensity; practice expenses, such as overhead and equipment; and business insurance. It tends to reward specialties that emphasize procedures, such as repairing a hernia or removing a tumor, more than primary care, where the focus is on talking with patients, answering questions, and educating them about managing their chronic conditions .

Medical students may not be familiar with the details of how the payment system works, but their clinical training exposes them to a punishing workload and burnout that is contributing to the shortage of primary care physicians expected to reach 48,000 by 2034. according to estimates from the Association of American Medical Colleges.

The difference in earnings between primary care and other specialists is not lost on them either. The average annual compensation for doctors who focus on primary care — family medicine, internists and pediatricians — ranges from an average of about $250,000 to $275,000, according to Medscape’s annual medical reimbursement report. Many specialists earn more than double that: Plastic surgeons top the compensation list at $619,000 annually, followed by orthopedists ($573,000) and cardiologists ($507,000).

“I think the biggest issues with the primary care physician pipeline are the compensation and the work in primary care,” said Russ Phillips, an internist and director of the Harvard Medical School Center for Primary Care. “You have to really want to be a primary care physician when the student will earn a third of what students going into dermatology will earn,” he said.

According to statistics from National Resident Matching Program, which tracks the number of medical graduate residency vacancies and the number of filled slots, 89% of 5,088 family medicine residencies were filled in 2023, compared to an overall residency rate of 93%. Internists had a higher occupancy rate, 96%, but a significant portion of internal medicine residents ultimately practice in a specialty area rather than in primary care.

No one would argue that doctors are poorly paid, but with the average medical student graduating with just over $200,000 in medical school debtgetting a good salary counts.

Not in it for the money

Still, it’s a misconception that student debt always drives the decision about whether to go into primary care, said Len Marquez, senior director of government relations and legislative advocacy at the Association of American Medical Colleges.

For Anitza Quintero, 24, a second-year medical student at Geisinger Commonwealth School of Medicine in rural Pennsylvania, primary care is a logical extension of her interest in helping children and immigrants. Quintero’s family came to the United States on a raft from Cuba before she was born. She plans to focus on internal medicine and pediatrics.

“I will continue to help my family and other families,” she said. “There’s obviously something attractive about having a major and a high salary,” Quintero said. Still, she wants to work “where the whole body is involved,” she said, adding that long-term doctor-patient relationships “are also attractive.”

Quintero is part of Abigail Geisinger Scholars Program, which aims to recruit primary care physicians and psychiatrists to the rural health system, in part with a promise of loan forgiveness for medical school. Lack of health care tends to be more acute in rural areas.

These students’ educational costs are covered and they receive a monthly stipend of $2,000. They may do their residency elsewhere, but when they graduate, they return to Geisinger for a primary care job with the health system. Each year of work that erases one year of the debt covered by their award. If they do not take a job in the health service, they must repay the amount they have received.

Payment imbalances are a source of tension

In recent years, the Centers for Medicare & Medicaid Services, which administers the Medicare program, has made changes to address some of the payment imbalances between primary care and specialist services. The agency has expanded the office visit services that providers can bill to manage their patients, including adding non-procedural billing codes to provide transitional care, chronic care management and advance care planning.

In next year’s final physician fee schedule, the agency plans to allow another new code comes into force, G2211. It would let doctors bill for complex patient assessment and management services. Any doctor could use the code, but it is expected that primary care doctors will use it more frequently than specialists. Congress has delayed implementation of the code since 2021.

The new code is a small piece of overall payment reform, “but it’s critically important and it’s our top priority on the Hill right now,” said Shari Erickson, chief advocacy officer for the American College of Physicians.

It also sparked a fight that highlights lingering tensions in Medicare physician payment rules.

American College of Surgeons and 18 other specialty groups published a statement describes the new code as “unnecessary”. They oppose the implementation because it would primarily benefit primary care providers, who, they say, already have the flexibility to bill more for more complex visits.

But the real problem is that under federal law, changes to Medicare physician payments must preserve budget neutrality, a zero-sum arrangement in which payment increases for primary care providers mean payment decreases elsewhere.

“If they want to keep it, they have to pay for it,” said Christian Shalgian, director of the division of advocacy and health policy for the American College of Surgeons, noting that his organization will continue to oppose implementation otherwise.

Still, there is general agreement that strengthening the primary health care system through the payment reform will not be achieved by tinkering with billing codes.

The current fee-for-service system does not fully accommodate the time and effort that primary care physicians put into “small-ticket” activities such as e-mails and phone calls, reviews of lab results, and consultation reports. A better arrangement, they say, would be to pay primary care physicians a fixed monthly amount per patient to provide all their care, a system called capitation.

“We’re much better off paying per capita, getting the monthly payment paid up front plus an extra amount for other things,” said Paul Ginsburg, a senior fellow at the University of Southern California Schaeffer Center for Health Policy and Economics and former commissioner for the Medicare Payment Advisory Commission.

But if adding a single five-character code to Medicare’s payment rules has proven challenging, imagine the heavy lifting involved in overhauling the program’s entire physician payment system. MedPAC and the National Academies, both of which advise Congress, have weighed in on the broad outlines of what such a transformation might look like. And there is a targeted effort in Congress: for example, a bill that would add an annual inflation update to Medicare physician payments and a proposal to address budget neutrality. But it’s unclear whether lawmakers have strong interest in acting.

“The fact that Medicare has depressed physician payment rates for two decades makes it more difficult to reform their structure,” Ginsburg said. “The losers are more sensitive to reductions in rates for the procedures they perform.”

KFF Health Newsformerly known as Kaiser Health News (KHN), is a national newsroom that produces in-depth journalism on health issues and is one of the core operating programs of KFF — the independent source of health policy research, polling and journalism.

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