Physician Compensation in the U.S.

Physician compensation in the United States Author: Ryan D. Mire, MD, FACP
Editor: Rishi Desai, MD, MPH The way that physicians get paid in the United
States has changed quite a bit over the years. For example, a long time ago, doctors got
paid directly by patients – which was no different than how you might pay a mechanic today. It was a fee-for-service system, which meant
that the more a doctor did for you, the more you paid. But unlike a car, folks can’t walk away
from bad health, and that’s where the private insurance company stepped in. And for those without private insurance there
were government funded insurance options – like Medicare, which covers the elderly, and the
Children’s Health Insurance Program, or CHIP, which covers children. Doctors who took care of patients with Medicare
or CHIP got paid a set amount according to a fee schedule. For example, taking out a child’s tonsils
might have earned a doctor $200, but actually collecting that money meant navigating a few
different systems and filling out forms. Doctors had to use the physician quality reporting
system, known as PQRS, to document how they cared for a patient, and then they had to
use the value-based modifier system to show that the quality of care was aligned with
the cost of care. Finally, doctors had to make sure that they
were appropriately documenting everything into the electronic health records, or EHRs,
according to the meaningful use system. Having three completely different systems
made it hard for a doctor to get paid because each system had it’s own reporting system,
and not only that, there was a combined 9% penalty among all three programs for “low-performing”
doctors, which are those who didn’t meet program standards. It would be like working hard for two weeks,
and then having to fill out three completely different forms about what you did and why
you did it, so that three different groups could pay you a small part of your overall
paycheck, and then getting paid less, for not completing the forms the right way. Needless to say, doctors were annoyed. In 2015, the U.S. Congress passed legislation
called the Medicare Access and CHIP Reauthorization Act called MACRA for short. MACRA set new expectations for a doctor’s
performance as they care for Medicare or CHIP patients, through the Quality Payment Program,
or QPP, which was a new program established to pay doctors. The program starts to track how a doctor performs
in 2017, and that will affect how doctors get paid in 2019. QPP set up a system of sticks and carrots. Doctors who get a high quality score are eligible
to get bonuses that increase from 4% in 2019 all the way to 9% in 2022, and doctors with
a low quality score get penalties of the same size. Now in addition to how much doctors get paid,
there’s also the issue of what they get paid to do. The current system is generally thought of
as a pay-for-volume system where you get paid for doing something. Start an IV line – $120, prescribe antibiotics
– $45, and so on. But with QPP in addition to getting paid-for-volume,
doctors also get paid-for-value, and there’s two programs that do that. The first one is the Merit based Incentive
Payment System, or MIPS. Doctors have to meet two criteria to qualify
for MIPS. The first is for a doctor to have more than
100 Medicare part B patients and the second is that they have to have more than $30K in
Medicare part B charges. In MIPS, doctors have an overall physician
quality score that determines whether they receive a bonus or have to pay a penalty. The physician quality score is basically like
getting a grade, and it compares individual physicians with one another as well as national
standards for how they should be performing. The physician quality score is based on a
few different things. Sixty percent of the score is based on reporting
both quality measures and outcome measures which vary by specialty. A quality measure would be something like:
What proportion of your patients with diabetes had their annual foot exam to check for ulcers? An outcome measure would be something like:
What proportion of patients had overall improvement in their blood pressures? In total, there are 271 of these quality and
outcome measures, and a doctor needs to report a minimum of six, with at least one being
an outcome measure. Now, twenty-five percent of the score is based
on use of advancing care information measures through the use of electronic health records,
or EHRs. Advancing care information measures are things
like making sure that a doctor reviews all of the patient’s medications during each
visit and that the patient is given a patient summary at the end of the appointment – like
getting notes at the end of a meeting. The number of advancing care information measures
depends on the specific of the EHR that’s being used and what it’s capable of doing. A doctor needs to report a minimum of 4 to
5 of these measures, once again, based on the specific EHR being used. Generally speaking, the US government wants
every doctor to practice advancing care information measures and to store patient data in an EHR
by December 31, 2018. The goal is to make it easier to share patient
data between patients and doctors as well as among doctors. So once almost everyone has switched over
to using electronic health records, this category will become less important to the overall
score. And finally, fifteen percent of the score
is based on completing clinical practice quality improvement projects. There are a total of 92 of these quality improvement
projects – and some are medium weighted and some are heavy weighted – based on how involved
they are. A doctor needs to do the equivalent of four
medium weighted quality improvement projects each year. A medium weighted project could be something
like setting up a tobacco screening and intervention program in your clinic to help patients kick
the habit. A heavy weighted project could be something
like improving how patients on anticoagulation medications are taken care of. The idea is for a doctor to help lead an effort
to improve his or her own clinic and community. Finally, there’s a fourth category about
resource use, which refers to how much time and money a doctor spends while taking care
of patients. This category doesn’t affect the score at
the moment, but will in the years ahead. So to sum this up with an example, let’s
say that there’s a family medicine doctor who submits 8 quality measures which is 2
more than the minimum, 6 advancing care information measures reflecting the EHR she uses, and
let’s say she does 4 medium weighted quality improvement projects. Her overall performance might generate a MIPS
score of 93 and that would be compared to thousands of other family medicine doctors
to figure out if she deserves a bit of a bonus above the fee schedule or if she should pay
a slight penalty. Now, to avoid getting penalized in the first
year, doctors have to enroll in MIPS by December 31, 2017, and have to report their performance
on one quality measure or demonstrate that they are using five advancing care information
measures or doing one medium weighted improvement project. To help ease the transition, some groups were
given even more flexibility in terms of what they had to report. These include doctors that are part of small
doctor’s groups or doctors that work alone, as well as those working in underserved areas. The second way for a doctor to get paid through
QPP, is by being part of an advanced Alternative Payment Model, or advanced APM, which is where
doctors take on some financial risk and it’s tied to the quality of their care. There are different programs that might use
an advanced APM, so let’s use the example of an accountable care organization or ACO. In this example, for high quality care, doctors
get paid more by the ACO and for low quality care they get penalized. To qualify, doctors have to have at least
25% of their medicare payments coming from an advanced APM and have 20% of their Medicare
patients coming from an advanced APM to qualify, and those cutoffs increase each year. So if a doctor is in an advanced APM, their
ACO will already expect them to document the same sort of things that go into the physician
quality score. In a way, the ACO serves as sort of a middle-man,
making sure that doctors are abiding to MIPS. And because the doctors in the advanced APM
are already being closely monitored, QPP gives them a 5% bonus each year from 2019-2024 with
no penalties. That’s because it’s assumed that they’ll
be penalized by the ACO if they don’t do a good job with the quality measures. Okay, as a quick recap – MACRA went into effect
in 2015 and it changed the way that most doctors had to report the care that they provided
to patients and how they would get paid for their performance. A lot of doctors started reporting their performance
using MIPS which calculates an overall physician quality score that determines whether individual
doctors get bonuses or penalties. Some doctors, though, work in advanced APMs
and get a flat 5% bonus each year because their performance is monitored by their ACO.


  1. Thank you for the efforts but i feel bad you spend your time on such subjects leaving the difficult pathophysiology of many diseases still unresolved by your fantastic explanatory ability

  2. I definitely don't understand or live the intricacies of billing as an attending physician in USA or Canada, but this sounds like an administrative nightmare. This video doesn't even touch on billing to insurers. As a Canadian medical student, I took forward to either a salary or a fee-for-service model to a single insurer (the government) or a mix of the two. Yes, this is complicated by certain things not covered by medicare (like Lasik or certain plastic surgery), but from what I understand that's a big part of family doctor's lives. Doctor's time can be spent with patients (and there is already a lot of paper work). I think simplifying billing can only save money in the long run.

  3. Make a video on Shoulder Dystocia and Obstructed Labour…Your videos are awesome..Helps us alot to build concept. #OsmosisTeam

  4. I learned this lesson a while ago, if you like patient care, go for nursing. It gets you on your feet faster, gets you interacting with patients faster and gives you a longer time to grow, learn, and one day practice medicine if you'd like to do that too. Side note, big thanks to Osmosis, very helpful overall for understanding many concepts!

  5. I wondered how this video would address such a broad topic. Well, you focused on a small portion of one payment system, which is fine, but the title suggests this would be more broad. Maybe this should be called something like "a brief discussion of MACRA" ? The short history was bizarrely truncated. No mention of the ACA? What about the many other compensation methods? Private insurance, Medicaid, managed care, PPOs, HMOs, etc etc. Not to mention that most physicians work in groups and hospital systems which adds another layer of complexity. Honestly, this would be a whole video series!

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