Newswise – Reston, VA – A new study from the Harvey L. Neiman Health Policy Institute found that Medicare physician reimbursement per patient declined 2.3% between 2005 and 2021 when taking into account inflation, despite a simultaneous increase of 45.5% in medical services to each patient. These reimbursement trends varied widely by physician specialty (-57.6% for cardiac surgery to +189.1% for pain management). In comparison, reimbursement of nonphysician physicians per patient from Medicare increased more than 3-fold during the same period. The research, published today in CONSULT: The Journal of Health Care Organization, Provision, and Financing assessed changes in payments for Part B services for 100% of traditional Medicare beneficiaries between 2005 and 2021.
The study was designed to assess how provider reimbursement has been affected by Medicare’s statutory budget neutrality requirement. Importantly, the research investigated the dynamics of the underlying factors that affect reimbursement: volume, reimbursement for service, and inflation. Medicare reimburses physicians based on the resource intensity of a service, measured as relative value units (RVUs). RVUs assigned to a service are multiplied by a dollar amount per RVU (the conversion factor) to determine Medicare payment.
“The statutory requirement of budget neutrality requires that RVUs and/or the conversion factor be adjusted so that Medicare expenditures do not exceed budget as new services are introduced or volumes of existing services increase. In other words, budget neutrality is a zero-sum game. Expansions in one area necessitate contractions elsewhere,” said Eric Christensen, PhD, director of research at the Neiman Institute. “Our study shows that physicians are now receiving 2.3% less per beneficiary compared to 16 years ago, as budget neutrality required compensation due to a substantial shift to other types of providers, particularly practitioners who they are not doctors.”
While the research found that across all medical providers and suppliers, payments per beneficiary increased by 9.9%, payments to non-physician professionals (eg nurse practitioners) increased by 206.5%, while that payments to physicians with limited licenses (eg, podiatrists) increased by 16.3% and payment to medical providers increased by 44.4%. While some physician specialties experienced growth in reimbursement, sixteen physician specialties experienced a decrease in reimbursement. Of these, thirteen experienced reimbursement declines despite higher volumes per beneficiary. Among them were psychiatrists, cardiologists, urologists, obstetrics/gynecology, internal medicine, internists, pulmonologists, radiologists, gastroenterologists, anesthesiologists, among others.
“Whether a specialty experienced a decrease in reimbursement per beneficiary or not was a function of changes in health care consumption per beneficiary and how that compared to inflation-adjusted conversion factor decreases,” Gregory Nicola stated , MD, Executive Leadership, Hackensack Radiology Group and President. , Economic Commission of the ACR. “We found that specialties would need to increase their volume of services by 50.7% per beneficiary to maintain the same reimbursement per beneficiary over the period 2005-2021.”
“While reducing physician payments can help contain Medicare spending, it can also lead to unintended consequences for patients,” said Joshua Hirsch, MD, senior research fellow at the Neiman Institute and vice president of Procedural Services, Massachusetts General Hospital. “Continued declines in Medicare reimbursement relative to private insurance reimbursement incentivize providers to favor privately insured patients. Our study highlights the extent to which real declines in reimbursement occur despite higher consumption of care . We hope this study motivates policymakers to find a solution that benefits the Medicare-insured population at risk of reduced access to care.”
The authors cited the boards of directors of the Medicare Hospital Insurance Trust Fund and the Supplemental Health Insurance Fund, which have reported substantial uncertainty about the adequacy of Medicare payments under current law. As such, the Boards anticipate significant future access problems if current trends are not mitigated (2023 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplemental Health Insurance Trust Funds).
To obtain a copy of the study or to arrange an interview with a spokesperson, contact Nichole Gonzalez at [email protected].
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About the Harvey L. Neiman Institute for Health Policy
The Harvey L. Neiman Institute for Health Policy is one of the nation’s leading socioeconomic medical imaging research organizations. The Neiman Institute studies the role and value of radiology and radiologists in the evolution of health care delivery and payment systems and the impact of medical imaging on cost, quality, safety and ‘efficiency of health care. Visit us at www.neimanhpi.org and follow us TwitterLinkedIn and Facebook.
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