Author: Cathy Kibbe
In 2023, healthcare organizations implemented a wide variety of physician compensation strategies driven by the individual organization's market, compensation philosophy, financial health, Medicare Physician Fee Schedule selection and risk tolerance, among other factors. These insights and others emerged from Gallagher's 2023 Physician Compensation & Production Survey Report, one of the most comprehensive and robust sources in the industry for physician leadership market data.
Survey drew data from 110,000+ physicians and 1,300+ sites of services
As the market evolves, and as the Centers for Medicare & Medicaid Services (CMS) makes regulatory changes to Physician Fee Schedules, organizations must adapt to ensure that compensation is both competitive and compliant with regulatory guidelines. Our survey drew responses from 110,515 physicians and 1,370 sites of service representing 214 practices and 156 distinct specialty positions.
In this year's survey, we reported six new specialties:
- Cardiac anesthesia
- Blood bank
- Ophthalmology, non-surgical
- Ophthalmology, neurological
- Orthopedic surgery, shoulder and elbow
- Psychiatry, neurological
Additionally, the survey addressed questions relating to Physician Fee Schedules, split/shared visits, and affordability.
Physicians saw increases in compensation and production
In Gallagher's 2023 survey, reported work relative value units (RVUs) increased for the majority of specialties compared to the prior year, with an average annual increase of 6.8% among all specialties at median. Cash compensation showed growth as well, with an average increase of 4.1% over last year at median. Correspondingly, this increase resulted in lower compensation per work RVU rates overall, with an average decrease of 1.1% at median.
Notably, cash compensation for the primary care specialty group increased 11.4% at median, one of the largest increases Gallagher has seen in any area of medicine. However, our team saw work RVUs increase 11.1% at median for the group as well, such that the overall payout rate remained relatively unchanged.
This change in compensation and production is partially explained by leadership at many organizations electing to transition providers to the 2022 Physician Fee Schedule without adjusting conversion factors. According to Gallagher's survey, slightly more than half — 54% — of organizations didn't adjust conversion factors down to account for the expected increase in work RVUs. In our experience, some organizations did try to reduce conversion factors; however, physician retention issues often resulted in organizations simply transitioning to the 2022 Physician Fee Schedule without adjusting conversion factors or making minimal adjustment.
The increased work RVUs weren't necessarily the result of more visits; in fact, encounters stayed relatively flat or trended slightly down. This trend can partially be explained by the increased use of patient messaging, which would likely result in physicians only seeing more acute patients in person, generating more work RVUs per visit.
2024 and beyond
In Gallagher's survey, we also asked organizations what Physician Fee Schedule they planned to use in 2023. Twenty-one percent of organizations indicated they would remain on the 2020 Physician Fee Schedule, while 79% said they will use the 2021, 2022 or 2023 Physician Fee Schedule. Transitioning from the 2020 Physician Fee Schedule ensures that organizations stay in touch with the market and can more easily benchmark their physicians to the reported market data.
Gallagher recommends working with a consultant if your organization is still using the 2020 or a prior Physician Fee Schedule.
CMS delays split/shared visit billing changes until at least 2025
Previously, CMS announced that changes to split/shared visits would take effect January 1, 2024. However, in its summer 2023 proposed rule, the CMS suggested delaying the implementation of the revised definition of "substantive portion" through at least December 31, 2024. Instead, CMS has proposed to maintain the current definition of substantive portion for calendar year 2024. That delay allows organizations to use one of the three key components — history, exam or medical-decision-making — or more than half of the total time spent to determine who bills the visit.
In 2024, the addition of the G-Code G2211 to common outpatient evaluation and management codes to address the ongoing management of chronic conditions will result in increased work RVUs for specialties that manage chronic health issues, such as internal medicine and family practice.
Gallagher's Physician Compensation and Valuation Consulting team can help your organization align physician service requirements and compensation with market trends. Let our industry-leading data help to drive your decisions to face the future with confidence. Learn more about the team or contact us.
