Last month, the Centers for Medicare and Medicaid Services (CMS) released its proposed 2023 Medicare Physician Fee Schedule.
Under this proposal, physicians will see a 4.42% reduction to the conversion factor (a multiplier used to calculate physician reimbursement for fee-for-service Medicare payments). This is in addition to a slew of other cuts already in effect, such as the resumption of a 2% Medicare payment cut that went into effect in July 2022.
This proposed pay cut is another slap in the face for physicians. While physicians have put their lives at risk to take care of the nation during COVID-19, the government’s thank you gift to them is to decrease reimbursements.
These cuts come in light of the current economic uncertainty and record-high inflation. Every other sector has raised their prices, except for physicians. Even my daughter’s daycare increased their fees by over $100/month this year.
This proposal highlights the continuation of a troubling trend many physicians are already acutely aware of. According to the American Medical Association, between 2001 and 2020, Medicare physician payments decreased 22% when adjusted for inflation.
Physicians need to start planning how to act in light of another round of upcoming proposed pay cuts.
I think there are three ways physicians can respond:
#1) Do Nothing: Be a Victim to the System
This is the default mode (and the path of least resistance) that most physicians assume. There’s no denying that the current medical landscape leaves many doctors feeling like they’re helpless victims to an overbearing system.
There’s a lack of control and loss of autonomy.
Insurance companies scrutinize the tests and treatments we order.
Administrators tell us we need to be more productive, that we need to see more patients and do more procedures.
Physicians feel like they can’t change anything, so they often just put their heads down and keep working. They tell themselves, “This is just the way it is.”
Or at best, we hope that someone will listen and eventually make the changes for us. Physicians are all too familiar with this dance: pay cuts are proposed, then various medical associations and societies respond by asking Congress to prevent these additional cuts. Cuts may temporarily be halted, but then the cycle repeats itself all over again.
Do you want to be the doctor that just sits back, waiting for someone else to rescue you?
#2) Play the Volume Game: Do More to Earn More
The second way physicians can respond to the proposed cuts is to do more.
To make up for the reduction in pay, you can see more patients to earn the same amount of money. It’s just simple math: if reimbursements come down, you increase your volume to make up the difference.
The problem with this model is that you still only have 24 hours in a day, and there’s a ceiling to how much you can work. And how much more can you really do in an already tight practice environment filled with 15-minute appointments, double books and never-ending EMR documentation?
#3) Control What You Can Control: Find Income Outside of the Medical System
While physicians continue to advocate for ourselves and hopefully see positive change in the medical system (often a slow process), there’s a third way to respond to the upcoming proposed pay cuts: start finding ways to earn income independent of your medical career.
In my opinion, this is the most effective, most sustainable way to respond as a physician. And one of the best ways to do this is to invest, so that you earn passive income – income independent of your time or effort.
If you’ve had enough of the continued pressure to work more and get paid less, then it’s time to take control of your financial destiny and not leave it in the hands of the medical system.
When physicians can afford to do so, they can freely leave Medicare (or any other insurance company or employer that takes advantage of them).
But most doctors can’t do this, so we often stay stuck in situations that don’t serve us, and in turn, lack the power to create positive change.
So the point here is to invest so you can make some money outside of the medical system. Once that financial burden is relieved, you can decide how you want to practice medicine, whether that’s to dump Medicare all together, cut back on your clinical time, or just work for fun.
Conclusion
The upcoming proposed Medicare reimbursement cuts is yet another threat to physicians. Physicians can react in different ways to these changes, but in my opinion, the best way to respond is to control what you can control, which includes earning some passive income outside of medicine.
What do you think of the proposed Medicare physician reimbursement cuts? What is your plan in response to these proposed cuts?
