Physicians and Insurers: Can They Get Along?

Carol Peckham


October 21, 2014

In This Article

Other Trends Affecting Physician Payments

The Shift to Value-Oriented Payments

A 2014 survey from Catalyst for Payment Reform reported that, although 60% of payments to physicians and hospitals are still fee-for-service, 40% of all commercial in-network payments are now value-oriented.[4,13,14] About half (53%) of the latter payments put providers at financial risk if they fail to meet objectives.The most common value-oriented incentive is capitation, which accounted for 15% of health plans' health spending and can force physicians to absorb losses when medical bills exceed payments.

On average, only 10% of payments to specialists and 24% to PCPs are value-oriented. So far, hospitals are the most affected by this approach. This is likely to change, however, now that CMS has proposed that, in 2017, all physicians could be subject to its Medicare value-based payment modifier program.[15]

Of particular note here is a move toward narrow provider networks, where insurers are dropping providers, presumably to improve quality and lower costs. But often the reasons are opaque and the results lead to less access to care.[16] Insurers have been using narrow networks since the 1990s, but this trend has grown significantly with employer pressures to reduce costs and has intensified under Medicare Advantage and health exchange plans.[17] The AMA has been critical of narrow networks and on its website has said, "Patients in a narrow network are frequently prevented from seeing physicians that are deemed too expensive by the insurer and are denied a place in the insurer's narrow network."[18]

Judy Aburmishan observed, "All those new methods for improving care are really just methods for cutting the doctor's pay."

Going Cash-Only

Although still small, there is a growing trend toward concierge and cash-only practices. In the 2014 Medscape Physician Compensation survey, physicians reported an increase of 4% to 9% between 2011 and 2013 in choosing these types of practices. In fact, when physicians were asked to give a write-in response in the current report for advising their peers on how to deal with insurers, over 7% wrote in advocating a cash-only business and nearly 2% suggested becoming a healthcare concierge, with 4.4% suggesting that physicians opt out of insurance altogether.

Becoming Employed

The major trend in how physicians are being paid is the increase in becoming employed. According to a 2014 Medscape report on employed physicians, financial security played a huge role in prompting more than a third of doctors (38%) to seek employment, with 45% saying that not having to deal with insurers was what they liked most about being employed. Also in this survey, nearly two thirds (64%) of employed physicians said they would recommend employment to their peers, with only 11% saying they were unlikely to. (The rest were neutral.)


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