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The Top Ten Ways Physicians are Devalued (More Work, Less Pay)

Michael Kitchell, MD Ames, Iowa

Michael Kitchell, MD, is a neurologist from Ames, Iowa and chair of the IMS board of directors.

If you are one of many Iowa physicians who wonder why we have been working harder but are getting paid less, here it is: The TOP TEN ways our physician work in Iowa has been devalued:

1. Medical expense inflation (MEI). The cost to run a practice has been increasing at a rate of 2-3% per year. This includes rent, equipment, supplies and staff wages. Recently, physicians have been encouraged to acquire electronic medical records which are estimated to cost about $40,000 (and $10,000 per year to maintain). MEI will continue to reduce physician income.
   
   
2. Practice expense (PE) Medicare adjustments. CMS (Centers for Medicare & Medicaid Services) periodically revalues practice expenses, and some specialties, such as anesthesiology, had cuts of as much as 7.5% nationwide due to PE adjustments.
   
   
3. Sustainable Growth Rate (SGR) formula. All physicians who see Medicare patients have had their fees devalued by this flawed formula, including a cut of 5% in 2002. Last minute reprieves by Congress have led to a freeze the last few years, but a cut of 10% is scheduled for all physicians in January 2008 (as well as 5% cuts every year for the next 8 years).
   
   
4. Work effort (WE) GPCIs. Geographic Practice Cost Indexes (GPCIs) adjust the WE portion of Iowa's Medicare fees down by 4% below the national average and 12% below the highest. There has been a temporary floor on this GPCI but we are still 8% below California for the same work. This floor will expire in 2008, resuming another geographic cut.
   
   
5. Practice expense (PE) GPCIs. These GPCIs claim Iowa's practice expenses are 13.1% less than average and about half of Silicon Valley California's practice expenses. This is the largest GPCI penalty for Iowa's physicians.
   
   
6. Malpractice expense GPCIs. These GPCIs adjust Iowa's malpractice portion of the fees slightly, but the total of the three GPCIs means Iowa's Medicare fees are devalued to 9% less than the U.S. average and about 35% less than some areas of California.
   
   
7. Budget neutrality adjuster (BNA). After the RUC (Relative Value Unit Update Committee) for 2007 increased the RVUs for some codes, CMS decided to keep the budget neutral by devaluing all physician work. The BNA cut only the work value (WE) portion of the fees, not the practice expenses (PE), by 10.1%. (And you thought our Medicare fees for 2007 were "frozen" at the 2006 level!?)
   
   
8. Another geographic cut. By using the BNA only for work devaluation (WE) rather than the conversion factor, which would also cut the PE, Iowa physicians (whose fees have more WE but fewer dollars for PE) were cut about .7-1.5% more than California's fees.
   
   
9. Wellmark for 2007 cut the OB conversion factor by 1.9% and the E&M codes conversion factor by 7%. Conversion factors are how RVU values are converted into dollars, so if you keep track of your RVUs, you will see in Medicare and Wellmark E&M codes that the dollars per RVU have dropped 5-7%. (The same work, 5-7% less pay.)
   
   
10. Devaluation of Quality. Despite Iowa's 6th highest ranking in quality, the new Physician Quality Reporting Initiative (PQRI) by CMS will devalue our quality by the same GPCI penalties, since the bonus for reporting is based on the GPCI-adjusted fees. CMS is not only content to pay us less for equal work, but they now give us the ultimate insult by devaluing our high quality. Our quality payments will be 35% less than some areas. Michael Kitchell, MD, is a neurologist from Ames, Iowa and chair of the IMS board of directors.