Healthcare News & Insights

Can physicians really afford a pay cut?

Every year it’s the same old thing — due to the sustainable growth rate, physicians are threatened with a cut to their Medicare reimbursement rate. But at the last second Congress steps in and stops the scheduled cut. It’s been this way since 2002. Could things be changing this year?


That’s the rumor.

There’s talk that lawmakers are considering doing away with the “flawed” Medicare physician reimbursement formula, once and for all. That would mean the regular short-term “doc fix” by Congress — that has often reduced payments to hospitals and other providers to compensate for it — wouldn’t be necessary.

Instead, a proposal for a long-term fix is being batted around, which would freeze current pay rates for a few years and base physician pay raises on doctors who meet specific quality measures, reported the National Journal.

But there is a chance this won’t happen, and once again Congress will have to step in to save the day.

Remained stable

According to the National Journal, despite the yearly Medicare cut threats, physicians pay has remained fairly stable.

So would a Medicare pay cut really break physicians or are they just crying wolf to guard the lifestyle they’ve become accustomed to?

That depends on who you ask.

Most physicians would probably say that between their pricey medical school loans and the fact that insurance companies and Medicare are constantly trying to cut their reimbursement, a pay cut would break many of them — and in some cases that might be true.

But the National Journal reported that most physicians can afford a pay cut, as they are among the best paid professionals in the U.S. And they also have some of the best job security.

No more Medicare patients?

Fact: Medicare pays less than most private insurers.

That’s why a lot of physicians say that another cut in Medicare reimbursement would force them to stop seeing Medicare patients.

And a recent Medical Group Management Association survey of physician practices backs that up, finding:

  • more than half said they would be somewhat or very likely to stop accepting new Medicare patients if Congress ditches the doc fix, and
  • more than one-third said they would stop seeing Medicare patients altogether.

While some primary care physicians (PCPs) would be able to do that, most doctors can’t.

Just think about it: Orthopedics, cardiology and oncology specialties are largely made up of senior citizens. Close the door to seniors and the core of those businesses goes bye-bye.

Plus, people over 65 use  medical services at a four times higher rate than younger people. How would a physician be able to turn that kind of business away and still prosper?

What’s next?

So if leaving the flawed pay formula in place isn’t an option and most doctors can’t turn away Medicare beneficiaries, what’s the medical community to do?

The Medicare Payment Advisory Commission suggests getting rid of the flawed formula and instead financing it with big pay rate cuts to specialists and pay freezes to PCPs.

Such cuts may cause some practices to merge with the practice down the street or a local hospitals for better pay compensation, while physicians nearing the retirement milestone in life may just call it quits a little early.

But no matter what, Medicare patients won’t be left out in the cold. There always will be an influx of new physicians eager to care for patients and take up the stethoscope to help Medicare patients.

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  1. Access to care is going to be a problem since 10,000 people are reaching Medicare age every day now. IT IS MANDATORY WE HAVE A TAX REFORM TO PAY FOR HEALTHCARE. We need to have a federal sales tax and eliminate the income tax. There are so many individuals who do not contribute their fair share by cheating on their income tax. When are those politicians ever going to see the obvious?