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Compensation Is Key To Fixing Primary Care Shortage

Money talks.

The United States faces a serious shortage of primary care physicians for many reasons, but one, in particular, is inescapable: compensation.

Substantial disparities between what primary care physicians earn relative to specialists like orthopedists and cardiologists can weigh into medical students' decisions about which field to choose. Plus, the system that Medicare and other health plans use to pay doctors generally places more value on doing procedures like replacing a knee or inserting a stent than on delivering the whole-person, long-term health care management that primary care physicians provide.

As a result of those pay disparities, and the punishing workload typically faced by primary care physicians, more new doctors are becoming specialists, often leaving patients with fewer choices for primary care.

"There is a public out there that is dissatisfied with the lack of access to a routine source of care," said Christopher Koller, president of the Milbank Memorial Fund, a foundation that focuses on improving population health and health equity. "That's not going to be addressed until we pay for it."

Primary care is the foundation of our health care system, the only area in which providing more services — such as childhood vaccines and regular blood pressure screenings — is linked to better population health and more equitable outcomes, according to the National Academies of Sciences, Engineering, and Medicine, in a recently published report on how to rebuild primary care. Without it, the national academies wrote, "minor health problems can spiral into chronic disease," with poor disease management, emergency room overuse, and unsustainable costs. Yet for decades, the United States has underinvested in primary care. It accounted for less than 5% of health care spending in 2020 — significantly less than the average spending by countries that are members of the Organization for Economic Cooperation and Development, according to the report.

A $26 billion piece of bipartisan legislation proposed last month by Sen. Bernie Sanders (I-Vt.), chair of the Senate Health, Education, Labor, and Pensions Committee, and Sen. Roger Marshall (R-Kan.) would bolster primary care by increasing training opportunities for doctors and nurses and expanding access to community health centers. Policy experts say the bill would provide important support, but it's not enough. It doesn't touch compensation.

"We need primary care to be paid differently and to be paid more, and that starts with Medicare," Koller said.

How medicare drives payment

Medicare, which covers 65 million people who are 65 and older or who have certain long-term disabilities, finances more than a fifth of all health care spending — giving it significant muscle in the health care market. Private health plans typically base their payment amounts on the Medicare system, so what Medicare pays is crucial.

Under the Medicare payment system, the amount the program pays for a medical service is determined by three geographically weighted components: a physician's work, including time and intensity; the practice's expense, such as overhead and equipment; and professional insurance. It tends to reward specialties that emphasize procedures, such as repairing a hernia or removing a tumor, more than primary care, where the focus is on talking with patients, answering questions, and educating them about managing their chronic conditions.

Medical students may not be familiar with the particulars of how the payment system works, but their clinical training exposes them to a punishing workload and burnout that is contributing to the shortage of primary care physicians, projected to reach up to 48,000 by 2034, according to estimates from the Association of American Medical Colleges.

The earnings differential between primary care and other specialists is also not lost on them. Average annual compensation for doctors who focus on primary care — family medicine, internists, and pediatricians — ranges from an average of about $250,000 to $275,000, according to Medscape's annual physician compensation report. Many specialists make more than twice as much: Plastic surgeons top the compensation list at $619,000 annually, followed by orthopedists ($573,000) and cardiologists ($507,000).

"I think the major issues in terms of the primary care physician pipeline are the compensation and the work of primary care," said Russ Phillips, an internist and the director of the Harvard Medical School Center for Primary Care. "You have to really want to be a primary care physician when that student will make one-third of what students going into dermatology will make," he said.

According to statistics from the National Resident Matching Program, which tracks the number of residency slots available for graduating medical students and the number of slots filled, 89% of 5,088 family medicine residency slots were filled in 2023, compared with a 93% residency fill rate overall. Internists had a higher fill rate, 96%, but a significant proportion of internal medicine residents eventually practice in a specialty area rather than in primary care.

No one would claim that doctors are poorly paid, but with the average medical student graduating with just over $200,000 in medical school debt, making a good salary matters.

Not in it for the money

Still, it's a misperception that student debt always drives the decision whether to go into primary care, said Len Marquez, senior director of government relations and legislative advocacy at the Association of American Medical Colleges.

For Anitza Quintero, 24, a second-year medical student at the Geisinger Commonwealth School of Medicine in rural Pennsylvania, primary care is a logical extension of her interest in helping children and immigrants. Quintero's family came to the United States on a raft from Cuba before she was born. She plans to focus on internal medicine and pediatrics.

"I want to keep going to help my family and other families," she said. "There's obviously something attractive about having a specialty and a high pay grade," Quintero said. Still, she wants to work "where the whole body is involved," she said, adding that long-term doctor-patient relationships are "also attractive."

Quintero is part of the Abigail Geisinger Scholars Program, which aims to recruit primary care physicians and psychiatrists to the rural health system in part with a promise of medical school loan forgiveness. Health care shortages tend to be more acute in rural areas.

These students' education costs are covered, and they receive a $2,000 monthly stipend. They can do their residency elsewhere, but upon completing it they return to Geisinger for a primary care job with the health care system. Every year of work there erases one year of the debt covered by their award. If they don't take a job with the health care system, they must repay the amount they received.

Payment imbalances a source of tension

In recent years, the Centers for Medicare & Medicaid Services, which administers the Medicare program, has made changes to address some of the payment imbalances between primary care and specialist services. The agency has expanded the office visit services for which providers can bill to manage their patients, including adding non-procedural billing codes for providing transitional care, chronic care management, and advance care planning.

In next year's final physician fee schedule, the agency plans to allow another new code to take effect, G2211. It would let physicians bill for complex patient evaluation and management services. Any physician could use the code, but it is expected that primary care physicians would use it more frequently than specialists. Congress has delayed implementation of the code since 2021.

The new code is a tiny piece of overall payment reform, "but it is critically important, and it is our top priority on the Hill right now," said Shari Erickson, chief advocacy officer for the American College of Physicians.

It also triggered a tussle that highlights ongoing tension in Medicare physician payment rules.

The American College of Surgeons and 18 other specialty groups published a statement describing the new code as "unnecessary." They oppose its implementation because it would primarily benefit primary care providers who, they say, already have the flexibility to bill more for more complex visits.

But the real issue is that, under federal law, changes to Medicare physician payments must preserve budget neutrality, a zero-sum arrangement in which payment increases for primary care providers mean payment decreases elsewhere.

"If they want to keep it, they need to pay for it," said Christian Shalgian, director of the division of advocacy and health policy for the American College of Surgeons, noting that his organization will continue to oppose implementation otherwise.

Still, there's general agreement that strengthening the primary care system through payment reform won't be accomplished by tinkering with billing codes.

The current fee-for-service system doesn't fully accommodate the time and effort primary care physicians put into "small-ticket" activities like emails and phone calls, reviews of lab results, and consultation reports. A better arrangement, they say, would be to pay primary care physicians a set monthly amount per patient to provide all their care, a system called capitation.

"We're much better off paying on a per capita basis, get that monthly payment paid in advance plus some extra amount for other things," said Paul Ginsburg, a senior fellow at the University of Southern California Schaeffer Center for Health Policy and Economics and former commissioner of the Medicare Payment Advisory Commission.

But if adding a single five-character code to Medicare's payment rules has proved challenging, imagine the heavy lift involved in overhauling the program's entire physician payment system. MedPAC and the national academies, both of which provide advice to Congress, have weighed in on the broad outlines of what such a transformation might look like. And there are targeted efforts in Congress: for instance, a bill that would add an annual inflation update to Medicare physician payments and a proposal to address budget neutrality. But it's unclear whether lawmakers have strong interest in taking action.

"The fact that Medicare has been squeezing physician payment rates for two decades is making reforming their structure more difficult," said Ginsburg. "The losers are more sensitive to reductions in the rates for the procedures they do."

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

How To Solve America's Shortage Of Primary Care Doctors? Compensation Is Key

Money talks.

The United States faces a serious shortage of primary care physicians for many reasons, but one, in particular, is inescapable: compensation.

"We need primary care to be paid differently and to be paid more, and that starts with Medicare," Koller said.

How Medicare drives payment

No one would claim that doctors are poorly paid, but with the average medical student graduating with just over $200,000 in medical school debt, making a good salary matters.

Not in it for the money

Payment imbalances a source of tension

It also triggered a tussle that highlights ongoing tension in Medicare physician payment rules.

Still, there's general agreement that strengthening the primary care system through payment reform won't be accomplished by tinkering with billing codes.

KFF Health News, formerly known as Kaiser Health News (KHN), is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.

Let's Leverage Graduate Medical Education To Increase Medicaid Re-enrollment

Lately, we've seen two distinct lines at our hospitals. We would all be healthier if we brought the two lines together.

The first line forms every morning before the building opens. Mothers, children, and the disabled clutch passels of documents along the sidewalk. They wait to reauthorize their Medicaid insurance.

The second line formed about a decade ago and takes place virtually. Future pediatricians, psychiatrists, and plastic surgeons log on for 30-minute calls seeking entry into residency. They are applying to begin their graduate medical training at our hospitals.

During the pandemic, both lines were altered in favor of equity. For the roughly three years of the official public health emergency, Medicaid was automatically renewed, keeping millions of people from disease and poverty. The public health emergency ended in May 2023, and Medicaid renewal now again requires the presentation of qualifying documents. In the fall of 2020, medical student interviews went virtual to minimize the spread of disease and improve equity by reducing interview barriers.

Today, only one of these two changes endures: Medical students can still apply for the next step in their training through virtual interviews.

Becoming a physician is a well-defined path. You earn an undergraduate degree laden with basic science courses, score well on a series of licensing exams, and successfully complete a four-year medical school degree, which makes you a doctor. To become a physician, you must train in a residency, which prepares you for independent practice. American medical students apply to an average of 95 residencies, and the students who successfully match interview at a median of 14 programs.

In our careers as academic physicians, we have long cheered the autumn parade of medical students applying to residencies. We each work at one of our nation's 871 teaching hospitals, where 149,296 doctors in training are enrolled in approximately 12,740 graduate medical education, or GME, programs. These doctors are caring, day and night, for the acutely ill. The training shapes their lives, as 57.1% will practice in the state where they train. The training defines their careers, as they select one of medicine's 182 specialties and subspecialties as their own. The training also alters the health of the people they meet, or don't meet, as patients.

The people in the other line are, often literally, dying to see a physician. These people, at least for now, are among the 72.5 million Americans who have Medicaid. Medicaid is an essential lifeline that has demonstrated the ability to save lives, reduce disparities, encourage workforce participation, and bolster economies. More Americans receive their health insurance through Medicaid than any other source, but they have to demonstrate annually that they still qualify. The Kaiser Family Foundation reports that 8.6 million Americans have been unenrolled from Medicaid since May 2023, 72% for procedural reasons, and roughly 40% of those disenrolled are children.

This summer, the federal government began publicly scolding 36 states for allowing so many of its citizens to fall off the Medicaid rolls. Ten of those states have previously refused the Medicaid expansion offered by the Affordable Care Act (ACA), so scolding will likely be futile.

But there's a more effective approach the federal government could take. It could bring together the two lines at teaching hospitals by tying more graduate medical education funding to Medicaid.

Both our patients and our trainees know that Medicaid is a partnership between the federal government and the states. States have a say in what Medicaid covers, but at minimum, it includes care for low-income families, qualified pregnant women and children, the blind, and the disabled. States can choose to add people in other vulnerable populations, including those who receive home and community-based care.

What few of our patients or our physicians in training know is that Medicaid is also the second-largest source of GME funding, with the District of Columbia and 43 states providing nearly $7.39 billion in 2022. Since it is a partnership between the federal government and the states, Medicaid is well adapted for local solutions. According to the Association of American Medical Colleges, 11 states extend payments to places beyond hospitals that train residents, and 12 states use the payments to support the training of non-physician health professionals. Many states audit Medicaid payments and scrutinize the financial performance of their teaching hospitals, some hold teaching hospitals accountable for their social impact, and others recognize GME costs as part of overall hospital costs; each of these strategies provides levels of local responsiveness which Medicare lacks. The partnership also allows 57% of Medicaid GME payments to support managed care with 43% of payments made under fee-for-service.

Unfortunately, it is the first-largest source of GME funding that keeps the lines of new doctors so orderly and the lines of impoverished patients so lengthy.

In 2020, Medicare provided $4.5 billion to partially compensate teaching hospitals for education costs and an additional $11.68 billion to compensate teaching hospitals for the higher patient care costs that can accompany teaching. While the underlying math follows a complicated formula, it depends primarily on the percentage of beds occupied at teaching hospitals by Medicare patients. As the cost of inpatient care rises for Medicare recipients, the payments to teaching hospitals rise as well.

Medicare primarily insures people older than 65, the disabled, and people with end-stage renal disease. Linking GME to Medicare has successfully trained generations of physicians to care for people insured by Medicare; more than 8 out of 10 practicing physicians accept patients insured by Medicare, almost identical to the rates of physicians accepting private insurance.

Medicare is a critical safety-net for our country, but a safety-net that favors the wealthier and whiter Americans who live longer and use more medical services. Medicare leaves many patients underserved and skews the kinds of physicians we train. It is, for example, difficult to train pediatricians because children rarely have Medicare.

Oddly enough, it also makes it difficult to train geriatricians. Teaching hospitals have broad latitude to use federal dollars for the training programs they desire. Trainees in a procedural specialty, like anesthesia or orthopedics, bring in more than double the amount of money generated by trainees in a non-procedural specialty like geriatrics or primary care. But teaching hospitals typically pay residents and fellows the same stipend for each year of training, regardless of specialty, financially incentivizing hospitals to train doctors in more remunerative specialties. Funding GME primarily through Medicare, a fee-for-service insurance system, is the flaw at the heart of our expensive health care system, leaving us with more specialists than primary care physicians. Our nation is short 26,980 geriatricians and, in less than ten years, is expected to be short as many as 55,200 primary care doctors as well.

So the line of patients keeps growing.

Instead of training future physicians on a fee-for-service model, where they learn to think about medicine as a consumer good and health care as the business which provides it to the insured, we should train future physicians to provide a community's essential services by shifting GME funding to Medicaid.

To be sure, Medicaid is well-known for lower reimbursement rates and more billing problems than Medicare. Many teaching hospitals would resist switching to Medicaid because of those lower reimbursement rates. States would also be reluctant to make the change because it requires their financial partnership. The change would be further resisted by many insurers because they prefer the fee-for-service model of Medicare.

But our health care system desperately needs reform, and all the resisters need physician trainees, so linking GME to Medicaid would enlist teaching hospitals, states, and insurers across the country in efforts to improve the administration of Medicaid — even in the 10 states that refused ACA Medicaid expansion. Alabama's 154 GME programs, Florida's 732, Georgia's 258, Kansas' 81, Mississippi's 86, South Carolina's 168, Tennessee's 247, Texas's 872, Wisconsin's 227, and even Wyoming's four rely upon federal support. Linking GME funds to Medicaid beds would encourage states to expand and improve Medicaid so they can retain their ability to train a physician workforce.

After all, Medicare was never meant to be the permanent source of GME funding. In its original 1965 legislation, it was intended as a stopgap until "the community undertakes to bear such education costs in some other way."

That some other way has arrived, and it is time for a third transformative expansion to Medicaid: tying it to graduate medical education.

Congress currently is considering two GME bills. The Resident Physician Shortage Reduction Act would expand federal funding for GME, and the Fairness for Rural Teaching Hospitals Act would alter some of the funding rules which disadvantage rural communities. Funding these, and all future, GME programs through Medicaid would advance Medicaid, the most cost-effective form of health care.

The medical students applying for our residencies right now are a bright, committed group; tomorrow's physicians. Physicians like us are teaching them clinical skills. We can also engage trainees to rebuild our safety net, to serve the patients waiting in line. Tying the federal teaching hospital support for graduate medical education to the number of patients with Medicaid, instead of hospital beds occupied by people with Medicare, would incentivize both Medicaid expansion and increase the provision of services to patients with Medicaid at our nation's teaching hospitals.

Residency determines what kind of physicians we have as a nation and where these physicians will practice. Tying GME to Medicaid would advance the how of medicine: access to physicians for all of us.

Abraham M. Nussbaum is the chief education officer at Denver Health and the author of "Progress Notes: One Year in the Future of Medicine." Renee Y. Hsia is professor and vice chair for health services research of the UCSF Department of Emergency Medicine, and a Paul & Daisy Soros fellow and public voices fellow of the OpEd Project.

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