9% CMS pay cut for physicians in 2022, practice costs on the rise

CMS plans to cut physician pay by 9 percent in 2022, while costs to run an independent practice continue to rise.

Since 2001, the cost of running a medical practice has increased 39 percent, but CMS has only increased pay for physicians by 11 percent, according to the American Medical Association. As a result, when adjusting for inflation in practice cost, Medicare physician pay dropped 20 percent over the past two decades.

Over the same time period, Medicare updated hospital pay by 60 percent.

The disparities in pay growth by CMS is a contributing factor to the decline in the number of physicians who are in private practice. Around 70 percent of physicians are employed by hospitals or corporations, up from 62.2 percent in January 2019, according to a July report from consulting firm Avalere Health. The pandemic drove increased consolidation over the past year, with both corporate entities and health systems purchasing independent physician practices and groups at a higher rate than before COVID-19 hit.

Early career physicians are also signing employment contracts at higher rates than previous generations. Around 55 percent of physicians aged 55 and older were in private practice last year, while the same was true for one-third of physicians under 40 years old, according to the American Medical Association.


Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Learning Opportunities

Featured Webinars

Featured Whitepapers

Featured Podcast