10 specialties that charge the biggest markups over Medicare prices
Key Takeaways
Private insurers tend to pay physicians substantially higher rates than Medicare for the same services. But those markups are not the same for every physician. Some medical specialties receive much higher reimbursements than others.
A study, published by the Urban Institute in October, examined the variation across physician specialties in commercial markups over Medicare prices for professional services, and found significant disparities. Researchers used data from a private health insurance claims database covering more than 150 million people nationwide, collected from March 2019 to February 2020. Among the 17 specialties included in the study, researchers found that some tended to receive very low commercial markups, while others received up to 330% more than Medicare rates.
Which specialties are raking it in, and which are receiving a much smaller share?
Who’s at the top and who’s at the bottom?
While studies indicate that, on average, commercial-to-Medicare payment ratios sit between 1.2 and 1.4 for physician services overall, the new study found that some specialties receive a much higher ratio over Medicare prices.
The following are the top 10 specialties that charge the most over Medicare prices, by average percent markup:
Anesthesiology: 330%
Emergency and Critical Care: 250%
Neurosurgery: 220%
Radiology: 180%
Orthopedics: 150%
Surgical and Radiation Oncology: 140%
General Surgery: 140%
Urology: 130%
Cardiovascular Surgery: 130%
Cardiology: 130%
These are the five specialties found to receive an average commercial payment that was closest to Medicare prices (from lowest to highest):
Dermatology: 90%
Psychiatry: 110%
Ophthalmology: 110%
Obstetrics and Gynecology: 110%
Family Medicine: 110%
Researchers referred to these specialties as “only modestly higher” than Medicare rates. However, regarding the specialties that receive significant markups, authors note that the study’s findings have “important implications for debates over physician payment reforms, including public option and single-payer policy debates, as well as Medicare payment reform.”
Why the discrepancy?
A closer look at the study results reveals a slightly more complicated picture. For example, researchers found that these commercial-to-Medicare payment ratios varied by state. In Pennsylvania, these ratios averaged 1.2, while in Wisconsin they averaged 2.6. Researchers hypothesized that this may reflect differences in the physician market structure of different states, including in the distribution of practice sizes, ownership, and market shares.
Authors noted that the highest-paid specialists may be “must-have providers” in an insurer’s network because of reputation, lack of competition, or other factors. Past research has also shed some light on the particulars of some of these medical specialties. For example, one study cited by authors found that insurers tend to include most anesthesiology groups in their networks because patients can’t choose these providers, leaving anesthesiologists with substantially more negotiating power than others—hence the 330% mark-up.
Bottom line
Authors concluded that policy proposals that aim to use Medicare rates as the target for commercial payments face serious opposition. This is primarily because many specialties would see a payment reduction under such proposals. However, authors point out that most primary care physicians (including those specializing in internal medicine, family medicine, or obstetrics and gynecology) already receive payments that are close to Medicare prices. In fact, some specialties (like dermatologists) would see a payment increase if policy was reformed in this way.
Authors also posit that raising Medicare rates for certain services (like evaluation and management) could lead to better patient outcomes by incentivizing preventive care, chronic care, and primary care services.
Of course, payment reductions for some specialties could lead to patient access issues. However, authors also wrote that “narrowing the payment disparity between primary care and other specialties, improving access to primary care, and reducing health system costs will require physician payment reforms aimed at all payers.”
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