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Most physicians can describe their compensation plan in general terms, but far fewer can explain exactly how the number on the paycheck is produced. In physician-owned practices, the question cuts twice - owners both set the plan and are paid by it.
Provider compensation is a paradox. It is highly regulated, formulaic and data-driven - and at the same time, it is someone's paycheck. Pay is personal. A compensation plan is one of the clearest statements a practice or healthcare organization makes about what work it values, what risk it will share, and how it expects physicians to practice. And the assumptions behind many plans have quietly shifted.
Something unusual happened in 2025. Median physician compensation continued to rise even as work RVUs fell in 16 of 23 common specialties, and total encounters declined in all 23, according to the MGMA 2026 Provider Compensation and Productivity Data Report. For years, production and pay moved together. When they separate, a plan built for yesterday’s production environment can keep calculating correctly while rewarding the wrong things.
The 2026 Medicare Physician Fee Schedule compounds this. CMS revalued roughly 7,700 non-time-based codes, so the same pay is now divided by fewer wRVUs. Compensation-per-wRVU ratios rise mechanically, even though nothing about the physician’s pay changed - which means benchmarks drawn from a revaluation year need to be read carefully before anyone calls a rate “at market.”
The good news is these are challenges with solutions. Across Michigan and nationally, hybrid models - a stable base plus incentives for productivity, quality, access, call and supervision - have become the practical answer for most groups. Physicians and practice leaders who understand which benchmarks were used, how conversion factors were set, and how expenses are assigned are far better equipped to design, implement, and advocate for fair, transparent and sustainable compensation.
Read the full article.
Source: Medical Group Management Association, one of TPA's Affiliate Partners, helps practices develop and manage provider compensation, revenue cycle optimization and more. To learn about TPA member discounts and schedule a free consultation, contact Jessica Minesinger, FACMPE, BBCC at JMinesinger@MGMA.com, (937) 210-9888.
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