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Reimbursement: A Picture is Worth 1000 Words

How Insurance Treats Your Physician

Reimbursement is how your physician gets paid by insurance. Some is paid by the patient, but most is paid by private insurance or programs like Medicare. But there is alot that we as patients don't know about the system of paying physicians and other practitioners or facilities.

Although Medicare was never meant to be used as a guide for private health insurance physician payment schedules, insurance companies and health plans have based their rates of payment on Medicare. No matter how much we pay for private insurance, their payment to physicians is either slightly above Medicare rates (for better insurance companies) or BELOW Medicare rates. It is not uncommon for some insurance companies to pay 10-20% LESS than Medicare.

Below are the Medicare reimbursement rate increases and decreases for 3 of the most common general surgical procedures (red line-bottom) as compared to the general cost of living increase over the same time period (blue line-top). Following is a Medicare rate table for these and other procedures showing the decrease in surgeon reimbursement. (Similar patterns occur in other specialties as well.) (I don't yet have a current chart of the past 3 years, but know surgeons are getting paid less for gallbladder surgery than Medicare paid 10 years ago.)

All charts below are used with permission of Robert Howisey, MD, FACS, a general surgeon inSeattle, who created them for a national conference.

The Pattern of Payment to Physicians for Services:

Cost of living rate (this is general cost of living and does not take into consideration increased practice expenses)

Medicare reimbursement rate to physician for procedure

Some Common Surgical Procedures:

Laparascopic cholycestectomy (gallbladder removal)






Partial Mastectomy



Inguinal Hernia Repair




Payment to Physicians has gone DOWN, while expenses go UP:

Reimbursement rate chart for Medicare

(These rates have continued to increase so that in 2006. Surgeons in Miami had rates of $277,000 per year and other parts of Florida, the low rate by the largest company was $143,000)

Malpractice insurance rates for physicians















You do the math!

Less coming in,
more going out . . .

Then, think about how this situation affects you, your physician and your healthcare.

(For more info, see Does Your Physician Charge Too Much?)

Take Action:
Related Resources and Actions:
Points for letters to insurance companies and state insurance commissioners (related to patient premiums and physician reimbursement--we will be adding ways to take action to address the malpractice issues)

Insurance Company Addresses or Links

Write Your Insurance Commissioner and/or Legislators About Insurance Concerns

As always, I welcome your constructive comments and suggestions about the material on this website and how we can all be most effective in co-creating the kind of healthcare system we all want.
E-mail me at
© Dawn Lipthrott, Ethical Health Partnerships, 2004

(May be copied and distributed as long as this identifying information is retained on copies.)

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