The Economic Exploitation of Independent Physicians by Insurers

Stranded in the market – independent physicians are surrounded by insurer sharks.

Imagine you’re a full-time ride-share driver. You just bought a new car, insured it for commercial use, and rearranged your life around peak demand hours. A few months in, the ride-hailing platform slashes your per-ride pay by 50% percent. You’re technically “free” to quit, but, practically, you’re trapped. Your car payment, insurance, and your rent don’t vanish because the company single-handedly changed the rules to squeeze more profit from your work.

Independent physicians, especially those in primary care, live a strikingly similar reality. They invest years in education and training before taking on the substantial costs of running a practice: rent, staff salaries, electronic health records, and equipment. They also hold the responsibility of caring for thousands of patients who depend on access and continuity of care. Then commercial health insurers present contract “offers” at 50% percent of already inadequate Medicare rates, treating the exchange as a “negotiation.” On paper, doctors can walk away. In practice, they can’t. The fixed costs, patient commitments, and limited commercial payer alternatives mean they must accept unsustainable rates or risk dismantling the practices their communities rely on.

At first glance, this might seem implausible. We are accustomed to hearing about health systems that command 200-300% of Medicare rates from commercial payers just to “stay afloat.” Yet the story is very different for independent physicians. When I worked as a strategic advisor to an innovative company delivering holistic preventive care to women, we encountered a large, for-profit insurer in a major U.S. state offering just 40% of Medicare (with a straight face, mind you!). The final offer (which we ultimately declined) wasn’t much higher. For context, this translates to roughly $40 for a typical 30-minute office visit (CPT 99213 – moderate complexity). It equates to a payment to the physician of approximately $40 while the average practice costs about $300 per hour to operate. Forty dollars might cover a coffee and bagel run for the staff but certainly not the cost of care delivery.

Across the country, these low commercial reimbursement rates for independent primary care physicians are widespread. Here are examples of median practice-level commercial payments for CPT 99213, as a percentage of Medicare, in several states:

• New York: 56.0%

• California: 67.8%

• Florida: 72%

• North Carolina: 80.8%

• Alabama: 84.9%

• Tennessee: 88.5%

These translate to reimbursement per visit that isn’t even close to breaking even.

Is it any surprise that fewer trainees choose primary care and that many established physicians are retiring early or leaving medicine altogether? If these trends continue, we are facing a projected physician shortfall of 80,000–90,000 by the late 2030s.

While many factors contribute to this crisis, the systematic devaluation and economic exploitation of independent physicians by insurers is a major - and addressable - driver.

Policy Actions to Restore Fairness

Here are two structural remedies that policy makers at the state and federal levels should consider.

1. Establish a minimum payment floor for independent physicians
   The AMA has explored this concept but determined it was not compatible with its existing positions. But given the current market failure, in which insurers and large hospital systems hold monopoly power and generate record corporate profits while income for independent physicians stagnate, this solution warrants renewed consideration. Commercial payers should be required to reimburse physicians at fair, transparent levels based on established benchmarks like Medicare rates, with geographic cost adjustments.
   

2. Modernize network adequacy standard for primary care
   Insurers can underpay independent physicians precisely because outdated standards allow them to claim “adequate networks” and therefore have minimal incentive to add new ones. Traditional time and distance standards are decades old and ignore the real-world shortage of available primary care access. Many physicians have closed their practices to new patients (or severely limit them), are retiring, or have excessively long wait times to get an appointment. Across the U.S., the average new-patient wait times now exceed 31 days and are rising. Network adequacy should account for actual appointment availability and active patient panels. Regulators could also require insurers to admit any qualified independent clinician into their networks at fair rates. I am not suggesting that primary care physicians are worse off than ride-share drivers. But when the people who we entrust with our health and well-being face similar exploitation (and are subjected to the same churn, instability, and one-sided terms), it signals a deeper market failure. The gig-ification of medicine should alarm us all.

3. Accelerate the transition to advanced payment models

   Provide physician practices with more predictable funding and real financial upside for improving outcomes. In these models, practices are rewarded for keeping patients healthier and reducing avoidable hospitalizations, not just for delivering more visits and procedures. By contrast, many payers are simply cutting baseline fee-for-service rates, then offering physicians the chance to earn some of that money back through bonuses and calling it “value-based care.” That approach is unsustainable and effectively becomes a race to the bottom for primary care reimbursement (and a profit-making machine for insurers).

Exhibit: Commercial reimbursement rates for independent primary care physicians for a Level III Evaluation and Management (E&M) office visit.

Data is from the 2025 CMS Transparency in Coverage dataset. Filtered for independent primary care physicians. Median rates displayed. The red line is the reference Medicare reimbursement rate.

Seth Glickman, MD, is a former insurance and health system senior executive. He now is a researcher and advocate for reform in the health care finance space.