Physician compensation methodology is the engine that drives recruitment, retention, regulatory compliance, and organizational culture in medical group practices. Yet how often that engine gets a tune-up varies dramatically across the industry.
An April 21, 2026, MGMA Stat poll asked medical practice leaders how often their organizations formally review physician compensation methodology. Most groups (75%) do these reviews either annually (37%) or every two to three years (38%), while about one in four (25%) report they’ve had no update in three or more years. The poll had 258 applicable responses.
What you told us
- Most respondents with annual reviews describe them automatic or scheduled, often tied to a set time of year such as year‑end or January. When reviews are triggered rather than automatic, the most common drivers are market data, strategic planning, retention concerns, production changes, and equity issues with new hires. Only a small minority noted the process is informal or ad hoc rather than consistently structured.
- In groups reviewing comp every two or three years, leaders said they are most often focus on updating productivity measures, frequently paired with quality metrics and benchmarking against current market data. Many also revisit base comp, incentive structures, call coverage, and panel or access measures.
- Among groups without a formal review in over three years, leaders most often said they would first change base comp or productivity measures, with access and quality also cited but less frequently. Several respondents emphasized a desire for greater fairness or clarity in the formula, even while acknowledging the difficulty of defining it. A notable minority said they would change nothing, expressing satisfaction with their current productivity‑based models and strong physician understanding and buy‑in.
The spread in review frequency can reflect differences in organizational size, ownership structure, specialty mix, and governance. But regardless of where your practice falls, physician compensation is shifting faster than ever, and practices that delay reviewing their plans risk falling behind.
Why review frequency varies across medical groups
Not every medical group is positioned to conduct an annual compensation review. An April 2025 MGMA Stat poll found that only 36% of medical group practices have a dedicated team or committee for physician compensation decisions, while 61% do not. In those organizations, compensation decisions typically fall to the CEO, physician owners, or the board — leaders juggling many other operational priorities.
Ownership type is a major differentiator. In private practices, compensation is often determined collaboratively between physician owners and administrators, with reviews tied to annual financial performance. Hospital- and system-owned clinics are most likely to have dedicated compensation committees with physician leaders, compensation specialists, and compliance officers evaluating and updating models on a regular cycle. Mid-sized groups tend to fall somewhere in between, with executive teams and finance departments overseeing strategy.
Practice size and specialty mix matter as well. A small single-specialty group with a straightforward productivity model may not feel the same urgency as a large multispecialty organization navigating complex blended formulas. Rural practices may defer reviews due to tighter administrative budgets. And governance plays a role: a 2024 MGMA poll found that 60% of medical group leaders said their physicians participate in developing compensation methodology, down from 67% in 2019. Where physicians are actively engaged, reviews become a natural part of the governance cycle.
Why regular reviews matter more than ever
Compliance and fair market value: Physician compensation plans must comply with the Stark Law, the Anti-Kickback Statute, and fair market value (FMV) standards. A February 2026 Medical Economics analysis emphasized that compensation grounded in FMV provides the foundation for managing provider cost and maintaining regulatory compliance. Outdated plans that no longer reflect current market data can create significant legal exposure. Organizations that go three or more years without a formal review are essentially betting the regulatory environment has remained static — a bet that rarely pays off.
Operational alignment: The compensation landscape is undergoing structural transformation. According to MGMA DataDive Provider Compensation data, the share of physicians compensated under pure 100%-salary or 100%-productivity models fell from 44.46% in 2020 to just 24.86% by 2024. Compensation methods incorporating quality metrics rose from 26.08% to 38.28% over the same period. The 2024 mean allocation data show that straight base salary accounts for about 62% of primary care physician compensation, with productivity at roughly 28% and quality and patient experience elements at nearly 5%. A plan designed around pure wRVU production several years ago may be badly misaligned with how compensation is structured today.
Recruitment and retention: Our 2025 data report highlighted that guaranteed compensation for newly hired physicians out of residency and fellowship grew substantially in 2024, with surgical specialist starting salaries increasing nearly 12% in one year and roughly 31% over five years. Physician shortages are projected to range from 13,500 to 86,000 by 2036, with nearly half of practicing physicians over 55. Groups that haven’t benchmarked recently may find their packages are no longer competitive.
Clinician satisfaction and culture: Provider morale around compensation is trending downward. Multiple 2025 surveys found that physician perceptions of fair pay have fallen to their lowest levels in a decade, with a growing share of doctors exploring outside work or early retirement. Transparent, regularly reviewed compensation plans build trust and reduce the dissatisfaction that leads to attrition.
Major shifts in compensation methods and market forces
The ongoing shift toward value-based care is reshaping how physicians are paid. MGMA polling in January 2025 found that 80% of practice leaders had a positive or neutral outlook for value-based care, with 44% expecting government payer VBC programs to be the biggest area of change. As practices layer quality, patient experience, and shared savings metrics into compensation formulas, plans need regular recalibration.
CMS’s 2026 Medicare Physician Fee Schedule introduced a new efficiency adjustment that reduces work RVUs for most non–time-based services by 2.5%. Physicians performing the same clinical work may see their wRVU-based compensation drop — not because they are less productive, but because CMS revalued the measurement. Forward-looking organizations are already “shadowing” 2026 wRVUs to 2025 values for internal purposes or adjusting conversion factors to avoid unintended pay reductions.
The growing role of advanced practice providers adds another dimension. MGMA data show primary care PA compensation rising nearly 30% over five years and primary care NP compensation increasing 20% over the same period. Practices that haven’t updated their frameworks to reflect the expanding role of APPs may face internal equity issues. Meanwhile, AI tools are beginning to automate wRVU attribution, forecast compensation scenarios, and identify retention risks, supporting more data-informed compensation designs in larger systems.
Taking the next step: Building a robust review process
If your organization hasn’t formally reviewed its physician compensation plan within the past year, now is the time to start.
- Establish clear ownership: Whether it’s a dedicated committee with physician leaders and compliance officers, or a smaller C-suite working group, assign responsibility for compensation review and set a recurring cadence — monthly or quarterly for larger organizations, at minimum annually for smaller groups.
- Benchmark against current data: Use trusted, federally recognized sources like MGMA DataDive Provider Compensation to compare your packages against peers by specialty, ownership type, region, and practice size. This is the foundation for demonstrating FMV and commercial reasonableness.
- Quantify regulatory impacts: With the 2026 CMS efficiency adjustment affecting wRVU values, run a specialty-by-specialty analysis using actual CPT code mix to determine whether your thresholds and bonus structures need recalibration.
- Engage physicians and simplify: Physician input through committees, surveys, or strategic planning fosters trust and ownership. At the same time, straightforward plans that are easy to explain and monitor promote transparency and flexibility across career stages.
- Document everything: Maintain thorough records of your review process, benchmarking data, and the rationale behind decisions. Documentation is crucial for compliance audits and demonstrates a culture of diligence.
The bottom line
The pace of change — from the rise of quality-based incentives and the decline of pure productivity models to CMS payment reforms, APP workforce growth, and emerging AI tools — means that a compensation plan designed even two or three years ago may already be out of step. Regular, formal reviews are an operational and compliance necessity.
As MGMA consulting expert Jessica Minesinger, CMOM, FACMPE, has advised: review provider compensation data and benchmarks annually, audit and update compensation with collaboration and feedback from providers, and emphasize transparency as a cornerstone of equitable pay. Your organization’s competitiveness, regulatory standing, and physician culture depend on it.
Join the conversation
- MGMA Stat polls are conducted weekly to give medical practice leaders a pulse on the latest trends in healthcare management. To participate, sign up for MGMA Stat at mgma.com/mgma-stat.
- Have a success story in physician compensation model updates? Let us know in the MGMA Member Community or email us at connection@mgma.com.
