Medicare payments for physician services are significantly higher when billed by hospitals than by independent practices. According to a study of Medicare claims from 2010 through 2016 in "Health Services Research":

• Payments billed by hospitals were an average of $114,000 per doctor per year higher.
• Medicare revenue for outpatient services billed by physician offices would have been 80 percent higher if they had been billed by a hospital outpatient department.
• The average bundle of Medicare services performed annually by physicians not employed directly or indirectly by a hospital was worth $141,000 if billed by an office and $240,000 if billed by a hospital.
• The payment differential between hospitals and private medical offices varied markedly by specialty. The payment gap was $63,000 for primary care physicians, $178,000 for medical specialists and $150,000 for surgeons.

The main reason for these large payment differences is that Medicare pays hospitals both a physician fee and a facility fee for each service, while private practices receive only physician fees. Although the professional fees are a bit lower in hospitals, the facility fees more than make up for the difference, and the total payments to hospitals are reflected in higher physician salaries and bonuses.