Health Practitioner Bonuses and Their Impact on the Availability and Utilization of Primary Care Services. 1. Impact of the Medicare Incentive Payment for Primary Care Providers (PCIP)

12/22/2014

Number of Medicare Providers:

  • Our estimates suggest that the number of Medicare providers with a PCIP bonus-eligible specialty and at least one PCIP eligible claim increased annually by about 2.8 providers per county per year due to the Medicare PCIP bonus policy. This represents a sizeable increase of almost 19 percent since there were about 15 providers per county per specialty per year under a PCIP bonus eligible specialty during the 2005-2011 period. When restricted to primary care physicians with a PCIP eligible specialty, the estimated increase in the number of physicians is approximately 10 percent in response to the PCIP policy (i.e., elasticity of the number of primary care physicians with respect to the payment is about 1).1

Evaluation & Management (E&M) Eligible Claims

The estimated impact of the PCIP policy on the volume of primary care services, measured by the volume of claims, is somewhat mixed.

More specifically, there were more PCIP eligible E&M claims submitted per provider in a particular claim type: 25 minute office visits for established patients. Specifically, on average, there was a 7 percent increase in the number of 25 minute office visits claims due to the PCIP policy. Thus, the implied elasticity of the number of 25 minute office visits with respect to the incentive payment is about 0.7. Hence, it appears that the PCIP may have induced a substitution toward slightly longer visits for established patients.

For PCIP eligible E&M claims in general, the estimates from the DID model indicate that, on average, primary care providers with PCIP-eligible specialties submitted fewer claims (per provider per year) related to PCIP-eligible E&M services in response to the Medicare PCIP policy.2,3

The positive impact of the PCIP bonus policy on the volume of E&M claims associated with 25 minute office visits for established patients is much stronger for providers near the PCIP eligibility threshold.4 For the primary care providers near the PCIP eligibility threshold, there was almost a 15 percent increase in the number of claims for 25 minute visits due to the PCIP policy.

Allowed Charges for E&M Services

  • We estimated no significant incentive payment impact on allowed charges per provider for the full sample of providers. However, for the sample of providers who were near the PCIP eligibility threshold in 20095, we found that per provider charges increased by about $5,611 annually in response to the policy. This estimated effect represents about 9.3 percent of the mean allowed charges ($60,235) per provider per year (i.e., the implied elasticity of allowed charges, which do not include the bonus payment, with respect to the payment is about 0.93).


1 The increase in the number of physicians with a PCIP eligible specialty attributable to the policy is about 2 per county per year. This is almost 10 percent of the average number of primary care physicians in a given PCIP eligible specialty per county per year (average is almost 19). Therefore, given that PCIP policy provides 10 percent incentive payment, the implied elasticity of the number of physicians in PCIP eligible specialty with respect to the payment is about 1.

2 Not all primary care providers are eligible for Medicare primary care incentive payments. In summary, primary care physicians (with internal medicine, family practice, pediatrics and geriatrics specialty) who have at least 60 percent of the practitioner’s allowed charges under the Medicare physician fee schedule (excluding hospital inpatient care and emergency department visits) are for primary care services. The PCIP eligible primary care services are defined by specific E&M codes. Medicare PCIP is also provided to physician assistants, nurse practitioners and clinical nurse specialists who also meet the similar eligibility criteria.

3 Note that total eligible claims increased. Claims per provider declined potentially because additional providers were induced to submit eligible claims.

4 For the purpose of our analysis we consider the primary care physicians (with the PCIP eligible specialty) who have 50 percent-65 percent of their services for PCIP eligible E&M services (defined by specific E&M codes) to be near the eligibility threshold. We apply the similar method to select non-physicians (physician assistants, nurse practitioners and clinical nurse specialists) near the eligibility threshold.

5 The determination of the eligibility of providers in the first year (2011) of the PCIP is based on the extent of their PCIP eligible services in 2009. Besides, the announcement of the PCIP program was made in 2010. Thus, we assumed that the providers with Medicare PCIP eligible specialties would be potentially responsive to the PCIP program as early as year 2010 and alter their behavior. Subsequently, it is more meaningful to examine providers who were near the PCIP eligibility threshold in 2009 which is the year just before the policy effect is expected to influence.

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