Health Practitioner Bonuses and Their Impact on the Availability and Utilization of Primary Care Services. 3. Impact of PCIP Policy on Allowed Charges for E&M Services

12/22/2014

The estimated effect of the PCIP policy on the allowed charges associated with the E&M claims is, in general, positive and statistically significant (Exhibit 16). While we estimate no significant policy impact on charges for our full sample of providers (Model 1), we do find a significant policy effect when we restrict the sample to those providers most likely to change their behavior in response to the PCIP, i.e., the providers that were near eligibility. More specifically, for the sample of providers who were near the PCIP eligibility threshold in 2009 (i.e., Model 3), the estimated coefficient of the interaction term in the last column of Exhibit 16 shows that in response to the Medicare PCIP policy on average the allowed charges of primary care providers with a PCIP eligible specialty increased by about $5,611. The estimated effect represents about 9.3 percent of the mean allowed charges ($60,235) per provider per year for the providers with PCIP eligible specialties who were near the eligibility threshold in 2009. This estimated effect on the allowed charges in response to a 10 percent Medicare PCIP program suggests an implied elasticity of the allowed charges per provider per year with respect to the payment is about 1 (i.e., 9.3%/10%). The effect is smaller if we restrict the sample to all the providers who submitted E&M claims under Medicare in all seven years. The mean allowed charges per provider per year for these providers were $51,016. Thus, due to the Medicare PCIP policy they experienced an additional 5.6 percent increase ($2839/$51,016) in allowed charges. One caveat surrounding these results is that since the actual Medicare payment may be smaller in magnitude compared to the allowed charges, the increase in actual Medicare payments may be lower than our estimated increases in allowed charges.

Exhibit 16: Impact of Medicare PCIP Policy on Allowed Charges for PCIP Eligible E&M Claims (2005-2011)


Dependent Variable: Allowed Charges for PCIP Eligible E&M Claims per Provider (E&M Payments)

Analysis Sample

(1)

 

E&M Charges

(2)

 

E&M Charges (Providers in All Years)

(3)

 

E&M Charges (Near Eligib. '09)

PCIP Elig. Specialty Indicator

7474.1* 1138.2 751.8
(1077.6) (1583.2) (1047.5)

Elig. Specialty Ind x Post 2009

59.44 2839.3* 5610.9*
(132.8) (176.9) (420.6)

Post 2009

828.5* 1209.0* 2418.0*
(183.5) (232.7) (212.0)

Age

550.1* 409.9* 123.4*
(3.093) (4.324) (3.721)

Male

11067.6* 13157.1* 6103.1*
(68.97) (87.80) (80.71)

Urban

-1043.5* -1509.7* -1971.9*
(111.6) (138.9) (139.4)

Median Income ($10k)

867.8* 1273.7* 978.7*
(61.78) (78.72) (71.47)

Percent in poverty

-247.3* -180.4* 134.3*
(14.70) (18.62) (17.50)

Population (10k)

-2.646* -3.481* -0.464
(0.322) (0.416) (0.384)

Percent Population over 65

1242.7* 1419.4* 1215.0*
(17.64) (21.77) (21.70)

Unemployment Rate

1217.5* 1592.8* 756.7*
(29.98) (38.69) (36.32)

Primary Care Phy./pop10k

-7.423* -7.227* -14.33*
(0.503) (0.703) (0.952)

PC Non-phy./pop10k

-34.12* -48.36* -17.18*
(1.082) (1.629) (1.540)

Intercept

-37177.8* -33786.2* -15834.7*
(1292.7) (1814.7) (1320.8)
Specialty Fixed Effects Yes Yes Yes
Year Fixed Effects Yes Yes Yes
State Fixed Effects Yes Yes Yes
N 2,014,835 1,397,760 746,845
Adj. R-sq. 0.222 0.246 0.367

Note: Robust standard errors are in parentheses; + significance at 10 percent; * significance at 5 percent.

So far, we have found that the PCIP program resulted in increased allowed charges for E&M services per provider despite some decline in the corresponding number of E&M claims. We have already discussed that one potential reason for the decline in the average volume of claims could be due the increase in the number of providers under PCIP eligible specialties that can be specifically attributed to the PCIP policy. However, the question still remains regarding a shift in the composition of services that may have resulted in increased allowed charges or payments despite the decline in the number of claims per provider.

In order to gain a deeper understanding of this issue we estimate the impact of the Medicare PCIP policy on each key component of E&M services (Exhibit 17). More specifically, we examine the impact of the policy on the volume of claims associated with services for new patients, established patients, and E&M claims for all other services. E&M claims associated with services for established patients account for more than 80 percent of all the E&M claims (and allowed charges) submitted by providers with PCIP eligible specialties.1 Furthermore, 15 and 25 minute visits account for 40 percent and 30 percent of all E&M claims for established patients, respectively. Moreover, the 25 minute visits account for a slightly higher share of allowed charges, i.e., 38 percent, relative to 34 percent for 15 minute visits.

In Exhibit 17, we present the estimated impact of the PCIP on the average number of E&M claims per provider, for three relevant samples of providers. We find that the introduction of the Medicare PCIP policy reduced the average number of E&M claims submitted for both new and established patients. The estimated impact suggests that, on average, the number of E&M claims per provider for 15 minute visits declined by an additional 46 among PCIP-eligible providers compared to non-eligible providers. Similarly, results using the sample of all providers suggest that E&M claims per provider for 25 minute visits increased by an additional 13 among PCIP-eligible providers compared to non-eligible providers. When we restrict the sample to providers near the PCIP eligibility threshold in 2009, the decline for E&M claims for 15 minutes visits due to PCIP policy is about 57 claims; while the E&M claims associated with 25 minute visits increased by about 42 claims due to the PCIP policy.

Exhibit 17: Estimated Impact of Medicare PCIP Policy on the Number of PCIP Eligible E&M Claims (2005-2011)

Estimated coefficient of variable "Elig. Specialty Ind x Post 2009" from each DID Model

Dependent Variable

Analysis Sample

All Providers in All Years Providers Near Eligibility ‘09
All E&M Claims -51.73* -36.96* -32.59*
New Patient Claims -13.54* -15.91* -11.72*
Established Patient Claims -35.25* -20.91* -22.24*
Other Claims -2.941* -0.150 1.369
Claims by Duration (Minutes)      
New Patient Visits      
10 0.0673* 0.0850* 0.0551*
20 0.160* 0.0269 0.209+
30 -5.102* -5.894* -4.607*
45 -7.697* -8.930* -6.854*
60 -0.966* -1.194* -0.528*
Established Patient Visits      
5 -3.926* -3.621* -6.227*
10 1.611* 1.702* -2.487*
15 -45.54* -47.16* -56.49*
25 12.57* 26.79* 41.55*
40 0.0347 1.382* 1.417*

Note: Robust standard errors are in parentheses; + significance at 10 percent; * significance at 5 percent.

The above findings raise the question of whether the policy-induced net decrease in the number of E&M claims will be reflected in the corresponding allowed charges. To answer this question we estimated the potential impact of the PCIP policy on the allowed charges associated with the each component of the E&M claims (Exhibit 18).

The estimated impact of the PCIP policy on allowed charges associated with 15 minute visits for established patients suggests that, on average, the policy additionally reduced the total allowed charges by about $1,577 per provider per year after 2009. However, the estimated policy induced reduction in allowed charges is smaller for providers near the PCIP eligibility threshold, i.e., a reduction of about $602.

Moreover, the PCIP policy additionally increased the total annual allowed charges by about $2,740 per provider, after 2009, for 25 minute visits for established patients. This is a substantial increase considering that providers with PCIP eligible specialties had about $15,217 in allowed charges per year for 25 minute visits for established patients. The impact is even larger once the sample is restricted to providers near the PCIP eligibility threshold: increase in total annual allowed charges by about $6,807, a 28 percent increase. Similarly, allowed charges associated with all E&M services for all established patients increased substantially, by about $6,544 or 12 percent, for providers near the PCIP eligibility threshold. In the case of all providers, the estimated increase in total annual allowed charges for established patients was $1,245 per provider. We find that the PCIP policy resulted in increased Medicare allowed charges across all providers with PCIP eligible specialties. This increase in allowed charges is likely to have also resulted in increased payments for these primary care E&M services.

Exhibit 18: Estimated Impact of Medicare PCIP on the Allowed Charges for PCIP Eligible E&M Claims (2005-2011)

Estimated coefficient of the variable "Elig. Specialty Ind x Post 2009" from each DID Model

Dependent Variable

Analysis Sample

All Providers in All Years Providers Near Eligibility ‘09
All E&M Payments 59.44 2839.3* 5610.9*
New Patient Payments -1910.9* -2206.5* -1602.4*
Established Patient Payments 1244.6* 3905.9* 6543.9*
Other Payments 725.8* 1140.0* 669.4*
Payments by Duration (Minutes)      
New Patient Payments      
10 0.951 1.407+ 0.706
20 -17.10* -28.91* -12.37+
30 -544.5* -620.3* -492.2*
45 -1184.5* -1359.4* -1033.1*
60 -165.8* -199.3* -65.51*
Established Patient Payments      
5 -75.15* -70.66* -122.3*
10 -34.12* -35.94+ -118.3*
15 -1577.2* -1095.2* -601.7*
25 2740.4* 4670.9* 6807.0*
40 190.6* 436.7* 579.2*

Note: Robust standard errors are in parentheses; + significance at 10 percent; * significance at 5 percent.


45 For the providers near the PCIP eligibility threshold, this share of E&M claims is almost 90 percent.

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