Health Practitioner Bonuses and Their Impact on the Availability and Utilization of Primary Care Services. A. Background

12/22/2014

Access to health care in underserved areas has been an ongoing source of concern among policy makers. A 2013 CRS report for the congress ("Physician Supply and the ACA" by E.J. Heisler) indicates that the expansion of health insurance coverage under the ACA is likely to stimulate the demand for primary care in general, and also in the underserved areas. HRSA designates certain underserved areas as primary care Health Profession Shortage Areas (HPSAs). These areas meet a defined threshold of physicians to population ratio.46 HPSA designations are currently limited to primary medical care HPSAs, dental HPSAs, and mental health HPSAs. In this section we focus on only primary care HPSAs. All non-federal Doctors of Medicine (M.D.) and Doctors of Osteopathy (D.O.) providing direct patient care and who practice principally in one of the four primary care specialties - general or family practice, general internal medicine, pediatrics, and obstetrics/gynecology - will be counted under the definition of primary care HPSA. As previously noted, since 1987, Medicare has been paying bonus payments, initially five percent, to physicians providing care in rural geographic HPSAs. In 1991 the bonus payment was increased to 10 percent and eligibility extended to services provided by physicians in urban geographic HPSAs. Thus, this particular form of bonus payment has been in place for almost 25 years. Although the HPSA bonus is available to non-primary care providers, such as dentists and mental health care providers, for the purpose of this study we focus only on primary care providers eligible for primary care HPSA bonus.

Section 413a of the Medicare Modernization Act put in place an additional 5 percent bonus payment for physicians practicing in Physician Scarcity Areas (PSAs)47. PSAs were those counties and rural zip codes in MSAs with the lowest physician to population ratios. These areas often coincided with geographic HPSAs so that physicians practicing in those areas received a 15 percent additional bonus payment during 2005-2008 when the PSA bonuses were in effect.

Some key points to note regarding the PSA bonus are the following:

  • Medicare paid the 5 percent PSA bonus on a quarterly basis, and the bonus was based on what Medicare actually paid, not the Medicare-approved payment amount;

  • The same service could be eligible for the PSA bonus and the HPSA bonus;

  • The payment was based on where the service is performed, not on the address of the beneficiary;

The PSA bonus was paid on services rendered on or after January 1, 2005 through June 30, 2008;

Only the physician designations of General Practice, Family Practice, Internal Medicine, and Obstetrics/Gynecology were paid the bonus for the ZIP code areas designated as primary care PSAs. All other physician provider specialties were eligible for the specialty PSA area bonus for the ZIP codes areas designated as specialty PSAs.48 Once again for the purpose of this study we focus only on the primary care physicians with PSA bonus eligible specialties.

Our main claims-level data includes a variable that indicates the location of each provider. Additionally, CMS provides the list of HPSA and PSA areas. In this section we review the PSA geographic areas and the extent of overlap with HPSAs. Physicians practicing in these overlap areas received a 15 percent additional bonus payment during 2005-2008 when the PSA bonuses were in effect.

In the exhibits below we present the distribution of primary care providers across HPSA and PSA areas. Due to limited data, we do not present provider counts for HPSA areas prior to 2007 while the PSA bonus was no longer in place after 2008. Moreover, we do not use data from 2011 for the DID analysis as it will include the confounding effect of Medicare PCIP.49 Although the PSA bonus does not apply to non-physicians, we report the number of non-physicians in PSA areas (in italics) for comparison purposes.

We consider only those counties that have a full rather than partial primary care HPSA designation. In 2011, we identified 1279 full HPSA counties covering 40 percent of the total US population. Exhibits 19 & 20 show the distribution of PCPs and 2011 PCIP recipients across HPSA and PSA areas over the 2005-2011 period.

 

Exhibit 19: Distribution of Primary Care (PC) Providers by HPSA and PSA Regions

 

2005

2006

2007

2008

2009

2010

2011

PC Physicians

Total %

Total

%

Total

%

Total

%

Total

%

Total

%

Total

%

All Providers

138,356 100

147,771

100

165,150

100

173,018

100

178,784

100

185,070

100

191,930

100

in HPSA*

x x

x

x

72,804

44.1

77,656

44.9

79,620

44.5

82,101

44.4

81,855

42.6

in PSA**

14,446 10.4

15,336

10.4

17,026

10.3

17,323

10

N/A

N/A

N/A

N/A

N/A

N/A

Both in HPSA & PSA

x x

x

x

6,267

3.8

6,461

3.7

N/A

N/A

N/A

N/A

N/A

N/A

PCIP 2011 Recipients

93,886 100

99,359

100

108,966

100

115,050

100

121,140

100

117,490

100

114,002

100

in HPSA*

x x

x

x

46,578

42.7

50,451

43.9

52,871

43.6

50,762

43.2

47,458

41.6

in PSA**

9,771 10.4

10,282

10.3

11,290

10.4

11,605

10.1

N/A

N/A

N/A

N/A

N/A

N/A

Both in PSA & HPSA

x x

x

x

3,927

3.6

4,143

3.6

N/A

N/A

N/A

N/A

N/A

N/A

PC Non-Physicians

All Providers

46,634 100

53,823

100

68,297

100

80,041

100

88,569

100

97,789

100

109,353

100

in HPSA*

x x

x

x

28,248

41.4

33,148

41.4

36,700

41.4

40,411

41.3

43,902

40.1

in PSA**

5,221 11.2

5,894

11

7,379

10.8

8,301

10.4

N/A

N/A

N/A

N/A

N/A

N/A

Both in HPSA & PSA

x x

x

x

2,919

4.3

3,270

4.1

N/A

N/A

N/A

N/A

N/A

N/A

PCIP 2011 Recipients

18,681 100

21,456

100

27,188

100

34,363

100

41,202

100

37,756

100

35,380

100

in HPSA*

x x

x

x

11,310

41.6

14,279

41.6

17,150

41.6

15,614

41.4

14,256

40.3

in PSA**

2,328 12.5

2,603

12.1

3,214

11.8

3,802

11.1

N/A

N/A

N/A

N/A

N/A

N/A

Both in PSA & HPSA

x x

x

x

1,273

4.7

1,527

4.4

N/A

N/A

N/A

N/A

N/A

N/A

Note: *HPSA includes only full HPSA areas (data from Area Resource File and HPSA status data are not available prior to 2007). **PSA status after 2008 is not applicable as 2008 was the final year of the PSA bonus.

Around 40 percent of all primary care providers supplied services in primary care HPSA counties while roughly 10 percent did so in PSA counties. The extent of overlap between these two designations amounts to approximately 3 to 4 percent of providers working in dual-designation areas. We do not observe important differences in these distributions between all providers and PCIP recipients. The same general observations apply to the two most represented specialties, i.e., family practice and internal medicine (Exhibit 20).

Exhibit 20: Distribution of the Number of Internal Medicine and Family Practice Physicians by HPSA and PSA regions

Practice Area 2005 2006 2007 2008 2009 2010 2011
Internal Medicine              
All Physicians 69,391 74,411 83,117 87,090 90,291 93,904 97,526
in HPSA* x x 38,011 40,382 41,411 43,461 43,188
in PSA** 5,428 5,770 6,390 6,521 N/A N/A N/A
in HPSA & PSA x x 2,304 2,372 N/A N/A N/A
PCIP 2011 Recipients 43,188 45,502 49,451 51,813 54,062 52,576 51,007
in HPSA* x x 22,166 23,824 24682 24113 22,537
in PSA** 3,423 3,585 3,915 4,009 N/A N/A N/A
 in PSA & HPSA x x 1,303 1,386 N/A N/A N/A
Family Practice              
All Physicians 61,438 65,205 72,247 75,132 77,536 79,891 82,298
in HPSA* x x 29,652 31,700 32,602 32,954 32,834
in PSA** 8,673 9,168 10,181 10,361 N/A N/A N/A
in HPSA & PSA x x 3,776 3,921 N/A N/A N/A
PCIP 2011 Recipients 48,448 51,377 56,622 59,902 63,227 61,584 59,931
in HPSA* x x 22,979 24,971 26,284 24,998 23,450
in PSA** 6,220 6,546 7,199 7,417 N/A N/A N/A
 in PSA & HPSA x x 2,561 2,695 N/A N/A N/A

Note: *HPSA includes only full primary care HPSA areas (data from Area Resource File and HPSA status data are not available prior to 2007). **PSA status after 2008 is not applicable as 2008 was the final year of the PSA bonus.

In the case of non-physicians, in 2008, around 40 percent were practicing in primary care HPSA areas (Exhibit B.8 in Appendix B). Nurse practitioners and physician assistants alike were distributed almost equally between shortage and non-shortage areas in 2008. The same is true whether we look across all providers or only 2011 PCIP recipients.


46 Health Professionals Shortage Areas (HPSAs) are based upon criteria set forth under Section 332 of the Public Health Service Act. HPSAs are defined to include 1) urban and rural geographic areas, 2) population groups, and 3) facilities with shortages of health professionals. HPSA designations are currently limited to primary medical care HPSAs, dental HPSAs, and mental health HPSAs; in the past, similar designations identified shortages in a wide vari­ety of health professions, including podiatry, pharmacy, and vet­erinary medicine (Salinsky, 2010). For primary care HPSAs, one of the following two conditions must prevail within the area: a) a ratio of population to full-time-equivalent primary care physician of at least 3,500:1; or b) a ratio of population to full-time-equivalent primary care physician of less than 3,500:1 but greater than 3,000:1 and an unusually high need for primary care services or insufficient capacity of existing primary care providers.

47 The expiration of the PSA bonus in 2008 was likely a result of Medicare expenditures being capped by law. In House Bill HR 6331 of 2008, the cut was equivalent to 10.6 percent. In order to avoid the 10.6 percent loss, PSA designations were allowed to expire, which automatically led to the expiration of the PSA bonus. Source: http://www.graham-center.org/online/etc/medialib/graham/documents/medicare-payment/ma.Par.0001.File.tmp/ma.pdf

48 Dentist, Podiatrists, Optometrists, and Chiropractors were not eligible for PSA bonus. Source: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HPSAPSAPhysicianBonuses/PSA.html. For zip codes that are not in CMS PSA zip code list the bonus payment cannot be made automatically. In these cases physicians have to check whether the county where service is provided is included in CMS PSA county list. If the county is included in the PSA county list then physicians need to include “AR” modifier in their claims to collect PSA bonus.

49 If a region switched its HPSA status in 2011 which is also the first year Medicare PCIP was available, econometrically it would be difficult to disentangle the effects of these two changes. The indicator variables showing change in HPSA status and availability of PCIP would be perfectly collinear.

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