Health Practitioner Bonuses and Their Impact on the Availability and Utilization of Primary Care Services. C. Impact of the HPSA Bonus on Primary Care Supply

12/22/2014

Access to health care in shortage areas has been an ongoing source of concern among policy makers. Expansion of health insurance coverage through the implementation of the ACA is likely to stimulate the demand for primary care in general, and specifically in these shortage areas. HRSA designates these shortage areas as primary care Health Profession Shortage Areas (HPSAs) using a defined threshold of primary care physicians to population ratio. The HPSA bonus has been in place since 1987 and since 1991 the bonus payment remained at 10 percent of the fees associated with the bonus eligible Medicare claims.50

In the absence of any variation in the HPSA bonus percentage in the recent past, we rely on the change in the primary care HPSA status of different counties in the US over the period between 2007 and 2010. In other words we rely on the variation in HPSA status over time and across counties to identify the effect of the policy. We detail the econometric model and exact interpretation of estimated coefficients in Appendix C.2. Our analysis of the Area Resource File indicates that 205 U.S. counties gained primary care HPSA status during 2007-2011 while 257 counties lost their HPSA status.51 Subsequently, we analyze the changes in the outcomes of interest among primary care providers over time due to changes in the county’s HPSA status during this period. It is important to note that although HPSA bonus applies to physicians generally, in this section we only focus on primary care physicians with primary care HPSA bonus eligible specialties described earlier. The primary outcome variables that we analyzed to identify the changes in physicians’ practice behavior are the volume of primary care services and total Medicare allowed charges associated with those services, as captured in Medicare claims data. In this framework we have assumed that the HPSA status of an area is exogenous to an individual provider’s decision to serve a certain number of patients or provide a given volume of services or any other individual-level outcomes. However, the HPSA status of an area may not be exogenous in models where the outcome of interest is the number of providers relative to the size of population in a given geographic area, at the aggregate level. This is specifically due to the fact that the HPSA status is designated based on the physician- to-population ratio in the area as a whole.

The coefficient of the interaction term between the county primary care HPSA status indicator (HPSAPC) and the indicator of whether the county ever gained the HPSA status shows the additional impact of HPSA status on the average number of claims per physician in column 1 (or payments in column 2) in the counties that ever gained the HPSA status (full model specification detailed in Appendix C.2.). As shown in Exhibit 23, we found that on average Medicare physicians with primary care specialties who are located in counties that ever gained the HPSA status tend to have about 17 more E&M claims submitted annually specifically due to the gain of full HPSA status. The effect is statistically significant at 10 percent significance level. On the other hand, the loss of HPSA status does not seem to have any statistically significant impact on the number of E&M claims.

Exhibit 23: Impact of HPSA Bonus on the Number of E&M Claims and Allowed Charges per Physician under Medicare, 2007-2010


 

Number of E&M Claims per Physician(1)

Allowed Charges for E&M Claims per Physician ($)(2)

County HPSA PC Indicator (HPSAPC)

-43.86*

-3024.5*

(2.500)

(172.1)

Ever Gained HPSA Status Indicator (ToHPSA)

-39.91*

-2593.4*

(6.900)

(459.3)

Ever Lost HPSA Status Indicator (ToNonHPSA)

-61.22*

-5149.6*

(6.772)

(467.3)

HPSAPC*ToHPSA

17.41+

407.0

(9.500)

(649.1)

HPSAPC*ToNonHPSA

11.37

1380.4*

(8.005)

(550.6)

Age

12.68*

854.4*

(0.0845)

(5.927)

Male

192.7*

13136.8*

(1.645)

(120.8)

Urban

-41.87*

-616.7*

(3.324)

(222.0)

Median Income ($10k)

-6.798*

1034.7*

(1.636)

(116.2)

Percent under poverty

-5.469*

-300.3*

(0.416)

(28.38)

Population (10k)

-0.116*

-3.253*

(0.00808)

(0.591)

Percent Population over 65

21.29*

1544.7*

(0.481)

(33.61)

Unemployment Rate

20.43*

1650.1*

(0.803)

(56.55)

Primary Care Phy./mcarepop10k

-0.00218

4.187*

(0.0126)

(0.881)

PC Non-phy./mcarepop10k

-0.951*

-68.78*

(0.0362)

(2.535)

Intercept

-594.3*

-57891.4*

(20.07)

(1384.6)

Specialty Fixed Effects

Yes

Yes

Year Fixed Effects

Yes

Yes

State Fixed Effects

Yes

Yes

N

743,907

743,907

Adj. R-sq.

0.188

0.184

Note: Robust standard errors are in parentheses; + significance at 10 percent; * significance at 5 percent. The sample is restricted to only providers with HPSA eligible specialty: family practice, internal medicine, pediatrics and OB-GYN.

Next, we focus on the impact of primary care HPSA status on the Medicare allowed charges per physicians associated with E&M claims (Exhibit 23, column 2). Column 2 indicates that Medicare primary care physicians who are located in counties that ever gained HPSA status do not experience significant changes in annual allowed charges per physician for E&M claims specifically due to the gain of full HPSA status. However, Medicare physicians with primary care who are located in counties that ever lost HPSA status tend to have about $1,380 more allowed charges annually when the location has the full HPSA status. This effect is statistically significant at 5 percent significance level.

For our analysis of the impact of HPSA status on the volume of services in terms of E&M claims, we focused only on the behavior of primary care physicians. We found that on average Medicare primary care physicians tend to submit about 17 more E&M claims annually specifically due to the gain of full HPSA status. This may suggest that HPSA bonus may encourage primary care providers to increase access to primary care services. In addition, based on our analysis of allowed charges for E&M Services, we find that the Medicare primary care physicians who are located in counties that ever lost primary care HPSA status tend to have about $1,380 more allowed charges annually before the location lost full HPSA status. Thus, gaining HPSA status is also associated with gain in additional earnings for primary care physicians. Hence, our analysis finds supportive evidence that HPSA bonus may improve access to primary care services in shortage areas.

Finally, when the outcome of interest is the PCP to population ratio at the county level, relying on the change in primary care HPSA status as the primary source of variation to identify an effect of HPSA status poses additional estimation challenges. The phenomena that cause decision makers to change the status may be highly correlated with our outcome of interest. In this sense, the HPSA status would be an endogenous variable in the regression model where the outcome of interest is the number of primary care providers per county. Specifically, this endogeneity problem may bias the effect of HPSA status on the number of primary care physicians toward zero. One potential way to circumvent the issue of endogeneity of the HPSA status above would be to use the instrumental variable (IV) approach. The IV approach relies on the identification of variables, i.e., instruments, that would be correlated with HPSA status and that would affect the provider-to-population ratio only through the HPSA status variable. These IVs will then be used in the regression framework to tease out the unbiased effect of the HPSA status on the provider-to-population ratio. However, IVs are not always readily available. In future, upon availability of appropriate IVs, a more in-depth study can be carried out to resolve the problem of this endogeneity to estimate the unbiased effect of HPSA status on the provider-to-population ratio.52


50 Physicians who furnish services to Medicare beneficiaries in areas designated as primary care geographic HPSAs by HRSA, as of December 31 of the prior year, are eligible for the Medicare HPSA bonus during the current year. Since 2005 the HPSA physician bonus payment has been automatically made to physicians who furnish services to Medicare beneficiaries in a ZIP code on the list of ZIP codes eligible for automatic HPSA bonus payment. This list is updated annually and is effective for services furnished on and after January 1 of each calendar year. Physicians who furnish services to Medicare beneficiaries in a geographic HPSA that is not on the list of ZIP codes eligible for automatic payment must use the AQ modifier, “Physician providing a service in an unlisted Health Professional Shortage Area (HPSA),” on the claim to receive the bonus payment. Services that are submitted with the AQ modifier are subject to validation by Medicare. The bonus is paid quarterly and is based on the amount paid for professional services.

51 Area Resource File (ARF) or Area Health Resource File is an extensive county level database assembled annually by Health Resources and Services Administration (HRSA) from over 50 sources. Source: http://arf.hrsa.gov/

52 Despite the issue of endogeneity of HPSA status, we analyze the changes in the number of Medicare primary care physicians per 10 thousand Medicare populations and the changes in the absolute number of Medicare primary care physicians over time due to changes in the county’s HPSA status during the period of 2007-2011 using the same DID framework laid out earlier. The results from these estimated models are available upon request.

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