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

12/22/2014

The Affordable Care Act includes two key provisions regarding reimbursement to primary care providers ): (a) it provides a 10 percent incentive payment under the Medicare PCIP program to eligible providers (effective January 1, 2011); and (b) it raises the Medicaid primary care reimbursement rate at least up to 100 percent of the Medicare rate.

We find that as a result of the Medicare incentive payment the number of Medicare PCPs has increased on average by about 2.8 providers per county annually in 2010 and 2011. Also, the number of primary care physicians with PCIP eligible specialty increased by about 10 percent in response to the 10 percent incentive payment under the PCIP policy (i.e., elasticity of the number of primary care physicians with respect to the incentive payment is about 1). Eligible claims for some types of PCIP eligible E&M services and associated allowed charges have also increased. For example, on average, there was a 7 percent increase in the number of claims for 25 minute office visits due to the PCIP policy. On the other hand, in response to the PCIP policy, there was a 9.3 percent increase in the average allowed charges (for eligible services) among primary care providers with PCIP eligible specialties.

The reader should exercise some caution in interpreting these results, however. The behavioral response to the PCIP was observed in our data only for one year. The relatively short period may have resulted in insufficient time for a full provider behavioral response. In addition, the legislation provided for a program of only limited duration. Some providers may have chosen, explicitly or implicitly, not to change their behavior for a program of limited duration.

In addition, we find that Medicare providers were attracted to PSA areas through the PSA bonus, and submitted 7.8 percent more E&M claims annually during the PSA period. Gaining HPSA status also generated an additional 17 E&M claims submitted by primary care physicians with HPSA bonus-eligible specialties.

The reader is again encouraged to exercise some caution in interpreting the results for the PSA bonus. Because the criteria for the bonus include the actual supply of providers, there is a risk that the results may be biased. Though the methods we employ attempt to minimize the potential impact of this type of bias, we cannot be completely sure that the results are unaffected by this.

Finally, we document the variation in Medicaid reimbursement rates relative to the Medicare rates, both for primary care and for all services, across US states during the period 2008-2012, using the existing body of evidence. Using the empirical results from our PCIP analysis, we also perform an exercise to simulate the effect of a 10 percent increase in the Medicaid-to-Medicare fee index on the proportion of US office-based physicians accepting new Medicaid patients across all states. The simulation suggests that a 10 percent increase in Medicaid-to-Medicare fee ratio, would increase the US average of office-based primary care physicians accepting new Medicaid patients from 66.2 percent to 72.8 percent. Again, however, caution is warranted in a literal interpretation of this result, as it is based on an extrapolation from a different program.

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