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Medicare payment generosity and access to care

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Abstract

All payments to physicians under Medicare Part B are adjusted to reflect geographic differences in practice costs. The methods used for this adjustment, and temporary price floors imposed by Congress, have created longstanding systematic under and overpayment across physicians, whereby some are routinely underpaid while others are routinely overpaid. Using a nationally representative 2008 survey of physicians, this study examines whether the relative generosity of Medicare influences beneficiary access to care. We find that in areas where Medicare payments are more generous physicians are more likely to accept new Medicare patients, whereas in less generous areas, they are less likely. Our estimated models suggest that if Medicare could eliminate the systematic biases inherent its payment formula, it would see a net improvement to access to care under Medicare Part B.

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Notes

  1. 161 physicians were not included in our final analytic sample because their practice setting was at an HMO, 341 were not included because they practiced at a medical school, 603 were not included because they practiced medicine at a hospital, and 190 were not included because they practiced medicine at some other undefined location. 53 were excluded because they did not report compensation arrangements, and the remainder were excluded because they reported not knowing the attributes of their practice (e.g., the percentage of patients with asthma or heart failure).

  2. During the period of our sample, this floor was in effect for all localities with a work adjustment factor less than one. For the 2012 update, the floor is restricted to the frontier states of Montana, Nevada, North and South Dakota, Wyoming, and Alaska (which has a 1.5 work floor).

  3. The mean practice expense underpayment for this group was 15.431.

  4. Full regression results are available from the author upon request.

  5. The category “some” and “most” have predicted reductions in probabilities of 2.2 and \(0.8\,\%\), respectively, as generosity moves from least generous to neutral.

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Correspondence to Christopher S. Brunt.

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Brunt, C.S., Jensen, G.A. Medicare payment generosity and access to care. J Regul Econ 44, 215–236 (2013). https://doi.org/10.1007/s11149-013-9218-7

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