Physician Payment under Medicare

Will projected cuts in Medicare physician payment limit Medicare beneficiaries' access to physicians?
HCFO-funded work may provide insight into this complex issue.

Update: Action Taken by Congress

In mid-February, Congress passed an omnibus budget reconciliation bill that includes $54 billion to increase Medicare reimbursements to physicians and hospitals over 10 years. The bill includes a provision eliminating the 4.4 percent reduction in Medicare physician reimbursement rates scheduled for March 1. On February 20, President Bush signed the bill into law. However, Centers for Medicare and Medicaid (CMS) officials caution that physicians may face payment cuts in 2004.

Background

Medicare physician payments were cut 5.4 percent in 2002, and additional cuts are anticipated over the next few years. These reductions have raised serious concerns from the physician community. For example, the American Medical Association states that the cuts have caused and will continue to cause physicians to limit the amount of services they provide to Medicare beneficiaries. The impact of this policy decision, however, extends beyond Medicare beneficiaries, as many health plans use Medicare's fee schedule to benchmark their physician payment.

Links

While the following HCFO grants and publications do not specifically address the current debate surrounding Medicare's reimbursement of physicians, they do touch on a number of related issues concerning physicians, how they practice, and how they are paid.

HCFO-sponsored meetings:

"When Public Payment Declines Does Cost-Shifting Occur? Hospital and Physician Responses"

View the presentation slides from this meeting.

Read the December 2, 2002, American Medical News article from this meeting titled "Shifting Medicare Costs to Private Payers Tough for Doctors."

HCFO-funded grants and publications:

Title: Changes in Physicians' Decisions to Treat Medicaid Patients and the Uninsured
Institution: Health Research and Educational Trust
Time: December 2001 to May 2003
PI: Phillip R. Kletke, Ph.D., pkletke@aha.org

Title: How Managed Care Growth Has Affected Health Departments and Physicians' Ability to Provide Indigent Care
Institution: University of Pittsburgh
Time: January 2002 to March 2003
PI: Christopher Keane, Sc.D., crkcity@pitt.edu

Title: Evolution of Physician Organization Under Managed Care
Institution: University of California at Berkeley
Time: May 1998 to April 2002
PI: James C. Robinson, Ph.D., jamie@socrates.berkeley.edu

Robinson, J.C. "Physician Organization in California: Crisis and Opportunity," Health Affairs, Vol. 20, No. 4, 2001, pp. 81-96.

Robinson, J.C. "Theory and Practice in the Design of Physician Payment Incentives," Milbank Quarterly, Vol. 79, No. 2, 2001, pp. 149-177.

Robinson, J.C. "Paying Doctors," Expert Voices. July 2001. Washington, D.C.: National Institute for Health Care Management.

Robinson, J.C. "Organizational Economics and Health Care Markets," Health Services Research, Vol. 31, No. 1, 2001, pp. 177-189.

Robinson, J.C. "Blended Payment Methods in Physician Organizations Under Managed Care," JAMA, Vol. 282, No. 13, 1999, pp. 1258-1263.

Title: Conditions of Practice and Quality of Care: Physicians' Perceptions
Institution: University of California at Davis
Time: January 2000 to January 2002
PI: Richard Kravitz, M.D., rlkravitz@ucdavis.edu

Leigh, P.L. et al. "Physician Career Satisfaction Across Specialties," Archives of Internal Medicine, Vol. 162, No. 14, 2002, pp. 1577-1584.

Title: Investigation into Specialty Payment: Effects on Cost and Treatments
Institution: University of Washington
Time: May 1998 to October 2001
PI: Barry G. Saver, M.D., saver@u.washington.edu

Title: Factors Associated with the Distribution of Physician Income: A Quantile Regression Approach
Institution: University of North Carolina at Chapel Hill
Time: January 2000 to July 2001
PI: Thomas Konrad, Ph.D., bob_konrad@unc.edu

Title: Physician Compensation & Risk Bearing Arrangements in Medical Groups: Market Level Effects and Impacts on Physician Productivity and Risk Contracting
Institution: University of Washington
Time: February 2000 to July 2001
PI: Douglas Conrad, Ph.D., dconrad@u.washington.edu

Conrad, D.A. et al. "The Impact of Financial Incentives on Physician Productivity in Medical Groups," Health Services Research, Vol. 37, No. 4, August 2002, pp. 885-906.

Title: Analysis of the Transfer of Risk and Clinical Management Responsibilities to Physician Organizations
Institution: University of California at San Francisco
Time: April 1999 to June 2001
PI: Robert H. Miller, Ph.D., millerr@itsa.ucsf.edu

Title: Impact of Physician Compensation Mechanisms on the Process of Care
Institution: University of Massachusetts Medical Center
Time: May 1998 to April 2001
PI: Terry S. Field, Sc.D., tfield@meyersprimary.org

Title: The Influence of Managed Care on Physician Scope of Practice
Institution: Boston University
Time: January 2000 to March 2001
PI: Carol Simon, Ph.D., cjsimon@bu.edu

Title: Physician Compensation and Risk-Bearing Arrangements in Medical Groups: Impact on Physician Productivity
Institution: University of Washington
Time: September 1997 to November 1999
PI: Douglas A. Conrad, Ph.D., dconrad@u.washington.edu

Sales, A. et al. "Profiling as a Basis for Physician Compensation," in Physician Profiling: A Sourcebook for Health Care Administrators, Jossey-Bass, 1998.

Tufano, J.T. et al. "Addressing Physician Compensation and Practice Productivity," Journal of Ambulatory Care Management, Vol. 22, No, 3, July 1999, pp. 47-57.

Tufano, J. et al. "Effects of Compensation Method on Physician Behaviors," American Journal of Managed Care, Vol. 7, No. 4, April 2001, pp. 363-373.

Title: Physician Responses to HMO Growth
Institution: University of Pennsylvania
Time: September 1996 to February 1999
PI: Daniel Polsky, Ph.D., polsky@mail.med.upenn.edu

Escarce, J.J. et al. "Health Maintenance Organization Penetration and the Practice Location Choices of New Physicians: A Study of Large Metropolitan Areas in the US," Medical Care, Vol. 36, No. 11, November 1998, pp. 1555-1566.

Title: Changing Medicaid Physician Fees: Effects on Access and Total Cost
Institution: RAND
Time: May 1993 to August 1997
PI: Stephen H. Long, Ph.D., long@rand.org

Coburn, A.F. et al. "Effects of Changing Medicaid Fees on Physician Participation and Enrollee Access," Inquiry, Vol. 326, No. 3, Fall 1999, pp. 265-279.

Title: Effects of Physician Compensation Method on Physician Behavior and Satisfaction in Managed Care Organizations
Institution: University of Washington
Time: February 1995 to March 1997
PI: Douglas A. Conrad, Ph.D., dconrad@u.washington.edu

Conrad, D.A. et al. "Primary Care Physician Compensation Method in Medical Groups: Does it Influence the Use and Cost of Health Services for Enrollees in Managed Care Organizations?," JAMA, Vol. 279, No. 11, May 1998, pp. 853-858.

Conrad, D.A. et al. "Physician Compensation Models in Medical Group Practice," Journal of Ambulatory Care Management, Vol. 19, No. 4, October 1996, pp. 18-27.

Zierler, B.K. et al. "Effect of Compensation Method on the Behavior of Primary Care Physicians in Managed Care Organizations: Evidence from Interviews with Physicians and Medical Leaders in Washington State," American Journal of Managed Care, Vol. 4, No. 2, February 1998, pp. 209-220.

Title: Evaluation of Natural Experiment to Raise Medicaid Fees for Physicians
Institution: Harvard University Medical School
Time: October 1993 to December 1994
PI: Joseph P. Newhouse, Ph.D., newhouse@hcp.med.harvard.edu

Title: Physician Response to Medicare Payment Reductions: Impacts on the Public and Private Sectors
Institution: University of California, Los Angeles, School of Public Health
Time: June 1992 to August 1994
PI: Thomas H. Rice, Ph.D., trice@ucla.edu

Rice, T. "Physician Payment Policies: Impacts and Implications," Annual Review of Public Health, Vol. 18, 1997, pp. 549-565.

Rice, T. et al. "A Tale of Two Bounties: The Impact of Competing Fees on Physician Behavior," Journal of Health Politics, Policy, and Law, Vol. 24, No. 6, December 1999, pp. 1307-1330.

Tai-Seale, M. et al. "Volume Responses to Medicare Payment Reductions with Multiple Payers: A Test of the McGuire-Pauly Model," Health Economics, Vol. 7, No. 3, May 1998, pp. 199-219.

Title: Effects of Competition and Rate Regulation on Access to Physician Services and Uncompensated Care
Institution: Western Consortium of Public Health/University of California
Time: November 1990 to April 1994
PI: Glenn A. Melnick, Ph.D., gmelnick@usc.edu

Melnick G.A. and J. Zwanziger. "State Health Care Expenditures Under Competition and Regulation, 1980 through 1991," American Journal of Public Health, Vol. 85, No. 10, pp. 1391-1396.

Title: Impact of Medicare Payment Reductions For "Overpriced" Surgical Procedures on Utilization and Access
Institution: Center for Health Economics Research
Time: March 1991 to December 1992
PI: Janet B. Mitchell, Ph.D., jmitchell@her-cher.org

Lee A.J. and J.B. Mitchell. "Physician Reaction to Price Changes: An Episode-of-Care Analysis," Health Care Financing Review, Vol. 16, No. 2, Winter 1994, pp. 65-83.

Mitchell J.B. and J. Cromwell. "Impact of Medicare Payment Reductions on Access to Surgical Services," Health Services Research, Vol. 30, No. 5, December 1995, pp. 637-655.