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PubMed2006

Medicare physician payments: impacts of changes on rural physicians.

Medicare payment disproportionately impacts rural physicians compared to urban. For example, 51% of rural physicians, compared to 44% of urban physicians, receive at least 38% of their payments from Medicare.1 Thus, the Medicare physician payment system is of significant rural interest. In this policy brief, we present the effects of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 on physician payment rates in rural areas. Specifically, we examine the impact of creating a floor of 1.00 in the geographic practice cost index (GPCI) for work expense. We also show the effects of the Medicare incentive payment (MIP) for providing services in shortage areas and of the bonus for practicing in a physician scarcity area. Our principal findings are the following: (1) Increases to the GPCI for work expense accounted for a substantial percentage of the two-year increases in total payment to physicians in rural payment areas. (2) Increases in the conversion factor (CF) (base payment) accounted for most of the increases in total payment in all but 6 of the 89 Medicare payment localities; in those 6 areas, the dominant factor was GPCI adjustment. (3) Bonus payments are a more direct means of targeting increased payments to physicians in specific areas than is a general increase in one part of the payment formula.

Humans↗
PubMed1991

Medicare payment options for recombinant erythropoietin therapy.

We analyzed alternative payment approaches that Medicare could use to pay for recombinant human erythropoietin (rHuEPO) therapy. How Medicare pays for rHuEPO therapy will affect whether providers make prudent purchases of the biologic and prescribe it appropriately and whether companies offer the program low prices. Medicare's policies may also guide policies of other third parties. Selecting payment options for Medicare payment requires balancing desirable and undesirable implications, especially trade-offs between improving access to and quality of care for beneficiaries versus constraining costs to Medicare and its beneficiaries. The options for paying providers that contain financial incentives to constrain expenditures also contain incentives for providers to skimp on use, perhaps to the detriment of patients' quality of care. On the other hand, options that may reward additional use may lead to higher expenditures and threaten the quality of care from the direction of overuse. Medicare currently varies the level and method of payment for rHuEPO therapy according to the setting in which it is provided. Equity among beneficiaries and providers and incentives for efficient use of medical services would argue for paying the same amount for the same service, regardless of where it was provided. Whatever payment options are adopted, the Health Care Financing Administration (HCFA) will have to be able to exercise flexibility in monitoring and responding to changing market conditions. In this dynamic market, the number of manufacturers, medical indications for use approved by the Food and Drug Administration, and, eventually, Medicare's predominance are likely to evolve over time. The appropriate level and perhaps even the method of payment may well change with market conditions.(ABSTRACT TRUNCATED AT 250 WORDS)

Competitive Bidding↗
PubMed1990

How the physician fee schedule affects Medicare patients' out-of-pocket spending.

Simulations of the redistributive effects of the new Medicare fee schedule have focused primarily on physicians, but patients may also be affected. Using a national sample of Medicare patients, we studied the fee schedule's potential impact on both components of out-of-pocket spending: copayments and balance bill amounts. While the fee schedule would raise copayments for the average patient, this effect would be more than offset by the balance billing limits (also imposed by Congress). Nevertheless, almost 10% of patients, particularly those who are black or living in rural areas, would experience large increases in their liability. Finally, the fee schedule with balance billing limits also serves as a "catastrophic coverage" program; patients with extraordinarily high medical expenses would enjoy substantial reductions in their out-of-pocket payments.

Aged↗