Access to medicare physician services

162 Pages·1997·6.4 MB·English

by  Zuckerman, Stephen

50272-101
REPORTDOCUMENTATION 1.ReportNo. 'pm'i'^mt^i
PAGE
4A.ccTietslseatondMeSduibctairtelePhysicianServices 5M.aRyep1o9r9t7date
6.
7.Autt)or(s) 8.PerformingOrganizationReptNo.
StephenZuckemrian,StephenNorton,DianaVerille,MarticiaWade,TimothyWaidman
92T.1h0eP0eUrrMfboraSttnrneiIenntsg,tiONtru.egWa.nizationNameandAddress 1101N..ACPornotjreacctt/T(Cas)WoWrorgkraUnnti(tGN)oNo
Washington,D.C.20037 (C)HCFA-17-C-90044/3
(G)
12.SponsoringOrganizationNameandAddress 13.Typeofreport&PeriodCovered
HealthCareFinancingAdministration FinalReport
OfficeofStrategicPlanning
7500SecurityBlvd.,MailStop 14.
Baltimore,MD21244-1850
15.SupplementaryNotes
16.AbTshtirsarcetpo(rLtimpirte:se2n0t0swfoinrddisng)softhreeanalysesofaccesstophysicianservicesbyMeditfierebeneficianessincetheimpl,ementationof,phuysician
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^Th"i°s^tParsikceexcaomnitnroelssparnidceMcehdaincgaersesdupreinndgintgh:eApsesrieosdsi1n9g86thtehvrooulguhme19of9f2seatcarsossusmtphteiofnul.l"raEnsgteimofatMeesdivcoalruemephoyfsfisceitasninserrevsipceosn.seThtoepeasytimmeanttedchaavnegreasg.e
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17.DocumentsAnalysisa.Descriptors
Medicare,utilization,access,physicianservices
b.Identifiers/OpenEndedTerms
c.COSATIField/Group
18.ANvTaiIlaSbiRlietlyeSatasteemUennltimited 1290..SSUeenccuucrrliiattsyysCCillfaaissessd((TThhiissrPeapgoer)t) 2212.NP1ro6i6coefpages
Unclassified
(SeeANSI-Z39.18) OPTIO(NFAOLRFMOERRMLY27N2TI(S4--3757))
B<^l^^s DepartmentofCommerce
l^fiol
ACCESSTOMEDICAREPHYSICIANSERVICES
StephenZuckerman.PrincipalInvestigator.
StephenA.Norton.DianaVerilli.MarticiaWade,andTimothyWaidmann
FederalProjectOfficers:JesseLevy.PaulEggers
TheUrbanInstitute
2100MStreet.N.W.
Washington.DC20037
Support forthisresearchwasprovidedbytheHealthCareFinancingAdministrationthrough
CsooloepleyratthiovseeAogfrteheemeauntthHorCsFaAn-d1d7o-Cn-o9t00n4ec4e/s3s.arCiolnyclruesfileocntstahnedvoipeiwnsioonfsethxeprUersbseadniInntshtiistuptaepoerrtahree
HealthCareFinancingAdministrationoritssponsors.
assignmentralesreducetheetYecti\epriceofcaretoMedicarebeneficiariesandleadtoincreased
utilization.Thus,wefocusonthebeneficia''vle\eltodeterminewhatfactorsaremostimportant
inexplainingcross-sectionaldifferencesinuseofawidearrayofphysicianservices.
Inwhatfollowswesummarizethethreecomponentstudieswhichmakeupthisreport.
Chapter1: TrendsinVolumeandIntensityofPhysicianServicesUndertheMedicare
FeeSchedule:1986-1994
InJanuan.'1992,theMedicareprogramreformedthewayitpaysforphysicianservices.
Overafiveyearperiod,thecustomary,prevailingandreasonable(CPR)paymentmethodwas
replacedwiththeMedicareFeeSchedule(MFS)whichreflectstherelativeresourcecostsofeach
service.Thesamereformlegislationplacedlimitsonbalancebillingtoprotectbeneficiariesfrom
increasedliabilities,andcreatedtheMedicareVolumePerformanceStandards(MVPS)inan
efforttoreducethegrowthinMedicarePartBexpenditures.
ThecentralelementofMFSistheRelativeValueScale(RVS)thatincreasespayments
forvisitsandconsultationsrelativetothoseofprocedures. Implicitinthepolicyisthe
assumptionthatsuchchangeswillresultinanincreaseintheprovisionofE&Mservicesrelative
toprocedures.Ifvolumeisrelativelyinsensitivetopricechanges,thentheabilityoftheMFSto
encouragetheprovisionofE&Mservicesrelativetootherservicesorachieveotherdesired
policyobjectiveswouldbefairlylimited. Ontheotherhand,ifvolumechangessignificantlyin
responsetotheMFS.byeitherincreasingordecreasingtheprovisionofmanyservices,
unexpectedaccesschangescoulddevelop. Theseimprovementsorreductionsinaccessmay
occurforonlysomeservicesorinsomegeographicareas. Fromabudgetar>'perspective,the
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responsivenessofvolumetopriceisrelevantforassessinghowrealistictheassumptionswere
regardingthe"\olumeoffset"usedintheinitialconversionfactorscalculations.
PriortotheimplementationofMFS,modificationstophysicianpaymentrateswere
targetedprincipallyatreducingfeesforservicesidentifiedas"overpriced."Inthefiveyears
precedingtheMFS.pricesforallservicesgrewatanaveragerate4.5percentperyear.However,
duetolargepricereductionsinnonE&Mservices,inthefirstyearoftheMFSoverallpricesfell
by1.9percent.AstheMFScontinuedtobephasedinthrough1994largenationalannual
declinesinpriceswerelesscommon. Infact,paymentsforallservicesincreased2.4 between
1992and1993and5.1percentbetween1993and1994. Feesforevaluationandmanagement
servicesandproceduresincreasedmostsubstantially.
Thisstudyisnotdesignedtoattributecausalityorisolatestatisticalrelationships,butto
provideacomprehensivepictureofwhathappened. Itrepresentsanimportantsteptoward
assessingtherelationshipbetweenchangesinthepriceandvolumeofMedicareservicesand
understandingwhatimpact,ifany.theMFShashadontheutilizationofMedicarephysician
services.
Ouranalysisdiffersfromexistingstudiesofthevolumeandintensityofservice
utilizationinthreeways. First,untilrecentlyresearchershavebeenconstrainedtousedeflated
expendituresasthemeasureofvolumeandintensityofserviceutilization. However,withthe
developmentandimplementationoftheRVS,weareabletouseamoredirectmeasureof
intensity(i.e..RVUs).Second,weconsidervolumeandintensitychangeswithina
comprehensiveserviceclassificationsystemdevelopedbytheUrbanInstituteincollaboration
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withstaffattheHeakhCareFinancingAdministration(HCFA). Finally,weexplorechangesin
volumeandintensityacrossMedicarepaymentlocalitiesbygroupinglocalitiesintothree
categoriesdependingontheHCFAactuaries'predictedlevelofpaymentchangewhicharelikely
tobemorestableacrosstimethancategoriesbasedonactualpaymentchanges.
UsingdatafromBMADandNCHProcedureFilesandtheMedicareDenominatorFiles.
weexaminenationaltrendsinthevolumeandintensityofphysicianservicesperMedicare
beneficiaryfortheyears1986-1991,1991-1992.1992-1993.and1993-1994andfindthatthe
growthinthevolumeandintensityofMedicarephysicianservicessloweddramaticallyduring
thefirstthreeyearsoftheMFSascomparedtotheprecedingfive-yearperiod. Ratesofgrowth
aslowasthoseobservedherehavenotbeensustainedovermultipleyearssincethemid-1980s.
Thisdeclineingrowthrateswascertainlynotuniformacrosseithertypesofserviceor
paymentlocalities. Someservices(e.g..majorgeneralproceduresandambulatoryprocedures)
exhibitednegativegrowthratesoverthisthreeyearperiod. However,sometypesofservices
(e.g..consultationsandsonograms)exhibitedfairlyrapidgrowthduringthe1991-1994period.In
fact,thevolumeandintensityofbothconsultationsandminorproceduresgrewmorerapidly
undertheMFSthantheyhadduringthebaseperiod.
Althoughvariationsinaggregatevolumeandintensitychangessuggestnoconsistent
evidenceofeithera"volumeoffset"or"standardsupply"response,aswemovebelowthe
broadestservicecategories,differentpatternsemerge. Forexample,forofficevisits,thedataare
consistentwiththeviewthatasfeesarereduced,thevolumeandintensityofphysicianservices
acceleratestocompensateforpotentiallylostrevenue. Ontheotherhand,forsomeprocedures,
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theresultsshowthat\olumegrowthissloweramonglocalitieslikelytoexperiencelarge
paymentratereductions,suggestingthatphysiciansmaybeshiftingawayfromproviding
Medicareservicesaspaymentsfall. Thesefindingscouldleadtothedevelopmemofconflicting
hypothesesregardingdifferencesinthenatureofvolumeresponsesacrossservicegroups.
However,thelackofaclearlinkbetweenthemagnitudeofthepricechangeforspecifictypesof
servicesandthe"average"'priceeffectusedtodefinethelocalitygroupsmakesitdifficultto
characterizetheprice/volumerelationshipsobservedinthisdescriptivestudy.
However,thesefindingsaremoreconclusivewithrespecttootherissues. Theyleadus
toconcludethatchangesinpaymentrules(beyondtheimplementationoftheRVS).
developmentsinclimcalpracticeandcodingchangesplayalargeroleindeterminingthe
observ'edRVUchanges.Includedamongthesepaymentrulechangeswereestablishinguniform
globalsurgeryperiods,redefiningvisitcodes,eliminatingandreinstatingpaymemsforcertain
EKGinterpretationsandimposingsiteofservicedifferentialsselectively. Thesefactorsseemto
haveplayedaroleindeterminingtrendsinvolumeandintensityofservicesofbothconsultations
andEKGs. TheeffectsofclinicalchangescanbeseenintheshiftsawayfromusingTURPsto
treatbenignprostatichypertrophyormajorbreastprocedureswhenlessinvasivetreatmemsare
possible. Intheotherdirection,thedatashowarecemresurgenceincarotid
thromboendarterectomiestopreventstrokesafteraperiodofdecliningusepriortotheMPS.
Thelargedeclineinvolumeandintensitygrowthduringthefirstfewyearsunderthe
MPSrelativetohistoricaltrendsdidnotnecessarilyimposehardshipsrelativetobeneficiaries-
needtocare. Eventhoughourlocalityimpactgroupanalysisisnotconclusive,thetrendsdoat
leastsuggestthatfurthermonitoringofbothpriceandpoHcychangesiswarranted. Theamount
ofcarebeneficiariesreceivedgrewatmuchslowerratesduringthefirsttwoyearsundertheMFS
thanithadpreviously. Subsequently,volumeandintensitygrowthreturnedtohistoricallevels
formanyservices. Thiswasparticularlyapparentamongmajorandendoscopicproceduresin
1994andoccurredatthesametimethattherewasalargeincreaseinMedicarefeesforthese
services. Thissuggeststhatthelinkbetweenpricesandvolumegrowthmaybeimportant.
Astrengthofthewaythisdescriptivestudyhasbeenorganizedisthatadditionalyearsof
datacanbeeasilyincorporatedastheybecomeavailable. Inparticular,thestabledefinitionsof
theMFSimpactgroupsandtheuseofahighlydisaggregatedserviceclassificationallowpolicy
makerstofocusonlocalitiesbeingaffectedsimilarlybytheMFSandonservicesthatmaybe
affectedbyspecificmodificationsinMFSpolicies. Forexample,anticipatedmodificationsin
thebasisforestablishingpracticeexpenserelativevaluesin1998willcontinuetoaltertheprices
Medicarepaysforindividualservices. Inalllikelihood,acontinuationofthistypeofdescriptive
studywillbeausefulfirststepinunderstandinghowvolumeandintensityreactstothosepolicy
changes.
Chapter!: PriceControlsandMedicareSpending:AssessingtheVolumeOffset
Assumption
OneofthemajorissuesinMedicarephysicianpaymentpolicyhasbeenthemagnitudeof
volumechangesthatoccurinresponsetochangesinthefeesphysiciansreceiveforservices.A
consensusexistsaroundtheideathatagivenreductioninMedicarefee-for-servicepaymentrate
willnotleadtothatsamereductioninprogramspending. Researchers,actuaries,andother
policymakersassumethat,inresponsetopaymentratecuts,volumeadjustsupwardsoasto
offsetsomeofthereductioninrates. TheoreticalK.theseadjustmentsmayreflectincreasesin
thequantityofservicesdemandedbybeneficiariesasprices(copayments)fallordecisionsonthe
partofphysicianstoincreasethesupplyofservicestomaintainincomelevels.
However,therehasbeiendisagreementabouttheactualsizeofthevolumeoffset.HCFA
actuarieshaveassumedthatwhenphysicianfeesarecutby,forexample.2percent,service
volumeandintensitychangessothatonlya1percentreductioninspendingoccurs.This50
percent"volumeoffset"wouldimplythatfeeswouldneedtobecutbytwicethereductionin
spendingrequiredtokeepspendingwithinatarget. Thisassumptionhasbeenbothsupported
andcriticizedintheliterature.
IfpricesaretobethemainpolicyleveravailableforcontrollingMedicarespending,as
someproposalssuggest,thenunderstandinghowtheoffsetmayvaryovertime,oracross
servicesandspecialtiescouldleadtomoreeffectiveandequitablepolicyresponses. For
example,ifvolumeandintensitychangestendtooffsetmoreofapricecutforcertainservices
(e.g..imaging)thanforothers(e.g..visits),policymakersmayfindthattheyachievegreater
spendingcontrolbyfocusingpricecutsonlessresponsiveservices. Inaddition,serviceswith
lesspotentialforvolumeoffsetscouldrequiresmallerpricereductionsinordertoachieve
spendingtargets.
Inthistask,weexaminepricechangesduringaseriesofnaturalpolicyexperiments
coveringtheyears1986through1992andestimatevolumeoffsetsacrossthefullrangeof
Medicarephysicianservices.Byanalyzingpriceandvolumechangesoveraseven-yearperiod,
ourstudydrawsonabroaderrangeofpolicychangesthanhasbeenconsideredintheliterature.
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Thebreadthofthesepolicychangesleadsusawayfromconsideringtheimpactofanysingle
naturalexperimentonthevolumeofalimitedsetofservices,asisthecaseinmuchoftheprior
literature,andtowardaframeworkthatconsidersresponsesamongalltypesofphysician
services.
Inordertoexaminetherelationshipbetweenvolumegrowthandthefeechanges
embodiedintheMFS.thefirststudy,describedabove,groupedlocalitiesaccordingtotheHCFA
actuaries'estimatesoftheimpactoftheMFSonaveragepaymentsperserviceafteritisfully
phasedin.However,thisapproachhasaseriouslimitation. Thechangeinaveragepaymentsper
service-estimatedoractual-maymaskvariationsinthechangeinpaymentratesacrossspecific
typesofservices. Forexample,undertheMFS.alocalitymaybecharacterizedasgaining,on
average,becauseithadarelativelylargeshareofE&Mservices(wherepricesincreased).
However,thisdoesnotmeanthatpaymentsforallcategoriesofprocedureswillincrease. Infact.
manyfeesforproceduresintheselocalitieswillnodoubtfall. Ifasaresultofthesefee
reductionsforprocedures,procedurevolumeslowsdown,asimpledescriptiveanalysiscould
suggestthatproceduregrowthisslowinginthelocalitiesthat,onaverage,aregainingunderthe
MFS. Thismightleadtoanunwarrantedconclusionthatfortheseproceduresthereissome
evidenceconsistentwithavolumeoffset.Toestimateimpactofpricechangesonvolume
growth,itisnecessarytorelatepricechangestovolumechangesforthesameservices.
Therefore,procedurevolumechangesshouldbeexaminedrelativetoprocedurefeechanges,as
opposedtooverallaveragefeechangesinalocality.
Theprimarydatausedinthisanalysistomeasurepriceandvolumeandintensitychanges
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arederivedfromthe1986-1991BMADProcedurefilesand1992NCHProcedurefiles.Lsina
theMedicarepaymentlocalityastheunitofobservation,wemodeltheannualchangeinthe
volumeandintensityofservicesperbeneficiaryforeachofthefourgroupsofservicesandnine
specialties. Volumeandintensitychangeismeasuredasthechangeinrelativevalueunitsper
beneficiarywithinaservicegroupandspecialty.
Whileasimplecomparisonofvolumegrowthratesandpricechangesdoesnotprovide
evidenceofvolumeoffset,aftercontrollingforyear,typeofservice,specialtyandmarket
conditions,weestimatetheaveragevolumeoffsettobe19percent.Ata95percentconfidence
level,wecanrejectthehypothesisthatthereisnooffset,butwecanalsorejectthehypothesis
thattheoffsetis50percent,asisassumedbyHCFAactuaries.
WealsofindevidencethatthevolumegrowthamongonetypeofMedicareservice
increaseswhenpricechangesforothertypesofMedicareservicesarereduced,suggestingthat
physiciansmaysubstituteamongdifferenttypesofservicesdependingonrelativeprices. We
alsofindevidencethatconsumersarepricesensitiveinthepositiveandsignificantrelationship
betweentheassignmentrate(aproxyforlowoutofpocketcosts)andvolumegrowth.
Significantvariationsexistbytypeofserviceandbyphysicianspecialtyaswell,
indicatingthatvolumeresponsesarenotuniformacrossallservices. Thisfindingcallsinto
questionwhetherasinglevolumeoffsetassumptionissufficientwhenmakingpriceadjustments
tomeetspendingtargets. Wefindthatprocedureshavethehighestoffseteffectofnearly80
percent,comparedtoeffectsbetween25and32percentfortheotherthreemajortypesofservice.
Furtherthevariationamongspecialtiesisevenlarger.
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