An Update on Medicare Beneficiary Access to Physician Services

Access to Physician Services Stabilizes for Medicare Seniors

After a significant decline between 1997 and 2001, access to physician services for Medicare beneficiaries aged 65 and older stabilized between 2001 and 2003, according to HSC's Community Tracking Study (CTS) 2003 Household Survey. About 9.9 percent of Medicare seniors reported delaying or not getting needed medical care in 2003, compared with 11.0 percent in 2001.

Policy makers had worried that seniors' access to care would continue to deteriorate in the face of a Medicare physician payment rate reduction of 5.4 percent in 2002 and the potential for further large annual reductions. When overall access to physician services declined in 2001 because of growing system-wide capacity constraints -- well before the payment cuts took effect -- policy makers feared Medicare patients in particular would have trouble getting care as a growing proportion of physicians indicated an unwillingness to serve new Medicare patients.

Access trends were parallel for Medicare seniors and privately insured people between the ages of 55 and 64 -- the near-elderly -- suggesting that broader health system developments were much more important influences on beneficiary access than any effects of Medicare's 2002 payment rate reduction. In addition, access to care for both groups was comparable in local health care markets where commercial insurance payment rates far exceeded Medicare's. However, both Medicare seniors and older privately insured people waited longer for physician appointments.

Access by the Numbers

Comparisons of trends for privately insured near-elderly people (ages 55-64) and Medicare seniors could indicate whether potential access problems were developing across the health system or, if exclusive to Medicare seniors, stemmed from Medicare policies.

Mirroring the trend for Medicare seniors, the proportion of privately insured near-elderly people that reported delaying or not getting care stabilized between 2001 and 2003. Similarly, the privately insured near-elderly population experienced a spike in access problems in 2001 comparable to Medicare seniors, indicating system-wide capacity constraints affected access to physician services before the Medicare payment reduction. Since then, access problems for both groups had moderated, indicating the Medicare payment rate reduction did not disrupt Medicare seniors' access to care in the short term.

For Medicare seniors reporting problems getting care in 2003, roughly one in five said they could not get an appointment soon enough, up from 14 percent in 1997. The proportion of Medicare seniors seeing a doctor at least once in the previous year continued to rise, with 92 percent reporting at least one visit to a doctor during the year in 2003, compared with 87 percent in 1997. Medicare seniors reported having 5.5 physician visits per year in 2003 on average, up from 5.2 visits in 1997.

Payment Differentials Across Local Communities

Across the country, there were significant differences between Medicare physician payment rates and commercial insurance payment rates, according to findings from HSC's 2002-03 site visits. In some health care markets -- including Indianapolis; Little Rock, Ark.; Seattle; and Syracuse, N.Y. -- many physicians received commercial payment rates for privately insured patients that ranged from 125 percent to 200 percent of the Medicare fee schedule. With such a wide gap in payment rates, Medicare seniors could potentially have more trouble getting medical care in these markets than in communities like Cleveland, Miami, and Orange County, Calif., where Medicare payment rates were at least as favorable as commercial rates.

Despite these differences in Medicare and commercial payment rates across markets, the proportion of Medicare seniors reporting problems in markets with the widest payment rate gap did not vary significantly from Medicare seniors in markets with more favorable Medicare payment rates. In addition, privately insured near-elderly people did not appear to gain better access to care relative to Medicare seniors in markets where commercial payment rates were most favorable.

Physician Choice

In 2003, dissatisfaction with physician choice decreased for the privately insured but remained unchanged for Medicare seniors. As provider networks expanded and health plans loosened managed care restrictions, a smaller percentage of privately insured near-elderly people in 2003 reported dissatisfaction with their choice of primary care physician (PCP) or specialist compared with 1997.

Seniors in Medicare fee-for-service did not face the same managed care shifts experienced by the privately insured. However, from 1997 to 2001, physicians' willingness to accept all new Medicare patients fell from about 75 percent to 71 percent. In particular, surgeons' willingness to accept all new Medicare patients dropped from about 82 percent to 73 percent. Despite this, the proportion of Medicare seniors reporting dissatisfaction with their choice of PCP and specialist remained essentially unchanged over the period.

Patients Waiting Longer

Although the proportion of Medicare seniors and privately insured near-elderly people with access problems did not grow, these patients waited longer to see physicians. Both groups experienced longer waiting times whether waiting for a checkup or an appointment for a specific illness.

Medicare seniors waited on average about 12 days in 2003 to see their primary care provider for a checkup, compared with 10 days in 1997. For privately insured near-elderly people, the average waiting time for a checkup with their primary care provider rose from 11 days to almost 14 days. Similar trends in average waiting times were observed for both Medicare seniors and near-elderly patients seeking specialist appointments for a specific illness.

Significant increases in waiting times had also occurred in 2001 and were attributed to growing system-wide capacity constraints. Although waiting times continued to rise, complaints about having to delay care did not show a comparable increase. Presumably, patients had adjusted expectations and no longer considered longer waits as delaying care.

Policy Implications

Historically, Medicare physician payment policy had sought to constrain total spending for physician services while remaining neutral to the care setting and type of care delivered. Medicare used a formula linking annual changes to the payment rate for each unit of service to growth in the number and mix of services physicians provided. If the number and mix of services physicians provided per beneficiary exceeded the established budget, the payment rate was cut to bring spending back within budget.

Due to growth in the number and intensity of physician services, the formula cut the 2002 payment rate by 5.4 percent and was expected to make further large annual reductions. Although the reduction held Medicare per capita spending growth for physician services to 2 percent, policy makers feared that additional payment reductions could threaten beneficiaries' access to care. In 2003, the formula reduced the physician payment rate by 4.4 percent, but subsequent legislation repealed the reduction and increased the payment rate 1.6 percent. For 2004 and 2005, Congress suspended the formula and increased the payment rate by 1.5 percent. From 2003 to 2004, Medicare spending per capita grew 7 percent.

From an individual physician's perspective, the Medicare payment adjustment appeared arbitrary, if not counterproductive. A cost-effective physician who provided fewer services per beneficiary would reduce his own Medicare revenue without affecting total Medicare physician spending. At year's end, the cost-effective physician would face the same payment rate reductions as a physician who had dramatically increased the number and mix of services provided.

Although access to care for Medicare seniors had stabilized in the short term, access problems could grow over time, especially if a large cumulative payment rate reduction was enacted. Physician response to the 2002 reductions may have been tempered by an expectation that Congress would overturn them. Also, making sharp changes in patient caseloads in the short term was impractical for physicians. Furthermore, some physicians could partially offset the effects of rate cuts on revenue by shortening visit times and increasing patient volume, increasing the number of services offered, or changing the type and location of services. But ultimately, continued declines in payment rates were likely to reduce physicians' acceptance of Medicare patients.

Without a way to control the growth in the number and intensity of services physicians provided, Congress was stuck between a trade-off of uncontrolled spending and risking access problems for Medicare beneficiaries. Attempts to rein in costs would likely require a larger toolbox encompassing a variety of approaches better targeted to reducing costs by focusing on high-cost patients and financial incentives for individual physicians.

Sources and Further Reading

This Issue Brief (No. 93, February 2005) was authored by Sally Trude and Paul B. Ginsburg and published by the Center for Studying Health System Change (HSC). The findings were based on the HSC Community Tracking Study Household Survey, a nationally representative telephone survey of the civilian, noninstitutionalized population conducted in 1996-97, 1998-99, 2000-01, and 2003. The first three rounds of the survey contained information on about 60,000 people, while the 2003 survey contained responses from about 47,000 people. Response rates ranged from 60 to 65 percent for the first three rounds and 57 percent in 2003.

Trude, Sally, and Paul B. Ginsburg. Growing Physician Access Problems Complicate Medicare Payment Debate. Issue Brief No. 55, Center for Studying Health System Change (September 2002). Medicare Payment Advisory Commission. Report to Congress: Growth in the Volume of Physician Services (December 2004). Letter from Paul B. Ginsburg to U.S. Sen. Max Baucus, April 10, 2003.

Centers for Medicare and Medicaid Services — Federal agency overseeing Medicare physician payment and beneficiary access.

Medicare Payment Advisory Commission (MedPAC) — Independent congressional agency advising on Medicare payment issues.

KFF — Medicare — Data and analysis on Medicare coverage and access.