Physician Shortage Areas

The Medicare Incentive Payment program pays doctors a 10-percent bonus for Medicare services they provide in areas identified as having a shortage of primary care physicians. GAO found that the program is not an effective way to improve the ability of Medicare beneficiaries to obtain health care. Since the program began, Congress has taken additional action to address this concern. This action generally increased reimbursement rates for primary care services and reduced the geographic variation in physician reimbursement rates. In addition, survey data from the Health Care Financing Administration show that Medicare beneficiaries who have access problems, including those who may live in underserved areas, generally cite reasons other than the unavailability of a physician -- such as the cost of services not paid by Medicare -- for their access problems. Moreover, the program does not appear to play a significant role in attracting and retaining physicians in shortage areas. The relatively small bonus payments most doctors receive -- a median payment of $341 for the year in 1996 -- are unlikely to have a significant impact on physician recruitment and retention. The Department of Health and Human Services has not developed goals or related performance measures for the program to clarify what the program is expected to accomplish. As it stands, the program provides no assurance that the more than $90 million spent each year is improving access to care in underserved areas. HCFA's oversight of the program also has shortcomings that allow physicians and other providers to receive and keep bonus payments they claimed in error.

GAO noted that: (1) the Medicare Incentive Payment Program is not an effective mechanism for improving Medicare beneficiaries' ability to obtain health care; (2) the program was created out of concern that low Medicare payment rates for primary care services, particularly in areas with a shortage of physicians, could cause access problems for Medicare beneficiaries; (3) however, since the program began, Congress has taken additional action to address this concern; (4) this action generally increased reimbursement rates for primary care services and reduced the geographic variation in physician reimbursement rates; (5) in addition, the Health Care Financing Administration (HCFA) survey data show that Medicare beneficiaries who have access problems, including those who may live in underserved areas, generally cite reasons other than the unavailability of a physician--such as the cost of services not paid by Medicare--for their access problems; (6) the Medicare Incentive Payment program is also not an effective mechanism for improving access to care for people not covered by Medicare in underserved areas; (7) although the program is considered a means of attracting and retaining physicians in shortage areas, the program does not appear to play a significant role in this regard; (8) the relatively small bonus payments most physicians receive--a median payment of $341 for the year in 1996--are unlikely to have a significant impact on physician recruitment and retention; (9) the program has two other severe limitations that restrict its ability to address identified needs of those in underserved areas; (10) specialists receive most of the program dollars, even though primary care physicians have been identified as being in short supply, while shortages of specialists, if any, have not been determined; (11) the program provides no incentives or assurance that physicians receiving bonuses will actually treat people who have problems obtaining health care; (12) the Department of Health and Human Services (HHS) has not developed goals or related performance measures for the Medicare Incentive Payment Program to clarify what the program is expected to accomplish; (13) without such goals and measures, it is difficult for HHS to determine what the program is accomplishing; and (14) HCFA's oversight of the program also has limitations that allow physicians and other providers to receive and retain bonus payments they claimed in error.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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