Medicare Fee-for-Service Beneficiary Access to Physician Services
Trends in Utilization of Services, 2000 to 2002 Gao ID: GAO-05-145R January 12, 2005In the 1990s, several reforms to Medicare physician fees were implemented to help control spending growth in the traditional Medicare program, known as fee-for-service (FFS) Medicare. Concerns were raised that these reforms might have a negative impact on Medicare beneficiaries' access to physician services, but at the end of the decade, there was little or no evidence of nationwide access problems. In 2002, access concerns were again raised when Medicare physician fees were reduced 5.4 percent. Some policymakers have questioned whether access to physician services may have diminished either nationwide, in certain geographic areas, or for certain beneficiaries needing high-cost services. In October 2003, we briefed the Senate Finance Committee on trends from 2000 to 2002 in (1) Medicare beneficiaries' use of physician services, an indicator of access to these services, and (2) physicians' decisions to "accept assignment," that is, accept Medicare's fee as payment in full. This report addresses the same two objectives and expands on the information provided in our October 2003 briefing.
Two indicators of beneficiary access to physician services--the percentage of beneficiaries who received services and the number of services provided to beneficiaries who were treated, including the number of office visits--suggest an increase in access from April 2000 to April 2002. These indicators also suggest that access increases occurred in virtually all parts of the country--both urban and rural areas. Nationally, the percentage of beneficiaries that received physician services during the month of April rose from 42.0 percent in 2000 to 46.0 percent in 2002. Although the percentage of beneficiaries who received physician services was generally lower in rural areas (39.7 percent in 2000) relative to urban areas (42.9 percent in 2000), the increase from 2000 to 2002 was somewhat higher in rural areas (4.3 percentage points) relative to urban areas (3.8 percentage points). Over the 2-year period, the percentage of beneficiaries receiving physician services increased in the rural areas and the urban areas of every state in the nation. On average, the number of services provided per 1,000 beneficiaries who saw a physician rose by 322 (from 3,619 to 3,941) in urban areas and by 251 (from 3,278 to 3,529) in rural areas from April 2000 to April 2002. All rural and urban areas, except rural Alaska, exhibited an increase in this indicator. The average number of office visits--an indicator of beneficiaries' access to the typical entry point into the health care system and the most basic level of physician services--rose for Medicare FFS beneficiaries. The average number of office visits for both new and established patients per 1,000 Medicare FFS beneficiaries rose by 68 in rural areas (from 399 to 467) and by 79 in urban areas (from 453 to 532) from April 2000 to April 2002. The vast majority--95.6 percent in April 2002--of services were performed by participating physicians, that is, physicians who submit claims on assignment. This represents a 0.6 percentage point increase in the share of services performed by participating physicians since 2000. Nonparticipating physicians performed a commensurately smaller percentage of services. This suggests that physicians did not attempt to compensate for the 2002 fee reduction by changing their decision to accept assignment in order to balance bill patients. From April 2000 to April 2002, the percentage of services that physicians submitted as unassigned claims--the only claims for which physicians are permitted to balance bill beneficiaries--fell from 1.7 percent to 1.3 percent. In short, from 2000 to 2002, Medicare beneficiaries were less likely to be exposed to balanced billing.
GAO-05-145R, Medicare Fee-for-Service Beneficiary Access to Physician Services: Trends in Utilization of Services, 2000 to 2002
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January 12, 2005:
The Honorable Charles E. Grassley:
Chairman:
The Honorable Max Baucus:
Ranking Minority Member:
Committee on Finance:
United States Senate:
Subject: Medicare Fee-for-Service Beneficiary Access to Physician
Services: Trends in Utilization of Services, 2000 to 2002:
In the 1990s, several reforms to Medicare physician fees were
implemented to help control spending growth in the traditional Medicare
program, known as fee-for-service (FFS) Medicare. Concerns were raised
that these reforms might have a negative impact on Medicare
beneficiaries' access to physician services, but at the end of the
decade, there was little or no evidence of nationwide access problems.
In 2002, access concerns were again raised when Medicare physician fees
were reduced 5.4 percent. Some policymakers have questioned whether
access to physician services may have diminished either nationwide, in
certain geographic areas, or for certain beneficiaries needing high-
cost services.
In October 2003, we briefed the Senate Finance Committee on trends from
2000 to 2002 in (1) Medicare beneficiaries' use of physician services,
an indicator of access to these services; and (2) physicians' decisions
to "accept assignment," that is, accept Medicare's fee as payment in
full. This report addresses the same two objectives and expands on the
information provided in our October 2003 briefing. Enclosure I of the
report contains an augmented set of briefing slides. A second report on
this topic, as required by the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003 (MMA), will include 2003 and 2004 data
and additional analyses.
To address the two objectives of the 2003 study for the Senate Finance
Committee, we obtained data on physician services from the Centers for
Medicare & Medicaid Services (CMS).[Footnote 1] Specifically, we
analyzed all of the Medicare physician claims for services provided
during the month of April in 2000, 2001, and
2002.[Footnote 2] We used counts of FFS beneficiaries that were tallied
at the end of March in the 3 years selected. We restricted our analyses
to physician services that were provided to Medicare FFS beneficiaries
in the 50 states and the District of Columbia.[Footnote 3] Using the
Office of Management and Budget's system for defining metropolitan
statistical areas, we classified the nation's counties as urban or
rural, consolidated the urban counties and rural counties in each state
and the District of Columbia, and created 99 geographic areas to
analyze access at a subnational level.[Footnote 4] We did not adjust
the data for factors that could affect the provision and use of
physician services, such as beneficiary diagnosis or coverage of new
benefits. (For more detail on our methodology and data reliability
testing, see enc. II.) We performed our work from March 2003 through
December 2004 according to generally accepted government auditing
standards.
Background:
Growth in the supply of physicians in both urban and rural areas more
than kept pace with the increase in the Medicare beneficiary population
in those areas. From 1996 to 2001, the number of physicians is
estimated to have increased at an average annual rate of 2.6 percent in
urban areas and 3.5 percent in rural areas.[Footnote 5] This compares
with the average annual increase in Medicare beneficiaries from 2000 to
2002 of 1.6 percent in urban areas and 1.3 percent in rural areas.
Individuals age 65 and older and certain younger disabled individuals
who desire Medicare coverage for physician services may enroll in Part
B of the program, which also covers outpatient hospital care and
certain other services, such as occupational therapy.[Footnote 6] In
2002, approximately 87 percent of the beneficiaries in Part B were
enrolled in Medicare's traditional FFS option and could obtain care
from any licensed provider willing to accept Medicare patients. The
remaining beneficiaries were enrolled in private health plans that
contract to serve Medicare beneficiaries and obtained care through
their health plans.
Traditional FFS Medicare generally pays physicians a predetermined
amount for each service provided based on an established fee schedule.
Physicians who "accept assignment" agree to accept Medicare's fee as
payment in full. This includes the coinsurance amount (usually 20
percent) paid by the beneficiary. Physicians who sign Medicare
participation agreements must accept assignment for all covered
services that they provide to beneficiaries. Physicians who do not sign
participation agreements can either opt to accept assignment on a
service-by-service basis or not at all. When a nonparticipating
physician accepts assignment, the Medicare-approved amount is reduced
by 5 percent. Medicare pays the physician 80 percent of the reduced
amount; the beneficiary pays 20 percent of the reduced amount. When a
nonparticipating physician does not accept assignment, the Medicare-
approved amount is also reduced by 5 percent, but the physician is
allowed to collect an additional amount from the beneficiary that more
than offsets the 5 percent fee reduction--a practice known as balance
billing.[Footnote 7] Specifically, nonparticipating physicians who do
not accept assignment can charge up to 15 percent over the reduced
amount (this amount is known as the "limiting charge") and thus receive
in total approximately 109 percent of the Medicare fee for the
service.[Footnote 8] The beneficiary typically has to pay the
nonparticipating physician the full amount. Medicare later reimburses
the beneficiary for 80 percent of the reduced fee schedule amount. (See
table 1.)
Table 1: Example of Medicare Payment and Beneficiary Coinsurance for
Physician Services When the Medicare-Approved Amount Is $100:
Amount charged;
Participating physician: $150;
Physician accepting assignment but not participating: $150;
Physician not accepting assignment: $150.
Medicare-approved amount;
Participating physician: $100;
Physician accepting assignment but not participating: $95;
Physician not accepting assignment: $95.
Limiting charge (15 percent more than Medicare-approved amount);
Participating physician: Not applicable;
Physician accepting assignment but not participating: Not applicable;
Physician not accepting assignment: $109.25.
Medicare payment (80 percent);
Participating physician: $80;
Physician accepting assignment but not participating: $76;
Physician not accepting assignment: $76.
Beneficiary coinsurance (usually 20 percent);
Participating physician: $20;
Physician accepting assignment but not participating: $19;
Physician not accepting assignment: $33.25[A].
How payment is made;
Participating physician: Medicare directly pays physician. Beneficiary
pays coinsurance;
Physician accepting assignment but not participating: Medicare directly
pays physician. Beneficiary pays coinsurance;
Physician not accepting assignment: Beneficiary pays physician limiting
charge. Medicare reimburses beneficiary for its share.
Source: CMS.
[A] The beneficiary pays the difference between the Medicare payment to
the physician and the limiting charge.
[End of table]
CMS adjusts or updates the physician fee schedule each year using a
mechanism called the sustainable growth rate (SGR) system.[Footnote 9]
Under this system, CMS sets a spending target and adjusts physician
fees up or down, relative to the estimated increase in the Medicare
Economic Index (MEI),[Footnote 10] depending on whether actual spending
has fallen below or exceeded the target. Physicians raised concerns
about the SGR system when fees dropped significantly in 2002, a decline
that was, in part, a correction for fees that had been set too high in
prior years because of errors in forecast estimates and other
data.[Footnote 11]
Results in Brief:
Two indicators of beneficiary access to physician services--the
percentage of beneficiaries who received services and the number of
services provided to beneficiaries who were treated, including the
number of office visits--suggest an increase in access from April 2000
to April 2002. These indicators also suggest that access increases
occurred in virtually all parts of the country--both urban and rural
areas. Specifically, our analysis of Medicare physician claims data
produced the following results:
* Nationally, the percentage of beneficiaries that received physician
services during the month of April rose from 42.0 percent in 2000 to
46.0 percent in 2002. Although the percentage of beneficiaries who
received physician services was generally lower in rural areas (39.7
percent in 2000) relative to urban areas (42.9 percent in 2000), the
increase from 2000 to 2002 was somewhat higher in rural areas (4.3
percentage points) relative to urban areas (3.8 percentage points).
Over the 2-year period, the percentage of beneficiaries receiving
physician services increased in the rural areas and the urban areas of
every state in the nation.
* On average, the number of services provided per 1,000 beneficiaries
who saw a physician rose by 322 (from 3,619 to 3,941) in urban areas
and by 251 (from 3,278 to 3,529) in rural areas from April 2000 to
April 2002. All rural and urban areas, except rural Alaska, exhibited
an increase in this indicator.[Footnote 12]
The average number of office visits--an indicator of beneficiaries'
access to the typical entry point into the health care system and the
most basic level of physician services--rose for Medicare FFS
beneficiaries. The average number of office visits for both new and
established patients per 1,000 Medicare FFS beneficiaries rose by 68 in
rural areas (from 399 to 467) and by 79 in urban areas (from 453 to
532) from April 2000 to April 2002.
The vast majority--95.6 percent in April 2002--of services were
performed by participating physicians, that is, physicians who submit
claims on assignment. This represents a 0.6 percentage point increase
in the share of services performed by participating physicians since
2000. Nonparticipating physicians performed a commensurately smaller
percentage of services. This suggests that physicians did not attempt
to compensate for the 2002 fee reduction by changing their decision to
accept assignment in order to balance bill patients. From April 2000 to
April 2002, the percentage of services that physicians submitted as
unassigned claims--the only claims for which physicians are permitted
to balance bill beneficiaries--fell from 1.7 percent to 1.3 percent. In
short, from 2000 to 2002, Medicare beneficiaries were less likely to be
exposed to balanced billing.
Agency Comments:
In written comments on a draft of this report, CMS agreed with our
findings, stating that they are a very useful measure to assess overall
access of Medicare beneficiaries to medical services. CMS said it was
particularly pleased with the finding that rural beneficiaries'
utilization of services increased from 2000 to 2002. CMS noted the
agency's continued efforts to monitor and enhance beneficiary access to
physician services and expressed its commitment to working with
Congress to preserve beneficiaries' access to high-quality health care
and address future updates under the Medicare physician fee schedule.
CMS provided technical comments, which we incorporated where
appropriate. We have reprinted CMS's letter in enclosure III.
As we agreed with your offices, unless you publicly announce the
contents of this report earlier, we plan no further distribution of it
until 30 days from the date of this letter. We will then send copies of
this report to the Administrator of CMS and to interested parties upon
request. In addition, the report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you or your staffs have any questions or need additional
information, please contact me at (202) 512-7101. Another contact and
key contributors are listed in enclosure IV.
Signed by:
A. Bruce Steinwald:
Director, Health Care - Economic and Payment Issues:
Enclosures - 4:
Enclosure I: Medicare Fee-for-service (FFS) Beneficiary Access to
Physician Services: Trends in Utilization of Services: 2000 to 2002:
Objectives:
1. Analyze the trend in Medicare FFS beneficiaries‘ use of physician
services from 2000 to 2002.
2. Analyze the trend in physicians‘ decisions to accept Medicare‘s fee
as payment in full from 2000 to 2002.
Methodology:
* We analyzed Medicare Part B claims data for physician services
performed during the month of April in 2000, 2001, and 2002.
* The number of Medicare FFS beneficiaries is from the end of March
each year.
* We restricted our analyses to physician services covered by the
physician fee schedule that were provided to Medicare FFS beneficiaries
in the 50 states and the District of Columbia.
* We did not measure the influence of the many factors that might
influence the provision and use of physician services, such as
beneficiary diagnosis or coverage of new benefits.
Summary of Results:
From April 2000 to April 2002, both nationally and in states‘ urban and
rural areas:
* The percentage of Medicare FFS beneficiaries that received physician
services in April each year increased.
* The number of physician services received by Medicare FFS
beneficiaries increased.
* On average, each Medicare FFS beneficiary who saw a physician
received an increasing number of services.
* On average, the number of office visits for Medicare FFS
beneficiaries (both new and established patients) increased.
* Participating physicians provided an increasing proportion of
services.
* Overall, the proportion of services for which claims were submitted
on assignment increased.
Consequently, beneficiaries were less likely to be exposed to balance
billing.
Percentage of Medicare FFS Beneficiaries Receiving Physician Services
for April of 2000, 2001, and 2002:
[See PDF for image]
[End of figure]
Number of Physician Services Received by Medicare FFS Beneficiaries for
April of 2000, 2001, and 2002:
[See PDF for image]
[End of figure]
Number of Physician Services per Medicare FFS Beneficiary Served for
April of 2000, 2001, and 2002:
[See PDF for image]
[End of figure]
Number of Office Visits for Medicare FFS Beneficiaries (Both New and
Established Patients) for April of 2000, 2001, and 2002:
[See PDF for image]
[End of figure]
Number of Office Visits for Medicare FFS Beneficiaries for April of
2000, 2001, and 2002, by Urban and Rural Location:
[See PDF for image]
[End of figure]
Utilization of Physician Services in States‘ Urban and Rural Areas (see
app. I):
From April 2000 to April 2002:
* The percentage of Medicare FFS beneficiaries receiving physician
services increased”at varying rates”in the rural areas and the urban
areas of every state.
* The total number of services per 1,000 Medicare FFS beneficiaries who
saw a physician increased”at varying rates”in the rural areas and the
urban areas of every state except for rural Alaska.
*
Proportion of Physician Services by Medicare Participation and
Assignment Status:
[See PDF for image]
[End of figure]
Appendix I:
Utilization of Physician Services in States‘ Urban and Rural Areas:
Percentage of Medicare FFS Beneficiaries Served by Physicians in
States‘ Urban and Rural Areas, April 2000:
[See PDF for image]
[End of figure]
Percentage of Medicare FFS Beneficiaries Served by Physicians in
States‘ Urban and Rural Areas, April 2002:
[See PDF for image]
[End of figure]
Change in the Percentage of Medicare FFS Beneficiaries Served by
Physicians in States‘ Urban and Rural Areas, April 2000 to April 2002:
[See PDF for image]
[End of figure]
Number of Physician Services per 1,000 Medicare FFS Beneficiaries Who
Received Services in States‘ Urban and Rural Areas, April 2000:
[See PDF for image]
[End of figure]
Number of Physician Services per 1,000 Medicare FFS Beneficiaries Who
Received Services in States‘ Urban and Rural Areas, April 2002:
[See PDF for image]
[End of figure]
Percentage Change in the Number of Physician Services per 1,000
Medicare FFS Beneficiaries Who Received Services in States‘ Urban and
Rural Areas, April 2000 to April 2002:
[See PDF for image]
[End of figure]
[End of section]
Enclosure II: Scope and Methodology:
To analyze Medicare beneficiary access to physician services, we used
Medicare Part B claims data from the National Claims History (NCH)
files. These data, which are used by the Medicare program to make
payments to health care providers, are closely monitored by both CMS
and the Medicare carriers--contractors that process, review, and pay
claims for Part B-covered services. The data are subject to various
internal controls, including checks and edits performed by the carriers
before claims are submitted to CMS for payment approval. Although we
did not review these internal controls, we did assess the reliability
of the NCH data. First, we reviewed all existing information about the
data, including the data dictionary and file layouts. We also
interviewed experts at CMS who regularly use the data for evaluation
and analysis. We examined the data files for obvious errors, missing
values, values outside of expected ranges, and dates outside of
expected time frames. We found the data to be sufficiently reliable for
the purposes of this report.
We constructed datasets for 100 percent of Medicare claims for
physician services performed by physicians in April of 2000, 2001, and
2002.[Footnote 13],[Footnote 14],[Footnote 15] These years encompass a
period during which fees rose (2000-2001) and a period during which
fees decreased (2001-2002). We established a consistent cut-off date
(the last Friday in December) for each year's data file and only
included those claims for April services that had been submitted by
that date. Because claims continue to accrete in the data files, this
step was necessary to ensure that earlier years were not more complete
than later years. We supplemented these claims files with CMS data on
the number of beneficiaries in the FFS program as of March of each year
from the Medicare Managed Care Market Penetration Quarterly State/
County Data Files. In addition, on the basis of beneficiary location,
we associated each service with an urban or rural location, using the
Office of Management and Budget's classification of metropolitan
statistical areas (MSA) for that year. We assessed the reliability of
these supplementary data files by examining the data for obvious
errors, missing values, and values outside of expected ranges. In
addition, to further assess the reliability of the Medicare Managed
Care Market Penetration Quarterly State/County Data Files, we
interviewed experts at CMS who are responsible for the creation of
these files and who regularly use the data for evaluation and analysis.
We found these data to be sufficiently reliable for the purposes of
this report.
We constructed several utilization measures to determine whether
Medicare beneficiaries experienced changes in their access to physician
services; these indicators included:
* the percentage of Medicare FFS beneficiaries obtaining services in
April of each year,[Footnote 16]
* the total number of physician services received, and:
* the total number of physician services per beneficiary.
We analyzed these utilization measures nationally, for urban and rural
areas within each state, and for specific services such as office
visits for new and established patients. Using MSAs, we classified the
nation's counties as urban or rural, consolidated the urban counties
and rural counties in each state and the District of Columbia, and
created 99 geographic areas to analyze access at a subnational
level.[Footnote 17] We also determined whether services were performed
by participating or nonparticipating physicians and whether claims for
physician services were paid either on assignment or not on assignment.
We did not adjust the data for factors that could affect the provision
and use of physician services, such as beneficiary diagnosis or
coverage of new benefits.
Comments from Centers for Medicare & Medicaid Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES:
Centers for Medicare & Medicaid Services:
Administrator:
Washington, DC 20201:
DATE: DEC 2 1:
TO: A. Bruce Steinwald:
Director, Health Care-Economic and Payment Issues:
Government Accountability Office:
FROM: Mark B. McClellan. M.D., Ph.D.:
Administrator:
SUBJECT: Government Accountability Office's (GAO) Draft Report:
MEDICARE_ FEE-FOR-SERVICE BENEFICIARY ACCESS TO PHYSICIAN SERVICES:
Trends in Utilization of Services, 2000-2002 (GAO-05-145R):
Thank you for the opportunity to review and comment on the draft
report. Beneficiary access to high quality health care services is a
top priority for the Centers for Medicare & Medicaid Services (CMS). We
recognize the efforts of GAO and are pleased with the findings of the
report concluding beneficiary access and physician participation both
increased from 2000 to 2002. We believe these findings are a very
useful measure to assess overall access of Medicare beneficiaries to
medical services, and we commend GAO for its thorough analysis.
Overall, we are particularly pleased with the finding that rural
beneficiaries' utilization increased during the period.
The report found that Medicare beneficiary utilization of physician fee
schedule services increased from the period 2000 to 2002. For example,
the report found the number of services provided per 1,000
beneficiaries who saw a physician increased for both the urban and
rural areas of every state, except rural Alaska. In fact, although the
percentage of beneficiaries who received physicians' services was
generally lower in rural areas relative to urban areas, the increase
from 2000 to 2002 was somewhat higher in rural areas.
The number of physicians accepting Medicare assignment during this
period increased as well. As the report points out, this is
particularly significant in light of the negative update to the
physician fee schedule conversion factor in 2002, as a result of the
sustainable growth rate formula during that year.
Reductions in the fee rates paid to physicians by Medicare in 2002 and
early 2003 raised concerns that beneficiaries in some market areas may
have difficulty obtaining the care they need in a timely manner. In
response to these concerns, in the spring of 2003, CMS sponsored a
survey of Medicare beneficiaries in 11 targeted geographic areas. The
purpose of the survey was to assess the extent to which beneficiaries
were experiencing problems in accessing physicians' services, and
whether certain types of beneficiaries were more likely to experience
problems. The goal was to identify whether there was evidence of a link
between changes in physicians' fees and beneficiary access problems.
While not being able to generalize beyond these 11 markets, the
findings from the survey suggest that the fee reductions did not lead
to measurable restrictions in access to care. Even though the study
targeted geographic areas thought most likely to be experiencing
difficulties, relatively few Medicare beneficiaries in the 11 markets
reported major problems with access to physicians' care, and only a
small percentage had problems attributed to physicians not taking new
Medicare patients or limiting Medicare participation.
However, the findings did indicate that access problems were more
common among certain subgroups that may be especially vulnerable to
changes in access, including beneficiaries who had recently moved to
the area, were new to Medicare, or had changed from managed care to
fee-for-service. A repeat of the survey in the same 11 markets was
conducted in the spring of 2004. Findings from the second round of the
survey will be available soon.
We are also working on other policies intended to enhance access to
physician services, particularly in rural areas. For example, we
implemented for 2005 additional payments to physicians in counties
where there is a scarcity of physicians, and automated the process to
identify practitioners who are eligible to receive incentive payments
for practicing in existing health professional shortage areas.
In addition to payment policy changes focused on improving access in
rural areas, a Medicare demonstration projects is under development
that will further enhance beneficiary access. For example, the recently
announced demonstration project to reduce disparities in cancer
prevention and treatment will focus on helping minority beneficiaries
navigate the health care system. Services available through the
demonstration, such as the provision of transportation, and the
coordination of care among various providers will help minority
beneficiaries overcome barriers that lead to fragmentation in care.
The CMS would like to thank GAO for this report. CMS is committed to
working with Congress to preserve beneficiaries' access to high quality
care and address future updates under the Medicare physician fee
schedule. We believe it will be important, as we proceed to establish
future physician fee schedule updates, to continue to monitor access
through similar analyses.
[End of section]
GAO Contact and Staff Acknowledgments:
GAO Contact:
James Cosgrove, (202) 512-7029:
Acknowledgments:
In addition to the contact named above, Kevin Dietz, Jessica Farb,
Hannah Fein, Jennifer Podulka, and Mike Thomas made key contributions
to this report.
(290259):
FOOTNOTES
[1] CMS is the agency responsible for administering Medicare.
[2] These three samples represent a snapshot of beneficiary access to
physician services for each of the 3 years. Physician fee updates
generally occur at the beginning of each calendar year and remain
constant throughout the year. We selected the month of April to allow
time for the annual fee updates to be implemented and for physician
behavior to adjust to the new fees.
[3] Medicare uses a fee schedule to pay for physician services in the
traditional Medicare program. Under the fee schedule, Medicare pays for
more than 7,000 services. We included services covered by the fee
schedule as well as anesthesia services. We excluded other services
that the Secretary of Health and Human Services has defined as
physician services but which are not covered by the fee schedule, such
as laboratory tests and Medicare-covered outpatient prescription drugs.
[4] Rhode Island and New Jersey had no rural counties.
[5] For information on changes in physician supply, see GAO, Physician
Workforce: Physician Supply Increased in Metropolitan and
Nonmetropolitan Areas but Geographic Disparities Persisted, GAO-04-124
(Washington, D.C.: Oct. 31, 2003).
[6] In 2002, approximately 94 percent of the more than 40 million
individuals covered by Medicare were enrolled in Part B.
[7] Physicians may "opt out" of the Medicare program altogether and
charge any amount for the services they provide. Under this option,
physicians must agree not to file any Medicare claims for 2 years and
their patients are responsible for 100 percent of the charges.
Relatively few physicians--approximately 3,000 in 2004--have opted out
of the Medicare program.
[8] The limiting charge is 115 percent of 95 percent of the fee
schedule, or 109.25 percent.
[9] The SGR system was created by the Balanced Budget Act of 1997 (see
Pub. L. No. 105-33, §4503, 111 Stat. 251, 433-34) and was revised by
the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999 (see Pub. L. No. 106-113, App. F, §211(b), 113 Stat. 1501A-321,
348-49) and, most recently, by MMA (see § 601(b), 117 Stat. 2301).
[10] MEI measures input prices for resources needed to provide
physician services. It is designed to estimate the increase in the
total cost for the average physician to operate a medical practice.
[11] GAO, Medicare Physician Payments: Concerns about Spending Target
System Prompt Interest in Considering Reforms, GAO-05-85 (Washington,
D.C.: Oct. 8, 2004).
[12] In rural Alaska, the number of services each beneficiary received
decreased on average by 0.9 percent.
[13] We excluded claims for services provided by nurse practitioners,
physician assistants, and other nonphysician practitioners.
[14] We included services covered by the fee schedule as well as
anesthesia services. We identified claims for physician services
covered by the fee schedule by limiting the files to include only
Healthcare Common Procedure Codes that are on the physician fee
schedule and covered by Medicare.
[15] We excluded claims from beneficiaries in Guam, Puerto Rico, and
the U.S. Virgin Islands because access issues in these areas may be
substantively different than those in the rest of the United States.
[16] Beneficiaries refers to all Medicare beneficiaries not just those
for whom claims were filed.
[17] Rhode Island and New Jersey had no rural counties.
