Physician Shortage Areas:

Medicare Incentive Payment Not an Effective Approach to Improve Access

HEHS-99-36: Published: Feb 26, 1999. Publicly Released: Feb 26, 1999.

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Pursuant to a congressional request, GAO reviewed the Medicare Incentive Payment program to determine if: (1) it is an effective mechanism for improving access to care for Medicare beneficiaries and underserved populations other than Medicare beneficiaries; and (2) the program's goals, performance measures, and financial controls provide a sound structure for continuing or expanding the program.

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.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Congress took action to make the bonus payment automatic without addressing our recommendation to take steps to better structure the program to better link the payments to intended outcomes.

    Matter: Congress should consider whether the Medicare Incentive Payment program is an appropriate vehicle for addressing medical underservice. If Congress decides to continue or expand the program, it should consider clarifying the intent of the program and taking steps to better structure the program to link limited federal funds to the intended outcomes.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In response to GAO inquiries, CMS did not identify action to implement recommendation.

    Recommendation: To improve management and oversight of the program, the Secretary of Health and Human Services should: (1) integrate the program into the Department's overall access-to-care strategic planning and performance measurement activities; and (2) direct the Administrator of HCFA to establish more intensive bonus payment review standards for all contractors.

    Agency Affected: Department of Health and Human Services


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