Medicare Seniorsí Access to Physician Care Stabilized between 2001 and 2003

Findings Suggest 2002 Medicare Physician Payment Cut Didnít Curtail Beneficiary Access

News Releases
Feb. 15, 2005

Alwyn Cassil (202) 264-3484 or

WASHINGTON, DC—After a significant decline in 2001, Medicare seniors’ access to physician services stabilized in 2003, according to a national study released today by the Center for Studying Health System Change (HSC).

Similar to Medicare seniors, privately insured near-elderly people between the ages of 55 and 64 experienced a spike in access problems in 2001, indicating system-wide capacity constraints were curtailing access to physician services for both groups of patients. Nonetheless, policy makers worried that a 5.4 percent Medicare physician payment cut in 2002 might limit seniors’ access to physician care.

However, 9.9 percent of Medicare seniors reported delaying or not getting needed medical care in 2003 compared with 11 percent in 2001 and 9.1 percent in 1997, according to HSC’s Community Tracking Study 2003 Household Survey, a nationally representative survey involving information on 46,600 people, including 6,900 Medicare beneficiaries 65 and older.

Mirroring the trend for Medicare seniors, the proportion of privately insured near-elderly people reporting access problems in 2003 was 17.4 percent compared with 18.4 percent in 2001 and 15.2 percent in 1997.

"Access problems for Medicare seniors and older privately insured Americans moderated in 2003, suggesting that the Medicare physician payment cut did not disrupt Medicare seniors’ access to care in the short term," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.

"However, with future payment cuts pending, policy makers still need to monitor beneficiary access because physician response to the 2002 cut probably was tempered by expectations that Congress would rescind additional payment cuts," said Ginsburg, a coauthor of the study with Sally Trude, Ph.D., an HSC consulting researcher.

The HSC study complements a recent Government Accountability Office (GAO) report that found the proportion of Medicare beneficiaries receiving physician services and the number of services provided to beneficiaries both increased between April 2000 and April 2002.

The HSC study’s findings are detailed in a new Issue Brief—An Update on Medicare Beneficiary Access to Physician Services. Other key findings include:

Historically, Medicare physician payment policy has sought to constrain total spending for physician services yet remain neutral to the care setting and type of care delivered. A formula links annual changes to the payment rate for each unit of service to growth in the number and mix of services physicians provide. If the number and mix of services physicians provide per beneficiary exceeds the established budget, the payment rate is cut to bring spending back within budget.

Due to the 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. In 2003, the formula reduced the physician payment rate by 4.4 percent, but subsequent legislation repealed the reduction and increased the physician payment rate 1.6 percent. For 2004 and 2005, Congress suspended the Medicare physician payment formula and increased the payment rate by 1.5 percent. From 2003 to 2004, Medicare spending per capita grew 7 percent.

With Medicare physician payment cuts again looming in 2006, the researchers noted that "without a way to control the growth in the number and intensity of services physicians provide, Congress is stranded between a trade-off of uncontrolled spending and risking access problems for Medicare beneficiaries."

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.