Medicare Payment Generosity and Access to Care

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Journal of Regulatory Economics




All payments to physicians under Medicare Part B are adjusted to reflect geographic differences in practice costs. The methods used for this adjustment, and temporary price floors imposed by Congress, have created longstanding systematic under and overpayment across physicians, whereby some are routinely underpaid while others are routinely overpaid. Using a nationally representative 2008 survey of physicians, this study examines whether the relative generosity of Medicare influences beneficiary access to care. We find that in areas where Medicare payments are more generous physicians are more likely to accept new Medicare patients, whereas in less generous areas, they are less likely. Our estimated models suggest that if Medicare could eliminate the systematic biases inherent its payment formula, it would see a net improvement to access to care under Medicare Part B.