Center for Studying Health System Change

Opening Statement Before the Subcommittee on Health of the House Committee on Ways and Means

Hearing on Medicare Physician Payment

Testimony
Feb. 28, 2002

It is really a privilege to be invited to talk on this topic. The Center for Studying Health System Change is an independent, nonpartisan research organization funded by The Robert Wood Johnson Foundation. It conducts research on how the health system is changing and the impact of those changes on people. Our research includes surveys and site visits that provide unique perspectives on health care in communities. We seek to inform policy with timely and objective analysis, but the Center does not advocate particular policy positions.

When the issue of the Medicare physician payment update developed late last year, I recognized that trend data from our surveys and data from our site visits could contribute to the debates. We have information from household survey respondents about their experience in obtaining care in a timely fashion. We have information from physician respondents about their acceptance of new patients and the time spent in patient care. And we have information from site interviews with health plan executives about how much they pay physicians in relation to Medicare payment rates.

My testimony contains a lot of charts with data, but I would like to take you right to the bottom line. Many of the trends in the testimony point to a tightening of physician capacity in relation to demand that is leading to declines in peoples’ ability to access care without delay. We see that more people are reporting delays in getting care. The time to get an appointment with a physician is increasing. Doctors are spending more hours per week in patient care and fewer doctors are accepting all new patients. A likely factor behind these trends is the recent growth in demand associated with the loosening of restriction of managed care throughout the medical care system.

These trends are affecting Medicare beneficiaries, but they are also affecting those with private insurance. The relative financial attractiveness between Medicare and private insurance has probably not changed much in the last few years. Physician willingness to accept all Medicare patients is declining, but so is physician willingness to accept all new privately insured patients.

But this parallelism in trends could change over the next few years. The current law formula is expected to reduce Medicare payment rates a lot more. Also, physicians, particularly specialists, have been exerting greater leverage with managed care plans and are likely to get higher payment rates. The bottom line is that there are greater risks of deterioration and access to care from sharp cuts in Medicare physician payment rates today than in the past because of the stresses on physician capacity. Thank you.