Shortcomings in Medicare Bonus Payments for Physicians in Underserved Areas

Medicare's Bonus Payment Program Has Not Met Its Goal of Providing Physicians with Incentives to Practice in Rural Underserved Areas

Published in: Health Affairs, v. 22, no. 4, July/Aug. 2003, p. 173-178

Posted on RAND.org on December 31, 2002

by Lisa R. Shugarman, Donna O. Farley

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This study examines trends in Medicare spending for basic payments and bonus payments for physician services provided to beneficiaries residing in nonmetropolitan counties. For our analysis, the authors used Medicare Part B physician/supplier claims data for 1992, 1994, 1996, and 1998. Payments under the congressionally mandated bonus payment program acccounted for less than 1 percent of expenditures for physician services in nonmetropolitan, underserved counties. Physician payments increased from 1992 to 1998, while bonus payments increased through 1996 but then declined by 13 percent by 1998. The share of bonus payments to primary care physicians declined throughout the decade, but the share for primary care services increased.

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