Effect of Primary Care Visits on the Demand for Specialty Care in Health Maintenance Organizations

Health maintenance organizations (HMOs) provide low cost access to primary care physicians (PCPs) in an effort to restrict expensive specialty use. Although managed care plans hope that low cost primary care will reduce specialist use, the theoretical effect of easing access to primary care on specialty use is unclear. Despite the importance of estimating the effect of PCP visits on specialty use, no previous studies have directly addressed this question at the enrollee level. This study examines the effect of visits to the PCP on the demand for episodes of specialty care in two health plans: a gatekeeper HMO and a point-of-service plan. Using person-level data, we estimate a generalized method of moments model of specialty episodes that accounts for the endogeneity of PCP visits within a count-data framework. The authors compare this model to three alternative models-an OLS model, a negative binomial model, and a two-stage least squares model. They find evidence that increases in primary care visits increase episodes of specialty care in both plans. The authors also find that the three alternative models yield biased but more efficient estimates compared to the generalized method of moments model.