Medicare Physician Services: Use of Services Increasing 	 
Nationwide and Relatively Few Beneficiaries Report Major Access  
Problems (21-JUL-06, GAO-06-704).				 
                                                                 
Congress, policy analysts, and groups representing physicians	 
have periodically raised concerns that Medicare's efforts to	 
control spending on physician services by limiting annual updates
to physician fees could have an adverse impact on beneficiaries' 
access to physician services. These concerns were heightened in  
2002 when Medicare's formula for setting physician fees required 
a 5.4 percent reduction in fees to help moderate rapid spending  
increases. From 2003 to 2006, fees have not grown as rapidly as  
the estimated cost to physicians of providing services, and	 
concerns about access have remained. The Medicare Prescription	 
Drug, Improvement, and Modernization Act of 2003 requires GAO to 
study access to physician services by beneficiaries in the	 
traditional fee-for-service (FFS) program. This report focuses on
(1) trends and patterns in beneficiaries' perceptions of the	 
availability of physician services from 2000 through 2004, (2)	 
trends in beneficiaries' utilization of physician services from  
2000 through 2005, and (3) indicators of physician supply and	 
willingness to serve Medicare beneficiaries from 2000 through	 
2005. GAO analyzed the most recent data available, including	 
several years of data from an annual survey of FFS Medicare	 
beneficiaries as well as utilization trends based on all Medicare
physician claims for services provided in April of each year from
2000 through 2005.						 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-704 					        
    ACCNO:   A57259						        
  TITLE:     Medicare Physician Services: Use of Services Increasing  
Nationwide and Relatively Few Beneficiaries Report Major Access  
Problems							 
     DATE:   07/21/2006 
  SUBJECT:   Access to health care				 
	     Beneficiaries					 
	     Health care cost control				 
	     Health care costs					 
	     Health care programs				 
	     Health care services				 
	     Health statistics					 
	     Health surveys					 
	     Medical fees					 
	     Medicare						 
	     Physicians 					 
	     Statistical data					 
	     Medicare Fee-for-Service Program			 

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GAO-06-704

     

     * Results in Brief
     * Background
          * Some Medicare Spending for Physician Services May Be Unneces
          * Efforts to Control Medicare Spending on Physician Services I
          * Medicare's Physician Fee Schedule Based on Relative Values
          * Medicare's Payments to Physicians for Services Are Affected
          * Studies of Medicare Beneficiary Access Suggest Few Problems
     * Overall Trends in Beneficiary Perceptions of Major Access Di
          * Proportions of Beneficiaries Reporting Major Access Difficul
          * Beneficiary Perceptions of Major Access Difficulties Varied
          * Beneficiary Perceptions of Major Access Difficulties Were Si
          * Beneficiaries with Certain Characteristics More Likely Than
     * From 2000 to 2005, Both Proportion of Beneficiaries Receivin
          * Proportion of Beneficiaries Receiving Physician Services Gre
          * Average Number of Services Provided Rose
          * Complexity of Services Provided Also Increased
     * From 2000 to 2005, Indicators of Physician Supply and Willin
          * Number of Physicians Serving Medicare Beneficiaries Increase
          * Proportion of Services for Which Physicians Accepted Medicar
     * Concluding Observations
     * Agency and Industry Comments and Our Evaluation
          * Agency Comments
          * American Medical Association Comments
          * Data Sources
          * Analysis of Beneficiary Responses to the CAHPS Survey
          * Data Reliability and Limitations
          * Data Reliability
     * GAO Contact
     * Acknowledgments
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Report to Congressional Committees

United States Government Accountability Office

GAO

July 2006

MEDICARE PHYSICIAN SERVICES

Use of Services Increasing Nationwide and Relatively Few Beneficiaries
Report Major Access Problems

Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access
Medicare Beneficiary Access Medicare Beneficiary Access Medicare
Beneficiary Access Medicare Beneficiary Access Medicare Beneficiary Access

GAO-06-704

Contents

Letter 1

Results in Brief 5
Background 6
Overall Trends in Beneficiary Perceptions of Major Access Difficulties
Were Stable over Time, with Some Beneficiaries More Likely Than Others to
Report Difficulties 13
From 2000 to 2005, Both Proportion of Beneficiaries Receiving Physician
Services and Number of Services Provided per Beneficiary Increased 24
From 2000 to 2005, Indicators of Physician Supply and Willingness to Serve
Medicare Beneficiaries Were Favorable 37
Concluding Observations 40
Agency and Industry Comments and Our Evaluation 40
Appendix I Methods and Models Used in Analyzing Factors Affecting Medicare
Beneficiaries' Perceptions of Access 44
Appendix II Methods Used to Analyze Medicare Claims Data 52
Appendix III Specific Physician Services Reviewed 54
Appendix IV Comments from the Centers for Medicare & Medicaid Services 56
Appendix V GAO Contact and Staff Acknowledgments 61

Tables

Table 1: Example of Medicare Payment and Beneficiary Coinsurance for
Physician Services When the Medicare-Approved Amount Is $100 11
Table 2: Medicare Beneficiary Responses to Three CAHPS Survey Questions
regarding Access to Physician Services, 2000-2004 14
Table 3: Average Percentage of Medicare Beneficiaries Who Reported Major
Difficulties Accessing Physician Services by Self-Reported Health Status,
2000-2004 20
Table 4: Average Percentage of Medicare Beneficiaries Who Reported Having
Major Difficulties Accessing Physician Services by Beneficiary Age Group,
2000-2004 21
Table 5: Average Percentage of Medicare Beneficiaries Who Reported Having
Major Difficulties Accessing Physician Services by Race, 2000-2004 22
Table 6: Average Percentage of Medicare Beneficiaries Who Reported Having
Major Difficulties Accessing Physician Services by Supplemental Health
Insurance Coverage, 2000-2004 23
Table 7: Changes in Volume and Complexity of Physician Services Provided
per Medicare Beneficiary, April 2000-April 2005 37
Table 8: CAHPS Survey Questions Related to Physician Access, 2000-2004 45
Table 9: Estimated Effects of Selected Medicare Beneficiary and Area
Characteristics on Reporting Major Difficulty Accessing Physician
Services, 2000-2004 47
Table 10: Percentage Change in the Number of Services Provided per 1,000
Medicare Beneficiaries, April 2000 to April 2005 54

Figures

Figure 1: Variation by State in Percentage of Medicare Beneficiaries Who
Reported Having a Big Problem Finding a Personal Doctor or Nurse, 2004 16
Figure 2: Percentage Point Change in Medicare Beneficiary Reports of
Having a Big Problem Finding a Personal Doctor or Nurse, 2000 to 2004 18
Figure 3: Percentage of Medicare Beneficiaries Receiving Physician
Services in April, 2000-2005 25
Figure 4: Variation by State Urban and Rural Areas in Proportion of
Medicare Beneficiaries Receiving Physician Services, April 2005 26
Figure 5: Percentage Point Change from 2000 to 2005 in Proportion of
Medicare Beneficiaries Receiving Physician Services in April, by State
Urban and Rural Areas 28
Figure 6: Number of Physician Services Provided per 1,000 Medicare
Beneficiaries Served in April, 2000-2005 29
Figure 7: Variation by State Urban and Rural Areas in the Average Number
of Physician Services Provided per 1,000 Medicare Beneficiaries Served,
April 2005 30
Figure 8: Change from 2000 to 2005 in Number of Physician Services
Provided per 1,000 Medicare Beneficiaries in April, by State Urban and
Rural Areas 32
Figure 9: Number of Physician Services Provided per 1,000 Medicare
Beneficiaries in April, 2000 and 2004 33
Figure 10: Number of Services Provided per 1,000 Medicare Beneficiaries in
April, by Service Category, 2000 and 2005 34
Figure 11: Number of Office Visits per 1,000 Medicare Beneficiaries in
April by New and Established Patients, 2000-2005 35
Figure 12: Number of Physicians Billing Medicare for Services Provided to
Medicare Beneficiaries in April, 2000-2005 38
Figure 13: Proportion of Physician Services by Medicare Participation and
Assignment Status, April 2000 and April 2005 39

Abbreviations

AMA American Medical Association ARF Area Resource File BETOS
Berenson-Eggers Type of Service CABG coronary artery bypass graft CAHPS
Consumer Assessment of Health Plans Study CAT computed axial tomography
CMS Centers for Medicare & Medicaid Services E&M evaluation and management
FFS fee-for-service FQHC federally qualified health center GDP gross
domestic product HSC Center for Studying Health System Change MedPAC
Medicare Payment Advisory Commission MEI Medicare Economic Index MSA
metropolitan statistical area MVPS Medicare volume performance standard
NCH National Claims History file RHC rural health clinic RVU relative
value units SGR sustainable growth rate

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United States Government Accountability Office

Washington, DC 20548

July 21, 2006

Congressional Committees

Since the early 1990s, Congress, policy analysts, and groups representing
physicians have periodically raised concerns that Medicare's efforts to
control spending on physician services by limiting annual updates to
physician fees could have an adverse impact on beneficiaries' access to
physician services. These concerns were heightened in 2002, when
Medicare's formula for setting physician fees required a 5.4 percent
reduction in fees to help moderate rapid spending increases for physician
services.1 In 2003 through 2006, a combination of administrative and
legislative changes averted additional fee declines that would otherwise
have occurred under the formula. However, concerns about access remained
because fees in these years did not grow as rapidly as the increase in the
estimated cost to physicians for providing their services.2 In the absence
of additional actions, Medicare's formula is projected to reduce physician
fees by approximately 5 percent each year for 9 years beginning in 2007.3

In January 2005, we reported that based on beneficiaries' utilization of
physician services, the 2002 fee cut did not appear to have an immediate
impact on beneficiary access to physician services and that beneficiary
access increased from April 2000 to April 2002.4 Our report did not
assess, however, how beneficiary access to physician services might have
changed since 2002 or how beneficiaries perceived their access to
physician services.

1For example, in February 2002, shortly after the fee reduction went into
effect, two congressional hearings on Medicare physician payments were
held. See Medicare Payment Policy: Ensuring Stability and Access Through
Physician Payments, Hearing Before the Subcommittee on Health of the
Committee on Energy and Commerce, House of Representatives, February 14,
2002, Serial No. 107-91, Washington, D.C., and Physician Payments, Hearing
Before the Subcommittee on Health of the Committee on Ways and Means,
House of Representatives, February 28, 2002, Serial No. 107-70,
Washington, D.C.

2The change in the cost of providing physician services is measured by the
Medicare Economic Index (MEI). MEI measures input prices for resources
needed to provide physician services. It is designed to estimate the
increase in the total cost for the average physician to operate a medical
practice.

3The Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds, 2006 Annual Report of the
Boards of Trustees of the Federal Hospital Insurance and Federal
Supplementary Medical Insurance Trust Funds (Washington, D.C.: May 1,
2006).

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
directed us to study access to physician services by beneficiaries in the
traditional fee-for-service (FFS) program.5 Specifically, we examined

           o  trends and patterns in beneficiaries' perceptions of the
           availability of physician services from 2000 through 2004,
           o  trends in beneficiaries' utilization of physician services from
           2000 through 2005, and
           o  indicators of physician supply and willingness to serve
           Medicare beneficiaries from 2000 through 2005.

           In addressing these objectives, we analyzed the most recent data
           available from two data sources. First, we analyzed several years
           of data from an annual Centers for Medicare & Medicaid Services
           (CMS) patient satisfaction survey of FFS Medicare beneficiaries,
           called the Consumer Assessment of Health Plans Study (CAHPS(R)).6
           Specifically, we examined beneficiaries' responses for the years
           2000 through 2004 to three questions related to access to
           physician services.7 The survey questions asked whether

           o  finding a personal provider was "no problem," "a small
           problem," or "a big problem";
           o  seeing a specialist was "no problem," "a small problem," or "a
           big problem"; and
           o  beneficiaries were able to schedule an appointment for routine
           care promptly "always," "usually," "sometimes," or "never."

           We measured access problems based only on beneficiaries' responses
           in the most negative category-that is, "a big problem" or "never."
           This approach enabled us to be as definitive as possible in
           describing beneficiaries' perceptions of access
           difficulties.8,9,10 Because the personal provider and prompt
           appointment questions were not limited to physician services, the
           proportion of beneficiaries who reported major difficulties for
           these questions may not be specific to difficulties accessing
           physicians. We also sought to determine whether certain
           characteristics, such as age, race, health status, and supply of
           physicians in a beneficiary's county of residence-15 beneficiary
           and area characteristics in all-were associated with the survey
           responses. To determine these relationships, we conducted a
           multivariate statistical analysis that yields an estimate of each
           characteristic's effect, controlling for the effects of all other
           characteristics in the analysis. (See app. I for more details on
           the methodology of our analysis of the CAHPS data.)

           Second, we analyzed utilization trends for 6 years by examining
           all Medicare physician claims for services provided in April of
           each year from 2000 through 2005.11,12,13 These data encompass
           several periods: 2 years in which fee increases were greater than
           the increase in the estimated cost of providing services (2000 and
           2001), 1 year in which fees decreased (2002), and 3 years in which
           fee increases were less than the increase in the estimated cost of
           providing services (2003, 2004, and 2005). Because it was outside
           the scope of our study, we did not adjust the claims data for
           factors that could affect the provision and use of physician
           services, such as incidence of illness or coverage of new
           benefits. Thus, we could not determine whether the amount of
           physician services provided over our period of study was
           appropriate. We also used the claims data to analyze trends in the
           number of physicians billing Medicare and in the proportion of
           services for which Medicare was accepted as payment in full. (See
           app. II for more details on our analysis of the Medicare claims
           data.)

           We ensured the reliability of the CAHPS and claims data used in
           this report by performing appropriate electronic data checks and
           by interviewing agency officials who were knowledgeable about the
           data. Specifically, we examined the accuracy and completeness of
           the CAHPS data by testing for implausible values and internal
           consistency and by interviewing experts at CMS about whether the
           CAHPS data could appropriately be used as we intended. The
           Medicare claims data we used are considered to be generally
           reliable, as they are used by the Medicare program as a record of
           payments to health care providers and are closely monitored by
           both CMS and the Medicare carriers-contractors that process,
           review, and pay claims for Part B-covered services. In addition,
           we examined the claims data files for obvious errors, missing
           values, values outside of expected ranges, and dates outside of
           expected time frames. We also interviewed experts at CMS who
           regularly use the claims data for evaluation and analysis. We
           found that both the CAHPS and claims data were sufficiently
           reliable for the purpose of our analyses. We conducted our work
           from October 2004 through June 2006 in accordance with generally
           accepted government auditing standards.

           From 2000 through 2004, among beneficiaries who needed access to
           physician services, the percentages reporting major
           difficulties-that is, "having a big problem" finding a personal
           provider or specialist or never being able to schedule an
           appointment promptly-remained relatively constant. Nationwide,
           relatively few beneficiaries-no more than about 7 percent-reported
           a major access difficulty. Beneficiaries living in urban areas and
           beneficiaries living in rural areas reported major access
           difficulties in similar percentages. Although the proportion of
           beneficiaries who reported major difficulties varied considerably
           among states-by as much as 12 percentage points-their perceptions
           over time of access to physician services in the vast majority of
           states remained nearly the same or improved. In our analysis of
           beneficiary subgroups, we identified certain beneficiary
           characteristics-including health status, age, and race-that were
           associated with beneficiaries' reporting a big problem finding a
           personal provider or specialist or never being able to schedule an
           appointment promptly. Specifically, survey respondents who rated
           their health as poor, were under 65 and disabled, were not white,
           and had no supplemental health insurance or had supplemental
           insurance from Medicaid, were more likely to have experienced
           physician access difficulties.

           Two indicators of beneficiary access to physician services-the
           proportion of beneficiaries who received services and the number
           of services provided to beneficiaries who were treated-suggest an
           increase in access from April 2000 to April 2005. In particular,
           the proportion of beneficiaries receiving services rose by 4
           percentage points nationwide-from about 41 percent to about 45
           percent; by 4 percentage points in urban areas-from about 42
           percent to 46 percent; and by 3 percentage points in rural
           areas-from about 39 percent to about 42 percent. Moreover, the
           average number of services provided per 1,000 beneficiaries
           nationwide rose by 14 percent, in urban areas by 15 percent, and
           in rural areas by 12 percent. Likewise, within every state's urban
           areas and almost every state's rural areas, the proportion of
           beneficiaries who received services increased, and within all
           states' urban and rural areas, the average number of services
           provided to beneficiaries who received services increased. Volume
           generally increased, for specific services-office visits,
           procedures, imaging services, and tests. Finally, services per
           beneficiary rose not only in number but also in complexity for the
           April 2000-April 2005 period we examined.

           Two other access related indicators-the number of physicians
           billing Medicare for services and the proportion of services for
           which Medicare's fees were accepted as payment in full-increased
           from April 2000 to April 2005. Specifically, the number of
           physicians billing Medicare increased by 11 percent, while the
           number of Medicare beneficiaries increased by 8 percent, over the
           period covered by our claims analysis. In addition, from April
           2000 through April 2005, the vast majority of Medicare services
           were performed by participating physicians-that is, physicians who
           accept Medicare's fees as payment in full for services provided.
           This proportion increased over this period from 95 percent to over
           96 percent. The increase suggests that there was no reduction in
           the predominant tendency of physicians to accept Medicare patients
           and payments.

           CMS agreed with our findings and conclusions, stating that our
           analysis of existing data was well-conceived and executed.
           Officials from the American Medical Association (AMA) stated that
           our analysis of survey, claims, and physician participation data
           showed no deterioration in beneficiaries' access to physician
           services over the time period studied. However, AMA officials
           cautioned that the results of this analysis should not be
           interpreted as an improvement in access and suggested that the
           report place more emphasis on our finding that beneficiaries with
           certain characteristics, such as those in poor health, were more
           likely, relative to other beneficiaries, to respond that they
           experienced major difficulty accessing physician services. CMS and
           AMA also provided technical comments, which we incorporated as
           appropriate.

           Medicare is the federally financed health insurance program for
           persons age 65 and over, certain individuals with disabilities,
           and individuals with end-stage kidney disease. In 2005 there were
           approximately 43 million Medicare beneficiaries.14 Eligible
           individuals are automatically covered by Part A, which helps pay
           for inpatient hospital, skilled nursing facility, and hospice
           care, as well as home health care that follows a stay in a
           hospital or skilled nursing facility. Most eligible individuals
           elect to pay a monthly premium-$88.50 a month in 2006-to obtain
           Medicare Part B coverage, which helps pay for physician services,
           hospital outpatient services, and certain other services, such as
           physical therapy.15 In addition, most Medicare beneficiaries have
           supplemental insurance that helps them pay for their care, thus
           reducing financial barriers to obtaining care. In 2002, 90 percent
           of Medicare beneficiaries obtained supplemental coverage either
           through their former employer (32 percent), a privately purchased
           supplemental insurance policy known as Medigap (26 percent),
           Medicaid (16 percent), or some other program.

           Medicare beneficiaries may choose how they receive covered
           services. In 2005, most beneficiaries in Part B-about 87
           percent-were enrolled in Medicare's traditional FFS option and
           could obtain care from any licensed provider willing to accept
           Medicare patients. The remaining beneficiaries were enrolled in
           private health plans that contract to serve Medicare beneficiaries
           and could obtain care through their health plans. These plans
           typically contract with some of the same physicians and hospitals
           that participate in FFS Medicare.

           Over the last several years, rapid spending growth for Part B
           services-driven in part by spending growth for physician
           services-has heightened concerns about the Medicare program's
           long-range fiscal outlook. Medicare spending for physician
           services has increased from about $32 billion in 1998 to about $59
           billion in 2005. We and others have noted that because of
           demographic trends and increases in per beneficiary health care
           spending, the Medicare program in its present form is not
           sustainable. Long-term projections indicate that Medicare's burden
           on the federal budget and the economy will balloon-almost tripling
           by 2035 and quadrupling by 2075.16 Moderating spending growth for
           physician services, in part by seeking to ensure that services
           provided are necessary and appropriate, will continue to be part
           of the larger effort to ensure future program sustainability.

           The provision of more services does not necessarily mean better
           health care or better health care outcomes. The wide geographic
           variation in Medicare spending for physician services-unrelated to
           beneficiary health status or outcomes-provides evidence that
           health needs alone do not determine spending. Furthermore, some
           studies have shown that in some instances growth in the number of
           services provided may lead to medical harm.17 Payments under the
           Medicare program, however, generally do not foster quality,
           efficiency, or medical efficacy. Therefore, some of the growth in
           beneficiary utilization of, and spending for, physician services
           may not be warranted. Although access to appropriate care is
           important, overutilization of services represents wasteful
           spending and may, in some instances, harm beneficiaries.
           Consequently, policymakers have deemed it both reasonable and
           desirable to question the appropriateness of current and projected
           spending on physician services, and to explicitly consider the
           affordability of such spending when setting physician fees.

           In the 1990s, several reforms to Medicare physician fees were
           implemented to help control rapid spending growth for physician
           services in the traditional FFS Medicare program. Among those
           reforms were the establishment of a national fee schedule and a
           system of spending targets.18 The target system was designed to
           control Medicare physician spending growth attributable to
           increases in the number of services, known as volume, and in the
           complexity and costliness of services, known as intensity. Under
           the design of the fee schedule and target system, annual updates
           to physician fees depend, in part, on whether actual spending has
           fallen below or exceeded the target. Fees are permitted to
           increase at least as fast as the costs of providing physician
           services as long as volume and intensity growth remains below a
           specified rate-currently, a little more than 2 percent a year. If
           spending associated with volume and intensity grows faster than
           the specified rate, the target system reduces fee increases or
           causes fees to fall.

           Under the fee schedule, Medicare pays for more than 7,000 services
           that can be classified in several broad categories-patient
           evaluation and management, which includes office visits, hospital
           visits, and consultations; procedures, which includes inpatient
           and minor surgeries; imaging, which includes X rays and more
           sophisticated diagnostic radiology, such as computed axial
           tomography (CAT) scans; and tests, which includes urinalysis and
           blood chemistries. Within these broad categories are varying
           levels of service complexity.

           The fee schedule expresses this complexity through relative value
           units (RVU), which account for the amount of physician time,
           expertise, and resources required to deliver a service compared to
           other services.19,20 The relative complexity-as measured by the
           costliness-of each service is compared to a benchmark service,
           defined as a midlevel office visit. For example, if a midlevel
           office visit had an RVU value of 1.000,21 a service with 1.475
           RVUs is estimated to be 47.5 percent more costly to provide than
           the midlevel office visit; while a service with 0.925 RVUs is
           estimated to be 7.5 percent less costly than the midlevel office
           visit. In this way, RVU weights quantify the complexity of
           services provided.

           Traditional FFS Medicare generally pays physicians a predetermined
           amount for each service provided. Physicians who "accept
           assignment" agree to accept Medicare's fee as payment in full for
           the services they provide to Medicare beneficiaries. This includes
           the coinsurance amount (usually 20 percent) paid by the
           beneficiary to the physician.22 Physicians who sign Medicare
           participation agreements-referred to as participating
           physicians-must accept assignment for all the covered services
           they provide to beneficiaries. Physicians who do not sign
           participation agreements-referred to as nonparticipating
           physicians-can either opt to accept assignment on a
           service-by-service basis or not at all. When a nonparticipating
           physician accepts assignment the fee schedule amount, also known
           as the Medicare-approved amount, is reduced by 5 percent. Medicare
           pays the physician 80 percent of the reduced amount; the
           beneficiary pays 20 percent of the reduced amount. When a
           nonparticipating physician does not accept assignment, the
           Medicare-approved amount is also reduced by 5 percent, but the
           physician is allowed to collect an additional amount from the
           beneficiary that more than offsets the 5 percent fee reduction-a
           practice known as balance billing.23 Specifically,
           nonparticipating physicians who do not accept assignment can
           charge up to 15 percent over the reduced Medicare approved amount
           and thus receive in total approximately 109 percent of the
           Medicare approved fee for that service (this amount is known as
           the "limiting charge").24 The beneficiary typically has to pay the
           nonparticipating physician the full amount of the limiting charge.
           Medicare later reimburses the beneficiary for 80 percent of the
           reduced Medicare approved amount. (See table 1.)

4GAO, Medicare Fee-for-Service Beneficiary Access to Physician Services:
Trends in Utilization of Services, 2000 to 2002, GAO-05-145R (Washington,
D.C.: Jan. 12, 2005).

5Pub. L. No. 108-173, S: 604, 117 Stat. 2066, 2301-02.

6CAHPS is a registered trademark of the Department of Health and Human
Services' Agency for Healthcare Research and Quality. CAHPS refers to a
family of surveys that asks consumers and patients to evaluate their
health care using a standardized set of questions. CMS conducts a CAHPS
survey of both the Medicare FFS population and the Medicare Advantage
population. Throughout this report we refer to the FFS CAHPS (R) survey as
the CAHPS survey. Beginning in 2005, the CAHPS acronym stands for Consumer
Assessment of Healthcare Providers and Systems.

7Between 100,000 and 125,000 individuals responded to the survey each
year.

8Throughout this report, we describe beneficiaries' collective responses
to the CAHPS survey questions as their perceptions of access.

9Throughout this report, we collectively characterize the most negative
responses to these three questions as "having major difficulties."

10Our pattern of results would have been similar if we had analyzed the
three questions for reports of any problem, that is, a "small problem" or
"big problem" and "sometimes" or "never."

11We examined over 60 million claims for April of each year. These claims
samples from the month of April represent an annual snapshot of
beneficiary access to physician services for each of the 6 years.
Physician fee updates generally occur at the beginning of each calendar
year and remain constant throughout the year. We selected April to allow
time for the annual fee updates to be implemented and for physician
behavior to adjust to the new fees. To avoid "calendar bias"-that is, the
occurrence of more weekdays in April in one year compared to another-and
to create an equal number of weekdays in each year's data set, we limited
each year's claims to services performed within the first 28 days of the
month.

12We defined physician services to include those services provided by a
medical doctor and paid under the physician fee schedule-such as office
visits, major and minor surgeries, and imaging services. We also included
anesthesia services. We excluded claims for services provided by nurse
practitioners, physician assistants, and other nonphysician practitioners.

13We excluded beneficiaries in Guam, Puerto Rico, and the U.S. Virgin
Islands because access issues in these areas may be substantively
different than those in the rest of the United States.

                                Results in Brief

                                   Background

14In 2005, 42.5 million people were covered by Medicare: 35.8 million were
age 65 and older, and 6.7 million were disabled.

15In 2005, about 93 percent of the 43 million individuals covered by
Medicare were enrolled in Part B.

16Medicare spending in 2005 was 2.7 percent of the gross domestic product
(GDP) and is projected to grow to 7.5 percent of GDP by 2035 and 12.9
percent of GDP by 2075.

Some Medicare Spending for Physician Services May Be Unnecessary

Efforts to Control Medicare Spending on Physician Services Include Fee Schedule
and Spending Targets

17Elliott S. Fisher and H. Gilbert Welch, "Avoiding the Unintended
Consequences of Growth in Medical Care: How Might More Be Worse?" Journal
of the American Medical Association, vol. 281, no. 5 (1999): 446-453; E.S.
Fisher, et al., "The Implications of Regional Variations in Medicare
Spending. Part 1: The Content, Quality, and Accessibility of Care," Annals
of Internal Medicine, vol. 138, no. 4 (2003): 273-287; E.S. Fisher, et
al., "The Implications of Regional Variations in Medicare Spending. Part
2: Health Outcomes and Satisfaction with Care," Annals of Internal
Medicine, vol. 138, no. 4 (2003): 288-298; and Joseph P. Newhouse, Free
for All? Lessons from the RAND Health Insurance Experiment (Cambridge,
Mass.: Harvard University Press, 1993).

18The first system of spending targets, the Medicare volume performance
standard (MVPS), was established along with the fee schedule in 1992. In
1998, the sustainable growth rate (SGR) system replaced MVPS. SGR is the
current spending target system.

Medicare's Physician Fee Schedule Based on Relative Values

19Some services paid under the physician fee schedule do not have RVUs
associated with them; these services are priced by Medicare's claims
administration contractors.

20Medicare adjusts a service's RVU-based payment for area differences in
physicians' cost of operating a private medical practice. The adjustment
is made using geographic practice cost indexes.

21In 2005, the RVUs for a midlevel office visit were 1.39 for services
provided in a non-facility setting and 0.94 for services provided in a
facility setting.

Medicare's Payments to Physicians for Services Are Affected by Physician
Participation and Assignment Status of Claim

22Although beneficiaries are responsible for this amount, most Medicare
FFS beneficiaries-about 90 percent in 2002-have supplementary coverage
that covers out-of-pocket expenses, including the beneficiary's
coinsurance amount.

23Physicians may "opt out" of the Medicare program altogether and charge
any amount for the services they provide but they must inform the
beneficiary in advance of this arrangement. Under this option, physicians
must agree not to file any Medicare claims for 2 years, and their patients
are responsible for 100 percent of the charges. Relatively few
physicians-approximately 5,000 as of 2005-have opted out of the Medicare
program.

24The limiting charge is 115 percent of 95 percent of the Medicare
approved amount, or 109.25 percent.

Table 1: Example of Medicare Payment and Beneficiary Coinsurance for
Physician Services When the Medicare-Approved Amount Is $100

                                           Physician                          
                                           accepting         Physician not    
                         Participating     assignment but    accepting        
                         physician         not participating assignment
Amount charged                     $150              $150             $150 
Medicare-approved                  $100               $95              $95 
amount                                                    
Limiting charge (15      Not applicable    Not applicable          $109.25 
percent more than the                                     
Medicare-approved                                         
amount)                                                   
Medicare payment (80                $80               $76              $76 
percent)                                                  
Beneficiary                         $20               $19          $33.25a 
coinsurance (usually                                      
20 percent)                                               
How payment is made   Medicare directly Medicare directly Beneficiary pays 
                           pays physician.   pays physician.        physician 
                          Beneficiary pays  Beneficiary pays limiting charge. 
                              coinsurance.      coinsurance.         Medicare 
                                                                   reimburses 
                                                              beneficiary for 
                                                                its share (80 
                                                               percent of the 
                                                                     approved 
                                                                     amount). 

Source: GAO analysis of CMS information.

aThe beneficiary pays the coinsurance of $19.00 plus the $14.25 difference
between the Medicare payment to the physician and the limiting charge.

Studies of Medicare Beneficiary Access Suggest Few Problems Nationwide

Studies from the Medicare Payment Advisory Commission (MedPAC), CMS, and
the Center for Studying Health System Change (HSC) have reported that
Medicare beneficiary access to physician services nationwide has been good
in recent years, with some exceptions. In its March 2006 report,25 MedPAC
reported the results of its 2005 survey comparing patient access measures
between Medicare beneficiaries and privately insured individuals age 50 to
64. It found that similar proportions of Medicare and privately insured
individuals had no problems finding a physician or scheduling an
appointment. Specifically, 75 percent of both Medicare beneficiaries and
of privately insured individuals had no problem finding a new primary care
physician,26 while 74 percent of Medicare beneficiaries and 67 percent of
privately insured individuals never experienced an unwanted delay in
getting an appointment for routine care.27 These results are generally
consistent with previous MedPAC reports on access related solely to
Medicare beneficiaries.28

25See Medicare Payment Advisory Commission, Report to the Congress,
Medicare Payment Policy (Washington, D.C.: March 2006).

26In 2005, 12 percent of Medicare beneficiaries had a small problem and 13
percent had a big problem finding a new primary care physician. Similarly,
16 percent of privately insured individuals had a small problem and 9
percent had a big problem finding a new primary care physician.

In 2005, CMS reported findings from its "targeted" beneficiary survey,
that is, a survey focused only on beneficiaries in 11 markets who might
have been likely to experience problems accessing physician services based
on evidence from CMS monitoring activities and responses to the 2001 CAHPS
survey.29,30 The survey results generally showed stability or improvement
in obtaining access from 2003 through 2004. For example, the proportion of
FFS Medicare beneficiaries who reported that seeing a doctor "has gotten
harder in the past year or two" remained the same-at 7 percent-for both
years. In addition, the proportions of beneficiaries reporting problems
getting routine care appointments in 2003 and 2004 declined from 27
percent to 21 percent. CMS also noted that certain groups of
beneficiaries-those transitioning to a new physician, disabled
individuals, those in poor or fair health, those with low incomes, and
those without supplemental coverage-had higher rates of problems accessing
physician services. For example, about 10 percent of disabled (under age
65) Medicare beneficiaries reported access problems related to physicians'
willingness to accept Medicare, whereas no more than 4 percent of
beneficiaries older than 65 (and therefore eligible for Medicare on the
basis of age) reported the same problem.

A January 2006 HSC report, based on periodic surveys of physicians, found
that the proportion of physicians nationwide accepting new Medicare
patients remained unchanged for the two most recent survey periods.31,32
Specifically, for both the 2000-2001 and 2004-2005 survey periods, HSC
found that over 70 percent of physicians surveyed accepted all new
Medicare patients.33 Only a small fraction-less than 4 percent-of
physicians responded that they did not accept any new Medicare patients.
HSC concluded that despite fluctuations in Medicare payments to
physicians, access has remained high for beneficiaries and comparable to
access rates for privately insured individuals.

27In 2005, with regard to getting an appointment for routine care, 21
percent of Medicare beneficiaries sometimes experienced an unwanted delay,
3 percent usually experienced an unwanted delay, and 2 percent always
experienced an unwanted delay. Similarly, among privately insured
individuals, 25 percent sometimes, 5 percent usually, and 3 percent always
experienced an unwanted delay in getting an appointment for routine care.

28See Medicare Payment Advisory Commission, Report to the Congress,
Medicare Payment Policy (Washington, D.C.: March 2005); Report to the
Congress, Medicare Payment Policy (Washington, D.C.: March 2004); Report
to the Congress, Medicare Payment Policy (Washington, D.C.: March 2002);
and Report to the Congress, Medicare Payment Policy (Washington, D.C.:
March 2000).

29Centers for Medicare & Medicaid Services and Mathematica Policy
Research, Inc., Results from the 2003 and 2004 Targeted Beneficiary
Surveys on Access to Physician Services Among Medicare Beneficiaries
(Washington, D.C.: Jan. 20, 2005).

30The 11 markets included the state of Alaska; Phoenix, Arizona; San
Diego, California; San Francisco, California; Denver, Colorado; Tampa,
Florida; Springfield, Missouri; Las Vegas, Nevada; Brooklyn, New York;
Fort Worth, Texas; and Seattle, Washington.

  Overall Trends in Beneficiary Perceptions of Major Access Difficulties Were
  Stable over Time, with Some Beneficiaries More Likely Than Others to Report
                                  Difficulties

From 2000 through 2004, the percentage of beneficiaries who reported major
difficulties accessing physician services-that is, "having a big problem"
finding a personal provider or specialist or never being able to promptly
schedule a routine appointment-did not vary much from year to year, and
relatively small percentages of beneficiaries reported these difficulties.
The percentage of beneficiaries who reported major difficulties accessing
physician services varied widely by state, but in the vast majority of
states this percentage remained relatively constant or declined from 2000
through 2004. Beneficiaries living in urban areas and beneficiaries living
in rural areas reported major access difficulties in similar percentages.
However, beneficiaries with certain characteristics-such as those in poor
health or less than 65 years of age-were more likely to report access
difficulties relative to other beneficiaries regardless of where they
lived.

31Center for Studying Health System Change, Tracking Report: Physician
Acceptance of New Medicare Patients Stabilizes in 2004-2005 (Washington,
D.C.: January 2006).

32The HSC Community Tracking Study Physician Survey is a nationally
representative telephone survey of physicians involved in direct patient
care in the continental United States. The survey had three data
collection periods, 1996-1997, 2000-2001, and 2004-2005.

33If the proportion of physicians who accepted "some" or "most" new
patients had been included, the percentage would have been higher.

Proportions of Beneficiaries Reporting Major Access Difficulties Were Relatively
Small and Stable

The percentage of beneficiaries who reported major difficulties accessing
physician services did not vary substantially from 2000 through 2004. (See
table 2.) For example, among those who needed to find a personal doctor or
nurse,34 about 7 percent of beneficiaries reported a big problem in 2000,
and about 5 percent reported a big problem in 2004. Similarly, among those
who needed to see a specialist,35 the percentage of beneficiaries who
reported having a big problem varied by less than 2 percentage points-from
a high of 5.6 percent in 2000 to a low of 4.3 percent in 2004. Among
beneficiaries who needed to schedule an appointment,36 the percentage who
reported never being able to schedule an appointment promptly remained at
less than 2 percent throughout the 5-year period.

Table 2: Medicare Beneficiary Responses to Three CAHPS Survey Questions
regarding Access to Physician Services, 2000-2004

                                       Percentage of respondents who reported
CAHPS survey questions regarding          having major difficulties
access to physician services          2000   2001   2002   2003       2004
How much of a problem was it                                               
finding a personal doctor or nurse                                    
you were happy with since enrolling                                   
in Medicare?                                  7.1    5.6    6.0   5.8  5.3
In the last 6 months, how much of a                                        
problem was it seeing a specialist?           5.6    4.6    5.0   4.9  4.3
In the last 6 months, how often did                                        
you get an appointment promptly?              1.1    1.1    1.6   1.5  1.5

Source: GAO analysis of CMS's Medicare CAHPS surveys.

Notes: We define major difficulties as reporting "a big problem" finding a
personal doctor or nurse or seeing a specialist or as reporting "never"
being able to promptly schedule a health care appointment. These questions
were paraphrased for the purposes of this report. The total number of
individuals responding to each question varied from year to year. We
reported proportions only for those beneficiaries who needed to find a
personal doctor or nurse, needed to see a specialist, or needed to
schedule an appointment.

34In each survey year, an average of 47 percent of beneficiaries reported
that they did not have the same personal doctor or nurse as before joining
Medicare.

35In each survey year, an average of 56 percent of beneficiaries reported
needing to see a specialist in the past 6 months.

36In each survey year, an average of 74 percent of beneficiaries reported
needing to schedule an appointment in the past 6 months.

Beneficiary Perceptions of Major Access Difficulties Varied by State, but Trends
over Time Were Stable or Improved

In each survey year, the proportion of beneficiaries who reported major
difficulties accessing physician services varied considerably across the
50 states and the District of Columbia. For example, in 2004, Alaska had
the highest proportion of beneficiaries-15 percent-who reported having a
big problem finding a personal doctor or nurse, whereas Nebraska had the
lowest, 3 percent. Figure 1 shows variation among the states in the
percentage of beneficiaries who reported having a big problem finding a
personal doctor or nurse in 2004. Also in 2004, the percentage who
reported having a big problem seeing a specialist ranged from a high of 11
percent in Alaska to a low of 2 percent in Vermont. In contrast, the
proportion of beneficiaries who reported never being able to schedule an
appointment promptly had a smaller range-from a high of 5 percent in
Alaska to less than 1 percent in Nebraska. In a separate analysis, we
found that the supply of health care resources, such as physicians and
hospital beds, did not have a sufficiently important impact on
beneficiaries' perceptions of access to physician services; the variation
we found among states in the percentages reporting major difficulties
should therefore not be interpreted as being related to the availability
of health care resources. (See app. I.)

Figure 1: Variation by State in Percentage of Medicare Beneficiaries Who
Reported Having a Big Problem Finding a Personal Doctor or Nurse, 2004

Note: Percentages are reported only for beneficiaries who indicated in
their survey responses that they had a different personal doctor than
before they enrolled in Medicare.

In the vast majority of states, the proportion of beneficiaries in 2004
who reported major difficulties accessing physician services was nearly
the same as, or lower than, the proportion in 2000. Specifically, in 49
states, the proportion of beneficiaries in each state who reported a big
problem finding a personal doctor or nurse either stayed the same-within 2
percentage points of that reported in 2000-or fell by more than 2
percentage points.37 (See fig. 2.) Similarly, in all 50 states and the
District of Columbia, the proportion of beneficiaries who reported a big
problem seeing a specialist either stayed the same or declined. In 47
states, proportions of beneficiaries who reported never being able to
schedule an appointment promptly remained the same.38

37The proportion of beneficiaries who reported a big problem finding a
personal doctor or nurse increased from 2000 to 2004 in the District of
Columbia and Idaho.

38The proportion of beneficiaries who reported never being able to
schedule an appointment promptly increased from 2000 to 2004 in Alaska,
the District of Columbia, Idaho, and Nevada.

Figure 2: Percentage Point Change in Medicare Beneficiary Reports of
Having a Big Problem Finding a Personal Doctor or Nurse, 2000 to 2004

Note: Percentage point changes are reported only for beneficiaries who
indicated in their survey responses that they had a different personal
doctor than before they enrolled in Medicare.

The District of Columbia and Idaho were exceptional in that beneficiaries'
perceptions of access grew worse from 2000 to 2004 on more than one
question. Specifically, during that period, the proportion of
beneficiaries in the District of Columbia who reported a big problem
finding a personal doctor or nurse increased by 7 percentage points, and
the proportion who reported never having scheduled an appointment promptly
increased by 3 percentage points. Over the same period, the proportions of
beneficiaries in Idaho who reported a big problem finding a personal
doctor or nurse and who reported never having scheduled an appointment
promptly increased by 2 percentage points.

Beneficiary Perceptions of Major Access Difficulties Were Similar for Urban and
Rural Areas

We observed very little difference between the proportions of urban and
rural beneficiaries who reported major difficulties accessing physician
services during the period 2000 through 2004. For example, in 2004, 5.5
percent of urban beneficiaries reported having a big problem finding a
personal doctor or nurse, and 4.8 percent of rural beneficiaries reported
a big problem. In that same year, 4.4 percent of urban beneficiaries and
4.1 percent of rural beneficiaries reported having a big problem finding a
specialist. Similarly, 1.6 percent of urban beneficiaries reported never
being able to schedule an appointment promptly, and 1.4 percent of rural
beneficiaries reported this difficulty.

The proportions of both urban and rural beneficiaries who reported major
access difficulties remained relatively stable-changing by no more than 2
percentage points-from 2000 through 2004. For example, the proportion of
urban beneficiaries who reported having a big problem finding a personal
doctor or nurse ranged from a high of 7.3 percent in 2000 to a low of 5.5
percent in 2004. Similarly, the proportion of beneficiaries in rural areas
who reported a big problem ranged from a high of 6.7 percent in 2000 to a
low of 4.8 percent in 2004. When asked about seeing a specialist, the
percentage of urban beneficiaries who reported having a big problem was
5.6 in 2000 and 4.4 in 2004. Likewise, 5.4 percent of rural beneficiaries
reported having a big problem in 2000, as did 4.1 percent in 2004.
Finally, the proportion of urban beneficiaries who reported never being
able to schedule an appointment promptly was relatively stable-1.2 percent
in 2000 and 1.6 percent in 2004. Among rural beneficiaries, 1.0 percent
and 1.4 percent reported this difficulty in 2000 and 2004, respectively.

Beneficiaries with Certain Characteristics More Likely Than Others to Report
Major Access Difficulties

Beneficiaries with certain characteristics-fair or poor self-reported
health status, under age 65, nonwhite, no supplemental health insurance or
supplemental insurance from Medicaid, college-educated-were somewhat more
likely than other beneficiaries to report major difficulties accessing
physician services.39 For example, when asked about their ability to find
a personal doctor or nurse they were happy with, on average over the 5
years, about 8 percent of beneficiaries in fair or poor health responded
that they had a big problem, compared with about 4 percent of
beneficiaries in excellent or very good health.40 (See table 3.) On the
other two physician access questions, those in fair or poor health
similarly reported major difficulties more frequently on average than
those in better health.41 This relationship between health status and
reported access is consistent with the fact that people in fair or poor
health are likely to have more physician encounters and thus have more
opportunities to experience an access problem.

Table 3: Average Percentage of Medicare Beneficiaries Who Reported Major
Difficulties Accessing Physician Services by Self-Reported Health Status,
2000-2004

                                                                   Percentage 
                      Percentage reporting a                  reporting never 
                       big problem finding a       Percentage   being able to 
Beneficiary self-      personal doctor or  reporting a big     schedule an 
reported health     nurse they were happy problem seeing a     appointment 
status                              witha      specialistb       promptlyc 
Excellent or very                     4.1              2.5             1.2 
good                                                       
Good                                  4.8              3.4             1.2 
Fair or poor                          8.0              7.2             1.6 

Source: GAO analysis of CMS's Medicare CAHPS surveys.

aPercentages are reported for beneficiaries who reported that they did not
have the same personal doctor or nurse before joining Medicare.

bPercentages are reported for beneficiaries who reported needing to see a
specialist in the past 6 months.

cPercentages are reported for beneficiaries who reported needing to make
an appointment in the past 6 months.

39Other beneficiary and area characteristics, such as sex, county of
residence, and county-level supply of physicians and hospital beds, did
not affect the proportion of beneficiaries reporting major difficulties.
(See app. I.)

40Beneficiaries' heath status was self-reported.

41Fair or poor health status was associated with reporting major access
difficulties even after we controlled for other characteristics, such as
age and race. (See app. I.) In total, we controlled for survey year and 15
beneficiary and area characteristics.

Compared with respondents age 65 and over, a larger proportion of
beneficiaries under age 65, who typically qualify for Medicare on the
basis of disability,42 reported major difficulties accessing physician
services. For example, on average during this period, about 11 percent of
beneficiaries under age 65 reported a big problem seeing a specialist,
compared with 4 percent of beneficiaries over age 65.43 (See table 4.)
This relationship suggests that disabled beneficiaries were more likely to
report having major physician access difficulties than beneficiaries age
65 and older.

Table 4: Average Percentage of Medicare Beneficiaries Who Reported Having
Major Difficulties Accessing Physician Services by Beneficiary Age Group,
2000-2004

                                                                   Percentage 
                                                              reporting never 
                      Percentage reporting a       Percentage   being able to 
                       big problem finding a  reporting a big     schedule an 
Beneficiary age  personal doctor or nurse problem seeing a     appointment 
group               they were happy witha      specialistb       promptlyc 
Under 65                             13.2             10.8             2.5 
65 and overd                          5.1              4.0             1.2 

Source: GAO analysis of CMS's Medicare CAHPS surveys.

aPercentages are reported for beneficiaries who did not have the same
personal doctor or nurse before they joined Medicare.

bPercentages are reported for beneficiaries who indicated that they needed
to see a specialist in the past 6 months.

cPercentages are reported for beneficiaries who attempted to make an
appointment in the past 6 months.

dAcross the age breakouts for those age 65 and over-that is, 65 to 69, 70
to 74, 75 to 79, 80 to 84, and 85 and over-the percentage reporting having
major difficulties varied little.

Nonwhite beneficiaries were somewhat more likely to report major
difficulties accessing physician services than white beneficiaries. For
example, the percentage of nonwhites reporting a big problem finding a
personal doctor or nurse, on average, was about 2 percentage points higher
relative to whites. In addition, the percentages of nonwhites reporting
major difficulties accessing specialists and scheduling appointments were
larger on average than the percentages of whites reporting major
difficulties-a difference of 6 and 1 percentage points, respectively.44
(See table 5.)

42Some beneficiaries under age 65 qualify for Medicare for other reasons,
such as having end-stage renal disease.

43When we controlled for the effect of other characteristics, including
self-reported health status, being under age 65 was associated with
reporting major access difficulties. (See app. I.) Regardless of health
status, these disabled beneficiaries reported major difficulties more
frequently. In total, we controlled for survey year and 15 beneficiary and
area characteristics.

Table 5: Average Percentage of Medicare Beneficiaries Who Reported Having
Major Difficulties Accessing Physician Services by Race, 2000-2004

                                                                   Percentage 
                                                              reporting never 
                  Percentage reporting a big       Percentage   being able to 
                  problem finding a personal  reporting a big     schedule an 
Beneficiary     doctor or nurse they were problem seeing a     appointment 
race                          happy witha      specialistb       promptlyc 
White                                 5.7              4.1             1.2 
Black                                 6.4              8.9             2.1 
Hispanic                              8.2             11.3             2.4 
Other                                 9.3             11.2             2.4 
All nonwhite                          7.5             10.1             2.3 

Source: GAO analysis of CMS's Medicare CAHPS surveys.

aPercentages are reported for beneficiaries who did not have the same
personal doctor or nurse before they joined Medicare.

bPercentages are reported for beneficiaries who indicated that they needed
to see a specialist in the past 6 months.

cPercentages are reported for beneficiaries who attempted to make an
appointment in the past 6 months.

Medicare beneficiaries with no supplemental health insurance and those
with Medicaid as a supplement were more likely than beneficiaries with
only Medigap or other non-Medicaid supplemental health insurance to report
major difficulties accessing physician services. For example, on average,
beneficiaries with no supplemental coverage or with Medicaid were about 2
and about 4 percentage points, respectively, more likely than
beneficiaries with only non-Medicaid supplemental coverage to report a big
problem finding a personal doctor or nurse. (See table 6.) With respect to
seeing a specialist, beneficiaries with no supplemental health insurance
or Medicaid were, on average, about 5 and 6 percentage points
respectively, more likely to report a big problem, compared with
beneficiaries with non-Medicaid supplemental coverage. Beneficiaries with
no supplemental coverage or Medicaid were about 1 percentage point more
likely than those with other supplemental coverage to report never being
able to schedule an appointment promptly.45

44After we controlled for other beneficiary characteristics, nonwhite race
remained associated with reporting major access difficulties for the
questions on finding a specialist and scheduling an appointment. (See app.
I.) For the question on finding a personal doctor or nurse, however,
blacks were less likely to report a big problem than whites, and Hispanics
were as likely as whites to report a big problem after we controlled for
other beneficiary characteristics.

Table 6: Average Percentage of Medicare Beneficiaries Who Reported Having
Major Difficulties Accessing Physician Services by Supplemental Health
Insurance Coverage, 2000-2004

                                                                   Percentage 
                                                              reporting never 
                      Percentage reporting a       Percentage   being able to 
Supplemental        big problem finding a  reporting a big     schedule an 
health insurance personal doctor or nurse problem seeing a     appointment 
coverage            they were happy witha      specialistb       promptlyc 
None                                  7.5              8.9             2.1 
Medicaid                              8.8              9.2             1.8 
Non-Medicaid                          5.1              3.6             1.1 

Source: GAO analysis of CMS's Medicare CAHPS surveys.

Note: Non-Medicaid includes supplemental coverage from the Department of
Veterans Affairs, Tricare, Medigap, and other private insurance. Some
beneficiaries included in the Medicaid supplemental category may also have
had non-Medicaid supplemental coverage.

aPercentages are reported for beneficiaries who did not have the same
personal doctor or nurse before they joined Medicare.

bPercentages are reported for beneficiaries who indicated that they needed
to see a specialist in the past 6 months.

cPercentages are reported for beneficiaries who attempted to make an
appointment in the past 6 months.

After we controlled for the other factors that could affect access to
physician services,46 including health status, age, and race,
beneficiaries who had a 4-year college degree were more likely to report
major difficulties accessing physician services. (See app. I.) For
example, a typical beneficiary-a white female, age 70 to 74, with a high
school diploma-had about a 7 percent likelihood of reporting a big problem
finding a personal doctor or nurse.47 In contrast, if the same beneficiary
had attained a 4-year college degree, she would have slightly more than an
8 percent likelihood of reporting a big problem finding a personal doctor
or nurse.

45After we controlled for other beneficiary characteristics, lack of
supplemental coverage from a source other than Medicaid remained
associated with reporting major difficulties accessing physician services.
(See app. I.)

46In total we controlled for survey year and 15 beneficiary and area
characteristics, which we describe in app. I.

47A typical beneficiary also had fair or poor self-reported health status,
had supplemental health insurance coverage only from a source other than
Medicaid, and resided in an urban area. See app. I for a complete list of
the typical characteristics-both beneficiary and area related.

From 2000 to 2005, Both Proportion of Beneficiaries Receiving Physician Services
           and Number of Services Provided per Beneficiary Increased

Two indicators of beneficiary access to physician services-the proportion
of beneficiaries who received services and the number of services provided
to beneficiaries who were treated-suggest an increase in access from April
2000 to April 2005. Nationwide, in urban areas and in rural areas, the
proportion of beneficiaries receiving services rose by 3 to 4 percentage
points over this period. Moreover, the average number of services provided
per 1,000 beneficiaries who received services rose nationwide by 14
percent, in urban areas by 15 percent, and in rural areas by 12 percent.
These two indicators increased within every state's urban areas and almost
every state's rural areas.

Proportion of Beneficiaries Receiving Physician Services Grew

In general, the proportion of beneficiaries who received physician
services rose during the period covered in our review. (See fig. 3.)
Specifically, from 2000 to 2005, the proportion of beneficiaries receiving
services during the month of April rose from about 41 percent to about 45
percent. Although this measure declined slightly in April 2003, the
proportion of beneficiaries receiving services remained a percentage point
higher than in April 2000 and the upward trend resumed in 2004.
Nationwide, this measure increased in both urban and rural areas.
Specifically, the proportion of beneficiaries receiving services rose from
about 42 percent in April 2000 to about 46 percent in April 2005 in urban
areas and from about 39 percent in April 2000 to about 42 percent in April
2005 in rural areas.

Figure 3: Percentage of Medicare Beneficiaries Receiving Physician
Services in April, 2000-2005

Note: Beneficiaries were included if they received a service in the first
28 days of April.

In each year, the proportions of beneficiaries receiving services in April
varied by state urban and rural areas. (See fig. 4.) For example, in 2005,
the lowest proportion of beneficiaries receiving services was 33 percent
in urban Alaska, whereas the highest proportion was 53 percent in rural
Delaware. The proportion of beneficiaries receiving services in April 2005
was 40 percent or higher in almost three-quarters of the 99 urban and
rural areas we examined.48 Specifically, within the states, in four-fifths
of the urban areas and two-thirds of the rural areas, the proportion of
beneficiaries receiving services was 40 percent or more.

48Using the Office of Management and Budget's system for defining
metropolitan statistical areas, we classified the nation's counties as
urban or rural. We consolidated the urban counties and rural counties in
each state and the District of Columbia, and created 99 geographic areas.
There were 51 urban areas and 48 rural areas. There are no rural areas in
New Jersey, Rhode Island, and the District of Columbia.

Figure 4: Variation by State Urban and Rural Areas in Proportion of
Medicare Beneficiaries Receiving Physician Services, April 2005

Note: Beneficiaries were included if they received a service in the first
28 days of April.

Within every state's urban areas and almost every state's rural areas, the
proportion of beneficiaries receiving services increased from April 2000
to April 2005. The percentage of beneficiaries receiving services
increased by 4 percentage points in urban areas and by 3 percentage points
in rural areas. There was a slight decline-1 percentage point or less-in
the rural areas of Hawaii and Washington. (See fig. 5.) The largest
increase- 14 percentage points-occurred in rural Alaska. In two-thirds of
the 99 areas we examined, there was at least a 3 percentage point increase
from April 2000 to April 2005.

Figure 5: Percentage Point Change from 2000 to 2005 in Proportion of
Medicare Beneficiaries Receiving Physician Services in April, by State
Urban and Rural Areas

Note: Beneficiaries were included if they received a service in the first
28 days of April.

Average Number of Services Provided Rose

From April 2000 to April 2005, an increasing number of services were
provided to beneficiaries who were treated by a physician. Specifically,
in that period, the average number of services provided per 1,000
beneficiaries who were treated rose by 14 percent-from about 3,400 to
about 3,900. From April 2000 to April 2005, the number of services
provided per 1,000 beneficiaries was lower in rural areas (3,196 services
per 1,000 beneficiaries who received services in 2000) relative to urban
areas (3,516 services per 1,000 beneficiaries who received services in
2000). (See fig. 6.) However, in percentage terms, the urban and rural
areas experienced similar increases in the number of services per treated
beneficiary-15 percent in urban areas, compared with 12 percent in rural
areas.

Figure 6: Number of Physician Services Provided per 1,000 Medicare
Beneficiaries Served in April, 2000-2005

Note: Beneficiaries and services were included if services were received
in the first 28 days of April.

The number of services provided also varied among states' urban areas and
rural areas. (See fig. 7.) For example, in April 2005, the lowest number
of services provided per 1,000 beneficiaries who were treated by a
physician was 3,071 services in urban Vermont, whereas the highest number
was 4,503 services in urban Florida. In rural areas, the number ranged
from 3,094 services in Vermont to 4,191 in Florida.

Figure 7: Variation by State Urban and Rural Areas in the Average Number
of Physician Services Provided per 1,000 Medicare Beneficiaries Served,
April 2005

Note: Beneficiaries and services were included if services were received
in the first 28 days of April.

Within every state's urban and rural areas, there was an increase from
April 2000 to April 2005 in the average number of services provided for
each beneficiary who was treated by a physician. (See fig. 8.) In 57 of
the 99 areas we examined, the number of services provided per 1,000
beneficiaries increased by at least 12 percent. Among the 51 urban areas
we examined, the percentage increase in the number of services provided
per 1,000 beneficiaries ranged from a high of 21 percent in New York to a
low of 3 percent in Vermont. Among the 48 rural areas, the increase ranged
from a high of 20 percent in Connecticut to a low of 4 percent in Wyoming.

Figure 8: Change from 2000 to 2005 in Number of Physician Services
Provided per 1,000 Medicare Beneficiaries in April, by State Urban and
Rural Areas

Note: Beneficiaries and services were included if the services were
received in the first 28 days of April.

Although the CAHPS survey showed a worsening in beneficiaries' perceptions
of access to physician services in two states-the District of Columbia and
Idaho-our analysis of the claims data demonstrated that the number of
services provided to Medicare beneficiaries increased in both states and
increased substantially in one of the two states. For example, from April
2000 to April 2004, the same period covered by the CAHPS surveys, we found
a double-digit increase in the number of services provided per capita both
nationwide (24 percent) and in Idaho (13 percent).49 In contrast, over the
same period, the number of services provided per capita increased by only
2 percent in the District of Columbia. (See fig. 9.)

Figure 9: Number of Physician Services Provided per 1,000 Medicare
Beneficiaries in April, 2000 and 2004

Notes: Services were included if they were received in the first 28 days
of April. We focused on the two states identified by our analysis of CAHPS
data as showing a worsening access problem from 2000 to 2004.

In examining trends in the number, or volume, of services, we found that
volume generally increased across broad categories of services-evaluation
and management, procedures, imaging services, and tests. Specifically, the
number of services provided per 1,000 Medicare beneficiaries increased in
all of these categories from April 2000 to April 2005. (See fig. 10.)
Within the procedures category, the number of minor procedures provided
per 1,000 beneficiaries increased by 36 percent, whereas the number of
major procedures declined slightly by 3 percent.

49Per capita refers to the average number of services per 1,000 Medicare
beneficiaries.

Figure 10: Number of Services Provided per 1,000 Medicare Beneficiaries in
April, by Service Category, 2000 and 2005

Note: Services were included if they were received in the first 28 days of
April.

In examining trends in the numbers of services provided, we also found
that the average number of office visits-an indicator of access to the
most basic level of physician services-generally increased (see fig.
11).50 Specifically, from 2000 to 2005, the number of office visits per
1,000 Medicare beneficiaries received during the month of April increased
from 26 visits to 28 visits for new patients (an increase of about 8
percent) and from 405 visits to 454 visits for established patients (an
increase of about 12 percent).51

50Office visits can be provided by both primary care physicians and
specialists. We examined office visits because they are the typical entry
point into the health care system and the most basic level of physician
services.

Figure 11: Number of Office Visits per 1,000 Medicare Beneficiaries in
April by New and Established Patients, 2000-2005

Notes: Services were included if they were received in the first 28 days
of April. Medicare defines an established patient as one who has seen the
same physician at least once before in the past 3 years.

We also found that the number of specialty services provided generally
increased over the 6 years reviewed. Most of the specialty services we
examined-such as aneurysm repairs, pacemaker insertions, and hip
replacements-experienced double-digit growth rates. (For a complete list
of the services we examined, see app. III.) For example, per capita growth
in aneurysm repairs rose by about 65 percent; in pacemaker insertions, by
about 64 percent; and in hip replacements, by about 11 percent. Moreover,
we found double-digit per capita growth rates over the 6 years reviewed
for services that are most likely to be affected by physician fee changes.
These discretionary services could be postponed without medically harming
the patient, and therefore physicians might provide fewer of them when
there is downward pressure on fees. For example, per capita growth in knee
replacement procedures rose by about 47 percent; in electrocardiograms, by
about 18 percent; and in CAT scans, by about 65 percent. Although per
capita declines occurred for a few specialty procedures,52 these declines
may have resulted for reasons other than access difficulties, such as
physician discretion, patient acuity, or the ability to substitute other
procedures. For example, coronary artery bypass grafting (CABG) declined
per beneficiary by about 31 percent, whereas coronary angioplasty, a
substitute in some cases for CABG, grew per beneficiary by about 34
percent.

51We examined office visits separately for new and established patients to
assess access to care trends among new patients who might be more likely
to experience access difficulties.

Complexity of Services Provided Also Increased

Service complexity-an element of utilization-increased from April 2000 to
April 2005. Specifically, physician services per beneficiary rose in
complexity, as measured in average annual changes in RVUs, over this
period. Increases in service volume occurred for each broad category of
services-evaluation and management, procedures, imaging, and tests-with
the exception of major procedures. Similarly, for all categories of
services, the complexity of services provided per beneficiary rose over
the same period. (See table 7.) Overall, volume rose by an average of
about 4 percent, while complexity rose by an average of about 5 percent.
Thus, beneficiaries' increased utilization of physician services has
manifested itself in both increased volume and increased complexity of
services for the 6 years reviewed.

52The procedures included were coronary artery bypass grafts,
thromboendarterectomy, sigmoidoscopy, hip fracture repair, and corneal
transplant.

Table 7: Changes in Volume and Complexity of Physician Services Provided
per Medicare Beneficiary, April 2000-April 2005

                        Annual percentage change  Annual percentage change in 
                       in number of services per   complexity of services per 
                              beneficiary, April  beneficiary, as measured in 
       Type of service           2000-April 2005  RVUs, April 2000-April 2005 
All services                              4.4                          5.2 
Evaluation and                            2.4                          3.7 
management services                           
Procedures                                5.7                          4.3 
Major                                    -0.7                          2.3 
Minor                                     6.3                          5.2 
Imaging                                   6.9                         10.5 
Tests                                     9.1                         13.9 

Source: GAO analysis of Medicare Part B claims and enrollment data from
CMS.

Notes: Services were included in the calculation of average annual
percentage changes if the services were received in the first 28 days of
April. To account for complexity of services, we used RVU weights for
2005.

From 2000 to 2005, Indicators of Physician Supply and Willingness to Serve
                     Medicare Beneficiaries Were Favorable

Two additional access related indicators-the number of physicians billing
Medicare for services and the percentage of services for which Medicare's
fees were accepted as payment in full-increased from 2000 to 2005. These
increases suggest that in the aggregate, physicians continued to accept
Medicare patients without requiring additional payments from beneficiaries
during this period.

Number of Physicians Serving Medicare Beneficiaries Increased

An increasing number of physicians billed Medicare from April 2000 to
April 2005. (See fig. 12.) In April 2000, the number of physicians billing
Medicare was about 419,000, and in April 2005, that number had increased
to a little more than 467,000. While Medicare experienced an 11 percent
increase in the number of physicians billing the program, the number of
beneficiaries in Medicare-FFS and managed care combined-rose by 8
percent.53

Figure 12: Number of Physicians Billing Medicare for Services Provided to
Medicare Beneficiaries in April, 2000-2005

Notes: Physicians were included if they served a beneficiary in the first
28 days of April. We counted each occurrence of the unique physician
identification number on the claim once.

53Because the majority of physicians serving FFS Medicare beneficiaries
also likely serve beneficiaries in Medicare managed care, we report the
change in the total number of Medicare beneficiaries-FFS and managed care
combined. The number of FFS beneficiaries increased by 13 percent, an
increase driven in part by a decline of about 18 percent in the number of
enrollees in managed care, from 6.8 million to 5.6 million.

Proportion of Services for Which Physicians Accepted Medicare Payment in Full
Increased

From April 2000 to April 2005, the vast majority of Medicare physician
services were performed by participating physicians-that is, physicians
who formally agreed to participate in the Medicare program and submit all
claims on assignment.54 This percentage increased from 95 percent to over
96 percent. (See fig. 13.) During the same period, the overall percentage
of services paid on assignment-that is, services performed by both
participating and nonparticipating physicians who accepted assignment-also
increased. In April 2000, 98.2 percent of services were paid on
assignment, and in April 2005, 99.0 percent of services were paid on
assignment. Fewer beneficiaries were likely to be subject to balance
billing for physician services in 2005 than in 2000 as the percentage of
services for which physicians were permitted to balance bill Medicare
beneficiaries fell from 1.8 percent to 1.0 percent.

Figure 13: Proportion of Physician Services by Medicare Participation and
Assignment Status, April 2000 and April 2005

Note: Services were included if they were received in the first 28 days in
April.

54Physicians may decide on an annual basis whether they will be Medicare
participating physicians.

                            Concluding Observations

Although concerns have been raised that Medicare's efforts to control
spending on physician services might have diminished beneficiary access to
those services, our analyses of data from 2000 through 2005 found access
to physician services stayed the same or increased. Specifically, during
the years we studied, relatively small proportions of beneficiaries
reported problems accessing physician services, the percentage of
beneficiaries who received physician services increased, and the number of
services provided per beneficiary increased. Finally, our indicators of
physician willingness to serve Medicare beneficiaries-the number of
physicians billing Medicare and the proportion of services for which
physicians accepted Medicare payment in full-help round out the picture of
beneficiary access to services. We found that during the 2000-2005 period
covered by our claims analysis, an increasing number of physicians billed
Medicare and an increasing number of claims were submitted "on
assignment." The general stability in perceptions of access problems and
increases in other indicators of access are notable, considering that
during all but 2 of the years examined, annual updates caused physician
fees either to fall or to increase at rates below the increase in the
estimated cost of providing services.

The increases in utilization and complexity we observed demonstrate that
beneficiaries were able to access physician services. However, we did not
determine the medical appropriateness of these increases. A more complex
study would be required to determine whether the increased utilization
over the period we studied resulted in positive health outcomes for
beneficiaries. Such analysis is important because these utilization trends
have implications for the long-term fiscal sustainability of the Medicare
program.

                Agency and Industry Comments and Our Evaluation

Agency Comments

In written comments on a draft of this report, CMS agreed with our
findings and conclusions, stating that our analysis of existing data was
well-conceived and executed. CMS noted the agency's commitment to ensuring
continued beneficiary access to care while attempting to address the
long-term fiscal sustainability of the Medicare program. CMS said that it
had conducted its own analyses of data from a variety of sources in order
to identify any beneficiary difficulties in accessing physician services,
and these analyses did not indicate a national problem accessing care. CMS
noted that we may want to include claims reflecting services performed in
federally qualified health centers (FQHC) and rural health clinics (RHC)
in any future analyses of utilization, as relying solely upon Part B
claims from the National Claims History files may underrepresent
utilization of physician services. However, the agency stated that
including these claims would not substantively change GAO's results and
conclusions. Furthermore, we note that our utilization measures would
change only to the extent that services provided in FQHCs and RHCs were
performed by medical doctors, as we excluded services performed by
nonphysicians, such as nurse practitioners and physician assistants. CMS
also provided other comments it characterized as minor editorial and
technical points, which we incorporated where appropriate. We have
reprinted CMS's letter in appendix IV.

American Medical Association Comments

We obtained oral comments on our draft report from officials representing
the AMA. The AMA officials expressed two overall concerns. First, while
stating that our analysis of survey, claims, and physician participation
data showed no deterioration in beneficiaries' access to physician
services over the period studied, the officials cautioned the analyses'
results should not be interpreted as an improvement in access. The AMA
officials said that for example, increases in the utilization of physician
services could be the result of beneficiaries growing sicker, the
substitution of physician services for care in the hospital or other
settings, or beneficiaries taking advantage of new Medicare-covered
benefits. An investigation of alternate explanations for the growth in
utilization was beyond the scope of this report. Although our report finds
that the percentage of beneficiaries reporting major access difficulties
remained relatively constant over the period, that the utilization of
services generally increased nationwide, and that physician participation
in Medicare also increased, the report does not characterize these
findings as improvements in access. Second, the AMA officials said that
the report should place more emphasis on our finding that beneficiaries
with certain characteristics, such as those in poor health, were more
likely, than to other beneficiaries, to respond that they experienced
major difficulty accessing physician services. Although this finding is
not the focus of our report, we believe that it is accorded the
appropriate emphasis, as it is included in the Highlights section and the
Results in Brief. Based on other comments from AMA officials, we revised
our draft report where appropriate.

We are sending copies of this report to the Administrator of CMS,
appropriate congressional committees, and other interested parties. We
will also provide copies to others on request. In addition, this report is
available at no charge on the GAO Web site at http://www.gao.gov .

If you or your staff have questions about this report, please contact me
at (202) 512-7101 or [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. GAO staff who made key contributions to this report are
listed in appendix V.

A. Bruce Steinwald Director, Health Care

List of Committees

The Honorable Charles E. Grassley Chairman The Honorable Max Baucus
Ranking Minority Member Committee on Finance United States Senate

The Honorable Joe L. Barton Chairman The Honorable John D. Dingell Ranking
Minority Member Committee on Energy and Commerce House of Representatives

The Honorable William M. Thomas Chairman The Honorable Charles B. Rangel
Ranking Minority Member Committee on Ways and Means House of
Representatives

The Honorable Nathan Deal Chairman The Honorable Sherrod Brown Ranking
Minority Member Subcommittee on Health Committee on Energy and Commerce
House of Representatives

The Honorable Nancy L. Johnson Chairman The Honorable Pete Stark Ranking
Minority Member Subcommittee on Health Committee on Ways and Means House
of Representatives

 Appendix I: Methods and Models Used in
Analyzing Factors Affecting Medicare Beneficiaries' Perceptions of Access

This appendix explains how we analyzed beneficiaries' perceptions of their
ability to access physician services and factors that might contribute to
those perceptions. First, we describe the data we analyzed from the
Medicare Consumer Assessment of Health Plan Study (CAHPS), which contains
indicators of fee-for-service (FFS) beneficiary perceptions of physician
access. Next, we explain how we identified beneficiaries' characteristics
that were associated with their perceptions of access to physician
services. We then describe how we reported the way those beneficiary
characteristics were associated with major difficulties accessing
physician services. We also explain how we identified trends in
beneficiary perceptions over time and across states. Finally, we discuss
how we evaluated the reliability of our data and the limitations of our
analysis.

Data Sources

To study beneficiaries' perceived access to physician services, we used
data from the Centers for Medicare & Medicaid Services' (CMS) CAHPS FFS
annual surveys administered from 2000 through 2004. The CAHPS survey asks
beneficiaries to describe their experiences with the Medicare FFS program.
We identified these annual surveys as a nationally representative source
of Medicare beneficiaries' perceptions of their access to health care that
would enable comparisons over time among states and between urban and
rural areas. CMS surveyed over 168,000 FFS beneficiaries each year.1 The
response rate was at least 63 percent each year.

We focused on the three CAHPS questions that were related to
beneficiaries' access to physician services. The questions, reproduced in
table 8, asked about beneficiaries' ability to access a personal provider
of care (a physician or nurse), specialists, and prompt appointments. For
each question, we included only the responses from those beneficiaries who
could have encountered an access problem-those who reported in a prior
question that they in fact needed care.2 For example, we include responses
to the specialist access question only for those beneficiaries who
answered in a prior survey question that they needed to see a specialist
in the past 6 months. We calculated the proportion of respondents who
responded the most negatively-those who responded that they had "a big
problem" or who "never" scheduled a prompt appointment. This approach
enabled us to be as definitive as possible in describing beneficiaries
perceptions of access difficulties.3

1We excluded responses from beneficiaries residing outside the 50 states
and the District of Columbia in our analysis.

2About 50 percent of beneficiaries indicated a need for a new personal
provider. Similarly, about 60 percent self-reported a need for access to
specialists, and about 70 percent indicated that they needed an
appointment.

Table 8: CAHPS Survey Questions Related to Physician Access, 2000-2004

                         Percentage of                                        
Respondents included     all survey                        
in analysis             respondents Access question        Response
Beneficiaries who                47 Since you joined          o  A big     
reported that they                  Medicare, how much of     problem      
did not have the same               a problem, if any, was    o  A small   
doctor before joining               it to get a personal      problem      
Medicare.                           doctor or nurse you       o  Not a     
                                       are happy with?           problem      
Beneficiaries who                56 In the past 6 months,     o  A big     
reported that they                  how much of a problem,    problem      
needed to see a                     if any, was it to see     o  A small   
specialist in the                   a specialist that you     problem      
past 6 months.                      needed to see?            o  Not a     
                                                                 problem      
Beneficiaries who                74 In the past 6 months,     o  Never     
reported that they                  how often did you get     o  Sometimes 
needed to schedule a                an appointment for        o  Usually   
routine health care                 health care as soon as    o  Always    
appointment in the                  you wanted?            
past 6 months.                                             

Source: GAO analysis of CMS's annual Medicare CAHPS surveys.

Note: The exact wording of each question varied by survey year.

The CAHPS survey also asked beneficiaries to provide information about
themselves, and we used those responses to determine whether beneficiary
characteristics were systematically associated with beneficiaries
reporting major difficulties accessing physician services. Specifically,
we analyzed beneficiary sex, race, age, educational attainment, urban or
rural residence, additional health care coverage, and self-reported health
status.4 We supplemented the CAHPS data for each beneficiary with
county-level information from the 2000 Area Resource File (ARF)5 on
primary care physicians per capita, specialist physicians per capita,
managed care penetration, per capita income, the proportion of the
population enrolled in Medicare, hospital beds per capita, and ambulatory
surgical centers per Medicare beneficiary.6

3When we conducted the analyses described in this appendix using any
negative responses-that is, both "big problem" and "small problem" and
both "never" and "sometimes"-the proportions were larger, but the effects
of beneficiary and area characteristics on the likelihood of reporting a
problem were about the same.

4Additionally, we tested whether the use of a proxy to help respondents
complete the survey had an effect on beneficiaries' perceptions of access.

Analysis of Beneficiary Responses to the CAHPS Survey

To analyze the extent to which various beneficiary and area
characteristics were associated with perceived access to physician
services, we first used a standard statistical method of analysis known as
logistic regression modeling to identify key beneficiary and area
characteristics, and then we computed simple proportions of beneficiaries
with key characteristics who reported major difficulties. For example, our
model showed that age was associated with reporting major difficulties, so
we reported percentages reporting major difficulties by age group.
Logistic regression modeling estimates the effect of each independent
variable-in this case, a beneficiary characteristic-on an either/or
(binary) variable-in this case, either reporting a major difficulty or
not-while holding constant the effects of other independent variables in
the model. The size of the effect of each beneficiary characteristic is
expressed as a coefficient, which can be mathematically converted into an
odds ratio. The odds ratio compares the likelihood of reporting a major
difficulty when a characteristic is present to the likelihood of reporting
a major difficulty when the characteristic is absent. When a
characteristic is absent, the beneficiary is classified as belonging to a
"reference group." For example, for the characteristic "race," our
logistic regression model compares three race variables-black, Hispanic,
and other race-to the reference group, white. (See table 9.) The odds
ratio of the reference group is always set equal to 1.00. Odds ratios
larger than 1.00 indicate that the presence of the characteristic
increases the likelihood of reporting a major difficulty compared to the
reference group, while odds ratios smaller than 1.00 indicate that the
presence of the characteristic decreases the likelihood of reporting a
major difficulty compared to the reference group. We combined observations
from all 5 CAHPS survey years in the logistic regression analysis.7 The
logistic regression models for the three access questions included
variables for 15 beneficiary and area characteristics, which are listed,
together with their odds ratios, in table 9.

5The ARF, which is maintained by the Health Resources and Services
Administration, is a county-based health resources information database
that contains data from many sources, including the U.S. Census Bureau and
the American Medical Association. The ARF is a standard data source that
is well-documented and widely used. We linked year 2000 ARF data to
beneficiaries from all 5 CAHPS survey years for two reasons. First, we
reasoned that local area characteristics would not change much over the
CAHPS survey years-2000 through 2004. Second, some fields of ARF data were
not available for 2001 through 2004.

6In the year 2000, CAHPS data on county of residence were missing for all
beneficiaries living in eight states-Alaska, Idaho, Montana, North Dakota,
Rhode Island, South Dakota, Wyoming, and Vermont-and the District of
Columbia. These missing data rendered 3,600 beneficiaries-roughly 3
percent of the year 2000 CAHPS respondents-not linkable to the ARF data.

Table 9: Estimated Effects of Selected Medicare Beneficiary and Area
Characteristics on Reporting Major Difficulty Accessing Physician
Services, 2000-2004

                                                     Odds ration
                                        Big problem                           
                                          finding a                     Never 
                                           personal Big problem  scheduled an 
                                          doctor or    seeing a   appointment 
                   Characteristic            nursea specialistb     promptlyc
Age             Under 65                   1.00d       1.00d         1.00d 
                   65-69                     0.63**      0.61**        0.77** 
                   70-74                     0.51**      0.58**        0.56** 
                   75-79                     0.43**      0.55**        0.55** 
                   80-84                     0.36**      0.55**        0.53** 
                   85 and over               0.30**      0.52**        0.56** 
Sex             Female                     1.00d       1.00d         1.00d 
                   Male                      0.84**       0.93*        1.21** 
Race            White                      1.00d       1.00d         1.00d 
                   Black                     0.83**      1.38**        1.28** 
                   Hispanic                    1.09      1.86**        1.50** 
                   Other                     1.28**      2.14**        1.64** 
Self-reported   Excellent or very         0.80**      0.75**          0.99 
health status   good                                         
                   Good                       1.00d       1.00d         1.00d 
                   Fair or poor              1.57**      1.80**        1.26** 
Supplemental    None                      1.26**      1.91**        1.60** 
health                                                       
insurance       Medicaid            1.27**      1.64**              1.33**
coverage                                               
                   Non-Medicaid               1.00d       1.00d         1.00d 
Educational     No high school            0.84**        1.04          1.03 
attainment      diploma                                      
                   High school diploma        1.00d       1.00d         1.00d 
                   4-year college            1.25**      1.20**         1.15* 
                   degree or more                               
Proxy assisted  Yes                         1.02        1.00         0.89* 
in survey                                                    
completion      No                   1.00d       1.00d               1.00d
Urban or rural  Urban                       0.99       0.91*          1.03 
residence                                                    
                   Rural                      1.00d       1.00d         1.00d 
Quartile of     Lowest                    1.09**        0.98          0.98 
hospital beds                                                
per capita      Second                1.03        1.03               1.06*
                   Third                      0.96*        0.99          0.98 
                   Highest                    1.00d       1.00d         1.00d 
Quartile of     Lowest                     0.94*       0.93*          0.95 
ambulatory                                                   
surgical        Second              0.89**       1.06*                0.95
centers per                                            
Medicare        Third                1.07*        1.01               1.07*
beneficiary                                            
                   Highest                    1.00d       1.00d         1.00d 
Quartile of     Lowest                      0.98        1.03          1.04 
primary care                                                 
physicians per  Second                0.97        0.98                0.99
capita          Third                 1.01        0.97                0.97
                   Highest                    1.00d       1.00d         1.00d 
Quartile of     Lowest                     0.90*        1.01          0.99 
specialist                                                   
physicians per  Second               1.04*        1.00                0.97
capita                                                 
                   Third                     1.09**        1.01          0.99 
                   Highest                    1.00d       1.00d         1.00d 
Quartile of     Lowest                    0.89**      0.88**          0.96 
Medicare                                                     
managed care    Second                1.01       0.96*               0.94*
penetration                                            
                   Third                      1.05*      1.08**          0.99 
                   Highest                    1.00d       1.00d         1.00d 
Quartile of     Lowest                    1.11**      1.11**          1.05 
Medicare                                                     
beneficiaries   Second                0.98        0.97               0.95*
per capita                                             
                   Third                     0.92**       0.94*          0.96 
                   Highest                    1.00d       1.00d         1.00d 
Quartile of per Lowest                      1.01        1.00          0.94 
capita income                                                
                   Second                      0.99        0.99          0.98 
                   Third                       0.98        1.01          1.03 
                   Highest                    1.00d       1.00d         1.00d 
Year            2000                       1.00d       1.00d         1.00d 
                   2001                      0.81**       0.88*          1.04 
                   2002                      0.88**        1.00        1.62** 
                   2003                      0.82**        0.94        1.43** 
                   2004                      0.74**      0.82**        1.46** 

7Time trends in the likelihood of reporting a major difficulty were
captured by including a variable for survey year in the model.

Source: GAO analysis of CMS's Medicare CAHPS and ARF data.

Legend: **= significant at the 0.0001 level; *= significant at the 0.05
level.

Note: Bolded odds ratios indicate a value equal to or below 0.85, and
equal to or above 1.15. Nonbolded odds ratios indicate a value from 0.85
to 1.15.

aThese results were derived from the responses of beneficiaries who
answered that they changed personal doctors since enrolling in Medicare-an
average of 47 percent a year.

bThese results were derived from the responses of beneficiaries who
answered that they needed to see a specialist in the past 6 months-an
average of 56 percent a year.

cThese results were derived from the responses of beneficiaries who
answered that they needed an appointment in the past 6 months-an average
of 74 percent a year.

dOmitted reference group.

Based on the results of our logistic regression analysis, we identified
beneficiary characteristics that were associated at the 0.05 level of
significance or better with either a substantial increased likelihood-an
odds ratio greater than or equal to 1.15-or a substantial decreased
likelihood-an odds ratio less than or equal to 0.85- of reporting a major
difficulty.8 For these characteristics, we computed a readily
understandable measure-the percentage of respondents in each group who
reported having a major difficulty-for each of the three survey
questions.9 However, for one characteristic-educational attainment of a
4-year college degree or more-we had to use a more sophisticated technique
to account for confounding factors. We estimated the likelihood of a
typical beneficiary reporting major difficulty finding a personal doctor
or nurse.10,11 We then compared that likelihood to the estimated
likelihood for a beneficiary who had a 4-year college degree and who was
typical in all other respects.

8We required the characteristic to be important in the same direction-that
is, an increased or a decreased likelihood-on at least two of the three
questions related to physician access.

9For illustrative purposes, we combined black, Hispanic, and other race
into one nonwhite category, when calculating the proportions for race, and
we combined all beneficiaries over age 65 into one age group when
calculating proportions for age.

In order to understand how reports of major difficulties accessing
physician services changed over time and varied among states, we analyzed
the proportion of beneficiaries reporting major difficulties on each of
the three questions related to physician access by state of residence and
by survey year. We also calculated these proportions for each survey year
by all urban and rural areas in the nation.

Data Reliability and Limitations

We took several steps to ensure that the CAHPS data were sufficiently
reliable for our analysis. We examined the accuracy and completeness of
the data by testing for implausible values and internal consistency.12 In
addition, we interviewed experts at CMS about whether the CAHPS data could
appropriately be used as we intended. We concluded that the data were
sufficiently reliable for the purpose of this analysis. We conducted our
work from October 2004 through June 2006 in accordance with generally
accepted government auditing standards.

There were three main limitations to our analysis. First, the CAHPS
questions on finding a personal provider and scheduling an appointment
were not limited to physician services.13 (See table 8.) If these survey
questions had asked only about access to physician services, we likely
would have found different proportions of beneficiaries who reported big
problems finding a personal provider or who reported never being able to
schedule an appointment promptly. Second, the proportions of beneficiaries
reporting major difficulties accessing physician services may not be
representative of the national population of Medicare beneficiaries.14
Finally, although we endeavored to model all of the important beneficiary
characteristics using logistic regression, we lacked some information that
may have been important, such as beneficiary income.

10The characteristics of a typical beneficiary were female, white, age
70-74, fair or poor health, no proxy assistance for completion of the
survey, high school diploma or some college, residence in an urban area,
and non-Medicaid supplemental health insurance coverage. We assigned the
study year 2003 and the second quartile of other measures, such as primary
care physicians per capita, as beneficiary characteristics.

11For this characteristic, we chose to report the likelihood of reporting
major difficulties finding a personal doctor or nurse for illustrative
purposes; we also analyzed the likelihood of reporting major difficulties
seeing a specialist or making an appointment promptly with somewhat
similar results.

12In order to ensure the consistency of individuals' responses to both the
prior question on the need for care and the related access question, we
recoded some survey responses. For example, if an individual answered in a
prior question that he or she did not need a specialist, we recoded the
response on the access question related to specialists to "not
applicable." We also excluded observations with implausible ARF
values-less than 1 percent of all observations-where complete ARF data
were essential to the analysis.

13For example, the question on finding a personal provider may include
services provided by nonphysicians, such as personal nurses. The question
on scheduling an appointment promptly for health care may include services
other than those provided by physicians.

14While the CAHPS is a random sample, we subset the data such that it
became a nonprobability sample. A nonprobability sample's statistics
cannot be generalized to a population because some elements of the
population being studied have no chance or an unknown chance of being
selected as part of the sample.

Appendix II: Methods Used to Analyze Medicare Claims Data

To analyze Medicare beneficiaries' access to physician services, through
their utilization of services, we used Medicare Part B claims data from
the National Claims History (NCH) files. We constructed data sets for 100
percent of Medicare claims for physician services performed by physicians
in the first 28 days of April of 2000 through 2005.1 These data encompass
several periods: 2 years in which fee increases were greater than the
increase in the estimated cost of providing services (2000 and 2001), 1
year in which fees decreased (2002), and 3 years in which fee increases
were less than inflation in the estimated cost of providing services
(2003, 2004, and 2005). We established a consistent cutoff date (the last
Friday in September of the subsequent year) for each year's data file and
only included those claims for April services that had been submitted by
that date.2 Because claims continue to accrete in the data files, this
step was necessary to ensure that earlier years were not more complete
than later years. We supplemented these claims files with CMS data on the
number of beneficiaries in the FFS program as of March of each year from
the Medicare Managed Care Market Penetration Quarterly State/County Data
Files. In addition, on the basis of beneficiary location, we associated
each service with an urban or rural location, using the Office of
Management and Budget's classification of metropolitan statistical areas
(MSA).

We constructed several utilization measures to determine whether Medicare
beneficiaries experienced changes in their access to physician services;
these indicators included

           o  the percentage of Medicare FFS beneficiaries obtaining services
           in April of each year,3 
           o  the total number of physician services received, and
           o  the total number of physician services per beneficiary who
           received services.

           We analyzed these utilization measures nationally, for urban and
           rural areas within each state, and for specific services, such as
           office visits for new and established patients. Using MSAs, we
           classified the nation's counties as urban or rural, consolidated
           the urban counties and rural counties in each state and the
           District of Columbia, and created 99 geographic areas to analyze
           access at a subnational level.4 We also determined the number of
           physicians billing Medicare, whether services were performed by
           participating or nonparticipating physicians, and whether claims
           for physician services were paid either on assignment or not on
           assignment. We did not adjust the data for factors that could
           affect the provision and use of physician services, such as
           incidence of illness or coverage of new benefits.

           Medicare claims data, which are used by the Medicare program as a
           record of payments made to health care providers, are closely
           monitored by both CMS and the Medicare carriers-contractors that
           process, review, and pay claims for Part B-covered services. The
           data are subject to various internal controls, including checks
           and edits performed by the carriers before claims are submitted to
           CMS for payment approval. Although we did not review these
           internal controls, we did assess the reliability of the NCH data.
           First, we reviewed all existing information about the data,
           including the data dictionary and file layouts. We also
           interviewed experts at CMS who regularly use the data for
           evaluation and analysis. We examined the data files for obvious
           errors, missing values, values outside of expected ranges, and
           dates outside of expected time frames. We found the data to be
           sufficiently reliable for the purposes of this report. We also
           assessed the reliability of the Medicare Managed Care Market
           Penetration Quarterly State/County Data Files by examining the
           data for obvious errors, missing values, and values outside of
           expected ranges. In addition, to further assess the reliability of
           these supplementary data, we interviewed experts at CMS who are
           responsible for the creation of these files and who regularly use
           the data for evaluation and analysis. We found these data to be
           sufficiently reliable for the purposes of this report.

           Using the Berenson-Eggers Type of Service (BETOS) code to which
           each procedure code in our claims data was assigned, we reviewed
           specific categories of physician services. According to the CMS,
           the BETOS coding system consists of readily understood clinical
           categories, is stable over time, and is relatively immune to minor
           changes in technology or practice patterns. Table 11 shows the
           specific categories we reviewed and the percentage change in the
           number of services provided per 1,000 beneficiaries from April
           2000 to April 2005. This table highlights certain frequently
           performed services and procedures. We collapsed data on other
           services and procedures into summary categories.

1We excluded claims for services provided by nurse practitioners,
physician assistants, and other nonphysician practitioners. We included
services covered by the fee schedule as well as anesthesia services. We
identified claims for physician services covered by the fee schedule by
limiting the files to include only Healthcare Common Procedure Codes that
are on the physician fee schedule and covered by Medicare. We excluded
claims from beneficiaries in Guam, Puerto Rico, and the U.S. Virgin
Islands because access issues in these areas may be substantively
different than those in the rest of the United States.

2We chose the month of September so our data would include two quarters of
processed claims from April of each year. This equates to about 95 percent
of the claims for services provided in April of each year.

3Beneficiaries refers to all FFS Medicare beneficiaries, not just those
for whom claims were filed.

Data Reliability

4Rhode Island and New Jersey had no rural counties. The District of
Columbia is only counted as an urban area.

Appendix III: Specific
Physician Services Reviewed

Table 10: Percentage Change in the Number of Services Provided per 1,000
Medicare Beneficiaries, April 2000 to April 2005

                                                                      Percentage 
                                    Services per 1,000   Services per    change, 
Overall                                       Medicare 1,000 Medicare April 2000 
service                            beneficiaries,April beneficiaries,   to April 
category   Specific category                      2000     April 2005      2005a 
Evaluation Office visits-new                      26.3           27.6        5.0 
and        patients                                                   
management                                                            
(E&M)                                                                 
           Office                                404.8          454.4       12.2 
           visits-established                                         
           patients                                                   
           Hospital visits                       170.6          209.9       23.0 
           Emergency room visits                  31.6           36.4       15.3 
           Other E&M services                    193.6          204.5        5.6 
Imaging    Advanced imaging-CAT                   24.6           40.6       64.7 
           scans                                                      
           Advanced imaging-MRIs                   6.5           12.7       93.5 
           Imaging procedures                     15.8           22.7       43.7 
           Standard imaging                      152.6          199.8       31.0 
Procedures                                                            
Major      Coronary artery bypass                  1.1            0.8      -30.5 
           grafts                                                     
           Aneurysm repairs                        0.1            0.2       65.3 
           Thromboendarterectomies                 0.3            0.2      -23.7 
           Coronary angioplasties                  0.9            1.2       34.2 
           Pacemaker insertions                    0.6            1.0       63.9 
           Other cardiac                          10.1            8.2      -18.8 
           procedures                                                 
           Hip fracture repairs                    0.5            0.4      -12.8 
           Hip replacements                        0.3            0.4       11.1 
           Knee replacements                       0.5            0.7       47.1 
           Other orthopedic                        1.6            2.2       35.5 
           procedures                                                 
           Other major procedures                  7.2            7.2        0.1 
Minor      Ambulatory procedures                  29.9           50.4       68.6 
           Corneal transplants                     0.0            0.0      -17.3 
           Cataract removals/lens                  4.7            4.8        2.2 
           insertions                                                 
           Retinal detachment                      0.1            0.1        8.9 
           repairs                                                    
           Eye procedure                           0.8            0.9       14.0 
           treatments                                                 
           Other eye procedures                    3.2            4.5       39.3 
           Arthropscopies                          0.5            0.8       65.1 
           Upper gastrointestinal                  4.3            5.2       20.6 
           endoscopies                                                
           Sigmoidoscopies                         1.7            0.5      -69.0 
           Colonoscopies                           5.1            7.1       39.7 
           Cystoscopies                            3.2            3.6       13.6 
           Bronchoscopies                          0.7            1.0       56.3 
           Laryngoscopies                          1.0            1.3       38.5 
           Other endoscopic                        1.4            1.7       18.1 
           procedures                                                 
           Dialysis services                       7.7            8.1        5.9 
           Other minor procedures                104.0          158.4       52.3 
           Anesthesia                             14.5           16.6       14.3 
Tests      Lab tests                               5.4           33.8      530.4 
           Electrocardiograms                     59.0           69.8       18.3 
           Stress tests                            9.7           14.1       44.9 
           EKG monitoring                          2.7            3.3       23.7 
           Other nonlab tests                     26.9           39.0       44.7 
All                                            1,417.4        1,757.1       24.0 
services                                                              

Source: GAO analysis of Medicare Part B claims and enrollment data from
CMS.

Note: Services were included if they were received in the first 28 days of
April.

aPercentage change was calculated prior to rounding.

Appendix IV: Comments from the Centers for Medicare & Medicaid Services


Appendix V: GAO Contact and Staff Acknowledgments

                                  GAO Contact

A. Bruce Steinwald (202) 512-7101 or [email protected]

                                Acknowledgments

James Cosgrove, Assistant Director; Kevin Dietz; Jessica Farb; Hannah
Fein; Zachary Gaumer; Rich Lipinski; Jennifer M. Rellick; Dan Ries; and
Eric Wedum made key contributions to this report.

(290412)

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www.gao.gov/cgi-bin/getrpt? GAO-06-704 .

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Highlights of GAO-06-704 , a report to congressional committees

July 2006

MEDICARE PHYSICIAN SERVICES

Use of Services Increasing Nationwide and Relatively Few Beneficiaries
Report Major Access Problems

Congress, policy analysts, and groups representing physicians have
periodically raised concerns that Medicare's efforts to control spending
on physician services by limiting annual updates to physician fees could
have an adverse impact on beneficiaries' access to physician services.
These concerns were heightened in 2002 when Medicare's formula for setting
physician fees required a 5.4 percent reduction in fees to help moderate
rapid spending increases. From 2003 to 2006, fees have not grown as
rapidly as the estimated cost to physicians of providing services, and
concerns about access have remained.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003
requires GAO to study access to physician services by beneficiaries in the
traditional fee-for-service (FFS) program. This report focuses on (1)
trends and patterns in beneficiaries' perceptions of the availability of
physician services from 2000 through 2004, (2) trends in beneficiaries'
utilization of physician services from 2000 through 2005, and (3)
indicators of physician supply and willingness to serve Medicare
beneficiaries from 2000 through 2005. GAO analyzed the most recent data
available, including several years of data from an annual survey of FFS
Medicare beneficiaries as well as utilization trends based on all Medicare
physician claims for services provided in April of each year from 2000
through 2005.

From 2000 through 2004, among beneficiaries who needed access to physician
services, the percentages reporting major difficulties-that is, "having a
big problem" finding a personal provider or specialist or never being able
to schedule an appointment promptly-remained relatively constant.
Nationwide, no more than about 7 percent of beneficiaries reported a major
access difficulty. We identified certain beneficiary
characteristics-including health status, age, and race-that were
associated with beneficiaries' reporting major access difficulties.

In general, from April 2000 to April 2005, an increasing proportion of
beneficiaries received physician services and an increasing number of
physician services were provided to beneficiaries who were treated (see
figure). This trend was evident in every state's urban areas and nearly
every state's rural areas.

Two other access related indicators-the number of physicians billing
Medicare for services and the proportion of services for which Medicare's
fees were accepted as payment in full-increased from April 2000 to April
2005. These increases suggest that there was no reduction in the
predominant tendency of physicians to accept Medicare patients and
payments.

The increases in utilization and complexity of services GAO observed
demonstrate that beneficiaries were able to access physician services.
However, GAO did not determine the medical appropriateness of these
increases. Although access to appropriate care is important, the
implications of these trends in utilization for the long-term fiscal
sustainability of the Medicare program would require careful examination.

CMS agreed with GAO's findings and conclusions, stating that the analysis
was well-conceived and executed. CMS also provided technical comments,
which GAO incorporated as appropriate.

Trends in Access to Physician Services, April 2000 through April 2005

Note: Beneficiaries and services were included if services were received
in the first 28 days of April.
*** End of document. ***