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OCR for page 41
Chapter 4
THE SUPPLY AND DISTRIBUTION OF PRIMARY HEALTH CARE PRACTITIONERS
This chapter discusses the supply of physicians, physician
assistants, and nurse practitioners and considers their specialty and
geographic distribution. Although supply and distribution issues are
related, they are examined separately because they require separate
policy considerations.
THE SUPPLY OF PHYSICIANS
The supply of physicians in the United States is increasing at a
significant rate. In 1975 there were 340,280 professionally active
physicians, a 30 percent increase from 1968. 1/ In addition, in 1976
there were 13,982 practicing doctors of osteopathy. 2/ If current
enrollment trends continue, the number of active physicians will increase
by over 60 percent by the year 1990 to 559,800, 3/ creating a physician
to population ratio in 1990 of 228 per 100,000 population compared to
156.8 per 100,000 in 1975. 4/
As dramatic as this projected increase in physicians appears to be,
it may not indicate an equivalent increase in physicians' services. In
particular, factors such as physician productivity and work effort, or
numbers of hours worked, critically affect the total supply of physi-
cians' services. Physician productivity may be measured by the number
of personal health services of different types produced per unit of time.
Some of the factors affecting the productivity of physicians are the type
and size of physician practice, the employment of different types of
ancillary health manpower, and quantity and quality of medical equipment.
Empirical research to date suggests that use of physician assistants and
nurse practitioners and allied health manpower increases the productivity
of a physician practice. 5/ Similar results have also been obtained for
the use of some types of medical equipment. 6/ Although the evidence is
less clear, group practice, especially single specialty groups, shows
some signs of having increased productivity. 7/
The physician's work effort is another important factor in determin-
ing the supply of physician services. Office based physicians averaged
51.5 hours per week in 1973. However, there is considerable variation
among physicians in different areas of the country, practice arrangements,
and medical specialties. 8/ Other factors, such as physicians' income,
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asset holdings, and manner in which they are reimbursed also affect
hours worked. There is some evidence that at high levels of income
physicians opt for more leisure time instead of greater income. 9/
Options and Recommendations
The committee considered three options related to the aggregate
supply of physicians: increasing, decreasing, or maintaining the number
of entrants to medical schools at the current annual level.
The committee does not believe that increasing the number of medical
school entrants is a reasonable policy given the available evidence at
this time. Some researchers believe we have or soon will have an excess
supply of physicians. 10/ Increasing the aggregate supply of physicians
may not increase the available supply of primary care services. Further-
more, increasing the aggregate supply of physicians may add significantly
to health expenditures. Given the market power of physicians as indepen-
dent professionals, they may be able to influence the use of their
services. Some researchers suggest that each additional physician
increases health care expenditures by $250,000 yearly. 11/
There is little direct evidence on how the total supply of physi-
cians affects the supply of primary care physicians. It is reasonable
to expect, however, that decreasing the number of entrants to medical
school will reduce the pool of physicians available to enter primary
care disciplines. In addition, reduction would be disruptive of the
medical educational system. Closing recently started medical schools
would be impractical; reducing the number of students accepted into
existing schools could harm the finances of such schools.
The committee recommends that (Recommendation #2) for the present,
the number of entrants to medical school should remain at the current
.
annual level. This recommendation is ma
continuous and vigorous efforts be made to monitor and evaluate the
aggregate supply of physicians.
SUPPLY OF NURSE PRACTITIONERS AND PHYSICIAN ASSISTANTS
In the face of an expanded physician supply, the future of nurse
practitioners and physician assistants appears somewhat uncertain.
Originally, nurse practitioners and physician assistants were seen as a
way of speedily increasing the supply of personal health services. In
less than two years, training programs could turn a registered nurse or
an individual with some health care experience, such as an ax-military
corpsman, into a provider of quality medical services. 12/ More
recently, new health practitioners have been considered as providers
of care different in scope or nature from care provided by physicians,
especially regarding health education and patient counseling.
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Although differences exist between training of nurse practitioners
and physician assistants, both groups are educated and trained to per-
form many of the tasks traditionally performed by physicians. As
defined in this report, nurse practitioners are formally trained in
academic programs, of which about one-third are one-year programs
conferring master's degrees. Other formal nurse practitioner programs
award certificates and generally take from a few months to a year. 13/
Formal physician assistant programs are usually university based and
require about two years. The first half of the physician assistant
program is spent on classroom instruction in the basic sciences and
the second half is spent in clinical application or preceptorships. 14/
Formal nurse practitioner and physician assistant programs began
to receive direct federal support in 1971 and continue to receive
support under authority of the Nurse Training Act of 1975 and the Health
Professions Educational Assistance Act of 1976. 15/ Given the current
numbers of physician assistants and nurse practitioners, and current
levels of support and training slots, in 1990 the projected number of
nurse practitioners will be 23,000, and the number of physician assis-
tants will be 18,520. 16/ In 1990 there would be slightly less than
one physician assistant or nurse practitioner for every fourteen actively
practicing physicians.
Options and Recommendations
-
The committee considered three policy options for the training of
physician assistants and nurse practitioners: increasing, decreasing,
or maintaining the numbers trained at the current annual level.
The committee rejected the option of increasing the number of
physician assistants and nurse practitioners being trained, partly
because the expected increase in the supply of physicians might limit
the employment of the new health practitioners. Although the committee
acknowledged the role of these practitioners, it finds no need for
expanding the supply of new health practitioners at this time.
A decrease in the numbers of physician assistants and nurse practi-
tioners in training was also rejected. In the opinion of the committee,
these groups have established themselves as important providers of primary
care. Physician and patient acceptance is high, and there is evidence
that the quality of care delivered by these new health practitioners for
certain services equals that of physicians. 17/ In addition, there is
sufficient evidence of their productivity and potential cost effective-
ness to warrant continued support. 18/
Thus, the committee recommends that (Recommendation #3) for the
present, the number of nurse practitioners and physician assistants
trained should remain at the current annual level. This recommendation
is made with the expectation that continued monitoring and health
services research will be directed to this area.
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In addition, this recommendation is based on the committee's
understanding that even with the projected increase in the supply of
physicians, physician assistants and nurse practitioners have an
important role to play in the delivery of primary care. Their role in
those rural communities unable to support a physician is of particular
importance. In the opinion of the committee, rural communities with
populations of 4,000 or less may be adequately and economically served
by a physician assistant or nurse practitioner with physician backup.
Even in more populated rural communities, they can augment the care
provided by the physician so that the patient can obtain needed primary
care on a 24 hour basis. _/ In addition, new health practitioners can
improve access to primary care in urban settings, especially in
hospitals, nursing homes, and as part of a team in a group practice.
Moreover, the committee views these providers as enhancing the
delivery of primary care by educating patients to lead more healthful
lives. The availability of a sufficient supply of new health practi-
tioners could assure that a wide breadth of services is offered to
patients on the primary care level. New health practitioners, by
concentrating on communication with patients, might help patients to
adhere more closely to prescribed regimens, to assure successfully an
increased responsibility for their own health, and to face illness and
other important events more resourcefully.
The committee also feels that nurse practitioners and physician
assistants, properly utilized, can reduce the cost of health care. They
are trained in two years or less as compared to the much longer training
period of the physician, and their average earnings are about 40 percent
of those of a physician. 20/ Moreover, research findings indicate that
nurse practitioners and physician assistants can provide a range of
medical services at a level comparable in quality to that of physi-
cians. 21/
THE SUPPLY OF PHYSICIANS IN PRIMARY CARE DISCIPLINES
Although physicians are only one group of providers of primary
care, the special role of physicians in the health care system makes
their availability extremely important. In 1976 the Congress declared
that "physician specialization has resulted in inadequate numbers of
physicians engaged in the delivery of primary care." 22/
In 1931, almost 95 percent (117,079) of all practicing physicians
were in primary care disciplines; 23/ by 1963 only 47.9 percent (or
125,367) were. 24/ From 1963 to 1975, the absolute number of physicians
in primary care disciplines increased to 152,365, but their percentage
dropped to 44.8 percent. 25/
Although the total number of physicians is expected to increase
dramatically by 1990, after adjusting for changes currently underway,
the percentage in primary care disciplines will increase to only 50
percent. 26/ However, as discussed previously in this chapter, the
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rigorous determination of the aggregate supply is difficult given the
current lack of data and level of knowledge in this area. Although
the committee acknowledges that other medical specialties and other
types of health manpower deliver primary care, the committee believes
that the current and projected future supply of physicians delivering
primary care, as currently organized, is and will be inadequate to meet
the primary care needs of the nation.
STRATEGIES TO INCREASE THE SUPPLY OF PHYSICIANS IN PRIMARY CARE DISCIPLINES
As part of a more systematic approach to increase the supply of
physicians in primary care disciplines, the committee explored policy
alternatives directed at practicing physicians, particularly those entering
medical practice, and at medical students and residents. (Recommendations
specifically affecting the medical student and the resident appear in
Chapter 5~. Physicians select their disciplines at different points in
their careers. As many as half do not make their final choice until
after graduating from medical school and some not until many years after
entering practice. Many factors, including social, economic, educational,
and personal influences, determine specialty choice. 27/
The committee considered four strategies for increasing the supply
of physicians in primary care disciplines. One was to continue to
increase the total supply of physicians with the assumption that some
would train in primary care disciplines. This option was rejected
because of its cost implications and because the assumption has no rigor-
ous empirical basis. As noted earlier in this chapter, at this time, the
committee does not support an increase in the training of physicians.
Another strategy discussed was to organize the delivery of primary
care into health maintenance organizations (HMOs) that would be more
flexible in ways of reimbursing providers, benefits offered, and par-
ticipating populations than the HMOs described in the current federal
legislation. 28/ The strategy was not adopted because of the lack of
data, the inconclusive research findings, and the political difficulty
of achieving the needed changes in the near future.
In an attempt to make the practice of primary care more attractive
to physicians, the committee considered policies to reduce the income
differentials between primary care and other physicians. To accomplish
this the committee considered a third strategy of direct controls on
income or income ceilings similar to those adopted in other countries,
but it rejected them 29/ They might produce negative work incentives
and were deemed politically and administratively unacceptable.
As a workable policy the committee explored a fourth strategy of
changes related to reimbursement for the delivery of primary care. The
enactment of national health insurance legislation would also have direct
and indirect consequences for the supply of primary care physicians. 30/
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In developing its reimbursement recommendations, the committee was
aware that Medicare, Medicaid, and private health insurance plans differ
in their approach to financing health care. Medicare is a federal
insurance program, similar in some ways to private health insurance
plans but not directly affected by the private market. Medicaid is a
state-administered program aided by federal funds and based on welfare
principles. There are variations among private health insurers as well.
Most commercial insurance companies use the traditional approach of
indemnity insurance; that is, they compensate subscribers for the costs
of medical care. Blue Shield plans, in theory, assure their members
certain units of medical service. The distinction has become blurred with
time, and in practice service plans have some indemnity features and many
indemnity plans have adopted some service concepts. Differences in
philosophy, ownership, and administrative practices will affect the imple-
mentation of the committee's reimbursement recommendations.
Currently, physicians are compensated for their services by either
salary, capitation payments, or fee-for-service. Salaried physicians
usually work for institutions such as hospitals, nursing homes, or group
practices. Capitation requires paying the physician for the number of
patients he or she is responsible for during a period of time. However,
fee-for-service, that is, payment for each service delivered, is still
the prevalent method of paying physicians: 71 percent of non-federal
patient care physicians are paid by the fee-for-service method. 31/
With fee-for-service payment, physicians' income is determined, to a
large extent, by the fee received for each service and the quantity of
services delivered.
Private and public third-party payors usually reimburse the physi-
cian on a fee-for-service basis. 32/ However, the determination of the
maximum level of reimbursement differs among third-party payers. They
use fee schedules or customary, prevailing, and reasonable reimbursement
(CPR), also known as the usual, customary and reasonable charge method
(UCR).
With the customary, prevailing and reasonable method, third-party
payors maintain records of the services provided and the charges billed
by the physicians in an area. From these, they develop individual and
area statistical profiles of physician charges. Medicare, approximately
half the Medicaid states, about half of the Blue Shield enrollees and
larger commercial insurers use this method. Under Medicare, payment to
the physician is based on the reasonable (allowable) charge for the
service, which is defined as the lowest of the physician's actual charge,
the physician's customary charge, or the area's prevailing charge. 33/
As defined by the programs, the actual charge is the physician's big ed
charged to the patient for the services provided; the customary charge
is the median of the charges filed by a physician during the previous
year for the service; and the prevailing charge is the 75th percentile
of the distribution of customary charges of all area physicians during
the previous calendar year, weighted by the number of times each physician
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has billed for that given service. In addition, Medicare has separate
reimbursement rates for general practitioners and specialists. Under
Medicaid, half the states have separate reimbursement rates for general
practitioners and specialists. The definitions of teems such as
customary, prevailing, and reasonable are not consistent for all third-
party payers, but the method is essentially the same. 34/ Most of the
Blue Shield Plans pay for physician services at the 90th percentile of
the distribution of all physician charges.
Physicians can bill the patient more than the reasonable charge paid
by the Medicare program and the charges paid by some private insurers.
Physicians can choose to have the payment assigned to them or to the
patient under Medicare and under some private health insurance plans.
If physicians accept assignment under Medicare, they may not bill the
patient for any difference between their charges and the Medicare pay-
ment. However, Medicare covers 80 percent of the cost of physician
services, with the remaining portion paid by coinsurance. If physicians
do not accept assignment, they may bill the patient more than the
Medicare payment but must collect the full amount from the patient.
The effectiveness of using third-party payments as a means of
redistributing physician manpower depends upon the physician's partici-
pation in a system. There has been a decline in the percentage of
physicians participating in Medicare, as measured by the assignment
rate which decreased from 64 percent in 1969 to just below 50 percent
in 1975. 35/ Medicaid is a mandatory assignment program and the
physician must collect no more than the maximum allowable. However,
physicians can refuse to participate in the program.
Approximately half of the state Medicaid agencies, about half of
the Blue Shield enrollees and many commerical insurers use fee schedules
to specify the maximum level of payment for a particular service. The
physician is paid at his billed charge or at the fee schedule level,
whichever is lower. Fee schedules are determined by a survey of physi-
cian's billed charges, through negotiations between insurance companies
and medical societies, or, as is done by most state Medicaid agencies,
by applying a dollar conversion factor to a relative value system. 36/
Relative value systems establish a quantitative but nonmonetary scale
on the worth of one procedure as compared to all other procedures. 37/
For example, if administration of a measles vaccine has a relative value
of 2.2 and the conversion factor is 10, then the third-party payor would
pay the physician a maximum of $22.00 for the immunization.
Relative value systems describe and code physician's services and
are used as a guide to physicians to determine their charges as well as
a basic reference to establish fee schedules. 38/ Medicare uses a
relative value system when there is no reliable statistical base for
determining a prevailing charge for a medical procedure or service in
the area, or to determine a physician's customary charge if there is no
sufficient data upon which to base this determination.
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In 1976 third-party payors paid for 61 percent of the expenditures
for physician services, and Medicare and Medicaid accounted for 20
percent. 39/ Although no payment method automatically favors one level
of care over another, any payment method can be structured to favor one
type of practitioner over another, or one service or procedure over
another. The current structure and methods of third-party payment
systems do not encourage physicians to enter primary care disciplines.
There are identifiable inequities in the way physicians are paid by
third-party payors which may deter physicians from providing primary
care. Nationally, the average income of physicians in primary care
disciplines is much lower than that of other physicians. Internists
on the average earned a net income of $53,900 in 1975 compared to net
incomes of radiologists and anesthesiologists of $124,400 and $87,000
respectively. 40/
Prevailing charges of Medicare carriers appear to favor non-primary
care physicians for some services and procedures. Between 1968 and
1972, Medicare payments to general practitioners and internists grew at
a slower rate than payments to surgeons and certain other specialists,
which suggests that economic advantages for nonprimary care physicians
exist in this program. 41/
Medicare and Medicaid legal provisions inhibit physicians in rela-
tively low-paid primary care fields from attaining the reimbursement
levels of more highly compensated physicians. By forbidding reimburse-
ment at a level higher than the 75th percentile of prevailing charges
of members of a physician's own specialty in the geographic area, Medicare
(and, by extension Medicaid, which disallows reimbursement higher than
that supplied by Medicare) limits the reimbursement of physicians in
those primary care fields where such reimbursement already is relatively
low. Indeed, Medicaid reimburses at an appreciably lower level than
Medicare for most services. 42/
Relative value scales also encourage the growth of procedure-
oriented specialization among physicians by placing higher values upon
separate procedures, such as radiological and laboratory services, than
upon other services, such as office visits. Furthermore, specific proce-
dures are more likely to be covered by private insurance. It is estimated
that only 20 percent of office visits but 80 percent of surgical services
are paid for by third-party payers. 43/ It is likely that some physicians
receive no compensation from third-party payors for performing some
essential aspects of primary care.
Options and Recommendations
Payment practices of third-party payors place no premium upon the
delivery of primary care and in fact may discourage physicians from
specializing in primary care disciplines. Thus, to increase the avail-
ability and quality of primary care services, the committee recommends
changes in the structure and practices of reimbursement methods.
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One change considered is to reimburse all physicians at the same
level for the same primary care service. One method of achieving this
aim is to base the payment level for a service on the minimum level of
skill required to provide the service, as measured by the education and
training of the physician. This option has the advantage of basing
third-party payments for physician services on objective measures rather
than on historical precedent and previous fee levels. It also has
obvious cost saving implications. However, in the opinion of the
committee, it would be difficult to implement and administer.
The committee did not specify how payment levels should be estab-
lished but they recommended that (Recommendation #4) third-party payers
(federal, state, and private) should reimburse all physicians at the same
.
payment level for the same primary care service. This recommendation
lessens the financial disincentive to physicians to enter the primary
care disciplines by equalizing third-party payments to all physicians for
the same primary service, and allows for equal payment for identical
services of acceptable quality. Fee levels would be statewide. See
Recommendation #8.
The committee recognizes that many primary care services are
provided by practitioners who may have the dual role of a primary care
practitioner and a specialist; for example, a general internist who has
a subspecialty in cardiology or a general surgeon would be in this
category. It is also recognized that this system might prove disadvan-
tageous because the practitioner may not be as well trained in the primary
care role as in the specialty role, and there may be a tendency to use
specialty skills when these are not needed For example, the cardiologist
might be more likely to conduct an extensive hypertensive workup on a
newly discovered case of hypertension than would another physician.
The committee suggests, therefore, that specialty differentials
in payment levels be limited to services that meet two tests: the
service is provided by one who is recognized as having special skills,
and the service is provided at the request of another physician (usually
a primary care physician).
The committee feels that consultant services may warrant a higher
level of payment, since they often involve more complex problems and
require greater time and special skills. Elimination of the specialty
differential would be an unacceptable option. Yet, adoption of the
recommendation without the application of the dual tests proposed above
would probably raise the payment level of primary care physicians nearer
to that of referral specialists, thus increasing total cost. The assign-
ment of a managerial role to the primary care physician would provide a
level of cost and quality control, more clearly separate physicians into
primary and referral specialist roles, and provide an operational
mechanism for providing reimbursement to all physicians, whether a
primary care physician or not, for performing primary care services.
There are unresolved issues in using this approach, including whether
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referral specialists can refer patients to other referral specialists
without patients being required to see a primary care physician first,
and whether primary care physicians in a group practice can refer
patients to referral physicians in the same group.
To increase the availability of primary care the committee also
recommends that (Recommendation #5) third-party payors (federal, state
and private) should reduce the differentials In payment levels between
. , .
primary care procedures and non-prtmary care procedures
As noted earlier, payment for services involving complex procedures
or equipment is usually higher than for other services. In many instan-
ces, as with the electrocardiogram or chest x-ray, the value was
established at an early point in the history of the procedure. Although
later technologic advances and higher rates of utilization may have
substantially reduced the time, judgment, skill, and cost of the
equipment required to perform the procedures, this reduction has not
been reflected in the value scales or in physician charges.
The committee considered three ways to remove the disincentive to
the provision of primary care procedures: removing the differentials
between payments for procedures completely; increasing payments for
primary care procedures above those for non-primary care procedures;
and reducing the differentials in payments between primary care and non-
primary care procedures. The first option was rejected because those
procedures that require the most time, skill, judgment, and training
warrant some additional payment. The second option was dismissed,
because the additional payment for primary care services might produce
the necessary additional primary care services and attract more physicians
into primary care disciplines, but it would increase the costs of health
care.
An intermediate course, and the one adopted by the committee,
is to reduce the differentials between procedures. This recommendation
would encourage physicians to enter primary care practice. It would
also allow some payment differentials based on the levels of training,
skill, and judgment required.
Finally, the committee recommends that (Recommendation #6) third-
party payors (federal, state, and private) should institute payments to
if_
providers and currently no ~ 1th
~ ~ , . ..
education and preventive services. The primary car
Chapter 3 of this report, is composed of one or more providers. The
majority of such units are currently owned and operated by physicians,
although they may be owned and operated by other health providers or
private or public bodies.
As emphasized in the definition, comprehensiveness of care, includ-
ing health education and preventive measures, is an attribute essential
to the practice of good primary care. The provision of a broad range of
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services, including services for basic medical problems, psychosocial
problems, and health education, distinguishes the primary care practi-
tioner from the secondary care practitioner and the referral specialist.
In general, third-party payors tend to restrict the provision of
preventive measures. An exception is the Medicaid program which mandates
states to provide early and periodic screening, diagnosis and treatment
(EPSDT) for those under 21 years of age and family planning services. 44/
Some preventive services are included under both provisions. States vary
in their performance in providing services so that only about 20 percent
of those eligible (1.1 million) received services under the EPSDT
provisions in 1976. 45/ Medicaid also allows the states the option of
covering other services and receiving federal reimbursement for them.
There are two major arguments against offering third-party payments
to physicians for providing preventive services. One is the limited
capability for assessing the efficaciousness of many preventive measures;
the other is the possibility of increasing health care expenditures.
The probability of an immediate rise in expenditures for health care
must be weighed against the possibility of future savings, both economic
and in terms of human suffering.
For example, there is a need for education about the health hazards
of cigarette smoking. Empirical evidence indicates cigarette smoking is
a causative factor in lung cancer, chronic bronchitis, emphysema, ischemic
heart disease, and obstructive peripheral vascular disease. Cigarette
smoking is considered to be the direct cause of 80 percent of the 80,600
deaths due to lung cancer in 1975 46/ The economic burden of cancer is
high as well. In 1975, 9 percent (23 billion dollars) of the total eco-
nomic costs of illness was due to cancer. 47/
Because the evidence on the efficacy and effectiveness of many
preventive measures is not firmly established, the committee suggests
instituting safeguards before establishing payment for particular
measures. Criteria should be developed and used for the incorporation
of specific measures into a third-party payment system. The criteria
of one proposal include an evaluation of the scientific evidence on the
significance of the measure and assessment of the costs and benefits in
economic and human terms. The proposal suggests preventive services
appropriate for each period of life. 48/ In addition, demonstration and
special projects to prove the efficac Or usness and effectiveness of the
measures might be undertaken. Other safeguards against overuse and abuse
suggested by the committee are providing payment for preventive services,
including health education, for a specific time, such as once a year.
Furthermore, such payments should be contingent upon the patient's
recognition and certification of receipt of the service. This could be
accomplished by the patient cosigning the physician's claim forms for
reimbursement.
The recommendation may have effects other than improving the avail-
ability of health education and preventive services. No doubt additional
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The practice of not reimbursing for primary care services provided
by nurse practitioners and physician assistants is another policy that
perpetuates the uneven geographic distribution of primary care practi-
tioners. Specific information on the payment practices of Blue Shield
and commercial insurers in this respect are not available, but Medicare
does not reimburse for services provided by physician assistants and
nurse practitioners, 67/ and only a few state Medicaid agencies allow
payment for such services. 68/
Restricting reimbursement for these providers, as well as requiring
the physical presence of the supervising physician, greatly limits their
usefulness in underserved areas, especially rural clinics. Various
legislative proposals to amend the relevant Medicare provisions and to
allow for the payment of services furnished by physician assistants and
nurse practitioners in rural health clinics have been proposed. 69/ The
recently enacted P.L. 95-210 provides reimbursement to rural health
clinics under Medicare and Medicaid for services furnished in rural
health clinics by nurse practitioners and physician assistants, if the
nurse practitioner or physician assistant is legally authorized to furnish
such services. This legal authority includes physician supervision. The
act contains provisions for demonstration projects for clinics employing
nurse practitioners and physician assistants in medically underserved
urban areas. 70/
The pattern of non-reimbursement for primary care services furnished
by nurse practitioners and physician assistants is inconsistent with
public policy that promotes the distribution of primary care practitioners
in underserved areas. Therefore, the committee recommends that (Recom-
mendation #9)
reimburse the practice unt
. .
same payment level regardless of whether the services are provided by
physicians' nurse practiti ~ ce
unit can be owned and operated by physicians, other health professionals,
or government organizations. In making this recommendation, the commit-
tee recognizes the unresolved problem of determining whether a service,
e.g., a physical examination, delivered by a physician is the same
service when delivered by a nurse practitioner or physician assistant.
Some believe that the physicians' medical expertise precludes their
service from being the same service as that delivered by a nurse
practitioner or physician assistant. Another point of view is that nurse
practitioners and physician assistants deliver some primary care services
with more communicative and facilitative skills than most physicians.
Most committee members agreed that, for reimbursement purposes, a service
delivered by a physician assistant and nurse practitioner is similar to
a service delivered by a physician if both are delivered at an acceptable
level of quality.
The committee rejected the option of the reimbursement for primary
care services provided by physician assistants and nurse practitioners
at a lower level than for similar services established for physicians.
Payment differentials are discriminatory and connote a two-tiered system
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of health care. In addition, the evidence indicates that the quality of
care for the range of services provided by nurse practitioners and
physician assistants is equivalent to that of physicians, 71/ and that
nurse practitioners and physician assistants increase the availability
of primary care services. A reduced payment level for physician assis-
tants and nurse practitioners may be offset by administration and
implementation costs. Furthermore, a reduced level of reimbursement
might hinder their employment potential. 72/
MONITORING AND RESEARCH NEEDS
The issues of the adequacy of the supply and distribution of primary
care practitioners require continuing attention. Policy decisions and
alternatives should be based on an accurate picture of the current as
well as future situations. Thus, the committee strongly recommends that
(Recommendation #10) there should be an active, continuous program for
~ _
monitoring a number of factors includ
, ~ .
geographic distribution of physicians, nurse practitioners, and physician
assistants,and also for monitoring the perce
.
Lion regarding the adequacy and availability of primary care services. A
factor that requires particular attention is the number of physicians
who change their specialty, even after they are in practice. The fact
that a physician is enrolled in or completes a residency in a specialty
does not ensure that he or she will later practice in that specialty.
Many physicians who train in internal medicine, pediatrics, family
practice, general practice, or obstetrics and gynecology later change to
referral specialties 73/ The magnitude of this change must be monitored
in developing policy about primary care manpower.
The committee also recommends that (Recommendation #11) an increased
emphasis should be given to health services research in primary care man-
power. In the committee's judgment,
is essential for the intellectual development of the field. A field
augments its body of knowledge, gains professional prestige, and increases
its competency through research. The committee also suggests that primary
care faculty members participate in research efforts to augment faculty
expertise and to add another positive dimension to the role model of a
primary care physician.
In its attempt to evaluate the need for primary care practitioners
and the factors that attract physicians and other health practitioners
to the delivery of primary care, the committee discovered a paucity of
reported reliable research. The type of research that the committee
believes would be most helpful is that of health services research.
Health services research has the potential of effecting a positive
change in the content, organization, and delivery of health services.
Although there is disagreement on a workable definition of health
services research, it has been defined as encompassing "...broad
scientific fields, the overall objective of which is to improve the
provision of health services." 74/
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There are studies now underway that will provide data on staffing
and manpower utilization patterns in primary care practice arrangements,
on the case mix seen by specialists and the time they spend in nonspeci-
alty practice, and on the utilization of new health practitioners. 75/
More definitive information is needed about the factors involved
in the physician's choice of specialty and in the physician's decision
to change specialties. The retention of physicians and other practi-
tioners in the primary care field needs investigation. Some of the
factors to be researched include the influence of professional
contraints, educational experiences, and community, social, and personal
characteristics.
Research is needed to determine the population's need for primary
care services and the manpower for meeting that need. Currently there
is no agreement about the definition of needs or an adequate methodology
for their assessment or an understanding of the work behavior of providers.
Moreover, to facilitate this research, accurate data is needed on the use
of specific primary care services, the efficacy of primary care procedures,
and the differing roles of primary care practitioners.
In addition, further work on the quality of primary care, the cost
and efficacy of the delivery of primary care in different practice ar-
rangements, team delivery of primary care, and the effect of reimbursement
policies and credentialing on the providers of primary care is needed.
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REFERENCES
Chapter 4
1. Gene Roback and Henry A. Mason, Physician Distribution and Medical
.icensure in the U.S.. 1975 (Chicago, American Medical Association:
1976~; see also staff paper, "Data on the Supply and Distribution of
Primary Care Physicians."
American Association of Colleges of Osteopathic Medicine, "Osteo-
pathic Medical Manpower Information (OMMI) Project," Final Report.
(DHEW Publication No. HRA 231-75-0615~. Rockville, Md., HRA, 1977
3. U.S. Department of Health, Education and Welfare, "Supply and
Distribution of Physicians and Physician Extenders: A Background
Paper Prepared for The Graduate Medical Education National Advisory
Committee," March 1, 1977, pp. 61-2 (mimeographed). The prelimi-
nary projections utilized in this background paper used the following
methodology: "Medical graduates were estimated by projecting medical
school first-year enrollments to the year 1986-87 and combining
them with enrollment attrition rates and three year program trends.
The first-year enrollment projections were based on studies of the
effects of federal capitation grants, construction grants, new
schools, and local and state funding. Foreign and Canadian medical
graduates were projected using a cohort model of FMG and CMG immi-
gration by type of visa and preference category accompanied by a
detailed analysis of the potential impact of current legislation
affecting FMGs. Since estimation of the anticiapted effect of the
legislative changes involves significant uncertainty, the results
were computed in ranges, and the midrange figure was used in this
'basic' projection. Mortality and retirement losses were computed
by five-year age cohort on an annual basis, using age distributions
and mortality and retirement rates from AMA data."
Ibid, p. 61, 9. Although the physician population ratio is
useful as an indicator of the adequacy of the supply of physicians,
it has a number of serious limitations. Among these are that it
does not account for the productivity of the physician, the pro-
ductivity of other health providers, the number of hours worked,
and the quality of care delivered. In addition, the physician
population ratio measure is only one dimension of the need or
demand for personal health services.
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5.
Richard M. Scheffler, "The Productivity of New Health Practitioners:
The Physician Assistant and Medex" in Health Manpower, Vol. 1, ed.
Richard M. Scheffler, Research in Health Economics: An Annual Com-
pilation (Greenwich, Conn.: JAI Press, in press); Uwe E. Reinhardt,
Physician Productivity and the Demand for~Health Manpower (Cambridge,
Mass.: Ballinger, 1975),- Kenneth Smith, Ralph Andreano~~~and Uwe E.
Reinhardt, "A National Health Manpower Policy: A Critique and
Strategy," in Health Manpower. Vol. T
6. Jack Hadley, "Research on Health Manpower Productivity: A General
Overview," in Health Manpower and Productivity, ed. John Rafferty
(Lexington, Mass.: Lexington Boo ~ . 143-205.
7. Uwe E. Reinhardt and Kenneth R. Smith, '`Manpower Substitution in
Ambulatory Care," in Health Manpower and Productivity, ed. John
Rafferty (Lexington, Mass.: Lexington Books, 1974) pp. 3-38; Richard
M. Scheffler, "Productivity and Economies of Scales in Medical
Practice; in Health Manpower and Physician Productivity, pp. 39-52;
Frank A. Sloan, "Effects of Incenti ~ formance,"
in Health Manpower and Physician Productivity, pp. 53-84; Richard M.
Scheffler, "Further Consideration on the Economics Group Practice:
The Management Input," Journal of Human Resources 10 (1975~: 258-63.
8. Martin S. Feldstein, "The Rising Price of Physician Services,"
Review of Economics and Statistics 52 (1970~: 121-133; Stephan G.
Vahovlch, "Phys ~ ons by Specialtyt' Industrial
Relations 10 (1977~: 51-60.
.
9. Frank A. Sloan, 'Physician Supply Behavior in the Short Run,"
Industrial and Labor Relations Review (1975~: 549-569; Frank A Sloan,
"A Microanalysis of Physicians Hours of Work Decisions," in The
Economics of Health and Medical Care, ed. Marc Perlman (London:
MacMillian, 1974).
10. Uwe E. Reinhardt, Physician Productivity and the Demand for Health
-
Manpower.
-
11. Robert G. Evans, "Supplier Induced Demand: Some Empirical Evidence
and Implications," in The Economics of Health and Medical Care, ed.
Marc Perlman, (London: MacMillan, 1974), pp. 15-77; Eli- Ginzberg,
"Paradoxes and Trends: An Economist Looks at Health Care," New
England Journal of Medicine 26 (1977~: 814-6.
12. See staff paper, "Education of Primary Care Practitioners."
13. American Nurses' Association and U.S. Bureau of Health Manpower, A
Directory of Programs Preparing Registered Nurses for Expanded Roles,
1974-75, DREW Pub. No. (BRA) 76-31, 1975. purse practitioners are
also trained in informal programs for which data are scarce and
unreliable.
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14. Association of Physician Assistant Programs, Nationa]. New Health
Practitioner Program Profile, ].976-77 (Washington, D.C.: 1975~;
see also staff paper "Education of Primary Care Practitioners."
15. P.L. 94-63 (1975); P.L. 94-484 (1976).
16. U.S. Department of Hea].th, Education, and Welfare, "Supp].y and
Distribution of Physicians and Physician Extenders," p. 78.
17. Char].es E. Lewis, "Evaluating the Performance of Intermediate Health
Workers," in Intermediate Health Practitioners, ed. Vernon W. Kippard
and Elizabeth E. Purcell (New York Josiah Mac y Jr. Foundation,
1973), pp. 89-103; Charles E. Lewis and Barbara Resnik, 'Nurse Clinics
and Progressive Ambulatory Patient Care," New England Journal of
Medicine 277 (1967~: 1236-41; Eva D. Cohen, et. al., An Evaluation
of Policy Related Research on New and Expanded Roles of Health
Workers, (New Haven, Conn.: Yale University School of Medicine,
October 1974~. See also staff papers, "Consumer Acceptance of Nurse
Practitioners and Physician Assistants" and "Physician Acceptance of
Nurse Practitioners and Physician Assistants."
18. Richard M. Scheffler, The Supply and Demand for New Health Profes-
sionals: Physician Assistants and Medex, Final Report, Submitted
.
to U^S. Department of Health, Education, and Welfare, Contract No.
1-44184, November 1977; Jane Cassels Record and Joan E. Bannon,
Cost Effectiveness of Physician Assistants, Fina]. Report; HMEIA
~ . . _
Contract No. 1-MB-44173 P U.S. Department of Health, Education,
and Welfare, 1976.
19. See checklist in Chapter 2.
20. Richard M. Scheffler, "Estimating the Private Rate of Return to
Training the Physicians' Assistant,'' Industrial Relations ].4
1975~: ].78-189; Richard Scheff].er, "The Market for Paraprofes-
sionals: The Physician Assistant," The Quarter].y Review of
Economics and Business 14 (].974~:.47-60.
21. Charles E. Lewis, "Evaluating the Performance of Intermediate
Health Workers"; Lewis and Resnick, "Nurse Clinics and Progres-
sive Ambulatory Patient Care '; Cohen, et. al., An Evaluation of
Policy Related Research on New and Expanded Roles of Health
~ ..
Workers. See staff papers, "Consumer Acceptance of Nurse Practi-
tioners and Physician Assistants" and "Physician Acceptance of
Nurse Practitioners and Physician Assistants."
22. P.L. 94-484 (1976~. This legislation identifies family medicine,
general internal medicine, and general. pediatrics as primary care
specia].ties. The American Medical. Association inc].udes obstetrics
and gynecology as wet].. In this chapter the data include family
and general physicians, internists, pediatricians, and obstetricians
and gynecologists.
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23. U.S. Department of Health, Education, and We].fare, Surgeon General's
Consultant Groups on Medical Education, Physicians for a Growing
America, Public Health Service Publicati
D.C.: October 1973~.
24. See staff paper, "Data on the Supply and Distribution of Primary
Care Physicians."
25. Ibid.
26. U.S. Department of Health, Education, and Welfare, '~SuppJ.y and
Distribution of Physicians and Physician Extenders,'' p. 68.
27. Institute of Medicine, Medicare-Medicaid Reimbursement Po].icies
(Washington, D.C.: National Academy of Sciences, 1976), pp. 289-
298; Jack Hadley, 'Models of Specialty and Location Decisions,"
Technical Paper No. 6, Nationa]. Center for Health Services Research,
Health Resources Administration, U.S. Department of Health, Educa-
tion and Welfare, October 1975; Id., "A Predictive Model of Specialty
Choices," Health Manpower Vo].. I (in press) ed. Richard M. Scheffler,
Research id -ice: An Annual Compilation (Greenwich,
. . . .
Conn.: JAI Press, 1978 .
28. P.L. 93-222, 1974.
29.
Jack Hadley, 'National Health Insurance and the Health Labor Force:
Physicians," Working paper 5057-7, Urban Institute, Washington, D.C.,
August 1977 (mimeographed); Owe E. Reinhardt, "Health Manpower
Policy in the United States,' paper presented at the Bicentennia].
Conference on Health Po].icy, University of Pennsylvania, Phi].ade].-
phia, November 1976.
30. Hadley, pp. 4-].2.
31. Jon R. Gabel and Michael A. Redisch, "A].ternative Physician Payment
Methods: Incentives, Efficiency and Nationa]. Health Insurance,..
paper presented at the Eastern Economic Association Meeting,
Hartford, Conn., April 1977 (mimeographed), p. 2.
32. The term service is used loosely and may refer to a defined unit
such as an x-ray, or a range of services related to a single
incident, as pre- and post-surgical care for an operation.
33. Institute of Medicine, Medicare-Med~caid Reimbursement Policies
(Washington, D.C.: Nationa]. Academy of Sciences, J.976), pp. 327-33]..
34. The National Association of Blue Shield Plans uses a usual, custo-
mary and reasonable charge method (UCR). A usual fee is the most
consistent charge by an individual physician or provider to patients
for a given service. A customary fee is a charge which falls within
the range of usual charges for a given service billed by most
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physicians or providers with similar training and experience
within a given area. A reasonable fee is one which meets the
usual and customary criteria, or which, in the opinion of an
appropriate peer review committee, merits special consideration
based upon the complexity of treatment of the particular case.
Private insurers use a similar method.
35. Institute of Medicine, Medicare-Medicaid Reimbursement Policies,
p. 343.
36. Jon Gabel, Martha Blaxall, Ira Burney and George Schieber, "Paying
the Physician: Some Lessons from the Med~care-Medicaid Experience,"
paper presented at the American Public Health Association Meetings,
Miami, Florida, 1976, p. 3.
37. W.S. Sobaski, "Effects of the 1969 California Relative Value
Studies on Costs of Physician Services Under SMI," Health Insurance
Statistics 69, Office of Research and Statistics, Social Security
Administration, U.S. Department of Health, Education, and Welfare,
(1975).
38. California Medical Association, 1974 California Relative Value
Studies (San Francisco' California Medical Association, 1975),
39. Robert M. Gibson and Margaret Smith Mueller, "National Health
Expenditures, Fiscal Year 1976,' Social Security Bulletin (April
1977~: 3-22.
40. Nancy Thorndike, "Net Income and Work Patterns of Physicians in
Five Medical Specialties," Research and Statistics 13, Office of
Research and Statistics, Social Security Administration, U.S.
Department of Health, Education, and Welfare (1977~; Abt Associ-
ates, "Physician Survey on Administrative Costs and Medicaid
Participation," HEW Contract No. 75-0212, paper presented at the
ORS-DHO Contractors Workshop, Washington, D.C., March 1977.
41. Institute of Medicine, Medicare-Medica~d Reimbursement Policies,
p. 340.
42. Ibid., p. 69.
43. Frank Sloan and Bruce Steinwald, "The Role of Health Insurance in
the Physicians' Service Market" Inquiry 12 (1975~: 275-299.
44. 92 U.S.C. 139d (a) (1) 5.
45. Children's Defense Fund, EPSDT:- Does it Spell Health Care for Poor
Children? (Washington, D.C.: Washington~Research Project, Inc.,
1977).
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46.
47.
Institute of Medicine, Perspectives on Health Promotion and Disease
Prevention in the United States: A Staff Paper (Washington, D.C.:
National Academy of Sciences, January ~ 88.
Dorothy P. Rice, Jacob J. Feldman and Kerr L. White, The Current
Burden of Illness in the United States, An Occasional Paper of the
Institute of Medicine (Washington, D.C.: National Academy of
Sciences, 1977~.
48. Task Force Report. Preventive Medicine USA (New York: Prodest,
1976).
49. See staff paper, "Data on the Supply and Distribution of Primary
Care Physicians"; Richard Scheffler, "The Regional Distribution
of Physicians and Specialists," Review of Regional Studies (Winter
1971~; Richard Scheffler, "The Relationship Between Medical Training
and the Statewide Per Capita Distribution of Physicians," Journal
of Medical Education (1971~: 995-8.
50. U.S. Congress, House, Committee on Ways and Means, Subcommittee on
Health; Hearings on Medicare Reimbursement for Physician Extenders
Practicing in Rural Health Clinics, Testimony of Dale W. Sapper,
February 28, 1977 (Washington, D.C.: Government Printing Office,
1977), p. 10.
51. See staff paper, "Data on the Supply and Distribution of Primary
Care Physicians."
52. Donald Dewey, Where the Doctors Have Gone: The Changing Distribu-
tion of Private Physicians in the Chicago Metropolitan Area, 1950-
1970, Chicago Regional Hospital Stud-y (Chicago: Illinois Regional
Medical Program, 1973~.
53.
American Academy of Family Physicians, "Preliminary Report on a
Survey of 1976 Graduating Family Practice Residents," (Kansas City:
1976, mimeographed).
54. Scheffler, "The Supply and Demand for New Health Professionals:
Physician Assistants and Medex"; Harry Sultz, Marie Zielezny and
Louis Kinyon, "Highlights: Phase 2 of a Longitudinal Study of
Nurse Practitioners," State University of New York at Buffalo,
New York, 1977 (mimeographed).
55. Scheffler, "The Supply and Demand for New Health Professionals:
Physician Assistants and Medex."
56. Sultz, Zielezny and Kinyon, "Highlights: Phase 2 of a Longitudinal
Study of Nurse Practitioners," p. 20.
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57. The major current effort to encourage physicians to locate in
shortage areas is a series of loan forgiveness and scholarship
provisions in the 1976 Health Professions Educational Assistance
Act (P.L. 94-484~. The act expands the appropriation authorization
for the National Health Service Corps and continues the system of
Area Health Education Centers.
58. Institute of Medicine, Medicare-Medicaid Reimbursement Policies,
pp. 279-294; Jack Hadley, "Models of Physicians' Specialty and
Location Decisions,' Technical Paper loo. 6, National Center for
Health Services Research, Health Resources Administration, U.S.
Department of Health, Education, and Welfare, October 1975.
59. Ibid., Medicare-Medicaid Reimbursement Policies.
60. Jack Had]ey, "National Health Insurance and the Health Labor Force:
Physicians..'
61. Institute of Medicine, Medicare-Medicaid Reimbursement Policies,
p. 341.
62. Frank Sloan and Roger Feldman, "Monopolistic Elements in the Market
for Physicians. Services," paper presented at the Conference on
Competition in the Health Care Sector: Past, Present and Future,
Federal Trade Commission, Washington, D.C., June 1977 (mimeographed).
63. Institute of Medicine, Medicare-Medicaid Reimbursement Policies,
p. 333.
64. Catherine White, Institute of Medicine, paper presented at the Social
Security, ORS-DHS Physician Contractors Workshop, Washington, D.C.,
March 1977.
Institute of Medicine, Medicare-Medicaid Reimbursement Policies,
. . _
p. 69.
66. For a discussion of the state role in health activities, see Florence
A. Wilson and Dune an Neuhauser, Health Services in the United States
(Cambridge, Mass.:. Ballinger, 1964), pp. 179-82.
67. See ]861(s) (2) of the Social Security Act, 42 U-S.C. Sec. 1395 (S)
(2) (A); 20 CFR 405.23]. For further discussion, see staff paper,
"Public Payment for Primary Care Services."
68. Seven states permit payment for medical services provided by nurse
practitioners and physician assistants as 'services provided...by
or under the personal supervision" of a licensed physician. See
staff paper, "Public Payment for Primary Care Services."
69. H.R. 14833, 94th Cong. 2nd session; H.R. 15159, 94th Cong. 2nd
session; H.R. 15594, 94th Cong. 2nd session and H.R. 8422, 95th
Cong. 1st session.
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70. P.L. 95-210 (1977).
71. See staff papers, "Consumer Acceptance of Nurse Practitioners and
Physician Assistants" and "Physician Acceptance of Nurse Practi-
tioners and Physician Assistants," and Cohen, et. al., An Evalu-
ation of Policy Related Research.
72. See staff paper, "Physician Acceptance of Nurse Practitioners and
Physician Assistants."
William D. Holden and Edithe J. Levit, "Migration of Physicians
From One Specialty to Another: A Longitudinal Study of U.S.
Medical School Graduates," Journal of the American Medical Associ-
ation 239 (1978): 205-9; Henry Wechsler, Joseph L. Dorsey and
Joanne D. Bovey, "A Follow-up Study of Residents in Internal
Medicine, Pediatrics and Obstetrics-Gynecology Training Programs
in Massachusetts," New England Journal of Medicine 298 (1978~:
15-21.
74. Panel on Health Services Research and Development of the Presidents
Advisory Committee, In Providing Health Care Through Research and
Development (APO #4106-00036, Washington, D.C.), March 1972, p. 1.
75. Ongoing studies include a nationwide survey of physicians and
surgeons in approximately twenty medical and surgical specialties
conducted at the University of California Medical School. The
study is attempting to derive empirically a basis for the catego-
rization of care as primary and non-primary care. A long diary
kept by the physicians will provide information about the case mix
seen by the specialists and will provide estimates of how physicians
spend their professional and nonprofessional time. The Physician
Extender Reimbursement Study conducted at the University of Southern
California and by Systems Sciences, Inc. is examining the effects
of various levels of reimbursement on the utilization, cost-effec-
tiveness, productivity, and types of services rendered by nurse
practitioners and physician extenders. The Health Services Research
and Development Center of the Johns Hopkins Medical Institutions is
examining the appropriate type of manpower to use in urgent, walk-
in facilities and the effect of utilization of such facilities on
the continuity and coordination of primary care. Another Johns
Hopkins project is examining the anxiety component of ambulatory
care with respect to outcome measures such as patient satisfaction
with care and the relation of the resolution of anxiety to different
types of primary care practitioners. Among the research being
conducted at the Health Services Research Center of the University
of North Carolina at Chapel Hill is a comprehensive evaluation of
several models of rural primary health care programs including the
effect of various mixes of providers on the programs.
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Representative terms from entire chapter:
physician assistants
