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«Comparing the Cost of Care Provided to Medicare Beneficiaries Assigned to Primary Care Nurse Practitioners and Physicians Jennifer Perloff, ...»

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Our sample consisted of 928,440 beneficiaries continuously enrolled in Medicare Part A and Part B in 2010, with 558,199 assigned to an NP or a primary care physician. The remaining 370,241 beneficiaries were either assigned to a specialist physician, a facility (e.g., dialysis center), or were unassigned because no single provider accounted for 30 percent of the beneficiaries’ E&M services and were excluded from the analytic sample. Of the beneficiaries in the analytic sample, 81 percent (N = 450,880) were assigned to primary care physicians and 19 percent (N = 107,219) assigned to NPs.

Beneficiaries assigned to NPs were significantly more likely to be nonwhite, younger, female, dually eligible for Medicare and Medicaid, and living in a rural area (Table 2). They were also more likely than beneficiaries assigned to primary care physicians to have originally qualified for Medicare due to a disability, and were significantly less likely to have each of the Elixhauser comorbid conditions, with the exception of paralysis, neurological disorder, AIDS, weight loss, alcohol abuse, drug abuse, and psychoses.

Applying the propensity score weights balanced the two groups of beneciaries on all demographic and diagnostic characteristics (Table 2).

Cost of Care Provided by Nurse Practitioners and Primary Care Physicians Table 3 presents the unadjusted estimates of the mean paid amounts and dollar adjusted RVUs per assigned beneficiary. The difference in costs between NP and primary care physician assigned beneficiaries is smallest (7 percent) in the inpatient setting. For the unadjusted total Part B paid amounts, beneficiaries assigned to an NP cost approximately 26 percent less than beneficiaries assigned to a primary care physician. Similarly, for unadjusted E&M paid Comparing the Costs of NP and PCMD Care 7

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Notes. Sidak adjusted p-value = 0.0012205.

Bonferroni adjusted p-value = 0.0011905.

amounts, NP assigned beneficiaries were 15 percent less costly than primary care physician assigned beneficiaries.

Dollar Adjusted RVUs. We next examined dollar adjusted RVUs. Findings from these analyses suggest that all Part B services provided to NP assigned beneficiaries over a 12-month period were $611 less than services provided to beneficiaries assigned to primary care physicians or a 24 percent difference (Table 3). This difference between beneficiary groups decreases to $274 when RVUs for E&M services only are assessed. This is about 17 percent less than the dollar adjusted RVU E&M amount for beneficiaries assigned to primary physicians.

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Figure 1: Side-by-Side Distribution of Nurse Practitioner Assigned Beneficiary and Primary Care Physician Assigned Beneficiary Propensity Scores Distribution of Probability Scores Primary care Physician Benes Nurse Practitioner Benes Note: Results based on 30 percent attribution threshold.

indicates that propensity weighted regression is appropriate for our analytic purpose (Sears et al. 2007a; Caliendo and Kopeining 2008; Garrido et al.

2014). However, as a sensitivity test, we also ran the final models with cases outside the region of common support removed (N = 17,173 primary care physician assigned and N = 3,245 NP assigned beneficiaries), and our results did not change.

Table 4 reports the propensity score weighted multivariable analysis, which adjusts for observable differences between beneficiaries assigned to NPs and primary care physicians. In these regression models, the intercept equals the average adjusted primary care physician paid amount, and the NP coefficient reflects the reduction in paid amounts for care provided by NPs.

The total adjusted mean paid amount for Part A inpatient admissions is $22,898. Controlling for demographic and diagnostic characteristics, and the propensity to see an NP, beneficiaries assigned to an NP cost, on average, $2,474 less than those assigned to primary care physicians. This difference is Comparing the Costs of NP and PCMD Care 11

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Notes. Parameter estimates in dollars adjusted for beneficiaries’ sex, race, age, dual eligibility status, provider type, CMS regions, rural region, and 30 Elixhauser comorbidities (parameter estimates are not shown for geographic measures and Elixhauser comorbidities).

*Results based on an attribution threshold of 30%.

† All parameter estimates are significant at the.0001 level.

‡ All parameter estimates except for female and white are significant at the.0001 level.

E&M, evaluation and management; NP, nurse practitioner; RVU, relative value unit.

approximately 11 percent less than the average, adjusted payment for physician assigned beneficiaries.

Regression results for Part B office-based expenditures indicate the average for primary care physician assigned beneficiaries was $2,955 while the average for NP assigned beneficiaries was $2,433. This is approximately 18 percent less or $522 (Table 4). By way of comparison, the unadjusted difference between NP and primary care physician assigned patients is $1,036 (Table 3). The adjusted results are nearly half of the unadjusted results.

For E&M services only, primary care physician assigned beneficiaries cost $705 compared to $498 for NP assigned beneficiaries. The adjusted difference is $207 or 29 percent.

The multivariate results for dollar adjusted RVUs are also shown in Table 4. After adjusting for demographic characteristics, geography, comorbidities, and the propensity to see an NP, the dollar adjusted RVU payments for beneficiaries assigned to an NP were $1,629 or approximately 15 percent less than primary care physician assigned beneficiaries ($1,911). Similarly, when E&M RVUs were examined, NP assigned beneficiaries cost $585, or approximately 18 percent less than primary care physician assigned beneficiaries ($173).

12 HSR: Health Services Research


The aim of this study was to determine the difference in paid claims for services provided to Medicare beneficiaries who were assigned to either an NP or to a primary care physician. To help ensure a meaningful clinical relationship existed between beneficiary and clinician, we imposed a high threshold for attribution, requiring the clinician to account for at least 30 percent of E&M services. Such a relationship is particularly important when examining Medicare beneficiaries who are often seen by many different clinicians during a year.

Propensity score weighted regression was also used to help adjust for clinical and socio-economic differences between beneficiaries assigned to an NP versus a primary care physician. We examined beneficiary level paid amounts for primary care services extending from inpatient to outpatient E&M care over a 12month period.

Findings indicate that Medicare paid amounts are consistently lower for NP assigned beneficiaries compared to primary care physician assigned beneciaries in both inpatient and office-based settings. When considering the size of the differences relative to their average cost, the largest difference is for E&M services. Here, the Medicare allowed payment amounts for NP assigned beneficiaries were approximately 29 percent less than primary care physician beneficiaries. This difference is at least partly explained by the payment differential between NPs and physicians.

Modeling dollar adjusted RVUs narrowed the E&M payment differences from 29 percent to 18 percent, suggesting that reimbursement rates are a major driver of observed cost differences. The unexplained cost difference of 18 percent may be due to differences in practice patterns between NPs and primary care physicians, uncontrolled differences in beneficiary case mix, or to other unobserved factors (such as beneficiaries’ preferences or requests) that affect the costs of providing primary care services.

We believe that our examination of beneficiary claims over a 12-month period offers a more comprehensive assessment of the costs of NP provided care. Prior studies that focused on much smaller units of time (Laurant et al.

2009) found similar or no differences in the costs of NP and physician provided care. However, by assessing claims over a year, findings from our analysis suggest the possibility of different practice styles between the two groups of clinicians which may result in lower average 12-month expenditures for similar patients. Not only does such an approach illuminate possible differences between NPs and primary care physicians, but it also implies that analysts Comparing the Costs of NP and PCMD Care 13 developing physician value based purchasing payment models consider that the full benefit of primary care services accrue over weeks or months of time rather than just days (Berenson and Kaye 2013; Chien and Rosenthal 2013).

Adjusting for potential differences in beneficiary characteristics is one of the major challenges in comparing provider performance. We considered using instrumental variables to address this selection problem. In this approach, the instrument serves as a proxy for the unobserved sorting mechanism that leads to the observed assignment (NP or primary care physician).

However, there were no viable instruments available in the claims data, such as distance to clinician or beneficiary preference. Propensity score weighted regression offers an alternative to adjust for observable differences between the two groups. However, it is possible that some unobservable differences remain, such as waiting time or beneficiary preference for type of clinician. It is not possible to capture these preferences using claims data.

The study is limited by the fact that some NPs bill Medicare for their services “incident to” a physician. Under incident to billing the care provided by an NP is billed under a physician’s NPI when certain conditions are met, including an initial encounter between the physician and patient and the presence of a physician in the office when the service is performed. Because services billed in this manner cannot be identified in the claims data, some services billed by physicians may have actually been provided by NPs. Incident to billing may be more common in states with restrictive scope of practice laws, but there may be financial and other reasons for a practice to select this approach. Therefore, our results should be interpreted with awareness that it is unclear whether incident to billing under- or overstates the differences between these two groups of clinicians. This uncertainty, as well as the unknown frequency of incident to billing, could be addressed by the Medicare program adjusting its claims coding practices to identify incident to billing.

In addition to incident to billing, there are other reasons why services provided to beneficiaries by NPs may not be visible in Medicare administrative data. For example, NPs may not bill all or some of the services they provide under their own NPI number either due to supervision requirements within their organizations, employment arrangements, or state scope of practice requirements for diagnosing and prescribing. We are limited in our capacity to see the impact of state regulations given the distribution of beneficiaries by state. Finally, because NPs who bill Medicare under their own NPI may differ from those who do not, our results cannot be generalized to all NPs providing care to Medicare beneficiaries.

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