Health Professional Shortage Area Bonus Payments and Access to Care Under Medicare

For over 3 decades, the Centers for Medicare & Medicaid Services (CMS) has provided a bonus payment for outpatient physician services provided to beneficiaries under Medicare Part B in areas designated as Primary Care Health Professional Shortage Areas (HPSAs) during the previous calendar year. Despite the longstanding existence of the program, no studies have explicitly evaluated how previously established physicians practicing in areas subject to an HPSA designation respond to the bonus payments. Using 2012-2019 physician-level data with stacked event study models that control for several characteristics, including the underlying criteria used to construct HPSA scores, I find little to no statistically significant changes in access to care (as measured through total annual beneficiaries treated or services delivered to Medicare beneficiaries) in the years leading up to HPSA designation. However, once physicians become eligible for a 10% bonus payment, their annual number of beneficiaries treated and volume of services decline, consistent with recent empirical work and CMS's actuarial assumptions about how physicians respond to changes in reimbursement.