A Perfect Storm: Changes Impacting Medicare Threaten Primary Care Access in Underserved Areas

One Pagers | Jun 15, 2008 Imam Xierali, PhD; Andrew Bazemore, MD MPH; Bob Phillips, MD MSPH; Stephen Petterson, PhD; Martey Dodoo, PhD and Bridget Teevan, MIS

A convergence of three policies could reduce physician Medicare payments by 14.9 to 22.3 percent in 2008, which could jeopardize access for Medicare beneficiaries in underserved areas. Congress and the Executive Branch should coordinate their roles in setting Medicare payment policy, because their overlapping decisions can have additive impact. 

It is well known that Medicare Part B payments are slated for a 10.6 percent reduction in the summer of 2008 unless Congress intervenes. Two lesser known policies threaten to reduce physician payments at nearly the same time. The Health Resources and Services Administration proposed a rule in early 2008 that overhauls the process for designating Medically Underserved Areas and primary care Health Professional Shortage Areas (HPSAs).1 Preliminary analysis suggests that 605 HPSAs (32 million persons and 23,805 primary care physicians) may lose designation.2 Physicians working in de-designated geographic HPSAs would lose the 10 percent Medicare bonus (see accompanying table) associated with work in those areas. Medicare Physician Scarcity Areas (PSAs) offer a payment bonus of 5 percent and are slated to expire in the summer of 2008, affecting more than 25,000 physicians and millions of Medicare beneficiaries.3 The convergence of all three policies, faced by physicians working in combined HPSAs-PSAs-some of the most underserved areas-would result in Medicare payment cuts of 22.3 percent in one year.3-5 

Table. Medicare Beneficiaries and Physicians Potentially Affected by Payment Cuts

Designation AreaPayment loss (with -10.6%)Medicare beneficiariesPrimary care physiciansFamily physicians
PSA-5% (-14.9%)7,539,65924,71913,031
Geographic HPSA-10% (-18.5%556,1223,8291,453
Geographic HPSA and PSA-15% (-22.3%239,272913507

HPSA = Health Professional Shortage Area; PSA = Physician Scarcity Area. 
Information from references 3 through 5. 

Before its expiration, the PSA incentive payment deserves evaluation, as mandated by Congress. The proposed HPSA regulations may offer bonus payments to more physicians, overall, but many urban areas (with underserved populations not adequately assessed by the proposed method) may be de-designated. 

This 'Perfect Storm' of reimbursement loss for providers in underserved areas may severely compromise physician access if it makes working in these areas unattractive or financially impossible. No policy-making body oversees all three payment proposals; policy makers should consider their convergence and find options to maintain access to a personal physician for persons living in these areas.


  1. U.S. Dept. of HHS. Designation of medically underserved populations and health professional shortage areas. Federal Register. 2008;73(41):11231-11281.
  2. Shin P, Ku L, Jones E, Rosenbaum S. Analysis of the proposed rule on designation of medically underserved populations and HPSAs. Geiger Gibson/RCHN Community Health Foundation Research Collaborative.http://www.gwumc.edu/sphhs/departments/healthpolicy/chsrp/downloads/MUAreport41108.pdf(www.gwumc.edu). Accessed April 18, 2008.
  3. American Medical Association. AMA Physician Masterfile; Sept 2007.
  4. U.S. Census Bureau. Statistical Abstract of the United States: 2006: The National Data Book. 125th ed. Washington, DC: The Bureau; 2005.
  5. HRSA. Find HPSAs. http://hpsafind.hrsa.gov(hpsafind.hrsa.gov). Accessed May 19, 2008.

The information and opinions contained in research from the Graham Center do not necessarily reflect the views or the policy of the AAFP. 

Published in American Family Physician, Jun 15, 2008. Am Fam Physician. 2008;78(8):924.This series is coordinated by Sumi Sexton, MD, AFP Associate Medical Editor.