"Lesser-of" payment policies and the use of physicians'services among dual-eligible beneficiaries in the United States

Most dual-eligible beneficiaries in the U.S. -people enrolled in both Medicare and Medicaid - are eligible for Medicaid through enrolment in the Qualified Medicare Beneficiary (QMB) program, which requires that states pay for Medicare cost sharing. Since 1997, states have gradually implemented policies under which they pay the lesser of Medicare cost sharing and the amount, if any, by which Medicaid's payment rate for the service exceeds Medicare's payment rate. Consequently, physicians in most states receive roughly 80% of the Medicare rate for primary care services provided to QMBs. We used difference-in-difference-in-differences models and administrative data from 1999 to 2012 to assess how the implementation of 'lesser-of' payment policies affected QMBs' access to care compared with Medicare-only beneficiaries. We found that lesser-of policies were associated with a 5% reduction in the number of new primary care visits and a 7% reduction in the likelihood of such visits among QMBs. Both the number and the likelihood of total and established patients' primary care visits fell by about 3%. However, we were unable to discern spillover effects on the use of acute care, including emergency room visits or hospitalizations. Those results suggest that continued monitoring of quality-of-care measures among dual-eligible beneficiaries may be warranted.