"Lesser-of" Payment Policies and the Use of Physicians' Services Among Dual-Eligible Beneficiaries: Working Paper 2023-01

By Tamara B. Hayford, Xiaotong Niu, and Sandra L. Decker.

Most dual-eligible beneficiaries—people enrolled in both Medicare and Medicaid—are eligible for Medicaid through their enrollment 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 percent of the Medicare rate for primary care services provided to QMBs.

For this analysis, 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 over that period affected QMBs’ access to care in comparison with that of Medicare-only beneficiaries. We found that lesser-of policies were associated with a 5 percent reduction in the number of new primary care visits and a 7 percent 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 percent. 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.

Corrections and Updates:

• CBO has corrected this working paper since its original publication. Corrections are described on the abstract page.
• A revised version of this working paper was published online by Applied Economics on June 18, 2024.