Nurse Practitioners, Physician Assistants, and Certified Nurse-Midwives: A Policy Analysis

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Nurse Practitioners, Physician Assistants,and Certified Nurse-Midwives: A Policy

Analysis

December 1986

NTIS order #PB87-177465





Preface

Nurse Practitioners, Physician Assistants, and Certified Nurse-Midwives: A Policy Analysis isCase Stud y 37 in OTA’s H ealth Technology CaseStud y Series. This case study has been prep aredin response to a request by the Senate Commit-

tee on Appropriations.OTA case stud ies are designed to fulfill two

functions. The primary purpose is to provideOTA with specific information that can be usedin forming general conclusions regarding broaderpolicy issues. The first 19 cases in the Health Tech-nology Case Study Series, for example, were con-du cted in conjunction w ith OTA’s overall projecton The Implications of Cost-Effectiveness Anal-

ysis of Medical Technology. By examining the 19cases as a group and looking for common prob-lems or strength s in th e techniqu es of cost-effec-

tiveness or cost-benefit analysis, OTA was ableto better analyze the potential contribution thatthose techniques might make to the managementof medical technology and health care costs andquality.

The second function of the case stud ies is toprovide useful information on the specific tech-nologies covered. The design and the funding lev-els of most of the case studies are such that theyshould be read p rimarily in the context of the as-sociated overall OTA projects. Nevertheless, inman y instances, the case studies d o represent ex-

tensive reviews of the literature on the efficacy,safety, and costs of the specific technologies andas such can stand on their own as a useful contri-bution to th e field.

Case studies are prepared in some instances be-cause they have b een specifically requ ested bycongressional comm ittees and in others becausethey have been selected th rough an extensive re-view process involving OTA staff and consulta-tions with the congressional staffs, advisory panelto the associated overall project, the Health Pro-gram A dvisory Comm ittee, and other experts in

various fields. Selection criteria were developedto ensure that case studies provide the following:

. examples of types of technologies by func-tion (preventive, diagnostic, therapeutic, andrehabilitative);

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examples of types of technologies by physi-cal nature (dru gs, devices, and p rocedu res);examples of technologies in different stagesof developm ent and diffusion (new, emerg-ing, and established);

examples from d ifferent ar eas of medicine(e.g., general medical practice, pediatrics,radiology, and surgery);examples add ressing med ical problems thatare imp ortant because of their high frequen-cy or sign ificant im pacts (e. g., cost);examples of technologies with associated highcosts either because of high volume (for low-cost technologies) or high individual costs;examples that could provide information ma-terial relating to the broad er policy and meth-odological issues being examined in theparticular overall project; and

examples with sufficient scientific literature.Case studies are either prepa red by OTA staff,

commissioned by OTA and performed under con-tract by experts (generally in academia), or writ-ten by OTA staff on the basis of contractors’papers.

OTA subjects each case study to an extensivereview p rocess. Initial dr afts of cases are reviewedby OTA staff and by members of the advisorypanel to the associated project. For commissionedcases, comments are provided to authors, alongwith OTA’s suggestions for revisions. Subsequent

drafts are sent by OTA to nu merous experts forreview and comment. Each case is seen by at least30 reviewers, and som etimes by 80 or more out-side reviewers. These individu als may be fromrelevant Government agencies, professional so-cieties, consumer and public interest groups, med-ical practice, and academic medicine. Academi-cians such as economists, sociologists, decisionanalysts, biologists, and so forth, as appropriate,also review th e cases.

Althou gh cases are n ot statemen ts of officialOTA position, the review p rocess is designed to

satisfy OTA’s concern with each case study’sscientific qua lity and objectivity. Durin g the v ari-ous stages of the review and revision process,therefore, OTA encourages, and to the extent pos-sible requires, authors to present balanced infor-mation and recognize divergent points of view.

.,,Ill



Health Technology Case Stud y Seriesa

Case Study Case stud y title; auth or(s); Case Study Case stud y title; auth or(s);Series No. OTA Publication number b Series No. OTA publication number b

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Formal Analysis, Policy Formulation, and End-Stage RenalDisease;

Richard A. Rettig (OTA-BP-H-9(1))C

The Feasibility of Economic Evaluation of Diagnostic Pro-cedures: The Case of CT Scanning;

Judith L. Wagner (OTA-BP-H-9(2))Screening for Colon Cancer: A Technology Assessment;

David M. Edd y (OTA-BP-H-9(3))Cost Effectiveness of Au tomated Multichannel ChemistryAnalyzers;

Milton C. Weinstein and Laurie A. Pearlman(OTA-BP-H-9(4))

Periodontal Disease: Assessing the Effectiveness and Costs of the Keyes Technique;

Richard M. Scheffler and Sheldon Rovin(OTA-BP-H-9(5))

The Cost Effectiveness of Bone Marrow Transplant Therapyand Its Policy Implications;

Stuart O. Schweitzer and C. C. Scalzi(OTA-BP-H-9(6))Allocating Costs and Benefits in Disease Prevention Programs:An Ap plication to Cervical Cancer Screening;

Bryan R. Luce (Office of Technology Assessm ent)(OTA-BP-H-9(7))

The Cost Effectiveness of Upper Gastrointestinal Endoscopy;Jonathan A. Showstack and Steven A. Schroeder(OTA-BP-H-9(8))

The Artificial Heart: Cost, Risks, and Benefits;Deborah P. Lubeck and John P. Bunker(OTA-BP-H-9(9))

The Costs and Effectiveness of Neonatal Intensive Care;Peter Budetti, Peggy McManus, Nan cy Barrand, an dLu Ann Heinen (OTA-BP-H-9(1O))

Benefit and Cost Analysis of Medical Interventions: The Caseof Cimetidine and Peptic Ulcer Disease;

Harvey V. Fineberg and Laurie A. Pearlman(OTA-BP-H-9(11))

Assessing Selected Respiratory Therapy Modalities: Trends andRelative Costs in the Washington, D.C. Area;

Richard M. Scheffler and Morgan Delaney(OTA-BP-H-9(12))

Cardiac Radionuclide Imaging and Cost Effectiveness;William B. Stason and Eric Fortess (OTA-BP-H-9(13))

Cost Benefit/ Cost Effectiveness of Medical Technologies: ACase Study of Orthop edic Joint Implants;

Judith D. Bentkover and Philip G. Drew (OTA-BP-H-9(14))Elective Hysterectom y: Costs, Risks, and Benefits;

Carol Korenbrot, Ann B. Flood, Michael Higgins,Noralou Roos, and John P. Bunker (OTA-BP-H-9(15))

The Costs and Effectiveness of Nurse Practitioners;Lauren LeRoy and Sharon Solkowitz (OTA-BP-H-9(16))

Surgery for Breast Cancer;Karen Schachter Weingrod and Duncan Neuhauser(O-I-A-BP-H-9(17))

The Efficacy and Cost Effectiveness of Psychother apy;Leonard Saxe (Office of Technology Assessmen t)(OTA-BP-H-9(18)) d

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Assessment of Four Common X-Ray Procedures;Judith L. Wagner (OTA-BP-H-9(19)) e

Mandatory Passive Restraint Systems in Automobiles: Issuesand Evidence;

Kenneth E. Warner (OTA-BP-H-15(20)) f

Selected Telecommunications Devices for Hearing-ImpairedPersons;

Virginia W. Stern and Martha Ross Redden(OTA-BP-H-16(21)) g

The Effectiveness and Costs of Alcoholism Treatment;Leonard Saxe, Denise Dougherty, Katharine Esty,and Michelle Fine (OTA-HCS-22)

The Safety, Efficacy, and Cost Effectiveness of TherapeuticApheresis;

John C. Langenbrunner (Office of Technology Assessment)(OTA-HCS-23)

Variation in Length of Hospital Stay: Their Relationship toHealth Outcomes;

Mark R. Chassin (OTA-HCS-24)Technology and Learning Disabilities;

Candis Cousins and Leonard Duhl (OTA-HCS-25)Assistive Devices for Severe Speech Impairments;

Judith Randal (Office of Technology Assessment)(OTA-HCS-26)

Nu clear Magnetic Resonance Imaging Technology: A Clinical,Industrial, and Policy Analysis;

Earl P. Steinberg and Alan Cohen (OTA-HCS-27)Intensive Care Units (ICUs): Clinical Outcomes, Costs, andDecisionmaking;

Robert A. Berenson (OTA-HCS-28)The Boston Elbow;

Sandra J. Tanenbaum (OTA-HCS-29)The Market for Wheelchairs: Innovations and Federal Policy;

Donald S. Shepard and Sarita L. Karen (OTA-HCS-30)The Contact Lens Ind ustry: Structure, Competition, and PublicPolicy;

Leonard G. Schifrin a nd William J. Rich (OTA-HCS-31)The Hemodialysis Equipment and Disposable Industry;

Anthony A. Romeo (OTA-HCS-32)Technologies for Managing Urinary Incontinence;

Joseph O usland er, Robert Kane, Shira Vollmer, and MelvynMenezes (OTA-HCS-33)

The Cost Effectiveness of Digital Subtraction Angiograp hy inthe Diagnosis of Cerebrovascular Disease;

Matthew Menken, Gordon H. DeFriese, Thomas R. Oliver,and Irwin Litt (OTA-HCS-34)

The Effectiveness and Costs of Continuous AmbulatoryPeritoneal Dialysis (CAPD)

William B. Stason and Benjamin A. Barnes (OTA-HCS-35)Effects of Federal Policies on Extracorporeal Shock WaveLithotripsy

Elaine J. Power (Office of Technology Assessm ent)(OTA-HCS-36)

Nurse Practitioners, Physician Assistants, and Certified Nurse-Midwives: A Policy Analysis;

(O-I-A-I-EC-37)aAvailab]e for sale by the Superintendent of Documents, U.S. Government dBackgroundpap er #3 to The Implications of Cost-Effectiveness Analysis of

Printing Office, Washington, DC,20402, and by the National Technical Medical Technology.

Information Service, 5285 Port Royal Rd., Springfield, VA, 22161.Call egackground paper # S to The Implications of Cost-Effectiveness Analysis of OTA’S Publishing Office (224-8996) for availability and orderinginfor- Medical Technology.

fgackground paper #l to OTA’S May 1982 report Technology and ~andi-mation.borigina]publication numbers appear in parentheses. capped People.cThe first 17 Ca= jn the Series were 17 separately issued cases in Background ggackground paper #2 to Technology and Handicapped People.

Paper #2: Case Studies of Medical Technologies, prepared in conjunctionwith OTA’S Augu st 1980 report The Implications of Cost-Effectiveness Anal- ysis of Medical Technology.

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OTA Project Staff for Case Study #37Nurse Practitioners, Physician Assistants, and Certified Nurse-Midwives:

A Policy Analysis

Roger C. Herdman, Assistant Director, OTA Health and Life Sciences Division

Clyde J. Behney, Health Program Manager

Gloria Ruby, P r o j e c t D i r e c t o r

Steven Sisskind, Research Assistant”

Virginia Cwalina, Administrative Assistant

Diann G. Hohenthaner, F’. C. Specialist

Carol A. Guntow, S ecretary/ Word Processor S pecialist

Principal Contractor

Edward G. Brooks, University of N orth Carolina, Chapel H ill, NC

Contractors

Louis P. Garrison, The Project Hope Health Sciences Education Center, Millwood, VA

Anne Mead ows, Washington, DC (Editing)

*From July to October 1986.



Advisory Panel— Nurse Practitioners, Physician Assistants, andCertified Nurse= Midwives: A Policy Analysis

Rosemar y Stevens, Chair Depar tmen t of H istory and the Sociology of Science

University of Pennsylvania, Philadelphia, PA

Walter H. CaulfieldKaiser Permanence

Oakland, CAPhilip D. ClevelandFamily Medicine SpokaneSpokane, WA

Lynn EtheredgeHealth Policy ConsultantWashington, DC

Willis Goldbeck Washington Business Group on HealthWashington, DC

Sandra Greene

Health Economics ResearchBlue Cross/ Blue Shield of North CarolinaDurham, NC

Hurdis GriffithRobert Wood Johnson FellowInstitute of MedicineNa tional Academ y of SciencesWashington, DC

Charles G. Hu ntingtonHermon Medical GroupHermon, NY

Lauren LeRoyPhysician Payment Review CommissionWashington , ‘DC

Kathy LohrThe Rand Corp.Washington, DC

Ruth LubicMaternity CenterNew York, NY

Association

Patricia A. PrescottSchool of Nursing

University of MarylandBaltimore, MD

Judith RooksConsultantPortland, OR

George M. RyanDepar tmen t of Obstetrics and GynecologyCollege of MedicineUniversity of TennesseeMemp his, TN

Richar d M. SchefflerHealth Policy and Ad ministration ProgramSchool of Public HealthUniversity of CaliforniaBerkeley, CA

Hen ry M. SeidelSchool of Med icineThe Johns H opkins Un iversityBaltimore, MD

Gerry SheaHealth Care DivisionService Employees International UnionWashington, DC

Barbara WardenNational Consumers’ LeagueWashington, DC

Ivan WilliamsKellogg CenterMontreal General HospitalMontreal, Quebec

Michael R. PollardOffice of Policy AnalysisPharmaceutical Manufacturers’ AssociationWashington, DC

NOTE:

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OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panelmembers. The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes fullresponsibility for the report and the accuracy of its contents,



ContentsPage

CHAPTER 1: SUMMARY AND POLICY CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . . . 3Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Background and Scope of the Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Organization of the Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Contributions of Nu rse Practitioners, Physician Assistants, and

Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Effects of Changing Payment Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Policy Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Ad dend um: Definition s an d Descrip tions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

CHAPTER 2: QUALITY OF CARE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Indicators of Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Comparisons With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Methodological Problems of Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Quality of Nurse Practitioners’ Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Comparisons With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Quality of Physician Assistants’ Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Com parison s With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Qu ality o f Certified Nurse-Mid wives’ Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Com parison s With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

CHAPTER 3: ACCESS T0 CARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Nurse Practitioners’ Contribution to Access to Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Physician Assistants’ Contribution to Access to Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Certified Nurse-Mid wives’ Contr ibu tion to Access to Care . . . . . . . . . . . . . . . . . . . . . . . . 33Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

CHAPTER 4: PRODUCTIVITY, COSTS, AND EMPLOYMENT . . . . . . . . . . . . . . . . . . 39Scop e of Profession al Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Services Provided by N ur se Practitioners and Physician Assistan ts . . . . . . . . . . . . . . 39Services Prov ided by Certified Nurse-Mid wives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Nurse Practitioners’ and Physician Assistants’ Productivity . . . . . . . . . . . . . . . . . . . . . 41Certified Nurse-Midwives’ Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Costs and Emp loym ent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Costs and Benefits of Training Nurse Practitioners, Physician Assistants, and

Certified Nurse-Midwives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Costs and Benefits of Private Employm ent of N urse Practitioners,

Physician Assistants, and Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . 46

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Contents—continued Page

Curren t Employm ent : Settin gs an d Trend s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Nurse Practitioners’ and Physician Assistants’ Employment . . . . . . . . . . . . . . . . . . . . . 47Certified Nurse-Mid wives’ Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

CHAPTER 5: PAYMENT ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Effects of Modifying Payment for Services of Nurse Practitioners,

Physician Assistants, and Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . 54Effects on Ind epend ent Practices of Nu rse Practitioners and

Certified Nurse-Mid wives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Effects on Physician s’ Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Effects on Health Main tenance Organization s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58Effects on Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58Effects on Nursing Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

The Changing Context of Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Supply of Physicians. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Delivery Sites and Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Effects of Chang es in the H ealth-Care Environment on N urse Practitioners,

Phy sician Assist ants, and Certified Nurse-Mid wives . . . . . . . . . . . . . . . . . . . . . . . . . 62Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

APPENDIX A.–METHODS AND ACKNOWLEDGMENTS. . . . . . . . . . . . . . . . . . . . . . 69

APPENDIX B.–PAYMENT FOR THE SERVICES OF NURSE PRACTITIONERS,PHYSICIAN ASSISTANTS, AND CERTIFIED NURSE-MIDWIVES . . . . . . . . . . . . . 71

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

TablesTable No. Page1-1.

1-2.

2-1.

2-2.

2-3.

5-1.B-1.

Coverage and Direct Payment for Services of Nurse Practitioners, Physician “Assistants, and Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Comp arison of Nu rse Practitioners, Physician Assistants, andCert ified Nurse-Mid wives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Equivalence in Qu ality of Care Provided by N urse Practitioners (NPs) andPhysicians (MDs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Difference in Qu ality of Care Provid ed by N urse Practitioners (NPs) andPhysicians (MDs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Percentage of U.S. Resident Certified Nurse-Midwives byType of Organization, 1976-77 and 1982 ......., . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Selected Alternatives to Traditional Health-Care Delivery . . . . . . . . . . . . . . . . . . . . 62Coverage and Direct Paym ent for Services of Nu rse Practitioners,Phy sician Assist ants, and Certified Nurse-Mid wives . . . . . . . . . . . . . . . . . . . . . . . . . 72

FigureFigure No. Page

3-1. Distribu tion of Physician Assistants by Size of Commu nity. . . . . . . . . . . . . . . . . . . 32

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Chapter 1

Summary and Policy Conclusions



Chapter 1

Summary and Policy Conclusions

INTRODUCTION

The use of nurse p ractitioners (NPs) and phy-sician assistants (PAs) to provide primary healthcare traditionally provided only by physicians de-veloped d ur ing the 1960s in response to a p er-ceived shortage and mald istribution of ph ysicians.Societal support for this innovation in the deliv-ery of health-care was based on the potential forNPs and PAs to improve access and to lower costswh ile maintaining t he qu ality of care. At aboutthe same time the number of certified nurse-mid-wives (CNMs),1 who had been providing healthcare for some 30 years, began to increase substan-tially.

In the past tw o d ecades, the ranks of NPs, PAs,and CNMs a nd their responsibilities for provid-ing care to patients have increased, despite theresistance these practitioners have encountered intheir attempts to assume more prominent or moreindependent roles in delivering health care. Today,approximately 15,400 NPs,16,000 PAs, and 2,000CNMs are p racticing in the Un ited States.

Changes in the health-care environment havealtered the forces that spurred the developmentand growth of these groups of providers. The

health-care sector has become increasingly com-petitive as the sup ply of physicians has grow n andas the proportion of physicians practicing in theprimary-care specialties has decreased. New formsof organization for the delivery of med ical carehave emerged . Concern over the rap idly risingcosts of health care has grown, and new meth-ods of pay ing for hospitals’ inpa tient services havebeen imp lemented. All of these changes have im-plications for the roles NPs, PAs, and C N Ms w illplay in th e futu re, and for the qu ality, accessibil-ity, and costs of health care.

As the health-care delivery system evolves,NPs, PAs, and CNMs are exploring w ays to over-come several obstacles, such as unsupportive

‘This case stud y uses the word certified to distinguish formallytrained and certified nurse-midwives from lay midwives, who mayor may not be nurses and who have informal training in midwifery.

physicians, restrictive State laws and regulations,and the inaccessibility and cost of malpr actice in-surance. Although these problems are significant(see box 1-A), they a re beyon d the scope of thisstudy, w hich focuses on another major barrier—limited third-party payment for the services of NPs, PAs, and CNMs.

Background and Scope ofthe Case Study

This case study w as prep ared in response to a

request by the Senate Comm ittee on App ropria-tions to upd ate a previous OTA case study, “TheCost and Effectiveness of Nurse Practitioners. ”The comm ittee also requested th at OTA add ressthe extent to w hich various Federal health-careprograms and private third-party payers pay forthe services of NPs and CNMs. Of particular in-terest to the committee were the issues of cover-age (i.e., author ization for paym ent) and directpayment (i.e., payment to NPs and CNMs) fortheir serv ices.2 The committee also requested thatOTA review the evidence on the quality and costsof the care NPs and CNMs p rovide. The analy-sis also add resses PAs because their h istoricalbackground and current roles are similar to thatof NPs, and because information on N Ps oftenoverlaps with information on PAs.

In considering N Ps and PAs, the study focuseson the large majority who pr ovide primary care,althoug h some attention is given to the roles of NPs an d PAs in nonp rimary-care settings. No d is-tinction is made between primary-care PAs andPAs trained in Med ex program s specifically toprovide primary care to underserved populations.

‘The Medicare program and other third-part y payers distinguishbetween coverage and payment. Coverage refers to benefits avail-able to eligible beneficiaries or subscribers; payment refers to theamounts and methods of payment for covered services.

3



4

The central questions the study attempts to an- . How wou ld changing the payment methodswer are: affect health-care costs for patients, third-

q

q

What contributions do NPs, PAs, and CNMs party payers, and society?

make in meeting the Nation’s health-careneeds? Organization of the Case StudyHow would changing the method of paymentfor the services of NPs, PAs, and CNMs af- The case study is organized into five chaptersfect the roles these practitioners would play and two appendixes. Chapter 1 presents a sum-in the evolving health-care delivery system? mary of the case s tudy and in an addendum de-



5

fines and describes NPs, PAs, and CN Ms. Chap-ters 2 through 4 discuss the contributions of NPs,PAs, and CNMs to health care. Chapter 2 ad-dresses the quality of care, reviewing studies thatcompare the care provided by NPs, PAs, andCNMs with that provided by physicians and stud iesthat gau ge p atients’ satisfaction with and physi-cians’ acceptan ce of the care provided by N Ps,PAs, and CNMs. Chap ter 3 considers access tohealth care; and chapter 4 focuses on productivity,costs, and employment. Chapter 5 analyzes whatimplications various payment modifications wouldhave for the employment and practice of NPs,PAs, and CNMs and for health-care costs; exam-ines the effects new developments in the health-

SUMMARYUnderstanding how the use of NPs, PAs, and

CNMs affects the quality of care, the access tocare, the p rodu ctivity of providers, and the costsof care is crucial for analyzing the effects of alter-native policies regarding payment for the servicesof these providers. Draw ing general conclusionsis possible, despite the methodological limitationsof many studies.

Contributions of NPs, PAs, and CNMs

Direct m easurement of the quality of the care

provid ed by N Ps, PAs, and CNMs is not possi-ble at this time. Instead, the quality must begauged by comparing their care with the care pro-vided by physicians; by examining the extent towhich patients are satisfied with the care providedby NPs, PAs, and CN Ms; and by assessing phy-sicians’ acceptan ce of such care. Many stud ies thatanalyze th ese relationships are method ologicallyflawed and almost none examine the quality of services p rovided without ph ysician involvement.

The weight of the evidence indicates that,within their areas of competence, NPs, PAs, and

CNMs provide care whose quality is equivalentto that of care provided by physicians. 3 More-over, NPs and CNMs are more adept than p hy-

3This study examined t he quality of the care provided by N Psand PAs in primaW-care ambulatory settings and the quality of careprovided by CNMs in ambu latory and inpatient settings.

care sector could have on NPs, PAs, and CN Ms;and assesses how payment modifications in thecontext of a rapidly changing health-care systemmight influence the roles of these practitioners andthe costs of health care.

App endix A describes the method of the stud yand acknowledges the assistance of the individ-uals and organizations that reviewed this casestud y and p rovided v aluable advice on its con-tent. Appen dix B presents a d etailed d escriptionof payment for the services of NPs, PAs, andCNMs by third-party payers in the pu blic and p ri-vate sectors.

Photo credit American College of Nurse-Midwives

CNM’s improve quality of care and access to care byproviding person-oriented services such as health

education and counseling.



6

sicians at providing services that depend on com-mu nication with patients and preventive actions.The evidence indicates that PAs also perform bet-ter than m any p hysicians in supp ortive-care andhealth-promotion activities. Patients are generallysatisfied w ith the qu ality of care provided by N Ps,PAs, and CNMs, particularly with the interper-sonal aspects of care. Although most physicianswho employ these practitioners are satisfied withtheir performance, physicians’ willingness to del-egate medical tasks is limited. Many physiciansare m ore comfortable delegating the rou tine tasksrelated to prim ary care, such as taking histories,than th e more technical procedures, such as ph ys-ical examinations. Employment statistics also re-flect physicians’ acceptance of these practitioners.

Historically, NPs, PAs, and CNMs h ave beencredited with improving the geographic distribu-tion of care, because many of them have beenwilling to locate in und erserved ru ral and inner-city areas. As a result of increases in the su pp lyof physicians, some physicians are beginning topractice in smaller communities. Although someexperts believe that the maldistribution of physi-cian m anp ower will imp rove over time, access toprimar y care is still limited and may persist as aproblem in certain geographic areas. How chang-ing pattern s in the distribution of primary-carephysicians will affect the employment and thepractice patterns of N Ps, PAs, and CNMs is un-certain, but these pr actitioners will continue toplay valuable roles in un derserved ar eas.

In add ition to improv ing access to care in ru -ra l areas, NPs, PAs, and CNMs increase accessto primary care in a wide variety of nongeographicsettings and for populations not adequately servedby p hysicians. Stud ies have shown , for examp le,that NPs increase access to primary care for un-derserved children in school settings, and elderlypatients in nu rsing homes. CNM s provide effec-tive and low-cost maternity care to und erserved,socioeconomically high-risk pregnant women andadolescents. NPs, PAs, and CNMs have also im-proved access by add ing to the scope of primary-care services available to patients. NPs and PAsare comp etent in guiding individu als through to-day’s complex health-care system and in caringfor chronically ill adults and children. Preliminaryreports ind icate that N Ps and PAs also increase

access to primary care in other settings, such as,in the home and in correctional institutions, whereneeded med ical care is not alw ays available.

In principle, the scope of NPs’ and PAs’ prac-tice encompasses most of the primary-care serv-

ices provided by their physician counterparts.Productivity studies indicate that NPs and PAsworking under physicians’ supervision can in-crease total p ractice outpu t by some 20 to 50 per-cent. Increases in productivity resulting from theuse of NPs and PAs vary w idely d epending onthe p ractice settings, on th e respon sibilities dele-gated to these practitioners, on the severity andstability of the patients’ illnesses, and on how thephysicians choose to use the free time that resultsfrom delegating tasks. Although mu ch less infor-mation on productivity is available for CNMsthan for NPs and PAs, the degree to which CNMs

can substitute for physicians appears to be con-siderable.

Indirect evidence indicates these providers coulddecrease costs to employers and society. Employ-ment levels for NPs, PAs, and CN Ms suggest thathealth-care providers consider these practitionersto be cost-effective substitutes for physicians indelivering many services. From a societal stand-point, training N Ps, PAs, and CNMs costs mu chless than training physicians.Given that the qual-ity of care provided by NPs, PAs, and CNMswithin their areas of competence is equivalent to

the quality of comparable services provided byphysicians; using NPs, PAs, and CNMs ratherthan ph ysicians to provide certain services wouldappear to be cost-effective from a societal per-spective.

Effects of Changing Payment Methods

Although the evidence indicates that NPs, PAs,and CNMs have made positive contributions tothe delivery of health care, these practitionershave not been used to their fullest potential. Ma-

jor obstacles to the greater employment and ap-

propriate use of NPs, PAs, and CNMs are thatmost third-party payers do not cover (authorizefor payment) the provision by NPs, PAs, andCNMs of many services that are typically andcharacteristically provided by p hysicians, and , inthose instances where th ird-party payers do cover







9

gate tasks commensurate w ith the training of theseproviders. If NPs’, PAs’, and CNMs’ services wereauthorized for payment, some physicians mightbe encouraged to employ and integrate theseproviders into their practices, knowing that prac-tices that emp loy NPs and PAs are better able tooffer competitive prices and broad er ranges of services than a re other pra ctices (17). Some ph y-sicians might find it ad vantageou s to hire newphysicians, rather than NPs, PAs, or CNMs, be-cause the rate at which physicians’ income is grow-ing is decreasing, and new physicians are express-ing interest in salaried positions an d are w illingto work for less money than established p hysi-cians earn. Employing physicians, rather thanNPs, PAs, or CNM s, might make some p racticesmore competitive, because of the status patientsoften confer on ph ysicians. Physicians w ith declin-ing pa tient bases migh t not be able to justify tak-ing on additional providers and expenses andmight compete by increasing the time spent w ithindividua l patients.

The advantages of extending coverage for NPs’,PAs’, and CNMs’ services in fee-for-service set-tings is apparent in certain settings, for certainpopulations and where there are demonstratedshortages of trained personnel. For example, rapidgrowth in the elderly population and in the useof nursing-home care has raised concerns abou tthe quality and costs of such care. Not only has

#

Extending coverage for NPs to provide primary careservices to elderly nursing home residents would

alleviate a demonstrated shortage of trainedpersonnel for that population.

physicians’ disinterest in visiting elderly residentsof nursing homes (166) been established, but thereare very few p hysicians trained in geriatrics(126).Furthermore the elderly institutionalized popula-tion is growing. Although m ore and better ph y-sician care for these patients may be available inthe futu re, their ability to furn ish all the healthneed s of this group is questionable. The geriatriccomponent of many of the training programs of NPs an d PAs h as been increased and the 1- to 2-year length of NP and PA training p rograms makesNPs and PAs readily available for providing care.NPs and PAs have the demonstrated ability toprovide care for a pop ulation with chronic prob-lems an d functional d isabilities. Coverage w ouldpermit NPs and PAs 8 to legally provid e the pr i-mary care services for which they are trained andlicensed—services that many nursing homes finddifficult to supply.

If coverage were extended, N Ps and PAs wou ldmost likely prov ide nu rsing home visits as em-ployees of physicians’ pra ctices or as team m em-bers in group p ractices to provide nu rsing-homevisits. If N Ps wer e paid d irectly, they could func-tion as independ ent practitioners, sup plying pri-mary-care services to nu rsing hom es. Except w henmore intensive care can be substantiated, theMedicare program currently limits the frequencyof physicians’ visits to nursing homes, so third-party payer costs in this setting might not be af-fected as long as payment levels were the samefor NPs an d PAs as for ph ysicians. Total coststo third-party payers w ould p robably decrease be-cause visits to nursing homes by teams of physi-cians and NPs or PAs w ould d ecrease the use of hospital facilities(128,155,257 ).’

8During the publication of this case study, the Omnibus Recon-ciliation Act of 1986 (Public Law 99-509) was enacted. The actchanges the Medicare law and authorizes the coverage of the serv-ices furnished by PAs un der th e superv ision of physicians in skillednursing facilities and intermediate care facilities in States where PAsare legally authorized to perform the services. This provision takeseffect Jan. 1, 1987. Payments, which go to the employer are 85 per-cent of the prevailing charges of physician services for comparableservices provided by nonspecialist physicians.

9As app. B describes, a number of other Medicare and Medicaidregulations specific to nursing homes limit the roles of NPs and PAsand specify services that must be performed by physicians in orderfor the nursing homes’ services to be covered. In addition to per-mitting coverage under Medicare and Medicaid, amendments to theseregulations would be required in order to encourage the employ-ment and appropriate use of NPs’ and PAs’ services in this setting.



10

Coverage for the services of NPs and PAs couldalso be advantageous for home-bound elderly pa-tients and for allowing pediatric NPs to care forchronically ill children at home. Medical teamsof pediatricians and PNPs—with the PNPs pro-viding r outine care, teaching children at h ome,and monitoring the program—have been shownto be effective in minimizing the social and psy-chological consequ ences of chron ic illness(234).CNMs could be covered for the m aternity careof pregnant d isabled w omen, in cases where thedisabling cond ition d id not complicate the p reg-nancy and birth process. Such women might ben-efit from the individualized care that CNMs typi-cally provid e.

Coverage would be advan tageous in rural areaswh ere the lack of med ical personnel is a p ersist-ing problem. Although the Rural H ealth Clinics

Services Act of 1977 extended coverage to NPs,PAs, and CNMs working in r ural clinics, not allresidents of such a reas have access to clinics. Cov-erage for NPs, PAs, and CNMs m ight encouragetheir use by physicians in fee-for-service practicesin rural areas who, because of fewer numbers,mu st see considerably m ore patients and work longer hours than their urban counterparts. Fur-thermore, direct payment might encourage qual-ified NPs and CN Ms to move into unserved a ndun derserved areas to expand access to heath care.

Comp etition am ong h ealth-care organizations

and the growth of HMOs—which have employedand used NPs, PAs, and CNMs extensively in thepast—augur s larger roles for these p roviders inthe health-care system as employees of HMOs.Cavitation, the method u sed to pay most HMO s,does not require providers to bill for specific serv-ices, and th e services provided by N Ps, PAs, andCNMs in such settings are, for the most part, al-

POLICY CONCLUSIONSNPs, PAs, and CNMs have mad e important

contributions to meeting the Nation’s health-careneeds by:

. improving the quality and accessibility of health-care services; and

ready covered by pu blic and private third-partypayers. Thus, coverage and direct payment forthe services of these practitioners would notdirectly affect their employment by HMOs.

Such em ployment m ight diminish, however, if

competition leads ph ysicians to accept salariesthat are sufficiently low to entice HMOs to em-ploy p hysicians instead of NPs, PAs, or CNMs.Another factor that might negatively affectHMOs’ employment of these practitioners is theincrease in the num ber of IPA-mod el HMOs. Be-cause they are primarily organized around phy-sicians who usually practice in private offices,IPA-mod el HMOs are less likely than are largegroup - or staff-mod el HMOs to emp loy these pro-viders. Although the nu mber of IPA-mod el HMOshas increased, the group - and staff-model HMO shave the greatest nu mber of enrollees.

The data su ggest that NPs, PAs, and CNMs of-fer financial savings to capitated HMOs. An in-creasingly competitive environment might en-courage providers to pass on to consumers thesavings generated by the employment and appro-priate use of NPs, PAs, and CN Ms, which w ouldbenefit society.

Providing coverage or direct payment for theservices of NPs, PAs, and CN Ms wou ld not nec-essarily affect their employment by hospitals forinpatien t care. NPs, PAs, and CNMs who work in hospitals are u sually hospital employees, and

the hospitals pay their salaries. Furthermore, thereis no statutory permission or lack of permissionunder Medicare or Medicaid for payment of NPs’,PAs’, or CNM’s services as inpatient hospital serv-ices when these providers are employed by hos-pitals. Most other third-party payers are also si-lent on this issue. With coverage, these servicescould be billed for as professional services.

q increasing the p rodu ctivity of medical prac-

tices and institutions.These practitioners have been accepted in a w iderange of settings under m any d ifferent paym entschemes, have the potential to reduce health-care



costs, and clearly play legitimate roles in thehealth-care system.

Although NPs, PAs, and CNMs are not em-ployed an d u sed to their fullest potential, manythird-party payers in the p ublic and private sec-

tors are grad ually lowering the barriers presentedby current payment m ethods and coverage re-strictions.

Although Federal third-party payers vary con-siderably in th e extent of their coverage of andpaym ent for the services of these provid ers, ingeneral, coverage and direct paym ent is limited(see app. B). Federal third-party payers could bemore in step with new and evolving paymentpractices by liberalizing coverage and paymentrestrictions for the services of NPs, PAs, andCNMs. A m ajor policy question is the man ner of liberalizing coverage and policy restrictions. Cov-erage could be extended for NPs’, PAs’, andCNMs’ services in all settings or only in certainsettings. Direct payment for the services of NPsand CNMs wou ld further remove barriers to prac-tice. (PAs have n ot sough t d irect p ayment. )

How extending coverage for the services of NPs, PAs, and CNMs in all settings wou ld affecttheir employment an d u se varies on the setting:

little change would occur in H MOs and in-patient h ospital settings; and

• the effect in physician fee-for-service prac-

tice settings is unclear.Coverage for the services of NPs, PAs, and

CNM s by add itional payers w ould h ave little ef-fect on the emp loyment and use of these providersby HMOs or by hospitals for inpatient care. Whileimportant changes in employment opp ortunitiescould occur in physician fee-for-service practices,the direction of change is not clear because of thelarge number of variables that affect physicians’decisions. Since the effect on costs is directly re-lated to the extent of employment, this questionalso remains unanswered.

Extending coverage for NPs’, PAs’, and CNMs’services in all settings or limiting coverage for theirservices to certain settings where health-care serv-ices are currently inaccessible or inadequate wouldbenefit certain ind ividuals, such as:

q those in certain locales (geographically under-served rural and inner-city areas);

q those in certain settings (e.g., homes andnursing h omes); and

q specific popu lations (e. g., some d isabled preg-nant women and some chronically ill patients,both adu lts and children).

Covering the services of NPs, PAs, and CNMsmight encourage physician fee-for-service prac-tices to employ these providers and use them insettings and for popu lations that are not receiv-ing sufficient and adequate care. Because paymentwould be to employing physicians, physicianswou ld have the final auth ority for the employ-ment and the exact nature of NPs’, PAs’, andCNMs’ responsibilities. Physicians would have torecognize the ad vantages of using N Ps, PAs, andCNMs in their practices for p roviding care to un-served and und erserved individuals.

Direct p aymen t as w ell as coverage for serv-ices of NPs and CNMs m ight enable them to d e-velop indep enden t pra ctices in comp etition withph ysician p ractices. Legal and financial restric-tions could be expected to keep the numbers of NPs and CNMs in independent practice very small.Comp etition from a n increasing su pp ly of physi-cians m ight offset the gains direct payment wou ldbring to the independent practice of NPs andCNMs.

How add ing these practitioners, particularly asindependent practitioners, to the health-care sys-tem, would affect costs cannot be resolved at thistime. The suspicion exists that total costs wouldincrease, but data are not available to answer thequestion. If costs increased due to an increase inthe provision of services, volume controls couldbe instituted .

If the overall volume of services did not in-crease, and if the NPs’ and CNMs’ payment levelswere lower than physicians’ levels for compara-ble services, third-party payers’ costs might de-crease. Patients m ight realize savings from d e-creases in the fees for some services. The extentof any savings would d epend on w hat paymentlevels were established. In any event, patientscould choose from a wider ran ge of providers andmight have greater access to primary-care services.



12

Direct payment for the services of NPs and PAscould be limited to certain settings w here thereare demonstrated shortages of primary-or mater-nity care services. For example, direct paymentmight be provided to N Ps and CNMs who in-crease geograph ic access to care. NPs and CNM sin independent practice may prove a viable solu-tion for meeting the health-care needs of sparselypopulated areas that cannot support a physicians’practice. However, limiting direct payment to cer-tain areas and pop ulations may not be an efficientcost containm ent m easure because of the poten-tially small number of independent practices.

It seems clear that covera ge for the services of NPs, PAs, and CN Ms in at least some settingscould imp rove health care for segments of thepopulation that are not being served adequately.How coverage would affect costs is unclear, butthe long-term result could be notable savings. Theeffect of direct paym ent on costs is even less cer-tain, but it might enable NPs and CN Ms to prac-tice in unserved and und erserved areas to expandaccess to health care.

ADDENDUM: DEFINITIONS AND DESCRIPTIONSDescriptions of the general roles of NPs, PAs,

and CNMs ind icate the similarities and d ifferencesof these three types of health practitioners. (Seetable 1-2 for a comparison of their general char-acteristics. )

Today’s nurse, operating in an expanded roleas a professional nurse practitioner, providesdirect patient care to individuals, families andother groups in a variety of settings. . . . Thenurse practitioner engages in independent deci-sionmaking about the nursing needs of clients,and collaborates with other health professionals,such as the ph ysician, social worker, and n utri-tionist in making decisions about other healthneeds. The nurse working in an expanded rolepractices in primary, acute, and chronic healthcare settings. As a member of the health careteam, the nurse practitioner plans and instituteshealth care programs.

–GEMNAC, 1979

The purp ose of the physician assistant in pri-mary care is to help the physician provide per-sonal health service to patients under his care.An assistant works with a supervising physicianin performing clinical functions and tasks whichprior to the mid-1960s were reserved principallyif not solely for performance by the physician.

–Allied Health Education Directory, 1985[Nurse-midwifery p ractice is] the independentmanagement of care of essentially norm al new-borns and women, antepartally, intrapartally,postpartally and/ or gynecologically [and] occurs

within a health care system which provides formedical consultation, collaborative manage-ment, and referral.

—American College of Nurse-Midwives, 1984

PAs differ from N Ps and CN Ms in their w ork-ing relations w ith physicians. PAs always w ork un der p hysicians’ supervision, wh ereas NPs andCNMs work under physicians’ supervision, or incollaborative relationships with physicians andother health professionals. Another major differ-ence lies in the training these pr actitioners un -dergo. NPs and CNMs are licensed registerednurses 10 who have received advanced training be-

yond that of other registered nurses. NPs aretrained as generalists in the provision of primarycare services. They m ay choose to sp ecialize atthe graduate level and deal with specific popula-tions, as do geriatric or pediatric NPs. CNMs re-ceive advanced training in midwifery. PAs, how-ever, are not required to be registered nurses, andthe great m ajority are not. They come from a v a-riety of backgrounds and experiences before train-ing to become PAs. Most PAs have had 3 or moreyears of college-level education or several years

‘“Three types of nursing education lead to registered-nurse licenses:

2-year community-college programs; 3-year hospital-affiliated diplomaprograms; and 4-year baccalaureate-degree programs. The trend tomake nursing education more academic and uniform is reflected inthe discontinuation of many hospitals’ diploma programs, althoughthis has not resulted in an increased demand for baccalaureate edu-cation for nurses.







Chapter 2

Quality of Care



Chapter 2

Quality of Care

Because health care encompasses both techni-cal care and the art of care (146), the quality of both mu st be assessed in d etermining the qualityof the care provided by nurse practitioners (NPs),ph ysician assistants (PAs), and certified nu rse-midwives (CNMs). Technical care comprises the

INDICATORS OF QUALITYCurren t method s of evaluating the qua lity of

care provided by N Ps, PAs, and CN Ms are inex-act. Structu re, process, and outcome of care aretraditionally used to measur e the qu ality of care

provided by ph ysicians (70).1

The quality of careprovided by NPs, PAs, and CNM s is often evalu-ated by comparing the p rocess and ou tcome 2 of the care they provide w ith the process and out-come of the care physicians deliver. Other acceptedindicators of the quality of care provided by NPs,PAs, and CNMs are patients’ satisfaction an d,to a lesser extent, ph ysicians’ acceptance.

Comparisons With Physicians

The quality of care provided by N Ps, PAs, andCNMs can be compared to the qu ality of care pro-

vided by physicians with regard to only thosefunctions that both physicians and NPs, PAs, andCNMs usually perform. Comparisons based onfunctions outside the scope of NPs’, PAs’, andCNMs’ training and practice, or on functions that

I Structural measures evaluate descriptive characteristics of facil-ities and providers, e.g., the soundness of a building and the boardcertification of a physician. Process measures evaluate what a pro-vider does to an d for a pa tient, e.g., order a card iogram for a pa-tient with chest pain. Outcome measures evaluate the result of pa-tient care, i.e., health status. Although outcome measures are themost accurate available measure of qu ality, they are difficult to ob-tain. (For a discussion of the problems associated with measuringthe outcome of care, see OTA’s 1986 report, Payment for F’hysi-

cian Services: Strategies for Medicare (246). )‘The structural measures applicable to NPs, PAs, and CNMs in-clude their certification, and the accreditation of their training pro-grams and of their continuing education programs.

3Although acceptance and satisfaction are not synonymous, theliterature uses the words interchangeably in describing positive re-sponses to NPs, PAs, and CNMs and the care they provide.

diagnostic and therapeutic components of care;the art of care refers to the environment in whichcare is provided and the provider’s manner andbehavior in caring for and communicating withthe patient (146).

physicians do not usually perform are unrea-sonable.

Comparison studies are biased against NPs,PAs, and CNMs because the studies assume themedical model as the standard—physician careis considered the stand ard for care. This stand -ard may be appropriate for measuring the tech-nical quality of the tasks th at N Ps, PAs, CNMs,and physicians perform. But the medical modelmay be less suitable for m easuring the interper-sonal quality or art of care, which is more char-acteristic of care provided by NPs, PAs, andCNMs than of that pr ovided by p hysicians. In-deed , health p romotion, teaching, and coun sel-ing are the essence of nursing education and arealso stressed in the curricula for training NPs and

CNM s. PAs also receive training in interpersonalskills, but to a lesser extent. Physicians can legallyprovide h ealth education and coun seling, but thetraining in these skills varies among medical spe-cialties and medical schools. Among physicians,only family practitioners and psychiatrists receiveextensive training in interpersonal skills, althoughsome physicians in all specialties provide personalcare.

Some other comp arison stud ies are biased infavor of NPs, PAs, and CN Ms. In stud ies wherepatients are not randomly assigned, patients as-signed to NPs, PAs, and CNMs are, on the w hole,healthier than patients wh o see ph ysicians exclu-sively; and either the practitioners or patients candecide to consult physicians at any time. Of thosepatients wh o consult ph ysicians, those wh o chooseto remain exclusively under the physicians’ care

17



18

most likely are less healthy than those wh o re-turn to the NPs, PAs, or CNMs.

Patients’ Satisfaction

Looking to patients’ satisfaction as an indica-tion of qua lity of care r eflects an increasing sen-sitivity to patients’ interests and concerns and arecognition that outcomes partly depend on pa-tients’ attitud es. Little eviden ce, how ever, suggeststhat p atients’ satisfaction p ositively correlates withfavorable technical outcomes (70). Patients’ judg-ments may be based less on the therapies’ successthan on the interpersonal aspects of care—for ex-amp le, on h ow courteously p atients felt they w eretreated, how they assessed th e value of the ad -vice they received, on how mu ch time they spentwith the providers, and on how their emotionalstates chan ged (267). Noneth eless, if patients aredissatisfied w ith the services they receive, part of the reason for their d issatisfaction ma y be thattheir expectations have not been fulfilled.

Malpractice insurance premium rates and mal-practice claims can also be used to judge patients’satisfaction. The comparison between physiciansand NPs, PAs, and CNMs is crud e because thenumber and scope of services provided by phy-sicians differ from those provided by NPs, PAs,and CNMs. The interpersonal aspects of care ap-

pear to influence malpractice cases: physicianswho maintain good relations with their patientstend to be sued less frequently than p hysicianswh o lack rapp ort with their patients (185).

Physicians’ Acceptance

Some authorities reject the notion that physi-cians’ acceptance of NPs, PAs, and CN Ms ind i-cates that th e care they provid e is good. Otherau thorities believe that p hysicians’ acceptance of such p roviders indicates good care to the extentthat physicians evaluate the care given by theproviders against the standard of physicians’ care.Physicians’ evaluations of the care provided byNPs, PAs, and CNMs in their employ, however,might be affected by the physicians’ fiscal inter-ests. Physicians pleased w ith the finan cial resultsof employing NPs, PAs, or CNMs might viewthese providers favorably, whereas physicians dis-pleased w ith the financial results might show theirdispleasure in negative assessments of the w ork of these pr oviders. Oth er su bjective factors, suchas gend er or p ersonal acquaintance, might influ-ence the degree to w hich physicians accept N Ps,PAs, and CNMs. Competition from NPs and CNMsin independent practice, for example, certainly in-fluences physicians’ acceptance of such practi-tioners.

METHODOLOGICAL PROBLEMS OF STUDIESOne or more common methodological prob- Study designs contain other weaknesses. Some

lems affect most studies of the quality of care pro- studies compare the processes and outcomes of vialed by NPs, PAs, and CNMs. The problems care provided by NPs, PAs, and CN Ms with theinclude using small samples, focusing on short- processes and outcomes of care provided by hou seterm outcomes, using nonrandomized study pop- staff rather than by experienced physicians. Studyulations, applying single evaluation criteria, using designs that compare only medical tasks as per-incomplete and unstandardized medical records formed by ph ysicians with tasks performed bydata, and choosing nonrep resentative samp les or NPs and CNMs are incomplete because they ig-sites. Some studies, because they were conducted nore the adv anced nu rsing responsibilities thatby edu cators and other proponen ts of NPs, PAs, NPs an d CNMs also fulfill.and CNM s, might be biased in favor of the care There are a few well-conducted, randomized,given by these providers. 4

controlled trials that are valid within th eir owndesigns. The conclusions of these trials, as well

4N0 bias against NPs, PAs, and CNMs was apparent in the studies as other less rigorou s stud ies, can be generalized—examined for this review. applied to other p opulations and settings—but



19

only in a limited way. Many studies report on are m ore or less flaw ed. Problems includ e m isin-only a few N Ps, PAs, or CNMs in only one set- terpretation of questions by responden ts, inves-ting, which limits the applicability of the findings tigators’ bias in framing questions, and reliancefor other providers and other settings. on the respondents’ memories. Little attention has

Some of the studies of patients’ satisfaction andbeen given to the systematic development of the

physicians’ acceptance are opinion surveys that,questionnaires or measuring scales used by inves-

dep ending on the rigor of design and execution, tigators.

QUALITY OF NURSE PRACTITIONERS’ CARE

Comparisons With Physicians

Reviews of comparison studies (230,242) andindividual studies comparing NPs and physiciansfind that the qu ality of care provided by NPs func-tioning w ithin their areas of training and exper-tise tends to be as good as or better than care pro-vid ed by physicians (50,51,72,104, 186,199,231).

In some cases, the qua lity of NP care is equiva-lent to ph ysician care (see table 2-1). For exam-ple, NPs generally resolve patients’ acute problemsas well as physicians (130,139), and the functionalstatus of patients treated by N Ps and physiciansis equivalent (212). Spitzer (231) found no differ-ence between N Ps and physicians in the ad equacyof their prescribing practices. Other researchersfound that NPs p rescribe and u se medications lessfrequently than d o physicians, and that N Ps tendto pr escribe only well-know n a nd relatively sim-ple drugs(29,204,225). The studies did not ascer-tain whether the differences in the prescribinghabits of physicians and NPs stem from differ-ences in patient mixes, prescribing philosophies,or other causes.

The quality of NPs’ care differs from that of ph ysicians’ care in oth er insta nces (see table 2-2).NPs ap pear to hav e better comm unication, coun-seling, and interviewing skills than physicianshave (84,104,178), a conclusion reinforced by oneliterature review citing a number of “variables forwh ich nur se practitioners received higher scores

than physicians. ” These variables include:. . . amount/ depth of discussion regarding childhealth care, preventive health, and wellness; amountof advice, therapeutic listening, and support of-fered to patients; completeness of history, includ-ing the recording of previous problems and fol-

lowup of problems and therapies; completenessof physical examinations and interviewing skills,and patient knowledge about the managementplan given to them by the provider (187).

Table 2-2 also sugg ests that N Ps are esp eciallygood at assisting ambu latory patients with chronic

problems such as hyp ertension and obesity(189,211). After clinic visits for chronic problems, NPs’patients are less likely than physicians’ patientsto report th at their activities are limited or th atthey experience anxiety about their problems(139).Whether NPs’ interp ersonal skills contribute totheir ability to care successfully for pa tients w ithchronic problems has not been d etermined. Phy-sicians, however, app ear to pr ovide better carein ma naging p roblems th at require technical so-lutions(104).

Patients’ Satisfaction

Overall, patients are satisfied with the care theyreceive from N Ps(25,41,80,82,139,141,145,207,231,265). Moreover, patients appear to be moresatisfied with the care they receive from NPs thanwith care from ph ysicians, in regard to severalfactors: personal interest exhibited, reduction inthe professional mystique of health-care delivery,amount of information conveyed, and cost of care(41,145,190),

A few studies, however, indicate patients’ dis-satisfaction with one or more aspects of NPs’ careor show patient preference for physicians’ care.Patients are concerned about long w aits to see NPs(145),

5about how well NPs commu nicate with pa-

5This finding was consistent across 10 settings, including solo prac-tices, university student-health centers, public health-departmentclinics, private-hospital outpatient clinics, and a health maintenanceorganization.









23

Physicians’ Acceptance

Physicians initiated and developed the conceptof PAs and serve as instructors in PA training pro-grams. PAs function as their name implies—as as-sistants to ph ysicians. Thu s, it is not surp rising

that m any p hysicians accept PAs and are satis-fied with their work (125,129,179,208).

Physicians’ confiden ce in PA s extends bey ondroutine care. One recent study found that al-though physicians generally delegate routine, un-comp licated cases to PAs, physicians also per mitPAs to treat walk-in patients with u rgent prob-lems if the physicians cannot treat those patients

and honor previously schedu led appointments(57). Perry and Breitner (182) found tha t sup er-vising p hysicians rate PAs higher than N Ps ontasks involving educating, counseling, or instruct-ing p atients.

The high level of physicians’ satisfaction w ithPAs may h elp accoun t for their continu ed h ighemp loyment rate. Employment rates provide themost consequ ential expression of physicians’ ac-ceptan ce, and nearly 86 percent of the N ation’sPAs were employed as PAs in 1981 (45). By 1984,the emp loyment rate had increased slightly to ap-proximately 88 percent; only 8.4 percent had notbeen employed as PAs for more than a year(219).

QUALITY OF CERTIFIED NURSE-MIDWIVES’ CAREComparisons With Physicians

CNMs can m anage norm al pregnancies safelyand can manage them as well as, if not better than,physicians (65,148,190,193,226). Studies showthat, in accordance with their training, CNMs rec-ognize deviations from the norm an d seek med i-cal consultation promptly(65,210). The fact thatCNMs provide standard care has been documentedin a variety of settings, includ ing hosp ital inp atientservices, hosp ital clinics, migra nt h ealth centers,neighborhood health centers, and private prac-tices(67).

As measured by such short-term ind icators asAp gar scores (a num erical expression of the con-dition of a newborn infant) and birthweight, com-parable outcomes of normal, low-risk pregnanciesresult from care by CNMs and care by physicians(65,196,226). CNMs’ care and physicians’ carealso comp are with regard to birth outcomes meas-ured by fetal, perinatal, neonatal, and maternalmortality (65,181). A ran dom ized clinical trial of uncomp licated d eliveries showed no significantdifference in th e outcome of care whether pro-vided by CNMs or by the obstetric hou se staff,except that CNMs kept more appointments andperformed fewer forceps deliveries(226).

Data on birth outcomes reveal that proportion-ately fewer low-birth-weight infants result fromdeliveries managed by CNMs than from those

managed by physicians (253). Although this mightseem to indicate that CNMs provide better carethan physicians, it might reflect CNMs’ referralof high-risk pregnan cies to ph ysicians. In on e re-cent study, the low-birth-weight rate for CNM-man aged d eliveries was 28 percent less than thecontrol group’s rate; the CNMs had also providedprenatal care, whereas the control group receivedprenatal care from State-supported maternal andchild -care clinics (184).

CNMs ap pear to d iffer from obstetricians insome processes of care. CNMs order medicationsless frequ ently than do obstetricians (65), low-risk patients of CNMs h ave shorter inp atient stays forlabor and d elivery than d o low-risk patients of obstetricians (65), more obstetrical patients of CNMs are tested for u rinary tract infections anddiabetes than are patients of house staff physicians(226), and CNMs communicate and interact morew ith their clients than d o ph ysicians(66,181,190,265). The care given by CNMs d iffers from th eusual care given by the p hysicians in the personalattention patients receive throughout labor anddelivery. Most physicians’ care is episodic, whichmay contribute to the fact that they rely moreheavily than CN Ms d o on technology, such as fe-tal monitoring (265).

Although CNMs are trained to provide normal,low-risk matern ity services, some of th em col-laborate with physicians to participate in the care





--

cians and Gynecologists has agreed with theAmerican College of Nurse-Midwives that:

. . . the ap pr opr iate practice of the certifiednurse-midwife includes the participation and in-volvement of the obstetrician/ gynecologist asmutually agreed upon in written medical guide-line/ protocols (13).

The two colleges further agree that:

Quality of care is enhanced by the interdepen-den t practice of the obstetrician/ gynecologistand the certified nurse-midwife working in a rela-tionship of mutu al respect, trust and professionalresponsibility. This does not necessarily implythe physical presence of the physician when careis being delivered by the certified nurse-midwife(13).

Non etheless, CNMs have had difficulty in ob-taining acceptance by practicing physicians, med-ical societies, hospital departments of obstetricsand ped iatrics, companies that provide m alprac-tice insurance, State boards of health, and—notinfrequently—nu rses, them selves (196). Obstetri-cians an d gynecologists are thou ght to find com-petition from CNMs threatening to physicians’ po-sition as the sole provid ers of a special type of medical care (43,190). Opposition may also re-flect the tightening market conditions facing ob-stetricians and gynecologists in urban areas (196).In addition, other physicians, particularly generaland family practitioners, have resisted CNMs

(258).

SUMMARYWithin their defined areas of competence, NPs,

PAs, and CNMs generally provide care that isequivalent in quality to the care provided by ph y-sicians for similar problems. Considerable evi-dence exists, particularly for NPs and CNMs, thatthey are more adept than many p hysicians at com-mu nicating effectively w ith patients and man ag-ing patients who requ ire long-term an d continu-ous care. Such patients include chronically illpatients and patients undergoing labor and deliv-ery. Althou gh the evidence is less voluminous con-cerning PAs’ supportive-care and health-promot-ing activities, da ta ind icate they overlap with N Ps’activities of that natu re.

Despite the reservations of many physicians asto whether CN Ms are needed, their emp loymentrate has been increasing in recent years. In 1976and 1977, only about half of the Nation’s CNMswere employed in clinical midwifery practice (9),but by 1982, ap pr oximately tw o-thirds (67.2 per -cent) of the CNMs in the U nited States were em -ployed in nurse-midwifery practice (10). TheCNMs' employment settings may better reflect theextent of ph ysicians’ acceptance. Although thepercentage of CNMs employed in private prac-tice w ith ph ysicians increased from 13 percent in1976 and 1977 to 20 percent in1982, most CNMsin 1982 were employed in organizational settingsor in private nurse-midwifery practice (see table2-3).

Table 2-3.—Percentage of U.S. Resident CertifiedNurse-Midwives by Type of Organization,1976-77 and 1982

Type of organization 1976-77 1982Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . .Private practice with physicians . . . . . .Private nurse-midwifery practice . . . . . .Public health agency . . . . . . . . . . . . . . . .Maternity service operated

predominantly by nurse-midwives . . .Branch of the U.S. military . . . . . . . . . . .Prepaid health plan . . . . . . . . . . . . . . . . .University health service . . . . . . . . . . . . .

45.6%12.9

2.413.8

7.68.23.45.0

35.8%19.814.48.6

7.76.26.01.8

SOURCES” American College of Nurse-Midwives, Nurse+ 4/dwivery In the UnftedStates’ 1976-77 (Washington, DC 1978); and American College ofNurse -M idwwes, Nurse-&f /dwivery In the Un/ted States 1982 (Washington, DC” 1964)

The findings for NPs an d PAs ap ply primarilyto care provided in am bulatory settings, and theactivities of CNMs have been d ocumented in avariety of settings with favorable results. Al-though th e findings are qu alified by the m ethod-ological limitations of the techniques used to in-dicate quality, the weight of the evidence seemsto show that the h ealth-care services provided bythese practitioners are equivalent in qu ality tocomparable services provided by physicians.

Although patients are generally very acceptingof care provid ed by N Ps, PAs, and CNM s, pa-tients are most satisfied with the services that re-



26

quire interpersonal skills. Patients seem to requirewh at m ight be called technical reassurance forserious cond itions and to prefer that NPs, PAs,and CNMs consult with ph ysicians w hen techni-cal care is required.

Patients’ satisfaction w ith N P, PA, and CNMcare is affected by factors external to th e actualcare provided . Satisfying a p articular p atient de-pend s par tly on the p hysician’s conveying to thepatient a sense of approval of the NP, PA, orCN M (113). Patients’ jud gmen ts m ay a lso reflecttheir past experiences with medical care and theirsocioeconom ic status. One stu dy , for examp le,found that an upper-middle-class populationaccustomed to receiving care from fee-for-servicephysicians evaluated providers mainly on the ba-sis of technical competence (35). Patients’ age, sex,and race also affect their opinions. Middle-aged

people, males, and blacks are more a ccepting of NPs (80); whites are more accepting of CNMsthan are blacks, who are more likely to associatethe word midw ife with un trained lay midw ives(201). The American Nurses’ Association (21) con-clud ed that trust in NPs and PAs varies with theoptions av ailable to p atients, and that satisfac-

tion w ith NPs and PAs tend s to be highest whenaccess to other sources of care, particularly phy-sicians, is limited. Patients’ satisfaction withCNMs, however, appears to be independ ent of access to other sources of obstetrical care (201).

Based on historical da ta, physicians accept theconcept of NPs and PAs but rem ain concernedabout their pra cticing independ ently. Physicianshave been reluctant to accept CNMs, especiallythose pr acticing indep end ently. Physicians’ w ill-ingness to delegate tasks depends on the particu-lar tasks. Most physicians w ho h ire NPs, PAs,or CNMs are satisfied w ith their performan ce.Employment status, the most relevant indicatorof whether physicians accept NPs, PAs, andCNMs, is satisfactory; PAs, in particular, appar-ently enjoy a high level of appreciation by phy-sicians. Increasingly, CNMs’ employment is in-

dependent of physicians. A growing supply of ph ysicians and potentially heightened competitionmay decrease physicians’ acceptance of thesehealth p ractitioners. Indeed, the American Med -ical Association resolved in 1985 to “op pose newlegislation extending medical practice to non-physician providers” (136).



Chapter 3

Access to Care



Chapter 3

Access to Care

In the late 1960s and the 1970s, health p olicyfocused on making health care accessible to all

Americans; much effort went toward helping peo-ple enter the health care system (1). A particularconcern was geographic access to primary care,because the geograph ic maldistribution of ph ysi-cians and their patterns of specialization had leftmany of the Nation’s inhabitants without ade-qu ate access to prim ary care.

Indeed, the creation and d evelopm ent of nur sepractitioners (NPs) and physician assistants (PAs)occurred in large part in respon se to the limitedaccessibility of basic medical services, especiallyin rural and inner-city areas, where physicianswere disinclined to practice(74,169,183 ).1 Thestated pu rpose of the early training program s forNPs w as to impr ove access to primary care forpeop le in areas w ithout enou gh p hysicians (236).Similarly, PAs were intend ed to “help rem edy theshortage of primary care physicians, particularlyin medically underserved areas” (180). Much of the impetus for the growth in the nu mber of cer-tified nurse-midwives (CNMs) during the 1970scan be attributed to concern about the limited sup -ply of obstetricians in the United States (180).

The various barriers to providing care mu st beconsidered in assessing the success of NPs an d PAs

in improving health care in medically underservedareas. Legislation and regulations vary widely fromState to State bu t generally tie m edical practiceby N Ps, PAs, and , to some extent, CNM s to asso-ciations with physicians and limit such practicewh ere physicians are not present. Although N Psmay provide n ursing services independ ently, forthe most part neither NPs nor PAs ‘can providemed ical services unless local ph ysicians ar e will-ing to hire them. Medicare and Medicaid rules re-

IOther factors, including imp roved integration of nursing an dmedicine, bolstered the NP movement, which signified a deliberatemove to expand the nursing role and to meet the health-care needsof many underserved populations. Other factors that contributedto the success of NPs, PAs, and CNMs are the consumers’ andwomen’s movements, the new focus on self-help and self-care, andother pushes for social and personal change that emerged duringthe late 1960s and continue today (229).

garding p ayment also significantly imped e N Ps,PAs, and CN Ms by restricting paym ent for med-ical services to the sup ervising ph ysician or insti-tution. The Rural Health Clinic Services Act (Pub-lic Law 95-210) waived the restriction for directsup ervision of NPs, PAs, and CN Ms pr acticingin certified ru ral health clinics located in d esig-nated un derserved areas (see app. B).

Whether NPs, PAs, and CNMs are needed toimprove access to primary medical care in u nd er-served areas remains an issue, even though th esupp ly of physicians has increased, and some ph y-sicians have m oved aw ay from u rban areas (174,264). Some experts believe that comp etitive p res-sures w ill eventually remedy the maldistributionof medical manp ower (222) but, the p roportionsof ph ysicians in urban an d ru ral areas have re-mained fairly constant since1970 (255).

Furthermore, large overall increases in physi-cian su pp ly in a State may still leave some areasin the State without ad equate access to m edicalcare (112). The situation may worsen in thoseareas as older physicians are not replaced byyounger on es. Ind eed, the Bureau of Health Pro-fessions has predicted that unmet needs for pri-mary care will persist in m any current ly desig-nated shortage areas. Although the dispersal of

young primary-care physicians is expected to re-du ce overall shortages, reducing shortages in allun derserved ar eas may take an extensive periodof time (250).

Although the need remains for NPs, PAs, andCNMs to provide care to underserved p opu lationsand in underserved areas, interest has increasinglyfocused on these p roviders’ abilities to delivergood medical care in certain institutional settings,such as jails, and to sp ecific popu lations, such a selderly people and poor w omen and their infants.In add ition, by functioning as case man agers, these

providers can help p atients find ap prop riate carein our increasingly complex health-care system.(The effect of N Ps, PAs, and CN Ms on access tospecific services, such as health edu cation, coun-seling, and health prom otion, is add ressed morecompletely in chapter 2.)

29



30

NURSE PRACTITIONERS’ CONTRIBUTIONS TO ACCESS TO CAREAlthough legal constraints (such as require-

ments for supervision by physicians ) have hin-dered NPs’ dispersal to isolated settings, NPs havehelped improve geographic access to primary care(31,86,160,168,261). In 1977, 23 percent of NPsworked in inner-city settings and 22 percent in ru-ral areas (238)—the geographic areas of greatestneed (120). In 1980, the prop ortion of NPs w ork-ing in these settings had increased to 47.3 percentin inner cities but decreased to 9.4 percent in ru-ral areas (255). In both inner cities and rural areas,more than half of NPs’ patients had annu al in-comes of less than $10,000 (255).

NPs alone cannot entirely resolve the problemof provider m aldistribution, because the p rofes-sional, social, and cultural attractions of the

suburbs an d cities that app eal to many p hysiciansalso appeal to many N Ps. An early survey of NPsin six States foun d that generally they “d o notwork in the inner city or in rural areas” (81), buta Pennsylvania NP-training program surveyed itsgradu ates through 1982 and found that 70 of the102 graduates worked in u rban programs w ithlow-income p eople (151).

N Ps tend to view themselves as being able tofunction effectively and app ropriately not on lyin settings with physicians, but also in practiceswithou t ph ysicians on the p remises. Starting inthe mid-1960s a significant minority of NPsworked in satellite settings as the sole providersof services; they received medical supervisionfrom ph ysicians working in other commu nities.Often, the backup physicians w ould be availablefor telephone consultations, would visit the sat-ellite settings, and wou ld be responsible for en-suring that the NPs ad hered to the protocols guid-ing the provision of medical services. These NPsincreased access to care by working in placeswh ere physicians had not located.

N Ps’ extension role is no longer as significantas it w as in th e 1960s and 1970s. A nationa l sam-ple of 44 ru ral comm un ities iden tified in 1975 as

‘Requirements for p hysicians’ supervision of N Ps vary from Stateto State. In m any States, physicians mu st be on th e prem ises butnot necessarily in the same rooms as the NPs providing the services.

‘The communities had populations of less than 10,000, with anaverage pop ulation of less than 2,000, and w ere at least ‘

2 hourin travel time from communities that had populations of more than10,000.

having satellite practices (most of w hich w erestaffed by NPs; some by PAs) illustrates this de-cline. By1979, only 24 of the centers were staffedby NPs or PAs alone (37). By 1984, 18 were staffed

only by NPs or PAs, 8 were staffed on ly by phy-sicians, and 6 were staffed b y a combination of physicians and NPs or PAs. In all but 4 of theremaining 12 communities, where satellite clinicshad ceased functioning, physicians’ practices hadbeen established (38).

More recently, NPs’ contribu tion to access hasbeen in nongeograph ic settings w here not enou ghphysicians have been available. Case stud ies re-port th e satisfactory performance of NPs in a widevariety of settings. NPs act as team members inhom e health and n ursing h ome care for elderly

patients (220) and in correctional institutions(104), and in home health care for children withchronic illness (234). NPs also provide terminalcare in patients’ homes (268); ambulator y care inlarge municipal teaching hospital units(30); andprimary care in inpatient units (224), in normalnewborn nurseries (188), and in occupational healthsettings (26). N Ps also deliver p reven tive care inthe workplace (216), in retirement communities(109), and in ind ustrial settings(47,162). Thesedescriptive reports are on ly a beginning; largerscale stud ies are needed to evaluate the qu alityof care NPs p rovide in th ese settings.

Whether NPs can improve access to health carein schools has been carefully examined. A large-scale study, involving 18 school districts in 5States, reports that N Ps working as p art of health-care teams in schools can have highly favorableeffects on school children’s health (197). NPs areespecially valuable in improving access to primarycare and supplementary care in rural areas andin health p rograms for the poor, minorities, andpeople without health insurance.

People over 65, a growing segment of the p op-ulation, suffer serious gaps in their ability to ob-tain health care. Many p hysicians lack the exper-tise or time required for m anaging all aspects of elderly patients’ health p roblems. Although pri-vate attending physicians provide most of themed ical care in n ursing hom es, many p hysiciansare un willing to care for patients in n ursing hom es(166).



31

NPs are trained to care for the older popula-tion. Indeed, 40 of the approximately 200 NP-training programs focus on geriatrics, and 31 otherNP programs have gerontological components(254). Further mor e, mu ch of the care that institu-

tionalized elderly people need is the kind that N Pscan best give—health maintenance, personal assis-tance, chronic-disease management, recognitionof acute or exacerbating chronic conditions, on-going accurate a nd comprehensive health assess-ment, app ropriate and expeditious referral to otherteam members, medication management and re-view, coordination of daily services, family andpatient education and counseling, and so on. NPshave the assessment skills to recognize comp li-cated acute illnesses or serious exacerbations of chronic diseases and t o mak e med ical referrals(157).

The few av ailable studies show that N Ps havethe professional ability to assist with the care of institutionalized eld erly patients (124,220,262).But of the m ore than 23,600 nu rsing hom es in theUnited States, only approximately 250 have ger-iatric NPs on their staffs prov iding p atient care(76). Interest in the effectiveness of N Ps in n ur s-ing homes is growing rapidly, however, as evincedby the nu mber an d size of current stu dies of theissue.4

NPs improve access for the general p opu lationby acting as case m anagers, matching the needsof patients with appropriate services (88). NPs areeffective in coordinating the care of many other

—.—

‘Ongoing studies include a large-scale research project measur-ing how geriatric NPs employed in nursing homes affect the qual-ity and costs of care. This project is being conducted by the Moun-tain States Health Corp., the Rand Corp ., and the Un iversity of Minnesota School of Health Sciences and fund ed by the H ealth CareFinancing Administration and the R.W. Johnson and the W.K. Kel-logg Foundations. The faculties of the Geriatric Nursing Programsat th e University of Arizona, the Un iversity of California at SanFrancisco, the University of Colorado, and theUniveristy of Wash-ington are examining the role of the geriatric NP in concert withthe study, and the Group Health Cooperative of Puget Sound hasreceived funding from the Fred Meyer Charitable Trust to evaluateNPs emp loyed by the health maintenan ce organization to serveelderly enrollees living in nursing homes—if a Medicare waiver of mandatory physician visits can be obtained (157), In addition, theHealth Care Financing Administration has granted a waiver underMedicare and Medicaid to perm it fee-for-service reimbursement forthe provision of medical services to residents of nursing homes byphysician-supervised NPs and PAs. A cost and utilization evalua-tion is being carried out by the Health Care Financing Administra-tion’s Policy Center at Rand.

health professionals, interservice transfers, andcontinuity of care, and in mobilizing family, in-stitutional, and commu nity resou rces (77).

NPs also are particularly effective in improvingaccess to care for groups that, for a variety of rea-

sons, have d ifficulty in obtaining the care theyneed. For examp le, NPs an d PAs w ork w ell asmembers of m ultidisciplinary teams in improvingaccess for chronically ill elderly people, whoseneeds for health services are great and whose abil-ities to manage the health-care system are limited(155). The NPs and PAs facilitate linkages betw eenthe comm unity and th e nursing home. NPs, work-ing as members of teams with physicians, are alsoeffective in educating couples about the nature of treatment for infertility and in providing emotionalsupport to people seeking such treatment (175).

In general, NPs a pp ear to imp rove continu ityof care. In institutional settings, their pa tients missfewer app ointments than d o physicians’ patients(30). Studies have generally shown that patientsof NPs in fee-for-service settings(34,84), as wellas in clinics and health maintenance organizations(225), have higher rates of completed followupvisits than d o p atients of ph ysicians (213). Thesefindings may explain the special success NPs havein caring for chronically ill patients and may re-flect the adequacy (or inadequacy) of relationshipsbetween the p ractitioners providing care and thepatients.

NPs a ffect access by expan ding the scope of carefor their patients into dimensions that physiciansmight ign ore. For example, some stud ies showthat NPs provide greater amou nts of health edu-cation th an d o p hysicians. NPs are m ore likelythan physicians to explain why medications areadm inistered an d w hat side effects are possible,and to discuss health-promoting behaviors withpatients (34,84). Unfortunately, these studies donot say wh ether the need for health education isgreater among the p atients seen by NPs or amongthose seen by physicians.

NPs spend about 50 percent more time thanphysicians spend on each encounter with a pa-tient (143). The time an N P spends ov er the courseof an illness, especially a chronic illness, m ay beless than that spent by a p hysician, however, be-cause the NP has fewer encounters with the pa-



32

tient (143). The fact that NPs provide a more per-sonal kind of care may account for the greatertime they spend w ith patients. One study foundthat ped iatric NPs are as efficient as ph ysiciansin gathering historical data and suggesting ther-apy, and attributed the N Ps’ greater time p er en-counter to greater commu nication with p atients—gathering more information from patients and

offering m ore ad vice to them (178). How ever, evi-dence from other studies is insufficient to supportor refute this stud y’s find ing, and other factorsmay play a role. For example, the greater amoun tof time NPs spend with p atients might be du e inpart to management. When NPs are used efficientlyin practices, physicians might be able to spend lesstime with patients.

PHYSICIAN ASSISTANTS’ CONTRIBUTIONS TO ACCESS TO CAREPAs have also contributed n otably to imp rov-

ing geograp hic access to care. A nu mber of stud ieshave shown that they are more interested thanph ysicians in locating in non affluen t, med icallyun derserved areas w ith high percentages of non-white populations (90,137,147,169). This willing-ness is reflected in statistics on where PAs prac-tice in the United States. Whereas about27 percentof the general popu lation and 14 percent of theNation’s ph ysicians are located ou tside standardmetrop olitan statistical areas (SMSAs), 32 percentof PAs practice outside SMSAs (49). And the per-centage of PAs working in commun ities with pop -ulations of 10,000 or less has remained constantfrom 1974 to 1981 (45). The 1984 Maste rfile Sur-vey of Physician Assistants reports that 6.5 per-cent of PA respon dents w ere located in rural areasof fewer than 10,000 people and that 40 percent

were in communities of fewer than 50,000 peo-ple (6) (see figure 3-l).

More N Ps than PAs have staffed rural satellitehealth centers (38), perhap s because some N P-training programs recruited students from ruralareas hoping they would return there as NPs.N oneth eless, in States that p erm it satellite clinicsand permit PAs to p ractice apart from p hysicians,a significant m inority of PAs work in su ch set-tings(45),

As members of health-care teams, PAs have im-prov ed a ccess to care in settings w here su fficient

ph ysician care is not alw ays available. PAs areemployed in indu strial organizations; comm unityclinics; drug and alcohol abuse clinics; nursinghomes and extended-care facilities; and Federal,State, county, and city prisons (25).

Figure 3-1 .—Distribution of Physician Assistantsby Size of Community

0% 5% 10%

Average community population = 980,235

SOURCE American Academy of Physician Assistants,Masterfile Survey (Arlington, VA 1984).

150/o 20 ”/0

1984 Physician Assistant

Few physicians are trained in geriatric medicine(126), and the inad equ acy of ph ysician serv icesfor the growing p opu lation of institutionalizedelderly patients is especially serious (122). Al-though more an d better p hysician care for thesepatients may be available in the future (122),whether physicians can satisfy all the health-careneeds of this group is questionable.

The potential of PAs in providing care for the

elderly has been discussed in the literature(160,215,218). Nearly 5 percent of PAs now providecare in nursing homes—the same proportion asin 1981 (6). The Federal Governm ent has recog-nized this potential and requires an increased ger-



33

iatric content in the cu rricula of feder ally fun d edPA-training programs. A survey of 34 federallyfunded programs’ curricula, in fiscal year 1983,reported that three-fourths had varying degreesof geriatric content (254). Furthermore, the Fed-eral Government (through the Administration on

Aging of the Office of Human Development Serv-ices of the U.S. Department of Health and Hu -man Services) partly supported the AmericanAssociation of Physician Assistants in its reporton the assessment and improvement of PAs’ knowl-edg e and skills in geriatrics(215). The reportfound a fivefold increase in the number of re-quired and elective experiences in geriatrics amongPA programs since 1980, which appear related tothe Federal fund ing rules. How ever, the report

noted the need for more uniform teaching of ger-iatric medicine in training programs. (The reportincludes guidelines for standardizing geriatric cur-ricula du ring the training period an d in continu-ing edu cation p rograms for PAs. )

PAs have also expanded the scope of care thatmost p atients receive. PA training program s re-quire competence in interviewing, educating, andcounseling patients (93). Although research is lim-ited as to the interperson al comp onents of carethat PAs provide, they appear to expand accessto patient education and counseling by mixingcompetence in technical care with interpersonalskills (182).

CERTIFIED NURSE-MIDWIVES’ CONTRIBUTIONS TO ACCESS TO CAREModern n urse-midw ifery started in this coun-

try in 1925, when Mary Breckenridge establishedthe Frontier Nursing Service to serve rural Ken-tucky. As o f 1977, 10 percent of CNMs w orkedin commu nities with p opu lations below 10,000(9). CNMs still practice extensively in und erservedareas, such as the rural South, Indian reservations,and inner cities, and significantly impr ove accessto health care in those areas. For example, inHolmes Cou nty, Mississippi, the infant mortal-ity rates drop ped from approximately38 per 1,000live births to 20 per 1,000 live births 2 years afterCNMs began providing primary care to pregnantwom en as part of a commu nitywide focus on thehealth problems of mothers and babies(158).

CNMs have also redu ced financial barriers toaccess by p roviding care at relatively low cost,particularly in short-stay, out-of-hospital births.Many su ch births occur in birth centers not af-filiated with hospitals. The number of these cen-ters increased from 3 in 1975 to more than 100in 1982 (33). They have made prenatal, labor anddelivery, and postn atal services increasingly acces-

sible to poor patients(65,149,193). For example,15 birth center s are a ccessible to families in N ewYork’s Lower East Side, a low-income area (150).The relatively low cost of CNMs’ services mayresult from shorter inpatient stays as well as lower

fees (53,65). One study, however, found thatCNM s’ fees exceeded p hysicians’ fees in ur banlocations (200), but nearly a year had clasped be-tween th e measurem ent of phy sicians’ fees and themeasurement of CNMs’ fees, which may accountfor the finding. Also, a disproportionately largenu mber of CNMs p ractice in academ ic med icalcenters, which have h igher costs than commun ityhospitals (200).

CN Ms affect access (as w ell as quality) by pro-

viding p erson-oriented services, such as comm u-nicating thoroughly with patients, counseling,prom oting self-help, and attend ing to patients’emotional needs (196). CNMs interact with p a-tients more than physicians do(66,190,265). Pa-tients feel more comfortable about asking ques-tions of CNMs than of ph ysicians(181,190). Inadd ition, CNMs’ patients obtain care relativelyearly in their pregnancies and continue to receiveprenatal care relatively frequently(140,193,226).CNMs tend to increase the amount of prenatalcare their patients receive.

In general, then, CNMs continu e not only tolower financial barriers to care, but to offer a con-siderable amou nt of care that includ es both healthadvisory and health-promotion services. This ex-per tise is reflected in the va luable care CN Ms on



34

SUMMARYNPs and PAs have long

creasing geograp hic accessbeen recognized for in-to primary health care,

pa rticularly for resident s of inner cities and r ura lcommu nities. Although indications are th at ph y-sicians are migrating to smaller communities(174),the growing supply of physicians appears to beaffecting d ifferent com mu nities d ifferently (250).Overall increases in the su pp ly of physicians ina State may still leave some areas in need of pri-mary care services (112). In those areas where ac-cess to physicians’ services remains inadequate toserve the population or has decreased (112), NPsand PAs can continue to serve as a source of pri-mary care. In areas w here access to p hysicians’services h as increased, em ployment opp ortunitiesfor NPs and PAs might d ecrease. But th e emp loy-ment of NPs and PAs in ru ral areas has previouslybeen limited by t he scarcity of ph ysicians w illingboth to pr actice in rural areas and to sup erviseNPs and PAs. Thus, the growing num bers of phy-sicians in previously underserved areas may wellincrease employment op portun ities for N Ps andPAs. The p hysicians m oving into sm aller com-munities are mainly young physicians, who are

multidisciplinary teams provide for high-risk preg-nant adolescents (184), especially in clinic settings(42). Indeed, th e Institute of Medicine’s repor t onpreventing low birthweight calls for:

. . . more reliance . . . on nu rse-midwives . . . toincrease access to prenatal care for hard-to-reach,often high risk, groups. This recommendation isbased on the studies that indicate that CNMs canbe par ticularly effective in manag ing the care of pregnant women who, because of social and eco-nomic factors are more likely to deliver low weightbabies (121).

Photo credit American College of Nurse-Midwives

CNMs are particularly effective in managing the careof pregnant women who are not at risk of having

low-weight babies.

more likely than old er ph ysicians to accept th eteam approach to health care and to use the serv-ices of NPs and PAs. Furtherm ore, a small townmight be able to support a physician-NP or aphysician-PA team but not two physicians. Whetherthese factors or others red uce the role NPs andPAs play in improving geographic access to care,these practitioners will continue to be valuable,especially in rural areas.

The evidence (primarily from case studies) isthat NPs and PAs are improving access to pri-mary health-care services in settings not adequatelyserved by physicians. For examp le, NPs and PAsare trained to p rovide primary care for elderly pa-tients in nursing homes, a growing populationwith poor access to standard health care. The ef-fectiveness of NPs and PAs in this role is und erscrutiny. They are also helping people to obtainprimary care in an increasingly comp lex health-

care system.Stud ies have shown that N Ps are especially val-

uable in providing primary care in school settingsto previously unserved or und erserved children,



35

and in expand ing the content of available care to care by the per sonal orientation of their services.include interpersonal and preventive care for all Studies have shown that CNMs’ communicationpatients. skills and attention to the social and psychologi-

CNMs h ave not only m ade care m ore accessi- cal needs of pregnan t ad olescents, as- w ell as the

ble in u nd erserved areas, they have also contrib-technical care CNMs pr ovide, have redu ced therate of low-birth-weight babies among this high-

uted to making care financially available and havecontributed to social and psychological access to risk population.



Chapter 4

Productivity, Costs, andEmployment



Chapter 4

Productivity, Costs, and Employment

Several studies have examined the scope of practice and productivity of nurse practitioners

(NPs), physician assistants (PAs), and certifiednurse-midw ives (CNMs); how that scope relatesto the tasks usu ally u nd ertaken by p hysicians; andthe implications of this evidence for the employ-ment of these providers and for the costs of med -ical care.

Questions related to productivity include thenatu re and size of the contributions NPs, PAs,and CNMs make to medical practices’ outputs(e.g., encounters between providers and patients).Questions related to costs include how mu ch a

practice must spend to employ an NP, PA, orCNM and how m uch society must spend to train

these types of practitioners. Questions related toemployment compare productivity with the costsof employment to ascertain w hether m edical prac-tices could gain from em ploying more N Ps, PAs,or CNMs, and whether society could gain fromtraining m ore N Ps, PAs, and CNMs. Because of the complexity of the issues involved and the lack of data, these questions are seldom addressed to-gether. The literature does, how ever, permit thepiecing togeth er of some p arts of this puzzle.

SCOPE OF PROFESSIONAL PRACTICEServices Provided by Nurse Practitionersand Physician Assistants

The tasks NPs and PAs are trained to p erformencompass a broad spectrum of primary care ac-tivities involving diagnosis and therapy (see ch.1). Distinguishing between NPs and PAs on thebasis of task descriptions is difficult. N P trainingmay emphasize counseling and health promotionactivities to a greater degree than PA trainingdoes, bu t th e major d ifference lies in th e pr acti-tioners’ relationship s w ith p hysicians. By d efini-tion, PAs work un der p hysicians’ sup ervision,whereas NPs have collaborative relationships withph ysicians and other health p rofessionals.

Most observers conclude that most primarycare traditionally provided by ph ysicians can bedelivered by NPs and PAs. Hausner and others(105) conclude that 60 to 80 percent of the tasksnormally performed by primary care physicianscan be provided by NPs and PAs without consul-tation. Record and others (192) estimated that 90percent of pediatric care can be p rovided by NPsand PAs, and that NPs and PAs can substitutefor p hysicians in p roviding 50 to 75 percent of all primary care services. Hausner and others (105)argue that NPs and PAs can safely perform enough

Photo credit” Arner/can Nurses Assoclatlon

NPs are trained to perform a broad spectrum ofprimary-care activities.

of the primary care responsibilities to be consid-ered viable alternatives in providing primary care,

even where direct supervision is unavailable.What NPs and PAs are trained to do and what

they do in practice maybe different. Their actualroles dep end on the settings in wh ich they w ork.Limited information exists as to how practicing

39





41

Technically, empirical measurement of substituta-bility is comp licated by th e need for large amou ntsof accurate data on the prices and u tilization levelsof resources used in the p rodu ction p rocess as wellas on the ou tpu t of the prod uction p rocess. There-fore, studies of the role of NPs, PAs, and CNMs

have taken the more straightforward approach of productivity analyses based on small samples,case stud ies, or simu lations.

Produ ctivity, simply stated, is output per u nitof input. The productivity of medical practitionersis frequently expressed in terms of the number of patients seen per w eek or per hour of the practi-tioners’ time. In comparing physicians with NPs,PAs, and CNMs, the approp riate method of meas-uring productivity depend s on w hether the NPs,PAs, or CNMs are working u nd er direct sup er-vision by ph ysicians or working interdepend ently

with physicians. For examp le, studies of PAsdirectly su pervised by physicians examine h owemploying PAs marginally affects total practiceoutput (e. g., the add itional num ber of patientsseen per week). Or time-and-motion stud ies of theprod uction p rocess might examine the tasks per-formed by PAs and how long they take, as com-pared with the time physicians would take. Toevaluate the p rodu ctivity of practitioners work-ing in collaboration w ith p hysicians, as CNMswork, studies could compare the number of pa-tients seen per week in collaborative practice withthe nu mber of patients seen for the sam e service

by an obstetr ician. Physicians could also be com-pared with N Ps, PAs, or CNMs with regard tothe num ber of minu tes required p er encounter fora par ticular typ e of patient or m edical service.This approach attempts to control for case mix.

Comp aring the pr odu ctivity of physicians andPAs is facilitated by th e fact th at the tasks theyperform overlap significantly. Indeed, PAs tendto provide essentially the same services physiciansperform. The need to understand differences incontent of care, therefore, is not as great in com-paring physicians with PAs as in comparing phy-

sicians with N Ps, wh o generally provide a mu chwider range of services.

Nurse Practitioners’ andPhysician Assistants’ Productivity

Studies of NPs’ and PAs’ produ ctivity have gen-erally taken one of three app roaches:

1.

2.

3.

time per visit (comp aring how mu ch timeph ysicians and NPs or PAs take to completeoffice visits);average number of visits per unit of time(comparing how many visits different typesof providers handle in a given period of time); andmarginal product (assessing the effect of add-ing an N P or PA on a p ractice’s total num-ber of patient visits).

Most studies of NPs and PAs indicate that theseprov iders spend more time p er office visit thando physicians (242). For example, Mendenhall and

others (160) found in a national survey of physi-cian practices that NPs averaged 19.4 minutes perdirect encounter with a patient, PAs averaged 13.3minutes per encounter, and physicians spent slightlymore than 11 minutes per encounter. A stud y byCharney and Kitzman (52) yielded similar results,but stu dies are not unan imous on th is issue. Ina large health maintenan ce organization (HMO )—a special setting—Record and others (191) re-ported that PAs sp ent less time p er routine visit(an average of 7.1 minutes) than physicians did(8.9 minu tes). The stu dy noted , however, that:

. . . a sampling of medical charts revealed thateven where the presenting morbidity was the same,physicians tended to get somewhat older patientswith a greater number of associated morbidities,including chronic diseases, which might easily ex-plain th e time d ifference.

Also, Kane and others (129) found little differ-ence in the am ount of time physicians and physi-cian assistants spent p er visit. These data supp ortthe conclusion reached by Record and her col-leagues (192) in a review of more than a d ecadeof experience and studies, that “there is more of a tendency for NPs than for PAs to vary from

physicians in the average amount of time spenton an office visit. ”



42

The shorter average time physicians, as com-pared with NPs and PAs, spend with patientstranslate into greater p rodu ctivity over time. Inother words, the number of encounters with pa-tients per hou r or per w ork week is higher for phy-sicians than for NPs or PAs. Mendenhall andothers (160) reported the following:

q

q

q

q

NPs average 7.9 direct encounters and 2.4telephone encounters w ith patients per d ay;PAs average 14.2 direct encounters and 2.6telephone encounters w ith patients per d ay;physicians w ho sup ervise NPs or PAs aver-age 18.9 direct encounter s and 3.4 teleph oneencounters with patients per day; andph ysicians wh o do n ot supervise NPs or PAsaverage 21.4 direct encoun ters and5.7 tele-phon e encounters with p atients per day.

Data from a recently completed national sur-

vey of rural health care delivery organizations in-dicated that primary care physicians saw an aver-age of 105.6 patients per week and worked 48.6hours p er week, whereas NPs and PAs saw anaverage of 75.0 patients per week and worked 40.7hours per week (107). On the average, then, thesephysicians, saw 2.2 patients per h our, comparedwith 1.8 patients per hou r for NPs and PAs. Rommand others (199) found that, comp ared w ith PAs,NPs spen t more time per p atient and, therefore,saw fewer pa tients per week. Because physicianswork more hours per week than do PAs and NPs,these productivity comparisons are best made on

a per-hour basis, i.e., adjusting for the numberof hours w orked p er w eek. Overall, the find ingsindicate that, in term s of patients seen p er un itof time, NPs a re less productive than PAs, wh o,are less productive than physicians. However, thisresult does not adjust well for severity of illness(i.e., case mix), nor does it necessarily mea n th atphysicians are relatively cost-effective. For exam-ple, physicians might be three times m ore prod uc-tive than N Ps and PAs are, but cost six times asmu ch as they do.

The extent to which hiring an NP or PA in-

creases the outp ut of a p ractice has been the subject of some debate(110,111,153). LeRoy (138)reported increases of between 20 and 90 percentin the productivit y of physicians’ practices thatadded NPs. Hershey and Kropp (110) used a model

to estimate that the pr odu ctivity gain maybe on ly20 percent after calculating th e “offsetting chan gesin measu res such as p rovider time available fornond irect p atient care activities, patients’ wait-ing time, waiting room congestion, practice hours,an d supervisor y requirements. ” The find ings of

Mendenh all and others (160) indicate that eventhough direct encounters between patients and thesupervising physician d ecline when an N P or PAis hired, the practice’s total output increases. Rec-ord and others (192) reported “greatly varying re-sults” in stud ies of how add ing an NP or a PAto a p ractice affected its prod uctivity. Some stu diesfound NPs and PAs to have greatly increasedprodu ctivity, and other studies found that add -ing PAs or NPs actually decreased the nu mber of pa tients seen. The one fact about w hich research-ers app ear to agree is that the poten tial for increas-ing pr odu ctivity is greater in large p ractices than

in small ones (111,192).Three major problems arise in assessing produc-

tivity in terms of length of encounter or n um berof patients seen per unit of time. First, these unitsof measure do not reflect the content of the careprovided or the severity of the patients’ illnesses.Because som e visits require m ore skill than ot hervisits Holmes an d oth ers (114) applied a r elative-value m easure of p rodu ctivity, considering boththe nu mber of visits and the comp lexity of thosevisits. The researchers found that although phy-sician-NP teams h and led only 5.7 patient visits

more than physician-nurse teams handled eachday, the teams w ith NPs were 26 percent moreproductive in terms of total value-weighted serv-ices (114). The difference in content of care is animportant consideration because NPs provide moretime-consuming services, such as health educa-tion and counseling, than do physicians and phy-sicians are capable of provid ing some med icalservices that NPs cannot provide. Measures un-adjusted for content and complexity of work m ayyield biased estimates of relative productivity.

The second major problem in basing produc-

tivity estimates on nu mbers of patients or lengthsof visits is that these measures inadequately re-flect the ultim ate objective of med ical care. Thepu rpose of medical care is to treat and preven thealth problems rather than to provide individ-



43

ua l services. Recognizing th is fact, Salkever a ndothers (213) examined the productivity of physi-cians and NPs in t erms of episodes of care, be-cause episode-based assessments account for dif-ferences in referral, and because “the episode isalso a more ap prop riate unit for measuring d iffer-

ences in effectiveness of care, since the outcomeof the care process may be causally related n otonly to a service received at a single visit, but toany services received over the course of the epi-sode.” The researchers found that the p er-episodecosts were about 20 percent lower when NPs w erethe initial providers than wh en ph ysicians werethe initial providers.

A third major problem in ascertaining produ c-tivity is that existing studies reflect current sub-stitution p ractices, which m ay n ot fully exploitthe p otential for using N Ps and PAs cost-effec-tively. The fact that NPs and PAs can safely per-form numerous medical-care services suggests thatthese pr actitioners ha ve the capacity to be highlyprod uctive as individuals and to contribute sub-stantially to the productivity of the organizationsin which they work. But a key factor affectingthe prod uctivity of NPs and PAs is the extent towh ich their emp loyers—often ph ysicians—arewilling to d elegate tasks to them .

The evidence about what physicians actuallydelegate as opposed to w hat they can safely del-egate is limited. A recent study of physicians ina large H MO (125) found that p hysicians did notdelegate as many tasks as they thought N Ps andPAs could handle safely. General internists, pedi-atricians, and obstetrician/ gynecologists indicatedthat 49, 46, and 29 percent, resp ectively, of theirtotal office visits cou ld be sh ifted safely to PAsand NPs. The internists and pediatricians, how-ever, wer e willing to shift only about28.5 per-cent of their visits to NPs and PAs, and obstetri-cian/ gynecologists were willing to shift only about14 per cent of their visits. Most p ediatr icians a ndobstetrician/ gynecologists cited their patients’preferences for being treated by physicians andthe p hysicians’ own needs to maintain overall pro-ficiency by seeing a full range of patients as theprimary reasons for not d elegating more. The pri-mary reasons most internists cited for not d elegat-ing more were that seeing only complex cases

would be too demanding and that patients pre-ferred to receive care from physicians (125).

In addition to reflecting physicians’ willingnessor unwillingness to delegate responsibilities, theprodu ctivity of NPs and PAs depend s on manyfactors, including practice type (solo or group),practice setting and size, case mix, how long theNPs or PAs have been practicing, practice regu-lations, and how much autonomy the NPs or PAshave. Many of these factors are beyond the con-trol of NPs and PAs, how ever, wh ich m eans thatthe p otential or capacity of NPs an d PAs h as alimited effect on th eir prod uctivity and , conse-quen tly, on their ab ility to affect the cost of care.Indeed, most p rodu ctivity analyses consider N Psand PAs as p art of physicians’ practices. Little evi-dence exists as to the productivity and cost-effec-tiveness of NPs and PAs as autonomous practi-tioners.

In sum, the stu dies of the produ ctivity of NPsan d

q

q

q

PAs suggest that:

ph ysicians can su bstantially increase theirpractices’ outpu t by emp loying N Ps or PAswho operate under the supervision of phy-sicians;although PAs, and, especially, NPs see fewerpatients per hou r than physicians see, thesepractitioners are capable of carrying substan-tial proportions of the w orkloads of primary-care physicians; and

practice setting may be an important factorin NPs’ and PAs’ pr odu ctivity, as eviden cedby the differences in the use and productivityof NPs and PAs in HMOs and traditionalsettings.

The potential suggested by these studies is lim-ited by the reluctance of physicians to delegatetasks. Evidence shows that physicians are reluc-tant to use NPs or PAs even to the extent thatph ysicians think feasible and safe, basing theirreluctance on patient preferences.

Certified Nurse= Midwives’ ProductivityCompared to the many stud ies of NPs and PAs,

much less information is available on the produc-tivity on CNMs. Furthermore, “it is characteris-



44

tic of the nurse-midwifery studies that they con-centrate on outcom e” (67). This almost exclusivefocus on outcome rath er than process limits in-formation abou t CNM s’ involvement in p rodu c-ing serv ices.

One stud y (253) indicated that CNMs were only“about 23 percent as productive as obstetricianswh en the nu mber of deliveries was used as theoutput measure. ” But the same study reportedwh en the volume of patient visits was used as theoutput measure, CNMs were 98 percent as pro-ductive as obstetricians.

As with N Ps, the content of care prov ided byCNMs mu st be und erstood because they stress the

COSTS AND EMPLOYMENTAlthough considerable scope exists for substi-

tuting of NPs, PAs, and CNMs in p roviding someof the care trad itionally provided by p hysicians,the resulting increases in productivity are notenough, by themselves, to justify greater employ-ment of these practitioners in p rivate practices.From the standp oint of a private firm, the mar-ginal value (as measu red by the amou nt patientswould pay for the additional output) must com-pare favorably w ith the marginal cost (i.e., thesalary and related expenses) of hiring an NP, PA,or CN M. From th e perspective of a long-run in-

vestment in t raining, either by society or by th etrainees, the valu e (i.e., com pen sation) placed onthe outpu t of the NPs, PAs, or CNMs m ust com-pare favorably with the costs of training to justifyexpending the resources.

In 1983, annu al salaries for N Ps, PAs, andCNMs averaged about $25,000, compared withthe $60,000 to $80,000 median salaries of primary-care physicians (18). This w age gap raises severalquestions. What are the costs and benefits to so-ciety of using N Ps, PAs, and CN Ms rather thanphysicians? And if NPs, PAs, and CNMs are cost-effective substitu tes, why isn’t their employm entincreasing relative to the emp loyment of physicians?

NPs, PAs, and CNMs, clearly could not com-pletely replace physicians, because the scope of the N Ps’, PAs’, and CNMs’ pr ofessional activi-ties is constrained by th eir more limited training,

interper sonal aspects of care, such as counseling,health edu cation, and patient interaction(103,184). Such an und erstanding is necessary in or-der to specify what facet of the care provided byCNM s contributes to th e p ositive outcomes theirpatients experience (226).

Data from the ACN M survey (1984) suggestsubstantial possibilities for CNMs to substitute forphysician care. Many CNMs are already assum-ing responsibility for a wide variety of complextasks in prenatal, labor, delivery, and postpar-tum care.

reimbursement policies, legal barriers, andtice setting characteristics. Furthermore,

prac-NPs,

PAs, and CNMs sometimes compete with profes-sionals other than p hysicians or operate independ -ent practices. Nonetheless, given the large over-lap of their practices, primary care physiciansprovide an ap prop riate comparison group for con-sidering the em ployment of NPs, PAs, and CNMs.Although some information is available about sal-aries, the figures are imprecise enough that th ediscussion mu st be carried ou t in app roximate andqualitative terms.

Costs and Benefits of Training NursePractitioners, Physician Assistants,and Certified Nurse-Midwives

Estimates of the social and private rates of re-turn to investments in training and edu cation in-dicate the value placed on these investments bysociety and private individuals, respectively. Thebest of such comp utations require large amoun tsof data on earn ings over the career of the ind i-vidua l. How ever, some conceptual issues can beadd ressed qu alitatively. In theory, the rate of re-

turn on investment in th e training of NPs, PAs,or CN Ms can be calculated w ithout reference tothe training or earnings of physicians. Societymust expend a certain amount to train a personto be an NP, for example, and this investmentyields a return of about $25,000 per year (plus



45

fringe benefits) minus what the person would haveearned otherwise.

An alternative approach w ould be to considerthe costs and benefits of training someone to bean N P, PA, or CNM instead of training the per-

son to be a ph ysician. The costs to society of train-ing an N P, PA, or CNM are m uch less than thecosts of training a p hysician. The d irect costs re-lated to edu cation such as p ayments for instruc-tors, supplies, and facilities, are greater for phy-sicians than for NPs, PAs, and CNMs, probablyon a yearly as well as overall basis. The indirectcosts, primarily what the individu al would h aveearned du ring the time spent in training, are alsogreater for p hysicians, because more years of school-ing are required.

Differences between the social and private ratesof return primarily reflect differences in the costsof edu cation. The more that govern ment su bsi-dizes training, the higher will be the private rateof return , comp ared with th e social rate. Little evi-dence exists as to what either rate of return is orwhat the differential between the two is, but ed u-cational subsidies over the years have been con-siderable. Scheffler (217) provides an estimate of the p rivate rate of return as of the early 1970s,arguing that “. . . the private rate of return issufficient to prod uce a relatively strong d emandfor PA training; therefore, an increase in gover n-ment support is unwarranted. ” He finds high rates

of return—over 20 percent—comparable to thosereceived by ph ysicians. The av ailable d ata areprobably insu fficient to allow d istinctions betweenthese two types of investment, but thinking abou tthem qualitatively is useful.

Nurse Practitioners and Physician Assistants

The most recent estimates of the costs of edu-cating physicians and NPs, PAs, and CNMs weremad e in 1979 by the Congressional Bud get Of-fice (CBO). CBO estim ated the mean total costsof educating N Ps and physicians at that time tobe $10,300 and $60,700, respectively. Assuming,conservatively, that these costs increased at anaverage ann ual rate of 6 percent, the total educa-tional costs would have been$14,600 for NPs and$86,100 for ph ysicians a s of 1985.

A substantial portion of these direct costs areborne by taxpayers, rather than by the trainees.Society, through government support, has in-vested heavily in the training of NPs as w ell asphysicians. For example, between 1975 and 1982,the Federal Government spent $65.9 million oneducating NPs. These funds supported approxi-mately half the NP training programs in theUnited States (251).

The ind irect costs—prim arily foregone earn-ings—are substantial, but they are difficult to esti-mate with any precision. Because a physicianspends about 6 more years in training than d oesan N P, the ind irect costs an individual mu st payto become a physician ar e mu ch greater. Deter-mining the value of the foregone earnings forthose individuals who become doctors versusthose wh o become N Ps is a more complex em-

pirical task. Clearly, howev er, several NPs couldbe trained for the cost of educating one physician.

Extrapolating from’ CBO’s estimates of PA-train-ing costs (242), the total d irect costs of traininga physician assistant would have been $16,900,compared with $86,100 for training a physicianas of 1985. The ind irect costs for PAs ar e abou tthe same as for NPs. Thus, the total costs of train-ing are higher for PAs than for NPs, but the aver-age earnings of PAs are higher than those of NPs($24,500 versus $23,500) (44,237). Although, amore precise comparison would require some ad-

justment for the sex compositions of the twogroups, the chief implication of the studies is thatPAs, like NPs, are much less costly to train thanphysicians.

Certified Nurse-Midwives

The tuition charges for nu rse-midw ifery edu -cation vary considerably among prog rams, butan estimated average of the annual cost of edu-cating a nu rse-midw ifery stud ent is app roximately$12,000 (78). The total cost of training is increas-ing with the growing trend toward master’s de-gree programs, which last 2 years and are usu allytw ice as long as certificate pr ograms. Ap proxi-mately 40 percent of the N ation’s CNMs havegraduated from master’s degree programs. Theaverage total training cost for certificate and



46

master’s p rogram s combined is about $16,800,compared to the $86,100 cost of physician train-ing as of 1985.

Costs and Benefits of PrivateEmployment of NPs, PAs, and CNMs

Because p hysicians or group practices some-times must choose between hiring ad ditional phy-sicians and hiring N Ps, PAs, or CNMs, the per-spective of the ph ysician as em ployer should beconsidered in any attemp t to und erstand the em-ploymen t levels of these nonp hysicians. UsingNPs, PAs, and CNMs to provide services thatwou ld otherwise be provided by physicians canbenefit society w ith lower fees if the cost of pr o-viding services by the nonphysicians is less thanthat of providing services by physicians and if thesavings are passed on to patients. The costs of em-ploying an NP, PA, or CNM include salary, fringebenefits, supervisory expenses, costs of any ex-pan sion necessitated by add ing another providerto the staff and costs of resources used by th e ad-ditional provider. These costs mu st be compa redwith the costs that wou ld be incurred if a physi-cian w ere add ed t o the p ractice, The benefits apractice receives by hiring an additional providerare the additional fees the provider’s services gen-erate for the practice.

Nurse Practitioners

How employing a nurse practitioner would af-fect the cost of a p ractice cannot be d eterminedwith any precision, but the following simple cal-culation provid es a rough picture of the effect.The med ian salary o f NPs in clinical practice in1983 was approximately $23,500. If fringe ben e-fits averaged 25 percent of salaries, total costswould be about $29,500 per year. This is far be-low the $82,000 net income of young physicians(19). Hiring a nurse practitioner or another phy-sician m ight also result in ind irect costs for suchthings as new office space, new equipment, ad-ditional supp ort staff, and add itional resources.

Total practice costs would change in composi-tion because p hysicians wou ld spend some timesupervising the NP instead of providing visits, orthe NP m ight order more or fewer lab tests thanthe physician would have. However, the basic

question is wh ether the total value of the prac-tice output increases enough (i.e., would there beenough add itional revenue) to cover the add itionalcost of the NP?

Denton and others (61) examined the effect of

the additional costs in a hypothetical calculationof the savings that would have resulted in Can-ada in 1980 “had nu rse practitioner time been sub-stituted for physician time in the provision of allservices for wh ich such substitution has been dem-onstrated to be safe and feasible. ” The research-ers concluded that the savings from this widespreaduse of NPs w ould have been from 10 to 15 per-cent for all medical costs (or from $300 millionto $450 million) and that the savings wou ld ha veamounted to between 16 and 24 percent of thetotal costs for ambulatory care. Furthermore, theresearchers determ ined that th eir “estimates are

quite insensitive to demograp hic changes and willbe as valid in the futu re as they are tod ay. ”

These findings are supported somewhat by thefind ings of Salkever and others(213), who com-pared patterns of treatment for otitis media andsore throat by three types of prepa id group prac-tices—NP only, NP-physician team , and ph ysi-cian only. With respect to otitis media, the find-ings support the contention that NPs’ services areless expensive tha n th ose of ph ysicians. Servicesprovided by N Ps alone are less costly than thoseprovided by p hysicians alone or by NP-physicianteams. The researchers found no difference, how-ever, between the cost of treatments for otitis me-dia by physicians alone and NP-physician teams.The findings were similar for care of sore throats.These results confirm earlier studies(81,141) com-paring the costs of specific medical tasks conductedby nurse practitioners with the costs of the sametasks conducted by physicians.

Physician Assistants

The average salary of a PA is $24,500 and fringebenefits probably amou nt to a bout 25 percent of their salaries, making the average direct cost of employing a PA approximately $30,600 per yeara sum mu ch lower than the average income of young primary-care physicians.

Accurately estimating the relative cost of em-ploying a PA versus that of employing a physi-



.-,4 /

cian requires an examina tion of the ind irect coststhat result from the resources expended by the ad-ditional employees. Little information exists aboutthe extent of the costs PAs generate by u sing apractice’s resources. For example, Wright and others(266) foun d that PAs gen erate more laboratorycosts than med ical residents but few er than med-ical faculty. The calculations that Denton andothers (61) employed for determining that usingNPs w ould save 10 to 15 percent of the total costfor medical care in Canad a could ap ply to usingPAs, as well, because the researchers used theterm nurse practitioner in a broad sense to encom-pass “several d ifferent types of interm ediate healthprofessionals. ”


The average salary of CNMs was $24,800 in1983. If their fringe benefits were 25 percent of their salaries, the average direct cost of employ-ing a CNM was approximately $31,000 that year.The mean net income of obstetricians in1983 was$119,900 (before fringe benefits) but because mostCNMs have been p racticing fewer than 15 years,the most ap prop riate figure for comp arison w ouldbe the average salary of young—rather than all–obstetricians. The average income of young ob-stetrician/ gynecologists is $100,000 per year p lus$25,000 or more for fringe benefits.

As w ith the other types of health-care provid-ers, the indirect costs a CNM generates by usinga practice’s resources need to be calculated to de-termine th e full costs of employm ent. Eviden ceexists that clients of CNMs have shorter hospitalstays than do clients of obstetricians(53,65). But

Dickstein (53) found that clinic prenatal and post-partum costs in a large HMO were higher forCNMs than for obstetricians, “primarily becausemidw ifery visits are longer and more frequent, usemore RN edu cational time, and include the costof OB consultations and referrals. ” Generally, al-though existing d ata do n ot allow p recise quan-tification of the costs of CN M care and ph ysiciancare, the salary d ifferential probably ensu res thatthe total costs are considerably less for CNMsthan for physicians.

Costs Versus Benefits of Private Employment

The private p hysician’s firm that em ploys anNP, PA, or CNM incurs extra costs for salary,fringe benefits, capital improvements, and otheritems. Productivity studies have shown that thetime a ph ysician spend s sup ervising the N P, PA,

or CNM red uces the num ber of patients the phy-sician sees, although the red uction is m ore thanoffset by the ov erall increases in pra ctice volum egenerated by the add itional provider. Stud ies havenot, however, directly addressed whether thevalue of the add itional outpu t exceeds the add i-tional cost. In terms of rough magnitudes, thecomparison is between a $25,000 salary (plusother costs) and a 20- to 50-percent increase inthe practice’s revenues, from a base of $150,000to $200,000 annually. In view of the uncertaintyabout the extent to which an NP, PA, or CNMwou ld increase marginal revenues, the marginalrevenues do not clearly exceed the marginal costs.But the careful accounting by Denton and others(61) in Canada suggests that significant savingsare possible for private p ractices that hire an N P,PA, or CNM rather than an add itional physician.

CURRENT EMPLOYMENT: SETTINGS AND TRENDSThe productivity studies suggest that hiring Nurse Practitioners’ and

NPs, PAs, and CN Ms may provide p rivate prac- Physician Assistants’ Employmenttices a cost-effective alternative to hiring addi-

tional physicians. And although p rivate markets Most of the pertinent stu dies have add ressedmay be functioning as expected under existing le- the employment of NPs and PAs in primary-caregal and market institutions, un exploited social settings, although NPs and PAs work at all levelsbenefits may be available from the gr eater em- of health care in a w ide va riety of settings (154).ployment of NPs, PAs, and CNMs. A 1982 national survey of pediatric NPs, for ex-



48

amp le, revealed that 22 percent of the respondentswork ed in hosp itals, 20 percent in commu nity-health agencies, 17 percent in private pediatricians’offices, 10 percent in specialty clinics, 8 percentin schools, 6 percent in HMOs, and the rest mainlyin nursing schools and military clinics (167).

NPs are increasingly being emp loyed in h omehealth agencies (155,196,220,268), and findingwork in nursing homes (87,262). NPs are alsoworking in industrial settings(216), correctionalinstitutions (104), and schools (156,228).

Different types of p ractice settings h ave d iffer-ent imp lications for any econom ic ana lysis of thebenefits of hiring N Ps or PAs. For examp le, com-paring NPs w ith other nurses might be more ap-propriate than comparing NPs with physicians insuch settings as hom e health agencies, HMOs,schools, and businesses, where NPs m ight be em-ployed instead of, or in ad dition to, registered orlicensed nu rses. In these settings, the NPs—themore costly alternative—might be selected be-cause they could p rovide a w ider range of serv-ices. NPs employed in schools, for example, canserve as liaisons among the variou s health-careproviders serving schools; NPs can also providebackup support and in-house education to schoolnurses and provide educational services to teach-ers, parents, and stud ents (228).

Because of increases in the variety of settingsin which NPs w ork, their emp loyment rates might

reasonably be expected to be h igher than ever.But, prop ortionately fewer N Ps are working asnu rse practitioners in the 1980s than were doingso in the 1970s (237). The exten t to w hich th is de-crease reflects increased competition from the grow -ing supp ly of ph ysicians is unkn own .

PAs also work in a wide variety of settings andin every level of health care from p rimary to ter-tiary. Of all the Nation’s PAs, about one-thirdwork in office-based practices (about half of thesePAs work with p hysicians in solo p ractices); anotherone-third or so are based in h ospitals; and the re-maining one-third w ork in prep aid groups, pub-lic health departments, drug and alcohol rehabili-tation centers, industrial settings, nursing homes,prison s an d jails, and military facilities (45). Con-siderable change h as occurred in the p roportionof PAs employed in various settings. For exam-

ple, the proportion of PAs employed in h ospitalsgrew from abou t 10 per cent in 1974 to mor e than30 percent tod ay.

Increasing num bers of NPs, as well as PAs, arefinding work in hospitals. This development maynot be du e to the implementation of prospectivepayment for hospitals based on diagnosis-relatedgroups (DRGs) and, in fact, maybe occurring de-spite DRGs. Instead, the trend is probably relatedin part to the grow th in the sup ply of physicians.

As the number of physicians increases in cer-tain sp ecialties, e.g., surgery, residency positionsare being decreased to contain the numbers andPAs [are being] employed as ‘junior house staff’to supp lement patient care (262).

New emp loyment opportun ities for NPs and PAsmay also stem from the trend for hospitals toestablish community-based, ambulatory-care cen-ters in order to broad en their patient bases andto assure th emselves of solid sour ces of inpa tientreferrals. Hospital man agers recognize that th eirbest interests are served by providing these serv-ices as efficiently as p ossible an d, consequ ently,by employing N Ps and PAs.

Certified Nurse= Midwives’ Employment

According to the 1982 ACNM survey, 36 per-cent of the Nation’s CN Ms w orked in hospitals,20 percent w ere in private p ractice with on e or

more physicians, 14 percent were in private nurse-midwifery practice, and the remainder worked inpu blic-health agencies, prepaid grou ps, and othersettings (10). Nearly 35 percent of the respond -ents to this survey revealed that they were notworking as nurse-midwives, and about half of these said the reason was that “no nurse-midwif-ery positions are available in my comm un ity. ”

The data in table 2-3 indicate the changes thathave taken place in how CNMs are distributedamong the types of organizations in w hich theywork . In gen eral, the shift has been aw ay fromemp loyment in hospitals, pu blic health dep art-ments, and university health services and towardprivate practice (9,10). In contrast to NPs andPAs, proportionately fewer CNMs practice in hos-pitals now than did so in the 1970s: in 1984, only6.7 percent of the Nation’s hospitals had CNMs



49

on staff (171). More than 14 percent of the Na-tion’s CNMs w orked in p rivate nurse-midw iferypractice in 1982, compared with 2.4 percent in1976 to 1977 (9,10).

CNMs are find ing increased employment w here

they are not a dm inistratively responsible to phy-sicians. Administrative independ ence must not beconfused with clinical independence, becauseCNMs do not aspire to clinical independence.They highly value their professional interdepen -den ce and collaboration w ith p hysicians (13).

Although most NPs and PAs in p rimary careare supervised directly by physicians, only48 per-cent of the CNMs practicing in the United Stateswho responded to the 1982 ACNM survey indi-cated that their immediate supervisors were phy-sicians. All the responding CNMs, however, col-

laborated on clinical matters with physicians (10).The proportion varied considerably depending onthe type of practice. For example, about 9 of every

SUMMARYStudies show that NPs, PAs, and CNMs can

provide services that both substitute for and com-plement p hysicians’ services, depend ing on th eparticular service or type of practice. Moreover,hiring an NP, PA, or CNM increases a practice’s

total output and costs less than employing an ad-d itional ph ysician. Becau se training is less costlyfor these practitioners than for physicians, usingNPs, PAs, and CN Ms rather than physicians forcertain services would presumably be cost-effec-tive from a societal point of view, given that thequality of care is equivalent to that p rovided byphysicians for comparable services (see ch. 2). Al-though add itional cost savings might result fromgreater emp loyment of these providers, the evi-dence suggests that current employment levels andpractices more or less reflect existing market con-ditions.

The abilities and cost-effectiveness of NPs, PAs,and CNMs raise a question as to why their ranks

10 CNMs in private practice with physicians weresup ervised directly by p hysicians, whereas ap-proximately one-third of hospital-based CN Mswere u nd er the sup ervision of physicians. Almosthalf the CNMs in p rivate nurse-midwifery prac-tice were not administratively responsible to any-

one other than them selves, and an ad ditional 22percent reported to other nu rse-midw ives. In all,nearly 36 percent of the respondents noted thatthey were sup ervised d irectly by other CNMs (10).

The evidence suggests that CNMs–-especiallythose in p rivate nur se-midw ifery p ractice—tendto function organ izationally m ore indep enden tlyof physicians th an d o NPs or PA s. Because of thesixfold increase in the percentage of CNMs work-ing in private nurse-midwifery practices between1976-77 and 1982, the organizational independ -ence of CNMs has increased markedly. This trend

shows no signs of slowing down, although allobstetrics-related care may be decreased by theliability-insurance crisis.

have not grow n and diffused to a greater extent.Although the p rivate markets for N Ps, PAs, andCNMs as employees in physicians’ practices donot suggest a current shortage, the removal of paym ent barriers and limitations could greatly in-

crease the demand for these alternative practi-tioners. Unless the barriers are altered, the poten-tial savings from a greater use of NPs, PAs, andCNMs will probably remain unexploited.

Continuing research and an alysis is needed toascertain the cost savings that w ould result fromincreased emp loyment of NPs, PAs, and CNMs.Many p rodu ctivity stud ies have been conducted,but few attempts have been mad e to comp are howNPs, PAs, or CN Ms affect th e revenu es of indi-vidu al practices with h ow th ey affect the p rac-tices’ costs. Changing market circumstances cre-ate a need for both types of stud ies, but those thatcompare reven ues and costs are especially im-portant.



Chapter 5

Payment Issues



Chapter 5

Payment Issues

In their areas of expertise, nurse practitioners(NPs), physician a ssistants (PAs), and certified

nu rse-mid wives (CNMs) can p rovide safe carethat m eets generally recognized stand ards of qu al-ity, care that emph asizes personal and preventivedimensions often un deremp hasized by ph ysicians,and care that would otherw ise be unavailable ininner cities, remote areas, and certain settingswhere demand or ability to pay are insufficientto support physicians’ practices. NPs, PAs, andCNMs could also reduce costs in certain settings.

Nonetheless, professional attitudes and restric-tive statutes, regulations, and policies have hin-dered the ability of NPs, PAs, and CN Ms to ob-tain employment in some settings and to practiceat levels commensurate with their training (see boxl-A). One major constraint is that many third-

party payers, including many Federal programs,do not cover (aut horize paym ent for) services pro-vided by NPs, PAs, and CNMs in certain settings,if t he services are typically an d characteristically

provided by physicians nor do they pay themdirectly for such services (see app. B). Althoughmost third-party payers usually do not look be-yond a physician’s claim for payment as to whetherthe ph ysician or NP, PA, or CNM h ave provideda particular service, uncertainties about coverageare partly responsible for some physicians’ reluc-tance to hire NPs, PAs, or CNMs. Lack of directpaym ent limits the independ ent practice of NPsand CNMs. Third-party payers have been moregenerous in covering and directly pa ying for theservices of CNMs th an N Ps. Althou gh PAs, aswell as NPs and CNMs, have actively sought cov-erage for their services, they d iffer from N Ps andCNMs in not w anting direct payment.

Observers have suggested m odifying the cur-rent rules for payment of such services by requir-ing coverage for N P, PA, and CN M services andby paying NPs and CNMs directly and not throu ghthe emp loying physician. Requiring coverage wou ldbe both an independent modification and a pre-liminary step toward direct payment. A thirdmodification —establishing a payment level—could

apply even if payment were indirect, i.e., to theN Ps’, PAs’, or CN Ms’ employer. ] These m odifi-

cations w ould have several imp lications for em-ployment and the scope of practice of these prac-titioners2 and for the costs borne by third pa rties,patients, and society.

Some Federal health pr ograms and private in-surers provide coverage and direct payment forthe services of N Ps, PAs, and CN Ms in some set-tings (see app. B). For purposes of analysis, thiscase study assumes that coverage and direct pay-ment for such services would be offered by al l theprograms and insurers and that any new Federallegislation w ould not override State laws or reg-ulations governing the licensing and practice of NPs, PAs, and CNMs.

The effect of the modifications would vary, de-pend ing on the setting in w hich the p rovider prac-ticed and on the method of payment. Becausethese two factors are interdepend ent—in that p ay-ment m ethod is u sually typical of a type of prac-tice setting—they are considered together.

The effect of these m odifications also dep end son the health-care environment, wh ich is chang-ing. The sup ply of physicians an d the organiza-tion and finan cing of health care are chan ging inw ays that are likely to bring about a more com-petitive m arket for health-care services. 3 Thesetrend s have imp lications for the futu re of NPs,

] During the publication of this case study, the Omnibus Recon-ciliation Act of 1986 (Public Law 99-509) was enacted. The act mod-ifies Medicare and authorizes p ayment for (covers) services of phy-sician assistants working u nder th e supervision of physicians inhospitals, skilled nursing facilities, intermediate-care facilities, andas an assistant at surgery. The payment is indirect and at levels lowerthan physicians would receive for providing comparable services.

2Many other factors affect the employment and practice patternsof NPs, PAs, and CNMs. Several issues, especially malpractice in-surance, ar e critical, but a discussion of them w ould be beyond thescope of this case stud y.

‘The fact that the U.S. population is aging and consequently need-ing more health-care services would also affect the employment of NPs and PAs and, to the extent that they provide gynecological serv-ices, CNMs. The aging of the population has been discussed in de-tail in a num ber of previous OTA reports, notably in Technologyand Aging in America (245).

53



54

PAs, and CNMs, regardless of w hether paym ent ing health-care environment, however, would cer-for their services changes. Modifying payment for tainly affect their employment an d use and mightthe services of NPs, PAs, and CNMs in a chang- alter the costs of health care.

EFFECTS OF MODIFYING PAYMENT FOR SERVICES OFNURSE PRACTITIONERS, PHYSICIAN ASSISTANTS, ANDCERTIFIED NURSE-MIDWIVES

Modifying the m ethod of paym ent could be ex-pected to h ave varying effects on th e emp loymentand scope of p ractice of NPs, PAs, and CN Ms,depending on whether they were in independentpractices or worked in physicians’ practices, healthmaintenance organizations, hospitals, nu rsinghomes, or other settings. Modifying the m ethodof paym ent m ight also affect costs.

Effects on Independent Practices ofNurse Practitioners andCertified Nurse-Midwives

Mandated coverage and direct payment to NPsand CNMs for pr oviding services typically andcharacteristically performed by physicians woulddramatically increase NPs’ and CNMs’ ability toestablish fee-for-service practices that were ad-ministratively independ ent from physicians. In-deed, direct payment w ould be the most advan-tageous p ayment method for NPs or CNMs inindependent practices. As autonomous providers,NPs and CNMs could provid e the full range of services for which they were trained and licensed.

Such p ractices would beadministratively inde-pend ent but according to current mod es of prac-tice, they would not be clinically independentfrom physicians when NPs and CNMs w ere per-forming d elegated med ical tasks. ’ The nur singprofession has agreed to clinical collaboration. Forexample, a joint statement of “practice relation-ships” calls for obstetrician/ gynecologists andCNMs to adhere to clinical-practice arrangementsthat include the participation and involvement of

obstetrician/ gynecologists with CNMs as m utu -ally agreed on in written m edical guid elines orprotocols. CNMs in administratively independ-ent pr actice believe that they are ad hering to the

4NPs and CF/Nls may legally be c1 in ical 1 y independent from physicians when performin g nursin g tasks.

joint statement, because it permits interdependentpractice without calling for physicians to be pres-ent whenever CNMs are caring for patients(13).In add ition, the American College of Nurse Mid -wives requires that CN Ms agree to w ork in clini-cal collaboration with physicians in order to ob-tain certification.

In addition to professional restraints, State lawsand regulations that limit NPs’ and CNMs’ scopeof practice and specify requirements for supervi-sion by p hysicians serve as a formal control onclinical independ ence. NPs and CNMs in ind e-pen den t p ractice are also accoun table for theirmod e of practice by the malpr actice insu rancethey carry.

Although a few NPs have attempted to estab-lish administratively independent practices, mostNPs in such practices provide traditional nursingcare rather than primary medical care(138), Amongthe barriers NPs face in undertaking independentpractices are the necessity of making substantialfinan cial investments and th e lack of coverage anddirect reimbursement for their services. The Amer-ican Nurses Association (ANA) believes thatman y N Ps w ould establish such p ractices if cov-erage and d irect paym ent were m ore widely avail-able(256).

CNMs are highly interested in administrativelyindependent practice. Indeed, the proportion of CNMs in pr ivate midw ifery p ractices increasedfrom 2.4 percent in 1976 to 1977, to 14 percentin 1982 (9,10). During that period, the num berof third-party payers that provided coverage and

direct payment for CNMs’ services increased. If additional third-party payers were to cover andpay for these services, more CNMs probably wou ldbe interested in ind epend ent pr actices

‘Problems with obtaining malpractice insurance coverageand highmalpractice premium costs are significant limitations on independ-ent practice by CNMs.



55

How coverage and d irect payment for NPs’services wou ld affect the establishment of admin is-tratively indep end ent fee-for-service practices byNPs partly depends on the extent to which NPsseek and obtain d irect paym ent. The imp etus fordirect third-party paym ent of nurses, an ANA pri-ority since 1948, increased for organized nursingwith t he establishmen t of NPs as health practi-tioners (22). Indeed, the ANA has been activelyinvolved in seeking an d sometimes obtaining suchpaym ent at the State and national levels(23,232).

Little information is available as to how manypracticing NPs receive direct payment. A 1983surv ey of NPs, cond ucted 4 years after the p as-sage of a Maryland law providing direct third-party payment for services not directly supervisedby p hysicians, foun d t hat fewer than 1 percentwere paid directly (99). In1986, however, 7 years

after the passage of similar legislation in Oregon,a survey of N Ps in that State found that25 per-cent were receiving direct third-party payment;42 percent had been issued p rovider numbers; and38 percent were signing the claims forms for theservices they provid ed(102). The researcher whoconducted both su rveys suggests that the disparatefindings might reflect the fact that more time hadelapsed between the passage of the legislation andthe survey in Oregon than had elapsed in Mary-land (101).

The establishment of independent fee-for-serv-

ice practices by NPs and CNMs could affect thecosts of third -party p ayers. If the total volumeof services by all providers did not increase, set-ting payment levels for services provided by NPsand CNMs lower than levels for comparable serv-ices provided by physicians might decrease thecosts of third -party p ayers. Of course, the size of any savings to third-party payers w ould dep endon the size of the gap between paym ent levels forph ysicians and paym ent levels for NPs and CNMs.Paying NPs and CNMs 10 percent less than p hy-sicians are paid wou ld have a m inimal effect onthird-party costs in the imm ediate future, in p artbecause the nu mber of NPs and CNMs is so mu chsmaller than the number of physicians. Savingsto third-party payers would also depend on theextent to w hich p atients chose to pa tronize NPsand CNMs in independent practices.

Patients’ costs migh t be lower if the NPs an dCNMs charged their patients lower fees than p hy-sicians charged for comparable services. For mostpr imary care services, e.g., office visits, savingsto most p atients w ould be small, because fees forsuch services are not high and third-par ty pay-ments cover a large part of them. Savings formaternity care could be appreciable however, be-cause charges and patient liability for such serv-ices are high. Coverage and direct p ayment w ouldallow p atients to choose NPs and CNMs as p ro-viders without being penalized financially by lack of reimbursement.

Any savings to third parties and p atients mightbe decreased or negated by duplicative visits. Pa-tients w ho sought care from NPs or CN Ms in in-dependent practices might also see physicians forthe sam e or related care, on their own initiative

or on referral by N Ps or CN Ms. Seeing both phy-sicians and nonp hysicians could r esult in du pli-cation of examination and laboratory p rocedu res.

Although NPs and CNMs in independent prac-tices could lower societal costs for health care, theextent of the sav ings is d ifficult to estima te. So-cietal costs would reflect, among other things, anydecreases in program costs and beneficiary costsand any savings resulting from N Ps’ and CNMs’care that redu ced the need for care in the future.For example, althou gh CN Ms might n ot find itfeasible to charge patients lower fees than physi-cians charge (because CNMs spend so mu ch moretime with patients than physicians spend), CNMsmight lower societal costs by decreasing the needfor expensive neonatal intensive care for infantsof women whose socioeconomic status puts themand their infants at high r isk (193).

Scant evidence is available as to how much NPsin indep endent practices charge their pa tients. Inan exploratory phase of a survey of MarylandNPs, Griffith (99) found that the median feescharged by NPs in independent practice were lowerthan the m edian fees charged by ph ysicians formost services. However, 59 percent of NPs’ feeswere the same as physicians’ fees for all types of visits (99). Charging lower fees than physicianscharge for similar services appears to be the normfor N Ps in man y types of settings other than in-dependen t p ractice. Brooks (36) reported that the



56

fees charg ed by N Ps in rural satellite settings arelower than those charged by a sample of ruralphysicians. Several national studies of NPs inorgan ized settings confirm th is finding (256). Pa -tients were generally charged less for visits to Ore-gon NPs who received direct payment either in

independent practices or in physicians’ fee-for-service practices than for visits to salaried NPs(102). The d ifference between the charges for shortinitial visits and brief followup visits was statis-tically significant. Furthermore, charges for visitsto NPs w ere lower than for visits to physiciansin both Oregon and Maryland. The difference be-tween charges for N Ps and those for p hysicianswas greater in Oregon than in Maryland, perhapsbecause th e prop ortion of NPs receiving d irectpayment was greater in Oregon than in Maryland(102).

Whether N Ps w ould increase their fees if theyw ere in indep enden t practice and received directpaym ent is unclear, although som e evidence in-dicates that other groups that provide servicestypically provided by physicians hav e gradu allyincreased th eir fees to the level of physicians’ feesafter receiving direct payment. The American Psy-chiatric Association (APA) has reported twostudies that found this phenomenon to be true of psychologists and clinical social workers (256).

Some private insurers report that their totalcosts from CNMs for m aternity care are lower

than those from physicians. Of course, physicians’care includes care for complex cases that requiremore resources than norm al maternity care. How-ever, Mutu al of Omaha h as noted that CN Msprovide a “valuable service at a reduction in costsfrom that charged by med ical doctors or osteo-paths, ” and the Blue Cross and Blue Shield Asso-ciation found that CN Ms w ere less costly thanphysicians in normal m aternity care(256), Indeed,based on th e current status of direct payment forservices, insurers of CNMs appear to be less resis-tant to coverage and direct payment than do in-surers of NPs (see table B-l). Insurers, such as

Mutu al of Omaha a nd Blue Cross, perceive thatNPs w ould p rovide services in ad dition to thosenormally provided by a ph ysician, whereas CNMsprov ide services that su bstitute for physicians’services(256).

Charges for CNM services in independent prac-tice appear to vary by region—in some areas theirfees are lower than those of physicians, and inother areas they are about the sam e (79). CNMscharge slightly less than obstetricians for normalmaternity care (98) wh en services are provided

in independent birthing centers (103,149). The to-tal costs of maternity care by CNMs may also beless than tota l costs for care by p hysicians for sim-ilar cases, not necessarily because CNMs havelower fees, but because the care they pr ovide isusually technologically less complex than physi-cian care (98,201).

Costs to patients, third-party p ayers, and so-ciety w ould a lso be influenced by changes in thevolume of services provided as a resu lt of cover-age and direct reimbursement for new providers.Historically, insurance companies have contended

that covering and directly paying additional pro-vider groups in fee-for-service settings increasesthe volume of services provided by the new p ro-viders, the physicians, or both and, consequently,increases costs for third-party payers, benefici-aries, and society. The eviden ce to prove or re-fute this argum ent is equivocal (246). The recentemphasis that pu blic and p rivate third-party payershave placed on m onitoring the volum e of health-care services may help to control potential in-creases in volume.

Direct evidence is una vailable as to how cov-erage and d irect paym ent wou ld affect the volumeof services provided by N Ps and CNMs. Indirectinformation, which consists only of anecdotalreports of private insurers’ experiences with othergroups, is conflicting. Mutual of Omaha and otherinsurers report that chiropractors increased theirprovision of services to consumers after being au-thorized for direct reimbursement bu t that p sychi-atric social w orkers d id n ot increase theirs (256).

Whether coverage and direct paym ent for serv-ices by NPs and CNMs would increase the pro-vision of services by physicians is unclear. Phy-sicians might change their behavior in responseto competitive providers. If NPs and CNMs chargedtheir patients lower fees, some physicians mightdecrease their fees in order to compete but, tomaintain their incomes, might increase the nu m-ber of services they provided to their patients (in-



57

du cing d emand for services). Although researchon physicians’ influence on the volume of serv-ices has been cond ucted for man y years, none of the studies positively proves the magnitude oreven the existence of induced demand for serv-ices (246). In the past, however, physicians in the

United States and Canad a have maintained theirincome level even with substantial increases in thesupply of physicians (28).

Effects on Physicians’ Practices

In the 1970s, a major reason cited by p hysiciansas a disincentive to employing NPs, PAs, andCNMs was that Federal payment policies did notauthorize payment for services provided by NPs,PAs, and CNMs (138). Whether m and ating cov-erage for such services wou ld increase incentivesfor physicians in fee-for-service practices to em-

ploy these practitioners and delegate more serv-ices to them dep ends on several factors, includ -ing phy sicians’ billing pra ctices and the p aym entlevels for NPs’, PAs’, and CNM s’ services. Thehigher the payment level, the greater the mone-tary incentive a ph ysician wou ld have to emp loyan NP, PA, or CNM, but simultaneously the cost-saving potential to the third-party payer woulddecline.

Providing coverage and paym ent for the serv-ices of NPs, PAs, and CN Ms (at any level) w ouldincrease practice incomes for physicians who have

emp loyed these p ractitioners without billing fortheir services. Such physicians might increase therange of services they delegate to NPs, PAs, andCNMs. Third-party payers’ costs would probablyincrease, regardless of whether the practices’ vol-umes of services increased. Whether increases inpractice income would be passed on to patientsin the form of lower fees is un clear.

If services by NPs, PAs, and CNMs w ere au-thorized for payment, physicians’ practices thatcurrently do not employ such practitioners mightbe more inclined to employ them rather than hireadd itional p rimary-care ph ysicians. If the pay-ment level was 100 percent of what a physicianwou ld receive for providing a comp arable serv-ice, third-party payers probably would incur highercosts for such p ractices regard less of w hether th enew employees were NPs, PAs, CNMs, or phy-

sicians. If the pa ymen t levels set for N Ps’, PAs’,or CNMs’ services were lower than those set forph ysicians’ services, the costs to third-pa rty p ayerswould be lower if NPs, PAs, or CNMs, ratherthan p hysicians, were em ployed. ’

However, authorizing payment for NPs’, PAs’,and CNMs’ services wou ld not necessarily increasethe opportunities for these providers to becomesalaried em ployees in p hysicians’ pr actices. Alle-gations have been m ade that many physicians’practices, knowingly or unknowingly, submit billsunder the physicians’ provider numbers for un-covered NPs’, PAs’, and CNMs’ services. The billsare seldom challenged by th ird-party p ayers. If the p aymen t levels were the same for the serv-ices of NPs, PAs, and CNMs as for th e emp loy-ing p hysicians, coverage of NPs’, PAs’, and CNMs’services would not affect the revenues of physi-

cians’ practices that w ere alread y billing for suchservices. In these practices, coverage probablywou ld affect neither the employment opp ortuni-ties for NPs, PAs, and CNMs nor the servicesphysicians delegated to such p ractitioners.

The revenues of these practices would decrease,however, if the payment levels were significantlylower for NPs’, PAs’, and CNMs’ services thanfor ph ysicians’ services, if the v olum es of serv-ices remained the same for th e practices, and if the physicians billed for the services of NPs, PAs,or CNM s un der the N Ps’, PAs’, or CNMs’ pro-vider numbers. How physicians would respondto decreases in th eir practices’ revenu es is unclear,but em ployment op portun ities for N Ps, PAs, andCNMs might be jeopardized. The physiciansmight increase the volum es of services providedby t heir p ractices.

Coverage of NPs’, PAs’, and CNM s’ serviceswou ld n ot affect third-party costs if the num berof services prov ided by p ractices remained sta-ble; i.e., if the pr actices had billed for services un -der the physicians’ provider numbers before cov-erage was expan ded , and if the paym ent levelswere th e same for NPs, PAs, and CNMs as forthe employing physicians. If the payment levelswere lower for NPs, PAs, and CNMs than for

‘It is not clear whether or not NPs would accept payment levelslower than those of physicians. As noted earlier, PAs are willingto accept levels of compensation lower than those of physicians.



58

physicians, third-party payers’ costs for such prac-tices might decrease. For physicians’ practices, asfor NPs’ and CN Ms’ independ ent p ractices, thesize of the difference between the payment levelsfor services provided by N Ps, PAs, and CN Msand for compara ble services provided by ph ysi-

cians would partly determine how lowering thepayment level would affect the costs of third-partypayers.

Because data d o not exist as to h ow physiciansbill for the services of NPs, PAs, and CN Ms, theoverall effect that required coverage w ould h aveon NPs’, PAs’, and CNMs’ employment oppor-tunities in physicians’ fee-for-service practices isuncertain. Coverage might influence employmentindirectly. NPs h ave argu ed th at coverage estab-lishes a collegial professional relationship. Further-more, they claim that coverage can cause physi-cians to see tha t N Ps’, PAs’, and CN Ms’ servicesgenerate revenue as w ell as costs (98). This per-spective m ight increase the employment potentialof these p ractitioners (98).

Direct payment would only indirectly affect theemployment of NPs and CNMs as salaried em-ployees of physicians. Direct paym ent w ould al-low NPs an d CNMs to choose to work as salariedemployees, to undertake independent practices,or to enter into joint practices with physicians(i.e., partnership arrangemen ts by N Ps or CN Mswith physicians). Paying NPs in physicians’ prac-tices directly, rather th an ind irectly, could be ex-pected to decrease theNPs (102).

Effects on HealthOrganizations

fees for patients’ visits to

Maintenance

Because most third-party p ayers in the pu blicand private sectors currently provide coverage forthe services of these pr actitioners in health m ain-tenan ce organizations (HMO s) (see table l-l), ex-tending coverage is largely irrelevant to their em-ploymen t in this setting. Also, most HMOs p ayNPs, PAs, and CNMs a direct salary, which makesthe issue of direct paym ent of little import ancein the HMO setting.

The data suggest that NPs, PAs, and CNMssave costs for H MOs:

It is to their [HMOs] financial advantage toproduce services with the most efficient combi-nation of inputs, substituting lower priced phy-sician extenders for higher priced physicians when-ever possible (138).

Furthermore, past experience with HMOs has shown

that:. . . capitation7 plans d o care for [non-Medicare]enrollees at lower costs while maintaining qual-ity at levels equal to or better than comparisonpractices (246).

Effects on HospitalsPayment for services delivered in inpatient hos-

pital settings by N Ps, PAs, and CNM s wh o arehospital employees is most commonly made ei-ther retrosp ectively on th e basis of cost or p ro-spectively on the basis of diagnosis-related groups

(DRGs). There is no statu tory p erm ission or lack of permission und er Medicare or Medicaid forpayment of NPs’, PAs’, and CNMs’ services asinpatient hospital services when the p roviders areemployed by the hospitals. Most other third-partypayers are also silent on this issue. Moreover, hos-pitals usually pay a salary to NPs, PAs, andCNMs that they emp loy.

Medicare, Medicaid, and most other third-partypayers pay hospitals for total operating costs, andmost hospitals’ accounting systems simply lumpthe costs of N Ps’, PAs’, and CNM s’ services to-gether with oth er types of operating costs. Nursescontend that coverage and d irect paym ent as wellas the id entification of the services that covera geand direct payment would require, would influ-ence hospitals interest in them as em ployees. De-lineating the costs of these services might facili-tate internal management decisions. Nurses haveadvocated the identification of the costs of nurs-ing services in institutional settings, believing thatidentification w ould increase nu rses’ autonom y,encourage economic decisionmaking, enhancenu rsing efficiency, and spur hospital adm inistra-tors to recognize that nu rses generate revenue as

‘Cavitation is a method of paying for medical care,in which aper capita amount is paid prospectively for all services received byan enrollee or beneficiary during a given period of time. The pay-ment is not related to the quantity of service provided. Cavitationpayment provides financial incentives to use resources more effi-ciently and even to underuse services.



59

well as costs (22,98,162). Nurses believe that rec-ognition of their revenue-producing abilities couldincrease their emp loyment opp ortunities in hos-pitals (161).

Extending coverage and direct payment for theservices of NPs, PAs, and CNM s as hospital em-ployees in the inpatient hosp ital setting most likelywou ld requ ire that the costs of the services be paidfor as pr ofessional services, the category un derwhich Medicare and other third-party payers cur-rently pay for physicians’ services. Such a movewould run counter to most current thinking, es-poused in both the public and private sectors,which is focused on containing costs by aggregat-ing services. For example, some observers haveexpressed interest in aggregating physician serv-ices by adap ting the DRG approach,8 particularlyfor hospital-based physicians (63,165). The Om-nibus Reconciliation Act of 1986 (Public Law 99-509), how ever, has extended direct paym ent foranesthetic services rend ered by certified registerednu rse anesthetists in hosp itals. These services wereoriginally to be paid for under Medicare as a com-ponent of a DRG but w ere passed through as ahospital cost.

Coverage of their services would affect the em-ployment of PAs wh o are emp loyees of physiciansor physicians’ practices but who work as surgi-cal assistants in h ospitals.9 PAs assist in perform-

ing surgical procedu res and also provide p reoper-ative and postoperative care (7). Medicare doesnot cover PAs’ provision of such procedur es andcare, although Medicare currently covers andpays at amou nts equivalent to 20 percent of thesurg eons’ fees for the serv ices of physicians wh oact as assistants at surgery. Some observers have

8Under the DRG approach, Medicare pays a fixed amount for theoperating costs associated with treating patients in each diagnosticcategory. In applying the DRG app roach to physicians, the pay-ment unit would be a bundle of services rather than an individualservice. This approach could control both costs and utilization byreducing the number of service units billed and encouraging the ju-dicious use of services within packages.

9During the publication of this case study, the Omnibus Recon-ciliation Act (Public Law 99-509) was enacted. The act modifiesMedicare and authorizes coverage of a physician assistant servicesfurnished under the supervision of a physician as an assistant at sur-gery. The paym ent to the em ployer will be 65 percent of the rea-sonable charge for a physician when acting as an assistant at sur-gery and will be effective after Jan. 1, 1987.

Photo credit: Geisinger Medical Center and the American Academy of Physician Assistants

PAs provide post-operative care as well as pre-operativecare and assisting in performing surgical procedures.

expressed concern that the lack of coverage hasrestricted PAs’ employment and the d elegation of appropriate services to PAs at surgery. Using PAsrather th an p hysicians as su rgical assistants re-duces practices’ costs, but whether the savings arepassed on to patients is unclear.

Effects on Nursing HomesBecause virtually all NPs an d PAs w orking in

nursing hom es are salaried em ployees, their em-ploymen t w ould not be necessarily affected bycoverage of their provision of services typicallyprov ided by ph ysicians .’” With coverage, NPs andPAs could sup ply primar y-care services in nur s-ing homes as employees of physicians’ practicesor as team members in group practices provid-

— . ———

IOSevera] other Medicare and Medicaid regulationsspecific to nurs-ing homes limit the role of NPs and PAs and specify services thatmust be performed by physicians in order for the nursing homes’services to be covered (see app. B). Many States have passed lawsto “permit the delegation of these services by a physician to a phy-sician assistant or nurse practitioner” (116). However, strict inter-pretation of these and similar rules prohibits the appropriate useof NPs and PAs in nursing homes. In addition to permitting cover-age under Medicare and Medicaid, amendments to these regulationswould be required in order for NPs and PAs to be used appropriately.



60

ing visits to nursing homes. 11 If NPs w ere paiddirectly, they could supply primary-care servicesto nursing homes as independent practitioners,similar to physical therapists.

Many nursing homes have difficulty supplyingprimary-care services because few physicians areinterested in visiting p atients in n ursing hom es toprovid e services (166). Furthermore, most p hy-sicians are poorly prepared to care for seriouslyill elderly patients. The growing nu mber of elderlypeople in our society, particularly those over 85who most frequently need nur sing-home care, hasincreased concerns about the qu ality and costs of such care. Many residents are medically stable butfunctionally impaired by chronic physical or men-tal conditions. Other residents are admitted fromhospitals for recuperation and rehabilitation fol-lowing surgery, or are terminally ill and do n ot

require hospital care (245). NPs and PAs areuniquely suited to provide the types of care neededby nu rsing home residents w ith chronic conditionsand their associated disabilities (see chs. 2 and 3).

1 IDU~i~~ th ePublication of this case study, the MedicareIafi wa schanged as a result of the enactment of the Om nibus Reconcilia-tion Act of 1986 (Public Law 99-509) during October 1986. The actauthorizes the coverage of the services of PAs furnished under thesupervision of a physician in skilled nursing facilities and interme-diate-care facilities in States where the physician assistant is legallyauthorized to perform the services. The payment to the employeris to be at 85 percent of the prevailing charge of physician servicesfor comparable services provided by a nonspecialist physician.

Except w hen m ore intensive care can be sub-stantiated, the nu mber of ph ysician visits to nu rs-ing homes is limited u nd er the Medicare program.Extending coverage, therefore, might not increasethe costs attributable to nursing-home visits forthird-party payers, assuming paym ent levels were

the same, or lower, for the N Ps and PAs as forthe physicians. When physician-NP teams, ratherthan physicians alone, visited nursing homes,how ever, total costs to third-party p ayers wereshown to decrease, mainly because of lower ratesof hospitalization and fewer visits to physiciansor clinics (128). A 1980 and 1982 study found that,as compared with p hysicians alone, a group prac-tice of salaried physicians, NPs, and PAs show edsubstantially lower overall medical costs for nurs-ing home residents even though the num ber of visits to the homes were not limited. Savings wererealized from d ecreases in expensive hosp ital-based emergency and outpatient services and inthe numbers of hospital days used (155,257). Fur-thermore, the qu ality of care increased, and th eNPs acted as pat ients’ adv ocates.

Although payment changes are a necessarystep, innovative app roaches to improving the careand redu cing the costs associated with nu rsinghomes need to include modifications of regula-tions concerning visit limitations and changes inother Medicare and Medicaid regulations thatlimit the role of NPs an d PAs in n ursing hom es.

THE CHANGING CONTEXT OF HEALTH CAREFinancing

A growing trend is to set payment rates forhealth services before, rather than after, they aredelivered. Prospective payment has been ad optedin response to rapidly rising health-care costs andthe recognition that cost increases have been partlycaused by retrospective reimbursement. One of the most innovative approaches is Medicare’s

method of paying for beneficiaries’ inpatient careon the basis of DRGs.

riod. The health-care organization receives itspaym ent, the amou nt of which is not related tothe quan tity of services provided, and mu st thenpay p hysicians and other prov iders. Cavitationpayment provides financial incentives to preventhigh-cost problems and to deliver services at lowcost. Acceptable stand ard s of care, or at least pa -tient satisfaction, are essential if capitated plansare to m aintain enrollment at su fficiently highlevels to m aintain financial viability (246).

The other major trend is increased interest in Supply of Physiciansthe use of cavitation, in w hich a per capita amou ntis set prospectively for all medical services received In the m id-1960s, pu blic po licy in th e Unitedby an enrollee or beneficiary d uring a given pe- States began to focus on coun teracting the short-



age and mald istribution of p hysicians. As a re-sult, the number of medical schools increasedfrom 89 in1965 to 127 in 1984 (255), and the num-ber of first-year m edical stud ents nearly d oubled(240,255). Expected increases in the numbers of graduates from U.S. medical schools, combinedwith graduates of foreign medical schools, are re-sulting in p hysician surp luses, wh ich the Gradu -ate Medical Edu cation N ational Advisory Com-mittee pr edicts w ill be significant by 1990. Since1982, enrollment in medical schools has declinedslightly, as the Federal Governm ent has redu cedboth its fun ding of subsidized loans for med icalstudents and its support of medical schools (58).The growth rate in the supp ly of foreign med icalgraduates also is expected to decrease(255), bu tthe effect of past efforts to increase the sup ply of ph ysicians w ill be felt w ell into the next centu ry.

Observers expect increases in the nu mber of physicians to significantly outpace populationgrow th. For every 100,000 peop le in the UnitedStates, there were 148 physicians in 1970 and 218in 1983 (255). Estimates for 1990 range from 215(240) to 224.4 (255) per 100,000. Estimates for th eyear 2000 rang e from 240 (240) to 245.2 (255) per100,000. ’2 From 1981 levels, the numbers of phy-sicians in primary-care specialties, including ob-stetrics and gynecology, are expected to have in-creased 28 percent by 1990 and 53 percent by2000, outpacing the gr ow th in the total sup ply of physicians (255). Although the need for physicians

is expected to increase, the supply of physiciansis expected to exceed the need by 1990, accord-ing to all estimates (94,240,251,255).

Delivery Sites and Organizations

In 1983, for the first time, the ma in practice ar-rangement of less than h alf (48.9 per cent) of allphysicians in the United States was solo practice.Only 8 years previously, more th an 54 percentof the Nation’s physicians practiced individually.In 1984, the number of group practices (three ormore physicians) was over 15,000—up 44 percentsince 1980 (16). The num ber of physicians in grouppractices du ring the same period increased from

“The total number of physicians in 1970 was 334,028 and in 1983was 519,546 (255 ). Estimates for 1990 range from 537,750 (240) to555,300 physicians (255). Estimates for 2000 range from 642,950 (240)to b55, Q20 physicians (255),

88,290 in 1980 to 140,213 in 1984 (4). Some phy-sicians join grou p p ractices becau se the p racticesare established, they entail less financial risk thansolo practices, and they provide access to the cap-ital required for purchasing and using sophisti-cated medical technology (16). Group practicesmay be even m ore attractive to ph ysicians in thefuture for a number of reasons including the cap-ital required to purchase expensive technology andincreased competition.

The types of organizations in which physicianspractice—with or w ithout other h ealth-care p ro-viders—have also increased. HM Os have beengrowing rapid ly in recent years. Enrollment inHMOs grew by 25.7 percent in 1985 to a total en-rollment of 21 million (123). Although Individ-ual Practice Association (IPA) models outnumberedall other kinds of HMOs combined, group-mod el

plans retained the lead in enrollment(123). Thatenrollment is expected to increase rapidly in th enext 5 years. Estimates of total enrollment inHMOs range between 25 and 50 million for 1990(241). Part of the grow th in HMO s has been at-tributed to the increased willingness of physiciansto be employed in them(240). Recent changes thatmight affect the employment an d use of NPs, PAs,and CNM s in HMO s are the increasing involve-ment of for-profit corporations in HMOs, and the joint pu rchasing a nd other cost-saving venturesund ertaken by group s of HMOs (246).

Preferred-provid er organ izations (PPOs) in-clude several types of arrangements between third-party payers and health-care providers, includ-ing physicians, hospitals, or both. In these ar-rangements, providers contract with insurers oremp loyers to d eliver care at red uced p rices. Thefirst PPO was organized in 1978; by June 1985,334 had been organized and 229 were operating(118). Although PPOs were designed to redu ceexpenditures, no evidence currently exists that thecare they d eliver costs less than th at d elivered byother types of organizations.

The d elivery of health ser vices is also affectedby the grow th of the mu ltihospital system—twoor mor e hospitals own ed, leased, controlled, orman aged by a single for-profit or not-for-profitcorporation. Indeed, the mu ltihospital system hasbecome an imp ortant comp onent in the chang-ing health-care-delivery system. Some 35 percent



62

of the Nation ’s hosp itals and 38 percent of all com-mu nity hospital beds are now in mu ltihospital sys-tems (14). Since 1976, the number of multihospi-tal systems has increased by m ore than 60 percent(2). A few observers believe that th e grow th of the for-profit component will eventually result inmost services being p rovided by a few nationwidesuppliers that might appropriately be labeled“megacorporate health care delivery systems”(85).

Another trend is toward increasingly diversesites for provid ing care (see table 5-1) . 13 For ex-amp le, the first free-standing center w as estab-lished in Delaware in 1973. By July 1984, therewere an estimated 1,800 such centers in the UnitedStates and the total is projected to grow to ap-proximately 4,500 by 1990 (152). In late 1983,about 9 percent of the Nation’s physicians worked

an average of about 13 hours p er week in free-standing centers providing primary or emergencycare. Some of these centers were operated by hos-pitals or chains and others operated independ ently(16).

1315ee M e d j c a ] Technology an d Costs of the Medicare program(244) for a more detailed d escription of alternative sites of care.

Table 5-1 .—Selected Alternatives to TraditionalHealth-Care Delivery

1. Alternative sites:

11.

Alcohol and drug abuse centersAmbulatory care centersAmbulatory surgical centersBirthing centersDiagnostic imaging centersFreestanding emergency centersHospicesMammography centersNurse-managed centersNutritional dietary centersOncology centersPain management centersPsychiatric centersRehabilitation centersSports rehabilitation centersStudent health centersWellness programsAl te rna t ive o rgan iza t i ons : Competitive medical plansExtensive provider organizationsHealth maintenance organizationsIndependent practice associationsPreferred provider organizationsSocial health maintenance organizations

SOURCE Office of Technology Assessment, 1986

Effects of Changes in the Health-CareEnvironment on Nurse Practitioners,Physician Assistants, andCertified Nurse= Midwives

How changes in the health-care environmentwill affect the integration of NPs, PAs, and CNMsin the health-care system is unclear. The changes,which generally reflect trends toward cost-con-tainment and increased competition, are inter-dependent. For example, the increasing supply of physicians has heightened competition amongmedical-care p roviders(19,176,205,206), leadingmany young physicians to accept salaried posi-tions and to enter into contractual arrangementswith third-party payers (19,240). The number of physicians in salaried positions is twice as greatfor those in practice 5 years or less as for those

in pr actice 6 years or more (18). In effect, the in-creasing supply of physicians is an important fac-tor in changing m edical practice arrangements inthe United States and in fostering a w illingnessto practice in fee-for-service groups and in capi-tated and institutional settings, which many phy-sicians avoided only a few years ago.

Competition in the health-care system could ei-ther limit or expand employment opportunitiesfor NPs, PAs, and CNMs. Comp etition resultingfrom the growing supply of medical-care providersmight reduce such opportunities, especially inphysicians’ office-based, fee-for-service practices.Physicians with declining patient bases might nothave enou gh p atients to justify emp loying ad di-tional providers (97). However, the AmericanMedical Association (15) notes that, faced withincreasing comp etition, rising p ractice costs, andcost-conscious patients, physicians are concernedabou t the cost-effectiveness of their pr actices an dmight attemp t to impr ove the pr actices’ prod uc-tivity and increase the practices’ income by em-ploying NPs, PAs, and CNMs. Compared withpractices that do not emp loy NPs and PAs, phy-sicians’ practices that d o emp loy NPs and PAshave higher nu mbers of patient visits per hou r andper w eek and h igher incomes for the emp loyingphysicians (17). Because such practices chargelower fees p er office visit (17), they might be morecompetitive with other practices. Physicians mightalso attemp t to attract more p atients by expand -ing the ran ge of the services provid ed by t heir



63

offices, which could ena ble NPs and PAs to pra c-tice the full range of services for which they weretrained.

Some physicians, however, might find it eco-nomically more advantageous to hire new phy-

sicians rather than NPs, PAs, or CNMs. The rateof growth in physicians’ incomes has started todecline, a trend that is expected to continue(20).If new physicians’ incomes decline sufficiently,and if their interest in salaried positions continueto increase, they might be m ore attractive thanNPs, PAs, or CNMs to established physicianswh o wan t to expand their practices.

Comp etition among different types of health-care organizations m ight increase the employmentand resp onsibilities of N Ps, PAs, and CN Ms (15,143,144). For example, the growth of risk-sharing

HMO s—which h ave used the services of NPs,PAs, and CN Ms extensively in the p ast—wouldseem to ensu re a larger role for these p rovidersin the health-care system. But like physicians’practices, HMOs could turn instead to physicians,if their incomes are red uced en ough. Anecdotalreports from California note “that clinics that hadintended to employ NPs and PAs were havingphysicians arr ive on their d oorsteps saying theywould work for $30,000or $40,000” (263). Clinicadministrators, then, must consider whether tohire NPs or PAs at $25,000 or to h ire physiciansfor only $10,000 more. In add ition to salary, how-

ever, other factors might en ter into such d ecisions.NPs, PAs, and CNMs save costs for capitated en-tities and prov ide the types of services—healtheducation, counseling, and preventive care—thatHMO s emp hasize. Ind eed, observers generallyagree that the opportunities for employment andfull use of NPs, PAs, and CN Ms are highest incapitated systems.

The increase in the numbers of IPA-modelHM Os is another trend that m ight adversely af-fect the employment an d u se of NPs, PAs, andCNMs. Large group - and staff-model HMOs u su-ally provide care at primary HM O sites and em -ploy NPs, PAs, and CN Ms because they are cost-saving, and because they provide health educa-tion and p reventive services that meet standa rdlevels of quality. The IPA m odel is less likely th another m odels to em ploy these p ractitioners, be-

cause the “plan is primarily organized aroundsolo/ single specialty group p ractices, ” (123) whichdo not benefit as much from emp loying and usingNPs, PAs, and CN Ms as d o larger practices.

The trend toward alternative providers, most

of whom are p rofit-making entities, suggests pos-sible new sources of employment. Anecdotal evi-dence indicates that am bulatory care centers areemploying PAs and NPs. A survey of 250 ind i-vidual ambulatory care centers, owned by142 pri-vate organizations, found that PAs’ salaries rangedfrom $20,784 to $35,000, with an average of$25,946 (172). Hum ana, Inc., owns150 ambu-latory care centers (Medfirst) and employs NPsonly in its high-volume centers, about 5 percentof the total (163). NPs, who receive salaries orhourly wages, have been found to provide stand-ard care and to cost Hu man a one-third as mu chas physicians. Nonetheless, the organization per-ceives a d eman d from its clients for ph ysician careand does not intend to change its staffing p atterns.

The effects of pay ment changes, such as th eDRG app roach, on the employment and use of NPs, PAs, and CNMs in hosp itals have not yetbeen well documented . From ind ividu al reports,the effects appear to vary among hospitals. Somehospitals have reportedly cut their nursing staffsand redu ced the nurses’ work schedu les becauseof DRGs (163). Other hospitals reportedly havehired PAs to increase efficiency (48). The d iffer-

ent responses were to be expected and might beattributed to d ifferences in p atient mix (and thu sdifferences in DRGs), in the costs of the hospi-tals with resp ect to specific DRGs, and in DRGrates (based on geographic location—urban or ru -ral). The aggregate effect on the employment anduse of NPs, PAs, and CNMs is thu s d ifficult toascertain.

Reports also indicate that, as a r esult of DRGpayment, some hospitals are dismissing NPs andPAs and shifting portions of their operations totheir outpatient departments, where fee-for-service ph ysicians deliver care (117). PAs’ advo-cates suggest that eventually hospitals might seek more efficient outpatient operations and use PAsin an attempt to contain their costs(48). New rolescould also emerge for PAs as utilization reviewspecialists or DRG coordinato rs (48).



64—

Nu rses expect that prospective paym ent and itsrelated cost m anagement will bring about increas-ing attention to the contribution of nursing serv-ices in critical care an d transplant u nits and willresult in a much more realistic allocation of dol-lars for nur sing services(233). Also, because p ro-spective paymen t may result in the early dischargeof patients into the comm un ity, followu p serv-ices for patients after they are discharged are as-suming increasing importance. Nurse-managedand nurse-owned organizations are emerging toprovide nu rsing services in the comm unity, andnurses are attempting to establish a mechanismof payment for community, nursing services(233).NPs are also assuming new roles in managingcases and reviewing the use of hospital services(96).

Studies are not available to show how the growth

of investor-owned hospitals and multi-hospitalsystems h as affected the em ployment and use of NPs, PAs, and CNMs. Studies on the differencesin economic performance based on ownership (in-vestor-own ed or n ot-for pr ofit) and system affili-ation (affiliated or free-standing) found no signif-icant difference in costs for delivering comparablecare to patients (260). Compared with other typesof hospitals, investor-owned chain-hospitals hadfew er employees per bed, but paid emp loyees—except nurses—more (260). The years studiedwere 1978 and 1980, when payment methods cre-

SUMMARYThe employment and use of NPs, PAs, and

CNMs wou ld be affected by changes in the m eth-ods of payment for their services and by otherchanges in the health-care system. Examining howparticular changes in paym ent wou ld interact withthe other changes provides some indication of wh at roles NPs, PAs, and CNMs m ight play inparticular health-care settings and how costs mightchange for health-care p roviders, patients, and

society.Despite anticipated changes in the m ethods of

paying for physicians’ services, fee-for-service willprobably remain a m ajor form of paym ent in theforeseeable future. Allowing coverage and direct

ated incentives for maximizing the costs of pro-viding services. The adoption of prospective pay-ment by Med icare, some Blue Cross p lans, andsome State Medicaid programs has created incen-tives for minimizing such costs. In addition, pri-vate sector groups—HMOs, PPOs, employers,and insurers—are contracting with selected hos-pitals on t he basis of price.

Hospitals, especially investor-owned hospitals,will need to lower their costs of produ ction in re-sponse to the increasingly competitive new envi-ronment (194), but investor-owned hospitals arenot hiring lower priced personnel, such as NPs,PAs, and CN Ms, to substitute for ph ysicians ininpatient settings (95). Indeed , investor-ownedhospitals are not em ploying man y p hysicians, ei-ther (170). Investor-own ed chains are using de-partment managers, who for fixed-price contractsprovide services, including personnel, for hospi-tal departments (95). Because the managers areat risk finan cially, how ever, they hav e incentivesto save costs and , therefore, might employ ap pro-priately trained NPs and PAs.

The growth of investor-owned hospitals mightsignal fewer opp ortun ities for CNMs to be em-ployed in hospital settings. Both system-affiliatedand free-standing hospitals treated proportion-ately fewer maternity patients than not-for-profithospitals treated (260).

paym ent for the services of NPs and CNMs wou ldsignificantly help them in administratively inde-pend ent practices, could stimulate the growth of such p ractices to the extent p ermitted by Statelaws and regulations, and would increase oppor-tunities for NPs and CNMs to provide the fullrange of services for which they ar e trained a ndlicensed.

As independent providers, IPA-model HMOsmight engage NPs as contractors for primary-careservices (100) and CNMs as contractors for ma ter-nity services, PPOs also might treat these practi-tioners as contractors wh o agreed to provide serv-ices at a discounted fee. The opportunities for NPs





66

would not be an issue for organizations paid pro-s p e c t i v e l y b y a c a p i t a t e d a m o u n t .

H o w e v e r , t h e i n c r e a s e i n t h e n u m b e r of IPA-mod el HMOs does affect the employment of NPs,PAs, and CN Ms. In 1985, although group model

HMO plans retained the lead in total enrollment,IPA model plans outnu mbered a ll other kinds of HMO p lans for the first time(123). Because theyare primarily solo or single-specialty practices,IPAs are less likely than group mod el HMOs toemp loy these p ractitioners.

The data suggest that NPs, PAs, and CNMssave costs for H MOs. In an increasingly comp eti-tive environment, the financial incentives promotepassing onto consumers the savings generated bythe emp loyment and full use of NPs, PAs, andCNMs. Thus, as the environment becomes morecompetitive, the emp loyment of these providersin capitated H MOs could benefit society finan-cially. To the extent these providers are used toprovide interpersonal care and preventive serv-ices, the types of services traditionally incorpo-rated into the p ractice of these providers and of HMOs, the quality of care will also benefit.

Third-party p ayers pay hosp itals an aggregatesum for operating costs, and the hospitals are re-sponsible for paying salaried employees. There-fore, coverage and direct payment for inpatienthospital services provided by NPs, PAs, and CNMswou ld not d irectly affect their emp loyment pos-sibilities. This is especially applicable to Medicare,which pays for inpatient services on a DRG-ratebasis. This payment method creates incentives forlowering th e cost of resources, and the costs of NPs, PAs, and CN Ms are includ ed in calculatingthe costs of resources. Although coverage and sep-arate billing for their services could clarify theirrevenue-producing abilities as well as their coststo the em ploying h ospital, the use of these prac-titioners to p rovide pa tient care as h ospital em-ployees is likely to decline under DRG-based pay-ment. PAs and NPs could be used in new roles,such as DRG coordinators.

In order for coverage and direct paym ent to af-fect the emp loyment of NPs, PAs, and CN Ms byhosp itals for provid ing inpa tient services, the costsof their services would be billed as professionalservices. If the p ayment levels for the services theyprovided were lower than those for physician’sservices, and if the volume of services were notincreased, savings might be likely for Medicareand—if fees were lowered accordingly—for so-ciety. However, if Medicare pa id N Ps or CN Msfor providing services for w hich hospitals werealso paid u nd er the DRG rate, paying for themseparately might increase program costs, if DRGpaym ent rates were not changed . Redu cing DRGrates to account for eliminating the costs associ-ated w ith the NPs’ or CN Ms’ services wou ld beextremely d ifficult because of the lack of d ata. Inany case, because the prop ortion of the DRG rateascribed to nursing costs is unknown, the effectsof direct payment on organizational, program, orsocietal costs cannot be determ ined.

A m ajor change in health-care delivery is thegrowth of investor-owned hospitals, particularlyinvestor-owned chains of hospitals. These orga-nizations are currently focusing their efforts onattracting medical specialists to their staffs andhave evinced no interest in employing NPs, PAs,and CNMs. The advantages of coverage for theservices of these provid ers do not ap pear to besufficiently significant to spark such interest.

In the final analysis, it seems that extend ingcoverage for the services of NPs, PAs, and CNMsin at least some settings could benefit the healthstatus of certain segments of the population cur-rently not receiving ap prop riate care. The imme-diate effects on third-party costs are unclear, al-though long-term effects could be a decrease intotal costs. The ad van tages of direct pa ym ent forthe services of NPs and CNM s are less obvious.Direct payment might encourage qualified NPsand CNMs to move into unserved and under-served areas to expand access to health care.



Appendixes



—

Appendix A

Methods and Acknowledgments

The study is based on an analysis of information obtained from an extensive review of the literature andfrom individuals and organizations with relevant experience. An advisory panel of experts with backgroundsin health policy, medical economics, health insurance, medicine, nursing and consumer advocacy defined thegoals for the study and suggested source material, subject areas, and perspectives to consider in presenting thematerial. The drafts of the report were revised to reflect the thoughtful comments of the panel. OTA thanksthe panel for its assistance and the following people and organizations for supplying information and reviewingdrafts.

Joel J. AlpertBoston City HospitalBoston, MA

American Nurses AssociationWashington, DCAmerican College of Nurse-

MidwivesWashington, DC

American Academy of PhysicianAssistants

Arlington, VA

David BantaThe Netherlands

James D. CampbellUniversity of MissouriColumbia, MO

James F. CawleyGeorge Washington University

Medical CenterWashington, DCKatherine H. ChavignyAmerican Medical AssociationChicago, IL

James CrouchUtah Department of HealthSalt Lake, City, UTM.L. DetmerAmerican Medical AssociationChicago, IL

Karen EhrnmanAmerican College of Nurse-


E. Havey Estes, Jr.,

Duke University Medical CenterDurham, NC

Claire M. Fagin,University of PennsylvaniaPhiladelphia, PA

Carl FasserBaylor UniversityHouston, TXWilliam Finefrock American Academy of Physician

AssistantsArlington, VA

Loretta C. FordUniversity of Rochester Medical

CenterRochester, NYLouis P. GarrisonProject HOPEMillwood, VA

Archie GoldenChesapeake Health Plan–South

SideBaltimore, MD

Linda GolodnerNational Consumers LeagueWashington, DC

Bradford GrayInstitute of MedicineWashington, DC

Marie Hawk Harvard Community Health PlanBoston, MA

Anita HegsterHealth Care Financing

AdministrationBaltimore, MD

Martha HillJohns Hopkins School of NursingBaltimore, MD

Ada JacoxUniversity of MarylandBaltimore, MDJean JohnsonGeorge Washington UniversityWashington, DC

Kerry KempOffice of Technology AssessmentWashington, DCCynthia P. KingAmerican Medical AssociationChicago, ILKarl KronebuschOffice of Technology AssessmentWashington, DCWilliam LarsonHealth Care Financing


Kenneth LeaseU.S. Office of Personnel

ManagementWashington, DC

Charles E. LewisUniversity of CaliforniaLos Angeles, CA

Joan LynaughUniversity of PennsylvaniaPhiladelphia, PANancy MarchAmerican College of Nurse-

MidwivesWashington DC

Lynn MayAmerican Academy of Physician


Kathy MichelsAmerican Nurses AssociationWashington, DCEvelyn MosesHealth Resources and Services

AdministrationRockville, MD

69



70

Norbert NelsonNew York University Medical

SchoolNew York, NY

Ronald NelsonAmerican Academy of Physician


Robert OseasohnUniversity of TexasSan Antonio, TX

Henry B. PerryMountain Medical CenterClyde, NC

Elaine PowerOffice of Technology AssessmentWashington, DC

Robert RanneyNational Rural Health Care

AssociationKansas City, MO

Ginette RodgerCanadian Nurses AssociationOt tawa , ON

Gretchen SchafftAmerican Academy of Physician


Sherry ShamanskyYale University

New Haven, CTJane Sisk Office of Technology AssessmentWashington, DC

Julie SochalskiAnn Arbor, MI

Sally SolomonNational League for NursingNew York, NY

Brenda SplitzGeorge Washington UniversityWashington, DC

Margetta Styles

American Nurses AssociationKansas City, MO

Dan ThomasHealth Insurance Association of

AmericaWashington, DC

Marlent VenturaVeterans Administration HospitalBuffalo, NY

Judith WagnerOffice of Technology AssessmentWashington, DC

Jerry WestonNational Center for Health

Services ResearchRockville, MD

Judith WillisHealth Care Financing


Sidney WolfeHealth Research GroupWashington, DCSusan YatesAmerican College of Nurse-




Appendix B

Payment for the Services ofNurse Practitioners, Physician Assistants,

and Certified Nurse-Midwives

Health-care services are paid for by ind ividuals andby third-party payers. Third-party payers in the pri-vate sector include commercial insurance companies;hospital and medical plans, such as Blue Cross andBlue Shield; prepaid group medical plans, such ashealth maintenance organizations (HMOs); and others,such as labor unions or employers of insured individ-uals (106). Specific benefits, exclusions, and limitationson financial coverage vary from one third-party payerto another and differ even among the policies and plansoffered by a particular payer. However, State and, toa lesser extent, Federal laws and regulations requireprivate third-party payers to offer some benefits anddo not permit them to offer others.

The Federal Government plays a significant role inpaying for health-care services under four primary-health-care programs. The government acts as a third-party payer for health care under the Medicare andthe Medicaid programs. Although the Health CareFinan cing Ad ministration (HCFA) is the Federal agencyresponsible for both Medicare and Medicaid, the twoprograms differ considerabl y in their payment prac-tices and covered populations. Medicare is a nation-wide health insurance program for the 27.5 millionAmericans who are at least 65 years of age and for2.9 million disabled Americans, Part A, the HospitalInsurance Program helps pa y for hospital services, re-lated institutional services, and other services. Part B,the Supplementary Medical Insurance Program cov-ers physicians’ services and man y other medical serv-ices. Medicaid is a joint Federal-State program for 22million low-income persons. The program is admin-istered by individual States under general Federalguidelines, which include mandatory minimum bene-fits that all States must provide to eligible recipientsand optional benefits that individual States may electto provide to recipients.

The Civilian Health and Medical Program of theUniformed Services (CHAMPUS), the third medical-benefits program provided by the Federal Govern-ment, is administered by the Department of Defense(DOD) (245), CHAMPUS covers nearly 8million de-pendents of military personnel, retirees, and depen-dents of retirees inside and outside the United States(60).

The fourth medical-benefits program provided bythe Federal Government is the Federal EmployeesHealth Benefits Program (FEHBP), a voluntary health-care program that provides health insurance for ap-proximately 10 million Federal employees and their de-pendents. Enrollees receive health-insurance servicesfrom more than 300 health-benefit plans under con-tracts negotiated with the Office of Personnel Man-agement of the U.S. Government (256).

As table B-1 shows, payment for the services of nurse practitioners (NPs), physician assistants (PAs),and certified nurse-midwives (CNMs) varies consider-ably, in part because of variations in the State lawsand regulations that govern these providers’ practicesand payment. Table B-1 provides a generalized over-view of the payment practices of the major third-partypayers in the public and private sectors. These prac-tices are described in greater detail below.

Nurse Practitioners andPhysician Assistants

Government-Sponsored Programs

Medicare.—Under Part B of the Medicare program,coverage and payment for NPs’ and PAs’ services arerestricted to services not traditionally performed byphysicians, to services normally delegated by physi-cians, and to services performed under the direct su-pervision of physicians. This provision is commonlytermed the “incident to” provisional

Under this provision, services of nonphysicians maybe covered where they are of types which are commonly

performed by physicians’ office personnel, and are per-formed by employees of the physician under his or herdirect supervision, e.g., giving injections, taking tem-peratures and blood pressures, performing blood tests,etc. Payment cannot be m ade, how ever, for servicesperformed by nonphysicians where the services are of

‘The relevant Medicare Part B regulation prohibits payment formedical services rendered by someone other than a physician ex-cept for services that are “furnished as an incident to a physician’sprofessional services of kinds which are commonly furnished in phy-sicians’ offices and are commonly either rendered without chargeor included in physician’s bills. ” Sec. 1861(s)(2)(A) of the Social Secu-rity Act, 42 U, S.C. Sec. 1395(s)(2)(A), 20 CFR 405-231(b).

71







74

4. obtain certification of a patient’s need for care inan SN F and ICF in the Medicaid program (42 CFR456.360, and 380).

The specific services that must be performed by physi-cians vary according to the type of certification andthe program. Under the Medicare and Medicaid pro-grams, for example, patients can be admitted to SNFsbased only on physicians’ medical findings, diagnosis,and orders. Patients’ care must be supervised by phy-sicians, and patients must be seen by physicians at leastevery 30 days for the first 90 days after admission.Only physicians can prescribe drugs and order diag-nostic and specialized rehabilitative services and ther-apeutic diets.

Unlike Medicare, Medicaid allows NPs and PAs torecertify patients’ needs for institutional care. NPs andPAs are authorized to recert ify the necessi ty of continuing medical care in SNFs (42 CFR 456.260) andICFs (42 CFR 456.360) where general supervision isprovided by physicians.

Civilian Health and Medical Program of the Uni-formed Services. -The Federal Government, throughthe Department of Defense’s CHAMPUS, has takenthe lead in treating NPs as autonomous and independ-ent providers of care for payment purposes. CHAMPUSbegan billing and paying for NPs’ services on an ex-perimental basis in fiscal year 1980. When the experi-ment ended 2 years later, CHAMPUS continued cover-age and direct fee-for-service payment of NPs, therebyrecognizing them as a distinct group of providers de-serving direct compensation for services (60). AlthoughCHAMPUS does not cover PAs’ services, PAs are notseeking coverage under CHAMPUS, because DOD hasindicated that CHAMPUS will begin contracting outits services and cease paying on a fee-for-service basis(83).

Federal Employees Health Benefit Program.—LikeCHAMPUS, FEHBP experimented with direct paymentand required that all FEHBP plans directly pay healthpractitioners, including NPs and PAs, who were li-censed under applicable State law in those States whereat least 25 percent of the population was located informally designated primary-medical-care manpower-shortage areas (60). After the experimental period of Janu ary 1980 to December 1984, FEHBP did not r equireplans to compensate NPs and PAs directly.

Payment to providers of covered services currentlydepends on the terms of the FEHBP’s contract with

each health-benefit plan and thus varies among theplans. There is no statutory requirement that all plansoffer payment to NPs and PAs, but some plans cur-rently authorize NPs and PAs to receive direct pay-ment or reimbursement for covered services withoutreferral or supervision (see table B-1). Of the 21 fee-for-service plans participating in FEHBP for the con-

tract year 1986, 7 cover and offer direct payment forservices of NPs and 6 cover and offer direct paymentfor the services of PAs 4 (256). Only 14 percent of enrollees in FEHBP are enrolled in plans that coverNPs’ services and 11 percent of enrollees in FEHBP areenrolled in plans that that cover PAs’ services. Directpayment for NPs and other providers is now underconsideration by Congress. 5

Private Insurance

Private third-party payment for NPs’ and PAs’ serv-ices is subject to State laws and health insurance reg-ulations. Increasing numbers of States have passedlaws and regulations concerning payment for the serv-ices of NPs and PAs. Such laws and regulations mustaccord with the States’ requirements governing thescope of practice of these providers and, in some cases,of physicians.

The State payment laws vary in a number of dimen-sions, including the types of insurers affected (for-profit, nonprofit, or both) and the types of insurancepolicy (22). Some laws affect the services of all nurses;others affect only special groups of nurses, such asNPs. Some States require insurers to include nurses’services as a reimbursable benefit (mandatory bene-fit), whereas other States require insurers to offer reim-bursement for nurses’ services as an option in their pol-icies (mandatory option) (232).

4The numbers do n ot include the more than300 prepaid compre-hensive medical plans in the FEHBP, because the organization of medical delivery systems under these plans makes the issues of di-rect access, payment, supervision, and referral largely irrelevant.

5In early 1986, President Reagan vetoed H. R. 3384 which con-tained a provision requiring direct reimbursements to nurses andnurse-midwives who provide services to employees covered by theFEHBP. Congress then passed new legislation, Public Law99-251,directing the Office of Personnel Management (OPM) to study andreport to Congress on the advisability of amending the law governingFEHBP to provide mandatory recognition of additional health-carepractitioners, such as nurse-midwives, nurse practitioners, chiroprac-tors, and clinical social workers. The legislation extended direct reim-bursement for nonphysician providers in medically underservedareas, which are determined by the Department of Health and Hu-man Services to have at least 25 percent of the population livingin areas with inadequate numbers of medical providers. OPM’s studyadvised against mandatory coverage on grounds specific to FEHBP(e.g., mandating coverage would not increase the choice of practitioners available to plan members, nor w ould it n ecessarily increasecompetition among the plans). Nonetheless, the Subcommittee onCompensation and Employee Benefits of the House Committee onPost Office and Civil Service remains interested in the topic. Thesubcommittee held hearings on direct reimbursement for nonphy-sicians on Apr. 15, 1986, and indicated its intention to continuestudying the issue. H.R. 4825, introduced on May 14, 1986, wouldauthorize direct payment for services performed by NPs and CNMsand other health-care providers. As of June 1986, the bill had beenreported favorably by the House Committee on Post Office and CivilService and was aw aiting floor action. The bill did not p ass the 99thCongress.



Although direct third-party payment is the excep-tion rather than the rule, 13 States currently permitdirect payment for NPs’ services (24). The wide vari-ation in conditions for payment of NPs’ services isapparent in the laws of Mississippi, Maryland, andOregon regarding supervision by physicians. In allthree States, insurers must pay for any service that iswithin NPs’ lawful scope of practice, but Mississippirequires the NPs to w ork und er the supervision of phy-sicians, whereas Maryland prohibits direct paymentto NPs who work under the direct supervision of phy-sicians (101). In Oregon, supervision by physicians isnot a condition for reimbursement (2 I).

No State laws mandate coverage of PAs’ services.Except in Wisconsin, State laws are silent even aboutoptional coverage of PAs’ services (83). None of theStates mandate direct reimbursement for PAs’ services;indeed, 16 States explicitly prohibit it. Although thereis anecdotal information concerning third-party payerswho cover PAs’ services, sometimes under physicians’billing, information concerning the extent of coverageis not available.

Businesses in the United States are beginning to pro-vide insurance that pays directly for NPs and PAs (aswell as CNMs). The Washington Business Group onHealth recently conducted a national survey of itsmember organizations, all of which are large firms.Of the approximately 200 respondents, 43 percent arepaying directly for the services of NPs, and 39 per-cent are doing so for PAs (91). The proportion of mem-ber companies reimbursing NPs and PAs (and CNMs)has increased steadily over the past decade (91).

In many States, NPs’ and PAs’ services still mustbe “incident to” physicians’ services, for payment pur-poses, and compensation for NPs’ and PAs’ servicesmust be made to their employing physicians or orga-nizations. Nevertheless, the recent changes in someStates’ laws and in the policies of major corporationssuggest a movement away from requirements for di-rect supervision by physicians. Increasingly, NPs andPAs can function administratively independently of physicians and qualif y for direct payment. Also, moreStates are likely to pass legislation providing for thedirect compensation of NPs and PAs.


Government-Sponsored Programs

Medicare and Medicaid.—Medicare’s policies con-cerning payment are the same for the services of CNMsas for the services of NPs and PAs. Medicaid’s pay-ment policies are much more permissive for CNMs’services than for NPs’ and PAs’ services. In 1980,Congress enacted legislation (Public Law 96-499) torequire that CNMs’ services be a mandatory benefit

75

under Medicaid. The Federal statute recognizes CNMs’autonomous practice expressly stating that the man-dated benefit shall be provided “whether or not he isunder the supervision of, or associated with, a physi-cian or other health care provider” (60). HCFA issuedthe regulations that implemented this law in May 1982.As of January 1985, all States in which CNMs prac-ticed either were complying with the statute and theregulations or were considering changing their Med-icaid plans to bring them into compliance. Currentlyonly four States and the District of Columbia do notprovide for direct Medicaid payment to CNMs, andHCFA’s regional offices are working with these juris-dictions to bring them into compliance (235). Further-more, the Medicaid statute was amended by PublicLaw 98-369 to ensure that birthing centers operatedby CNMs need not be administered by physicians tobe eligible for coverage as Medicaid clinic services.

Rural Health Clinics.--CNMs are treated differentlyfrom NPs and PAs under the Rural Health Clinics Act.Only rural clinics employing NPs or PAs are eligiblefor certification under the act (Title 42, Section 481.4).Once a clinic is certified, however, it can receive pay-ment for the services of the CNMs it employs.

Civilian Health and Medical Program of the Uni-formed Services.—CHAMPUS singled out CNMs forspecial consideration before it experimented with di-rect payment for NPs’ services starting in 1980. TheDefense Appropriations Act of 1979 (Public Law 95-457) was the first Federal law to pay directly for serv-ices provided by CNMs without either referrals or di-rect supervision by physicians.

Federal Employees Health Benefit Program.—Of the21 FEHBP fee-for-service plans, 20 cover CNMs with-out a contractual requirement for physicians’ referralsor supervision. In addition, many prepaid plans in theFEHBP employ CNMs. Roughly 90 percent of all Fed-eral enrollees are in plans that cover CNMs (256).Many of the insurance companies in the FEHBP offerthe same coverage of CNMs for their private sectorbusiness.

Private Insurance

Private third-party payment for CNMs’ services hasalso been mandated in a growing number of jurisdic-tions. As of 1983, 14 States had mandated direct reim-bursement by private insurers for CNMs’ care (55), ByApril 1986, the number of States had increased to 17

(11). In most States, direct supervision by p hysiciansis not a condition of reimbursement (22). In addition,“in many other States insurers voluntarily have cho-sen to pay for nurse-midwifery care” (55). Fifty-sevenpercent of the large corpor ations surveyed by the Wash-ington Business Group on Health provide direct reim-bursement to CNMs (91).



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