Nurse Practitioners, Physician Assistants,

and Certified Nurse-Midwives: A Policy

Analysis

December 1986

NTIS order #PB87-177465
Recommended Citation:

U.S. Congress, Office of Technology Assessment, Nurse Practitioners, Physician Assistants, and Certified Nurse-Midwives: A Policy Analysis (Health Technology Case Study

37), OTA-HCS-37 (Washington, DC: U.S. Government Printing Office, December 1986).

Library of Congress Catalog Card Number 85-600596

For sale by the Superintendent of Documents

U.S. Government Printing Office, Washington, DC 20402
Preface

Nurse Practitioners, Physician Assistants, and

Certified Nurse-Midwives: A Policy Analysis is

Case Study 37 in OTA’s Health Technology Case

Study Series. This case study has been prepared

in response to a request by the Senate Committee on Appropriations.

OTA case studies are designed to fulfill two

functions. The primary purpose is to provide

OTA with specific information that can be used

in forming general conclusions regarding broader

policy issues. The first 19 cases in the Health Technology Case Study Series, for example, were conducted in conjunction with OTA’s overall project

on The Implications of Cost-Effectiveness Analysis of Medical Technology. By examining the 19

cases as a group and looking for common problems or strengths in the techniques of cost-effectiveness or cost-benefit analysis, OTA was able

to better analyze the potential contribution that

those techniques might make to the management

of medical technology and health care costs and

quality.

The second function of the case studies is to

provide useful information on the specific technologies covered. The design and the funding levels of most of the case studies are such that they

should be read primarily in the context of the associated overall OTA projects. Nevertheless, in

many instances, the case studies do represent extensive reviews of the literature on the efficacy,

safety, and costs of the specific technologies and

as such can stand on their own as a useful contribution to the field.

Case studies are prepared in some instances because they have been specifically requested by

congressional committees and in others because

they have been selected through an extensive review process involving OTA staff and consultations with the congressional staffs, advisory panel

to the associated overall project, the Health Program Advisory Committee, and other experts in

various fields. Selection criteria were developed

to ensure that case studies provide the following:

. examples of types of technologies by function (preventive, diagnostic, therapeutic, and

rehabilitative);

●

●

●

●

●

●

●

examples of types of technologies by physical nature (drugs, devices, and procedures);

examples of technologies in different stages

of development and diffusion (new, emerging, and established);

examples from different areas of medicine

(e.g., general medical practice, pediatrics,

radiology, and surgery);

examples addressing medical problems that

are important because of their high frequency or significant impacts (e. g., cost);

examples of technologies with associated high

costs either because of high volume (for lowcost technologies) or high individual costs;

examples that could provide information material relating to the broader policy and methodological issues being examined in the

particular overall project; and

examples with sufficient scientific literature.

Case studies are either prepared by OTA staff,

commissioned by OTA and performed under contract by experts (generally in academia), or written by OTA staff on the basis of contractors’

papers.

OTA subjects each case study to an extensive

review process. Initial drafts of cases are reviewed

by OTA staff and by members of the advisory

panel to the associated project. For commissioned

cases, comments are provided to authors, along

with OTA’s suggestions for revisions. Subsequent

drafts are sent by OTA to numerous experts for

review and comment. Each case is seen by at least

30 reviewers, and sometimes by 80 or more outside reviewers. These individuals may be from

relevant Government agencies, professional societies, consumer and public interest groups, medical practice, and academic medicine. Academicians such as economists, sociologists, decision

analysts, biologists, and so forth, as appropriate,

also review the cases.

Although cases are not statements of official

OTA position, the review process is designed to

satisfy OTA’s concern with each case study’s

scientific quality and objectivity. During the various stages of the review and revision process,

therefore, OTA encourages, and to the extent possible requires, authors to present balanced information and recognize divergent points of view.

.,, Ill
Health Technology Case Study Seriesa

Case Study Case study title; author(s); Case Study Case study title; author(s);

Series No. OTA Publication numberb

Series No. OTA publication numberb

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

Formal Analysis, Policy Formulation, and End-Stage Renal

Disease;

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

The Feasibility of Economic Evaluation of Diagnostic Procedures: The Case of CT Scanning;

Judith L. Wagner (OTA-BP-H-9(2))

Screening for Colon Cancer: A Technology Assessment;

David M. Eddy (OTA-BP-H-9(3))

Cost Effectiveness of Automated Multichannel Chemistry

Analyzers;

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 Therapy

and Its Policy Implications;

Stuart O. Schweitzer and C. C. Scalzi (OTA-BP-H-9(6))

Allocating Costs and Benefits in Disease Prevention Programs:

An Application to Cervical Cancer Screening;

Bryan R. Luce (Office of Technology Assessment)

(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, Nancy Barrand, and

Lu Ann Heinen (OTA-BP-H-9(1O))

Benefit and Cost Analysis of Medical Interventions: The Case

of Cimetidine and Peptic Ulcer Disease;

Harvey V. Fineberg and Laurie A. Pearlman

(OTA-BP-H-9(11))

Assessing Selected Respiratory Therapy Modalities: Trends and

Relative 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: A

Case Study of Orthopedic Joint Implants;

Judith D. Bentkover and Philip G. Drew (OTA-BP-H-9(14))

Elective Hysterectomy: 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 Psychotherapy;

Leonard Saxe (Office of Technology Assessment)

(OTA-BP-H-9(18))d

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

Assessment of Four Common X-Ray Procedures;

Judith L. Wagner (OTA-BP-H-9(19))e

Mandatory Passive Restraint Systems in Automobiles: Issues

and Evidence;

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

Selected Telecommunications Devices for Hearing-Impaired

Persons;

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 Therapeutic

Apheresis;

John C. Langenbrunner (Office of Technology Assessment)

(OTA-HCS-23)

Variation in Length of Hospital Stay: Their Relationship to

Health 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)

Nuclear 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, and

Decisionmaking;

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 Industry: Structure, Competition, and Public

Policy;

Leonard G. Schifrin and William J. Rich (OTA-HCS-31)

The Hemodialysis Equipment and Disposable Industry;

Anthony A. Romeo (OTA-HCS-32)

Technologies for Managing Urinary Incontinence;

Joseph Ouslander, Robert Kane, Shira Vollmer, and Melvyn

Menezes (OTA-HCS-33)

The Cost Effectiveness of Digital Subtraction Angiography in

the Diagnosis of Cerebrovascular Disease;

Matthew Menken, Gordon H. DeFriese, Thomas R. Oliver,

and Irwin Litt (OTA-HCS-34)

The Effectiveness and Costs of Continuous Ambulatory

Peritoneal Dialysis (CAPD)

William B. Stason and Benjamin A. Barnes (OTA-HCS-35)

Effects of Federal Policies on Extracorporeal Shock Wave

Lithotripsy

Elaine J. Power (Office of Technology Assessment)

(OTA-HCS-36)

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

(O-I-A-I-EC-37)

aAvailab]e for sale by the Superintendent of Documents, U.S. Government dBackground paper #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 ordering infor- Medical Technology.

mation. fgackground paper #l to OTA’S May 1982 report Technology and ~andiborigina] 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 conjunction

with OTA’S August 1980 report The Implications of Cost-Effectiveness Analysis of Medical Technology.

iv
OTA Project Staff for Case Study #37

Nurse 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, Project Director

Steven Sisskind, Research Assistant”

Virginia Cwalina, Administrative Assistant

Diann G. Hohenthaner, F’. C. Specialist

Carol A. Guntow, Secretary/Word Processor Specialist

Principal Contractor

Edward G. Brooks, University of North Carolina, Chapel Hill, NC

Contractors

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

Anne Meadows, Washington, DC (Editing)

*From July to October 1986.
Advisory Panel— Nurse Practitioners, Physician Assistants, and

Certified Nurse= Midwives: A Policy Analysis

Rosemary Stevens, Chair

Department of History and the Sociology of Science

University of Pennsylvania, Philadelphia, PA

Walter H. Caulfield

Kaiser Permanence

Oakland, CA

Philip D. Cleveland

Family Medicine Spokane

Spokane, WA

Lynn Etheredge

Health Policy Consultant

Washington, DC

Willis Goldbeck

Washington Business Group on Health

Washington, DC

Sandra Greene

Health Economics Research

Blue Cross/Blue Shield of North Carolina

Durham, NC

Hurdis Griffith

Robert Wood Johnson Fellow

Institute of Medicine

National Academy of Sciences

Washington, DC

Charles G. Huntington

Hermon Medical Group

Hermon, NY

Lauren LeRoy

Physician Payment Review Commission

Washington, ‘DC

Kathy Lohr

The Rand Corp.

Washington, DC

Ruth Lubic

Maternity Center

New York, NY

Association

Patricia A. Prescott

School of Nursing

University of Maryland

Baltimore, MD

Judith Rooks

Consultant

Portland, OR

George M. Ryan

Department of Obstetrics and Gynecology

College of Medicine

University of Tennessee

Memphis, TN

Richard M. Scheffler

Health Policy and Administration Program

School of Public Health

University of California

Berkeley, CA

Henry M. Seidel

School of Medicine

The Johns Hopkins University

Baltimore, MD

Gerry Shea

Health Care Division

Service Employees International Union

Washington, DC

Barbara Warden

National Consumers’ League

Washington, DC

Ivan Williams

Kellogg Center

Montreal General Hospital

Montreal, Quebec

Michael R. Pollard

Office of Policy Analysis

Pharmaceutical Manufacturers’ Association

Washington, DC

NOTE:

vi

OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel

members. The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full

responsibility for the report and the accuracy of its contents,
Contents

Page

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

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

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

Organization of the Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Contributions of Nurse Practitioners, Physician Assistants, and

Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Effects of Changing Payment Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Policy Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Addendum: Definitions and Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

CHAPTER 2: QUALITY OF CARE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Indicators of Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Comparisons With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Methodological Problems of Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Quality of Nurse Practitioners’ Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Comparisons With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Quality of Physician Assistants’ Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Comparisons With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Quality of Certified Nurse-Midwives’ Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Comparisons With Physicians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Patients’ Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Physicians’ Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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

CHAPTER 3: ACCESS T0 CARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Nurse Practitioners’ Contribution to Access to Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Physician Assistants’ Contribution to Access to Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Certified Nurse-Midwives’ Contribution to Access to Care . . . . . . . . . . . . . . . . . . . . . . . . 33

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

CHAPTER 4: PRODUCTIVITY, COSTS, AND EMPLOYMENT . . . . . . . . . . . . . . . . . . 39

Scope of Professional Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Services Provided by Nurse Practitioners and Physician Assistants . . . . . . . . . . . . . . 39

Services Provided by Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Nurse Practitioners’ and Physician Assistants’ Productivity . . . . . . . . . . . . . . . . . . . . . 41

Certified Nurse-Midwives’ Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Costs and Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Costs and Benefits of Training Nurse Practitioners, Physician Assistants, and

Certified Nurse-Midwives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Costs and Benefits of Private Employment of Nurse Practitioners,

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

vii
Contents—continued Page

Current Employment: Settings and Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Nurse Practitioners’ and Physician Assistants’ Employment . . . . . . . . . . . . . . . . . . . . . 47

Certified Nurse-Midwives’ Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

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

CHAPTER 5: PAYMENT ISSUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Effects of Modifying Payment for Services of Nurse Practitioners,

Physician Assistants, and Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . 54

Effects on Independent Practices of Nurse Practitioners and

Certified Nurse-Midwives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Effects on Physicians’ Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Effects on Health Maintenance Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Effects on Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Effects on Nursing Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

The Changing Context of Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Supply of Physicians. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Delivery Sites and Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Effects of Changes in the Health-Care Environment on Nurse Practitioners,

Physician Assistants, and Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . 62

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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

Tables

Table No. Page

1-1.

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Comparison of Nurse Practitioners, Physician Assistants, and

Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Equivalence in Quality of Care Provided by Nurse Practitioners (NPs) and

Physicians (MDs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Difference in Quality of Care Provided by Nurse Practitioners (NPs) and

Physicians (MDs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Percentage of U.S. Resident Certified Nurse-Midwives by

Type of Organization, 1976-77 and 1982 ......., . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Selected Alternatives to Traditional Health-Care Delivery . . . . . . . . . . . . . . . . . . . . 62

Coverage and Direct Payment for Services of Nurse Practitioners,

Physician Assistants, and Certified Nurse-Midwives . . . . . . . . . . . . . . . . . . . . . . . . . 72

Figure

Figure No. Page

3-1. Distribution of Physician Assistants by Size of Community. . . . . . . . . . . . . . . . . . . 32

. . . Vlll
Chapter 1

Summary and Policy Conclusions
Chapter 1

Summary and Policy Conclusions

INTRODUCTION

The use of nurse practitioners (NPs) and physician assistants (PAs) to provide primary health

care traditionally provided only by physicians developed during the 1960s in response to a perceived shortage and maldistribution of physicians.

Societal support for this innovation in the delivery of health-care was based on the potential for

NPs and PAs to improve access and to lower costs

while maintaining the quality of care. At about

the same time the number of certified nurse-midwives (CNMs),1 who had been providing health

care for some 30 years, began to increase substantially.

In the past two decades, the ranks of NPs, PAs,

and CNMs and their responsibilities for providing care to patients have increased, despite the

resistance these practitioners have encountered in

their attempts to assume more prominent or more

independent roles in delivering health care. Today,

approximately 15,400 NPs, 16,000 PAs, and 2,000

CNMs are practicing in the United States.

Changes in the health-care environment have

altered the forces that spurred the development

and growth of these groups of providers. The

health-care sector has become increasingly competitive as the supply of physicians has grown and

as the proportion of physicians practicing in the

primary-care specialties has decreased. New forms

of organization for the delivery of medical care

have emerged. Concern over the rapidly rising

costs of health care has grown, and new methods of paying for hospitals’ inpatient services have

been implemented. All of these changes have implications for the roles NPs, PAs, and CNMs will

play in the future, and for the quality, accessibility, and costs of health care.

As the health-care delivery system evolves,

NPs, PAs, and CNMs are exploring ways to overcome several obstacles, such as unsupportive

‘This case study uses the word certified to distinguish formally

trained and certified nurse-midwives from lay midwives, who may

or may not be nurses and who have informal training in midwifery.

physicians, restrictive State laws and regulations,

and the inaccessibility and cost of malpractice insurance. Although these problems are significant

(see box 1-A), they are beyond the scope of this

study, which focuses on another major barrier—

limited third-party payment for the services of

NPs, PAs, and CNMs.

Background and Scope of

the Case Study

This case study was prepared in response to a

request by the Senate Committee on Appropriations to update a previous OTA case study, “The

Cost and Effectiveness of Nurse Practitioners. ”

The committee also requested that OTA address

the extent to which various Federal health-care

programs and private third-party payers pay for

the services of NPs and CNMs. Of particular interest to the committee were the issues of coverage (i.e., authorization for payment) and direct

payment (i.e., payment to NPs and CNMs) for

their services.2 The committee also requested that

OTA review the evidence on the quality and costs

of the care NPs and CNMs provide. The analysis also addresses PAs because their historical

background and current roles are similar to that

of NPs, and because information on NPs often

overlaps with information on PAs.

In considering NPs and PAs, the study focuses

on the large majority who provide primary care,

although some attention is given to the roles of

NPs and PAs in nonprimary-care settings. No distinction is made between primary-care PAs and

PAs trained in Medex programs specifically to

provide primary care to underserved populations.

‘The Medicare program and other third-part y payers distinguish

between coverage and payment. Coverage refers to benefits available to eligible beneficiaries or subscribers; payment refers to the

amounts and methods of payment for covered services.

3
4

The central questions the study attempts to an- . How would changing the payment method

swer are: affect health-care costs for patients, third-

●

●

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

make in meeting the Nation’s health-care

needs? Organization of the Case Study

How would changing the method of payment

for the services of NPs, PAs, and CNMs af- The case study is organized into five chapters

fect the roles these practitioners would play and two appendixes. Chapter 1 presents a sumin the evolving health-care delivery system? mary of the case study and in an addendum de-
5

fines and describes NPs, PAs, and CNMs. Chapters 2 through 4 discuss the contributions of NPs,

PAs, and CNMs to health care. Chapter 2 addresses the quality of care, reviewing studies that

compare the care provided by NPs, PAs, and

CNMs with that provided by physicians and studies

that gauge patients’ satisfaction with and physicians’ acceptance of the care provided by NPs,

PAs, and CNMs. Chapter 3 considers access to

health care; and chapter 4 focuses on productivity,

costs, and employment. Chapter 5 analyzes what

implications various payment modifications would

have for the employment and practice of NPs,

PAs, and CNMs and for health-care costs; examines the effects new developments in the healthSUMMARY

Understanding how the use of NPs, PAs, and

CNMs affects the quality of care, the access to

care, the productivity of providers, and the costs

of care is crucial for analyzing the effects of alternative policies regarding payment for the services

of these providers. Drawing general conclusions

is possible, despite the methodological limitations

of many studies.

Contributions of NPs, PAs, and CNMs

Direct measurement of the quality of the care

provided by NPs, PAs, and CNMs is not possible at this time. Instead, the quality must be

gauged by comparing their care with the care provided by physicians; by examining the extent to

which patients are satisfied with the care provided

by NPs, PAs, and CNMs; and by assessing physicians’ acceptance of such care. Many studies that

analyze these relationships are methodologically

flawed and almost none examine the quality of

services provided without physician involvement.

The weight of the evidence indicates that,

within their areas of competence, NPs, PAs, and

CNMs provide care whose quality is equivalent

to that of care provided by physicians.3 Moreover, NPs and CNMs are more adept than phy3This study examined the quality of the care provided by NPs

and PAs in primaW-care ambulatory settings and the quality of care

provided by CNMs in ambulatory and inpatient settings.

care sector could have on NPs, PAs, and CNMs;

and assesses how payment modifications in the

context of a rapidly changing health-care system

might influence the roles of these practitioners and

the costs of health care.

Appendix A describes the method of the study

and acknowledges the assistance of the individuals and organizations that reviewed this case

study and provided valuable advice on its content. Appendix B presents a detailed description

of payment for the services of NPs, PAs, and

CNMs by third-party payers in the public and private sectors.

Photo credit American College of Nurse-Midwives

CNM’s improve quality of care and access to care by

providing person-oriented services such as health

education and counseling.
6

sicians at providing services that depend on communication with patients and preventive actions.

The evidence indicates that PAs also perform better than many physicians in supportive-care and

health-promotion activities. Patients are generally

satisfied with the quality of care provided by NPs,

PAs, and CNMs, particularly with the interpersonal aspects of care. Although most physicians

who employ these practitioners are satisfied with

their performance, physicians’ willingness to delegate medical tasks is limited. Many physicians

are more comfortable delegating the routine tasks

related to primary care, such as taking histories,

than the more technical procedures, such as physical examinations. Employment statistics also reflect physicians’ acceptance of these practitioners.

Historically, NPs, PAs, and CNMs have been

credited with improving the geographic distribution of care, because many of them have been

willing to locate in underserved rural and innercity areas. As a result of increases in the supply

of physicians, some physicians are beginning to

practice in smaller communities. Although some

experts believe that the maldistribution of physician manpower will improve over time, access to

primary care is still limited and may persist as a

problem in certain geographic areas. How changing patterns in the distribution of primary-care

physicians will affect the employment and the

practice patterns of NPs, PAs, and CNMs is uncertain, but these practitioners will continue to

play valuable roles in underserved areas.

In addition to improving access to care in rural areas, NPs, PAs, and CNMs increase access

to primary care in a wide variety of nongeographic

settings and for populations not adequately served

by physicians. Studies have shown, for example,

that NPs increase access to primary care for underserved children in school settings, and elderly

patients in nursing homes. CNMs provide effective and low-cost maternity care to underserved,

socioeconomically high-risk pregnant women and

adolescents. NPs, PAs, and CNMs have also improved access by adding to the scope of primarycare services available to patients. NPs and PAs

are competent in guiding individuals through today’s complex health-care system and in caring

for chronically ill adults and children. Preliminary

reports indicate that NPs and PAs also increase

access to primary care in other settings, such as,

in the home and in correctional institutions, where

needed medical care is not always available.

In principle, the scope of NPs’ and PAs’ practice encompasses most of the primary-care services provided by their physician counterparts.

Productivity studies indicate that NPs and PAs

working under physicians’ supervision can increase total practice output by some 20 to 50 percent. Increases in productivity resulting from the

use of NPs and PAs vary widely depending on

the practice settings, on the responsibilities delegated to these practitioners, on the severity and

stability of the patients’ illnesses, and on how the

physicians choose to use the free time that results

from delegating tasks. Although much less information on productivity is available for CNMs

than for NPs and PAs, the degree to which CNMs

can substitute for physicians appears to be considerable.

Indirect evidence indicates these providers could

decrease costs to employers and society. Employment levels for NPs, PAs, and CNMs suggest that

health-care providers consider these practitioners

to be cost-effective substitutes for physicians in

delivering many services. From a societal standpoint, training NPs, PAs, and CNMs costs much

less than training physicians. Given that the quality of care provided by NPs, PAs, and CNMs

within their areas of competence is equivalent to

the quality of comparable services provided by

physicians; using NPs, PAs, and CNMs rather

than physicians to provide certain services would

appear to be cost-effective from a societal perspective.

Effects of Changing Payment Methods

Although the evidence indicates that NPs, PAs,

and CNMs have made positive contributions to

the delivery of health care, these practitioners

have not been used to their fullest potential. Major obstacles to the greater employment and appropriate use of NPs, PAs, and CNMs are that

most third-party payers do not cover (authorize

for payment) the provision by NPs, PAs, and

CNMs of many services that are typically and

characteristically provided by physicians, and, in

those instances where third-party payers do cover
7

the services of NPs, PAs, and CNMs, the payments are most often indirect (i.e., to the employing physicians or institutions) rather than direct

(i.e., to the NPs or CNMs). PAs have not sought

direct payment.

Most NPs, PAs, and CNMs are employed in organized settings where employment is usually not

contingent upon coverage, However, the reluctance of some physicians in private practice to hire

these practitioners stems partly from uncertainties

about payment for their services. NPs and CNMs

in independent practices must depend on patients’

out-of-pocket payments. Some third-party payers

in the public and private sectors cover the services

of NPs, PAs, and CNMs (see table 1-1). Coverage

and direct payment has been mandated most often

for CNMs, and to some extent they have been able

to operate with suitable physician collaboration.

The effects of extending coverage for the services of NPs, PAs, and CNMs and paying directly

for the services of NPs and CNMs would undoubtedly be influenced by the markets for their

services. The health-care system is currently undergoing substantial changes in the supply of physicians and in physicians’ practice arrangements.

Innovations in methods of paying other providers

are multiplying. For example, some third-party

payers are paying prospectively for hospitals’ inpatient services (e.g., Medicare is paying on the

basis of diagnosis related groups4), and cavitation’

is a growing mode of payment. These changes,

along with the fact that an increasing proportion

of the population is aged 65 or older, and thus

in need of significant amounts of health-care services, have major implications for the employment

and use of NPs, PAs, and CNMs and for healthcare costs. The uncertainty surrounding the markets for the services of NPs, PAs, and CNMs in

a health-care system in a state of flux makes it

difficult to predict the effect of payment changes.

4Diagnosis related groups are groupings of diagnostic categories

drawn from the International Classification of Diseases and modified on the basis of surgical procedures, patients’ age, significant

comorbidities or complications, and other relevant criteria. DRGs

are the case-mix measure mandated for Medicare’s prospective hospital payment system by the Social Security Amendments of 1983

(Public Law 98-21).

‘Cavitation payment is prospective payment of a per-capita amount

for all services received by an enrollee or beneficiary during a given

period.

Table 1-1 .—Coverage and Direct Payment for Servicesa of Nurse Practitioners,

Physician Assistants, and Certified Nurse. Midwives

Nurse practitioners Physician assistants Certified nurse-midwives

Direct Direct Direct

Third-party payer Coverage payment Coverage payment Coverage payment

Medicare:

Part A . . . . . . . . . . . . . . . .

Part B . . . . . . . . . . . . . . .

HMO S

C 

. . . . . . . . . . . . .

State Medicaid programsd

Medicare and Medicaid:

Rural Health Clinics. .

CHAMPUS e 

. . . . . . . . . . . .

FEHBP f 

. . . . . . . . . . . . . .

Private insurance . .

. No

No

. . , Yes

. . . . Some

programs

. Yes

. . . . Yes

. . , 7 plans

. . . . In some

No

No

NA

A few

programs

No

Yes

7 plans

In some

No

N o b

Yes

Some

programs

Yes

No

6 plans

No

No

No

NA

None

No

No

6 plans

No

No No

No No

Yes NA

Almost all Almost all

programs programs

Yes No

Yes Yes

20 plans 20 plans

In some In some

States States States States

NA = not available.

aseryices that are typically and characteristically provided by physicians.

bDurlng the publication of this case study, the omnibus Reconciliation Act of 1~ (public Law 99~9) was enacted. The act modifies part B of Medicare and authorizes

payment for (covers) services of physician assistants working under the supervision of physicians in hospitals, skilled nursing facilities, intermediate-care facilities,

and as an assistant at surgery The payment is indirect and at levels lower than physicians would receive for providing comparable services.

cHealth maintenance organizations

dstate Medicaid programs have the option of including Np and pA Services in their Siate Medicaid plans, Congress mandated coverage of CNMS’ SeWiCeS ifl 19S0,

As of January 1985, all States in which CNMS practiced either were complying with the law (Public Law 96-499) or were considering changes in their Medical plans

to comply with the law

ecivilian Health and Medical Program of the Uniformed SerViCeS.

fFederal EmployeesHealth Benefit Program. FEHBP has 21 fee-for-service plans, some of which authorize PaYment to Nps, pAs, and CNMS

gwhether State laws and regulatlofls require or pemlit lrlsurailce Coverage and direct payment for the services of NPs, PAs, and CNMS

SOURCE Office of Technology Assessment, 1986.
8

The effect of modifying the payment system to

cover and allow direct payment for the service

of NPs, PAs, and CNMs depends on their employment setting. Such changes could spur the

growth of NPs’ and CNMs’ independent fee-forservice practices and joint practices with physicians, to the extent permitted under State laws and

regulations. Because CNMs are currently less limited than NPs by payment limitations of thirdparty payers, NPs would benefit most from coverage and direct payment.

Even with coverage and direct payment, the

number of NPs and CNMs engaging in independent practice should be expected to remain very

small. In addition to the restriction imposed by

State laws and regulations, there are many difficulties in undertaking such a practice, including

high startup costs, obtaining malpractice insurance, and high premium malpractice insurance

rates. NPs in independent practices also depend

on physician referrals to establish a clientele. Concerns expressed by physicians and the current

competitive market suggest that such referrals

might not be forthcoming, Independent practices

of CNMs are limited by physician concern with

competition and difficulty in obtaining physician

collaboration and hospital privileges. Although

many patients might continue to prefer a physician, direct payment would give patients the choice

of a wider range of providers.

One possible drawback of coverage and direct

payment is that additional covered providers

might increase the volume of services provided

and increase costs to patients and third-party

payers. Although the sparsity of conclusive data

makes it difficult to allay this concern, the increasing emphasis most third-party payers place on

monitoring the use of services might help control

any increase in the volume of services provided.

Because of their potentially small number, NPs

and CNMs in independent practice might not seri-

‘Such practices would be administratively independent. Administratively independent practices are not clinically independent from

physicians when NPs and CNMs are performing delegated medical

tasks. In addition to the nursing profession’s agreement to clinical

collaboration with physicians, State laws and regulations that proscribe the scope of practice of NPs and CNMs and specify requirements for physician supervision serve as a more formal control on

clinical independence. NPs and CNMs may legally be clinically independent from physicians when performing nursing tasks.

ously affect costs. However, NPs and CNMs in

administratively independent practices could potentially lower costs to third-party payers, patients, and society. If the provision of services by

NPs, CNMs, and physicians did not increase, ’ and

if NPs’ and CNMs’ payment level were lower than

those of physicians for comparable services, lower

costs for third-party payers would be likely. If the

fees to patients reflected the lower payment levels,

costs to patients’ and society could be lower. For

primary care services, such as office visits, savings to patients would be small, because the fee

for the service is small, and because insurance usually covers most of the providers’ fees. Savings

for maternity care could be important, because

the care itself is costly and insurance coverage is

incomplete. Patients, third-party payers, and society could have lower costs if the total costs of

care provided by these practitioners was lower

than the total costs of care provided by physicians

for similar medical conditions.

NPs and CNMs in independent practices would

benefit by being able to offer lower prices as a

competitive strategy. Individual practice association (IPA)-model health maintenance organizations (HMOs), which contract with individual

physicians for services, might turn to NPs as contractors for primary-care services and CNMs as

contractors for maternity services. Preferred provider organizations (PPOs), which contract with

providers to supply services at discounted fees,

might also consider NPs and CNMs as contractors. These developments, however, would be

limited by the increasing availability of primarycare physicians (including obstetricians) and other

barriers (see box 1-A). Moreover, physicians appear to be engaging in price competition as a result of the changing health-care market.

How coverage for NPs, PAs, and CNMs would

affect their employment and appropriate use by

fee-for-service physicians’ practices is uncertain,

because many variables affect physicians’ decisions to employ these practitioners and to dele7N0 direct evidence is available as to how coverage and direct

payment would affect the volume of services provided by NPs and

CNMs. Although research on physicians’ influence on the volume

of services has been conducted for many years, none of the studies

unequivocally proves the magnitude or even the existence of physicians’ ability to control the volume of services (246).
9

gate tasks commensurate with the training of these

providers. If NPs’, PAs’, and CNMs’ services were

authorized for payment, some physicians might

be encouraged to employ and integrate these

providers into their practices, knowing that practices that employ NPs and PAs are better able to

offer competitive prices and broader ranges of

services than are other practices (17). Some physicians might find it advantageous to hire new

physicians, rather than NPs, PAs, or CNMs, because the rate at which physicians’ income is growing is decreasing, and new physicians are expressing interest in salaried positions and are willing

to work for less money than established physicians earn. Employing physicians, rather than

NPs, PAs, or CNMs, might make some practices

more competitive, because of the status patients

often confer on physicians. Physicians with declining patient bases might not be able to justify taking on additional providers and expenses and

might compete by increasing the time spent with

individual patients.

The advantages of extending coverage for NPs’,

PAs’, and CNMs’ services in fee-for-service settings is apparent in certain settings, for certain

populations and where there are demonstrated

shortages of trained personnel. For example, rapid

growth in the elderly population and in the use

of nursing-home care has raised concerns about

the quality and costs of such care. Not only has

#

Extending coverage for NPs to provide primary care

services to elderly nursing home residents would

alleviate a demonstrated shortage of trained

personnel for that population.

physicians’ disinterest in visiting elderly residents

of nursing homes (166) been established, but there

are very few physicians trained in geriatrics (126).

Furthermore the elderly institutionalized population is growing. Although more and better physician care for these patients may be available in

the future, their ability to furnish all the health

needs of this group is questionable. The geriatric

component of many of the training programs of

NPs and PAs has been increased and the 1- to 2-

year length of NP and PA training programs makes

NPs and PAs readily available for providing care.

NPs and PAs have the demonstrated ability to

provide care for a population with chronic problems and functional disabilities. Coverage would

permit NPs and PAs8 to legally provide the primary care services for which they are trained and

licensed—services that many nursing homes find

difficult to supply.

If coverage were extended, NPs and PAs would

most likely provide nursing home visits as employees of physicians’ practices or as team members in group practices to provide nursing-home

visits. If NPs were paid directly, they could function as independent practitioners, supplying primary-care services to nursing homes. Except when

more intensive care can be substantiated, the

Medicare program currently limits the frequency

of physicians’ visits to nursing homes, so thirdparty payer costs in this setting might not be affected as long as payment levels were the same

for NPs and PAs as for physicians. Total costs

to third-party payers would probably decrease because visits to nursing homes by teams of physicians and NPs or PAs would decrease the use of

hospital facilities (128,155,257 ).’

8During the publication of this case study, the Omnibus Reconciliation Act of 1986 (Public Law 99-509) was enacted. The act

changes the Medicare law and authorizes the coverage of the services furnished by PAs under the supervision of physicians in skilled

nursing facilities and intermediate care facilities in States where PAs

are legally authorized to perform the services. This provision takes

effect Jan. 1, 1987. Payments, which go to the employer are 85 percent of the prevailing charges of physician services for comparable

services provided by nonspecialist physicians.

9As app. B describes, a number of other Medicare and Medicaid

regulations specific to nursing homes limit the roles of NPs and PAs

and specify services that must be performed by physicians in order

for the nursing homes’ services to be covered. In addition to permitting coverage under Medicare and Medicaid, amendments to these

regulations would be required in order to encourage the employment and appropriate use of NPs’ and PAs’ services in this setting.
10

Coverage for the services of NPs and PAs could

also be advantageous for home-bound elderly patients and for allowing pediatric NPs to care for

chronically ill children at home. Medical teams

of pediatricians and PNPs—with the PNPs providing routine care, teaching children at home,

and monitoring the program—have been shown

to be effective in minimizing the social and psychological consequences of chronic illness (234).

CNMs could be covered for the maternity care

of pregnant disabled women, in cases where the

disabling condition did not complicate the pregnancy and birth process. Such women might benefit from the individualized care that CNMs typically provide.

Coverage would be advantageous in rural areas

where the lack of medical personnel is a persisting problem. Although the Rural Health Clinics

Services Act of 1977 extended coverage to NPs,

PAs, and CNMs working in rural clinics, not all

residents of such areas have access to clinics. Coverage for NPs, PAs, and CNMs might encourage

their use by physicians in fee-for-service practices

in rural areas who, because of fewer numbers,

must see considerably more patients and work

longer hours than their urban counterparts. Furthermore, direct payment might encourage qualified NPs and CNMs to move into unserved and

underserved areas to expand access to heath care.

Competition among health-care organizations

and the growth of HMOs—which have employed

and used NPs, PAs, and CNMs extensively in the

past—augurs larger roles for these providers in

the health-care system as employees of HMOs.

Cavitation, the method used to pay most HMOs,

does not require providers to bill for specific services, and the services provided by NPs, PAs, and

CNMs in such settings are, for the most part, alPOLICY CONCLUSIONS

NPs, PAs, and CNMs have made important

contributions to meeting the Nation’s health-care

needs by:

. improving the quality and accessibility of

health-care services; and

ready covered by public and private third-party

payers. Thus, coverage and direct payment for

the services of these practitioners would not

directly affect their employment by HMOs.

Such employment might diminish, however, if

competition leads physicians to accept salaries

that are sufficiently low to entice HMOs to employ physicians instead of NPs, PAs, or CNMs.

Another factor that might negatively affect

HMOs’ employment of these practitioners is the

increase in the number of IPA-model HMOs. Because they are primarily organized around physicians who usually practice in private offices,

IPA-model HMOs are less likely than are large

group- or staff-model HMOs to employ these providers. Although the number of IPA-model HMOs

has increased, the group- and staff-model HMOs

have the greatest number of enrollees.

The data suggest that NPs, PAs, and CNMs offer financial savings to capitated HMOs. An increasingly competitive environment might encourage providers to pass on to consumers the

savings generated by the employment and appropriate use of NPs, PAs, and CNMs, which would

benefit society.

Providing coverage or direct payment for the

services of NPs, PAs, and CNMs would not necessarily affect their employment by hospitals for

inpatient care. NPs, PAs, and CNMs who work

in hospitals are usually hospital employees, and

the hospitals pay their salaries. Furthermore, there

is no statutory permission or lack of permission

under Medicare or Medicaid for payment of NPs’,

PAs’, or CNM’s services as inpatient hospital services when these providers are employed by hospitals. Most other third-party payers are also silent on this issue. With coverage, these services

could be billed for as professional services.

● increasing the productivity of medical practices and institutions.

These practitioners have been accepted in a wide

range of settings under many different payment

schemes, have the potential to reduce health-care
costs, and clearly play legitimate roles in the

health-care system.

Although NPs, PAs, and CNMs are not employed and used to their fullest potential, many

third-party payers in the public and private sectors are gradually lowering the barriers presented

by current payment methods and coverage restrictions.

Although Federal third-party payers vary considerably in the extent of their coverage of and

payment for the services of these providers, in

general, coverage and direct payment is limited

(see app. B). Federal third-party payers could be

more in step with new and evolving payment

practices by liberalizing coverage and payment

restrictions for the services of NPs, PAs, and

CNMs. A major policy question is the manner of

liberalizing coverage and policy restrictions. Coverage could be extended for NPs’, PAs’, and

CNMs’ services in all settings or only in certain

settings. Direct payment for the services of NPs

and CNMs would further remove barriers to practice. (PAs have not sought direct payment. )

How extending coverage for the services of

NPs, PAs, and CNMs in all settings would affect

their employment and use varies on the setting:

• little change would occur in HMOs and inpatient hospital settings; and

• the effect in physician fee-for-service practice settings is unclear.

Coverage for the services of NPs, PAs, and

CNMs by additional payers would have little effect on the employment and use of these providers

by HMOs or by hospitals for inpatient care. While

important changes in employment opportunities

could occur in physician fee-for-service practices,

the direction of change is not clear because of the

large number of variables that affect physicians’

decisions. Since the effect on costs is directly related to the extent of employment, this question

also remains unanswered.

Extending coverage for NPs’, PAs’, and CNMs’

services in all settings or limiting coverage for their

services to certain settings where health-care services are currently inaccessible or inadequate would

benefit certain individuals, such as:

● those in certain locales (geographically underserved rural and inner-city areas);

● those in certain settings (e.g., homes and

nursing homes); and

● specific populations (e. g., some disabled pregnant women and some chronically ill patients,

both adults and children).

Covering the services of NPs, PAs, and CNMs

might encourage physician fee-for-service practices to employ these providers and use them in

settings and for populations that are not receiving sufficient and adequate care. Because payment

would be to employing physicians, physicians

would have the final authority for the employment and the exact nature of NPs’, PAs’, and

CNMs’ responsibilities. Physicians would have to

recognize the advantages of using NPs, PAs, and

CNMs in their practices for providing care to unserved and underserved individuals.

Direct payment as well as coverage for services of NPs and CNMs might enable them to develop independent practices in competition with

physician practices. Legal and financial restrictions could be expected to keep the numbers of

NPs and CNMs in independent practice very small.

Competition from an increasing supply of physicians might offset the gains direct payment would

bring to the independent practice of NPs and

CNMs.

How adding these practitioners, particularly as

independent practitioners, to the health-care system, would affect costs cannot be resolved at this

time. The suspicion exists that total costs would

increase, but data are not available to answer the

question. If costs increased due to an increase in

the provision of services, volume controls could

be instituted.

If the overall volume of services did not increase, and if the NPs’ and CNMs’ payment levels

were lower than physicians’ levels for comparable services, third-party payers’ costs might decrease. Patients might realize savings from decreases in the fees for some services. The extent

of any savings would depend on what payment

levels were established. In any event, patients

could choose from a wider range of providers and

might have greater access to primary-care services.
12

Direct payment for the services of NPs and PAs

could be limited to certain settings where there

are demonstrated shortages of primary-or maternity care services. For example, direct payment

might be provided to NPs and CNMs who increase geographic access to care. NPs and CNMs

in independent practice may prove a viable solution for meeting the health-care needs of sparsely

populated areas that cannot support a physicians’

practice. However, limiting direct payment to certain areas and populations may not be an efficient

cost containment measure because of the potentially small number of independent practices.

It seems clear that coverage for the services of

NPs, PAs, and CNMs in at least some settings

could improve health care for segments of the

population that are not being served adequately.

How coverage would affect costs is unclear, but

the long-term result could be notable savings. The

effect of direct payment on costs is even less certain, but it might enable NPs and CNMs to practice in unserved and underserved areas to expand

access to health care.

ADDENDUM: DEFINITIONS AND DESCRIPTIONS

Descriptions of the general roles of NPs, PAs,

and CNMs indicate the similarities and differences

of these three types of health practitioners. (See

table 1-2 for a comparison of their general characteristics. )

Today’s nurse, operating in an expanded role

as a professional nurse practitioner, provides

direct patient care to individuals, families and

other groups in a variety of settings. . . . The

nurse practitioner engages in independent decisionmaking about the nursing needs of clients,

and collaborates with other health professionals,

such as the physician, social worker, and nutritionist in making decisions about other health

needs. The nurse working in an expanded role

practices in primary, acute, and chronic health

care settings. As a member of the health care

team, the nurse practitioner plans and institutes

health care programs.

–GEMNAC, 1979

The purpose of the physician assistant in primary care is to help the physician provide personal health service to patients under his care.

An assistant works with a supervising physician

in performing clinical functions and tasks which

prior to the mid-1960s were reserved principally

if not solely for performance by the physician.

–Allied Health Education Directory, 1985

[Nurse-midwifery practice is] the independent

management of care of essentially normal newborns and women, antepartally, intrapartally,

postpartally and/or gynecologically [and] occurs

within a health care system which provides for

medical consultation, collaborative management, and referral.

—American College of Nurse-Midwives, 1984

PAs differ from NPs and CNMs in their working relations with physicians. PAs always work

under physicians’ supervision, whereas NPs and

CNMs work under physicians’ supervision, or in

collaborative relationships with physicians and

other health professionals. Another major difference lies in the training these practitioners undergo. NPs and CNMs are licensed registered

nurses 10 who have received advanced training beyond that of other registered nurses. NPs are

trained as generalists in the provision of primary

care services. They may choose to specialize at

the graduate level and deal with specific populations, as do geriatric or pediatric NPs. CNMs receive advanced training in midwifery. PAs, however, are not required to be registered nurses, and

the great majority are not. They come from a variety of backgrounds and experiences before training to become PAs. Most PAs have had 3 or more

years 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 diploma

programs; and 4-year baccalaureate-degree programs. The trend to

make nursing education more academic and uniform is reflected in

the discontinuation of many hospitals’ diploma programs, although

this has not resulted in an increased demand for baccalaureate edu-

cation for nurses.
13

Table 1-2.—Comparison of Nurse Practitioners, Physician Assistants, and Certified Nurse-Midwives

Nurse practitioners

Date of first educational

program ,. ., .............1966

Approximate number trained .25,000 to 30,000a

Approximate number employed

in field of trainingd

. 15,433e

Services . . . . . . . . . . Provide medical services within

limits of competence; provide

counseling and health-promotion

services

Role . . . . . . . . . . Provide advanced nursing

services, including working with

clients having complex or multiple

needs; provide medical services in

collaboration with physicians and

other health providers

Settings . . . . . . . . . Mainly primary care; trend toward

hospitals, long-term care facilities,

and other settings

Education Registered nurse with additional

training, increasingly at masters

level

Physician assistants –

1965

18.116 b

16,000f

Provide medical services as

assistants to physicians

Provide medical care under

supervision of physicians

Mainly primary care; trend

toward hospitals, long-term

care facilities, and other

Special academic and on-thejob training

Certified nurse-midwives

1931

3,500C

2,0009

Provide full range of prenatal,

labor, delivery, and postpartum

care; family-planning counseling,

and gynecological services

Provide midwifery services in

consultation with physicians,

mainly serve low-risk women;

increasingly work administratively

independent of physicians

Hospitals, trend toward birthing

centers, health departments. and

family planning clinics

Registered nurse with additional

training. about half at masters

level

Approximate average Income $25,975h

$27,560’ $25,000J

i?IEStlrn.at@ bY Denl~e GelOt, Dlvl~lOn of Nur~l ng, B“ rea” of Health pr~fes~i~n~, Health Resources and services Admi nlstratlon, Publ IC Health seWl Cfc3 U S be~artm-en-t

of Health and Human Services, Rockvllle, MD, personal communication, Aug 20, 1966

b Amerlcan Academy of Physician Assistants, “AAPA Membership Statlstlcs by Graduation Date,” Arllngton, VA, May 13. 1986

cE~tlmated by American Col}ege of F4urse-Mldwlves, Washington, DC, PerSOnal communication Aug 20, 1986

dThe figures for NPs and CNMs are from 198rJ Later data from the U S Department of Health and Human services, Publlc Health SeTVICe Health Resources and Serv

Ices Adml nl strat Ion, Bureau of Health Professions, Divlston of Nursl rig, ” 1984 National Sample Survey of Registered Nurses, ” Rockwlle, MD Indicates that the ag

gregate number of employed NPs and CNMS is 18642

eN a t ,Onal sample Sumey of Registered Nurses, November 1980, i n ‘Registered N Ursepopulation and Overview, ’ U S Department of Health and Human Serv{ces Pub

IIC Health Service, Health Research Services Adminlstratlon, Publication No HRS.P-OD-83-I, November 1982

fEstlmated by Gretchen Shafft, American AcademY of physlclan Assistants, Arlington,VA, personal communlcatlon, Sept 15, 1986

gEsttmate from Kathy Mlchels Ass!stant Director, Congressional and Agency Relatlons, American Nurses’ Assoclatlon, Washington DC personal commun!catlon

June 17, 1986

hu s Department of Health and Human SewIces publlc Health Service, Health Resources and SWVlCt2S Admlnlstratlon, Bureau Of Health professions Dlvlslon of Nursing, 1984 National Sample Survey of Registered Nurses, ” Rockvllle, MD

IAmerlcan Academy of Physlclan Assistants, 1984 Rrys/c/an Ass/sfarrt Masterf//e Survey (Arl!nglon, VA 1984)

jAmerlcan college of Nurse Mldwlves, Washington DC, personal communication Aug 20, 1986

SOURCE Off Ice of Technology Assessment 1986

of experience in health-related fields, although

these are not entrance requirements for the training programs.

Certification is available to all three types of

health practitioners and is required for CNMs.

Certification is offered to registered nurses by the

American Nurses Association, by nurse-specialty

associations and by some academic nursing-education programs. An NP can be certified after

completing either an NP-master’s program or an

NP-certificate program. Master’s degree programs

require applicants to have baccalaureate degrees

and registered-nurse licenses, and such programs

entail an average of more than a year of additional

training. Certificate programs are generally a year

long and require registered-nurse licenses. CNMs

are certified according to the requirements of the

American College of Nurse-Midwives. PAs are

certified by the National Commission of Certification of PAs.

CNMs are trained to provide care for essentially

normal expectant mothers and to handle abnormal cases by referring the patients to physicians

or by consulting physicians or working jointly

with them. Specific functions include providing

prepartum care, managing normal deliveries, providing postpartum care, providing gynecological

care, providing care to normal newborns and infants, and providing family-planning services.

NPs are taught to perform functions beyond

those of traditional nursing and to assume responsibility for some of the care usually provided by

physicians (see box I-B). PAs are also trained to

provide some of the services typically provided

by physicians (see box I-B). PAs are trained in
14

interpersonal skills, but not to the extent that NPs

and CNMs are. Indeed, counseling and health

education are traditional dimensions of nursing

practice. Although many PAs pursue medical and

surgical subspecialties, this study focuses on those

PAs who are primary-care practitioners in ambulatory settings.

The roles PAs and NPs play depend on their

work settings. In some settings, no functional distinctions between NPs and PAs exist; in other settings the two types of providers function very

differently. NPs, as registered nurses, perform the

full scope of nursing practice in addition to performing medical tasks, whereas PAs only perform

medical tasks. In reality, NPs and PAs often perform the same roles, and evaluations often focus

on NPs and PAs collectively, rather than on either NPs or PAs alone.
Chapter 2

Quality of Care
Chapter 2

Quality of Care

Because health care encompasses both technical care and the art of care (146), the quality of

both must be assessed in determining the quality

of the care provided by nurse practitioners (NPs),

physician assistants (PAs), and certified nursemidwives (CNMs). Technical care comprises the

INDICATORS OF QUALITY

Current methods of evaluating the quality of

care provided by NPs, PAs, and CNMs are inexact. Structure, process, and outcome of care are

traditionally used to measure the quality of care

provided by physicians (70).1 The quality of care

provided by NPs, PAs, and CNMs is often evaluated by comparing the process and outcome2 of

the care they provide with the process and outcome of the care physicians deliver. Other accepted

indicators of the quality of care provided by NPs,

PAs, and CNMs are patients’ satisfaction and,

to a lesser extent, physicians’ acceptance.

Comparisons With Physicians

The quality of care provided by NPs, PAs, and

CNMs can be compared to the quality of care provided by physicians with regard to only those

functions that both physicians and NPs, PAs, and

CNMs usually perform. Comparisons based on

functions outside the scope of NPs’, PAs’, and

CNMs’ training and practice, or on functions that

I Structural measures evaluate descriptive characteristics of facilities and providers, e.g., the soundness of a building and the board

certification of a physician. Process measures evaluate what a provider does to and for a patient, e.g., order a cardiogram for a patient with chest pain. Outcome measures evaluate the result of patient care, i.e., health status. Although outcome measures are the

most accurate available measure of quality, they are difficult to obtain. (For a discussion of the problems associated with measuring

the outcome of care, see OTA’s 1986 report, Payment for F’hysician Services: Strategies for Medicare (246). )

‘The structural measures applicable to NPs, PAs, and CNMs include their certification, and the accreditation of their training programs and of their continuing education programs.

3Although acceptance and satisfaction are not synonymous, the

literature uses the words interchangeably in describing positive responses 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 which

care is provided and the provider’s manner and

behavior in caring for and communicating with

the patient (146).

physicians do not usually perform are unreasonable.

Comparison studies are biased against NPs,

PAs, and CNMs because the studies assume the

medical model as the standard—physician care

is considered the standard for care. This standard may be appropriate for measuring the technical quality of the tasks that NPs, PAs, CNMs,

and physicians perform. But the medical model

may be less suitable for measuring the interpersonal quality or art of care, which is more characteristic of care provided by NPs, PAs, and

CNMs than of that provided by physicians. Indeed, health promotion, teaching, and counseling are the essence of nursing education and are

also stressed in the curricula for training NPs and

CNMs. PAs also receive training in interpersonal

skills, but to a lesser extent. Physicians can legally

provide health education and counseling, but the

training in these skills varies among medical specialties and medical schools. Among physicians,

only family practitioners and psychiatrists receive

extensive training in interpersonal skills, although

some physicians in all specialties provide personal

care.

Some other comparison studies are biased in

favor of NPs, PAs, and CNMs. In studies where

patients are not randomly assigned, patients assigned to NPs, PAs, and CNMs are, on the whole,

healthier than patients who see physicians exclusively; and either the practitioners or patients can

decide to consult physicians at any time. Of those

patients who consult physicians, those who choose

to remain exclusively under the physicians’ care

17
18

most likely are less healthy than those who return to the NPs, PAs, or CNMs.

Patients’ Satisfaction

Looking to patients’ satisfaction as an indication of quality of care reflects an increasing sensitivity to patients’ interests and concerns and a

recognition that outcomes partly depend on patients’ attitudes. Little evidence, however, suggests

that patients’ satisfaction positively correlates with

favorable technical outcomes (70). Patients’ judgments may be based less on the therapies’ success

than on the interpersonal aspects of care—for example, on how courteously patients felt they were

treated, how they assessed the value of the advice they received, on how much time they spent

with the providers, and on how their emotional

states changed (267). Nonetheless, if patients are

dissatisfied with the services they receive, part of

the reason for their dissatisfaction may be that

their expectations have not been fulfilled.

Malpractice insurance premium rates and malpractice claims can also be used to judge patients’

satisfaction. The comparison between physicians

and NPs, PAs, and CNMs is crude because the

number and scope of services provided by physicians differ from those provided by NPs, PAs,

and CNMs. The interpersonal aspects of care appear to influence malpractice cases: physicians

who maintain good relations with their patients

tend to be sued less frequently than physicians

who lack rapport with their patients (185).

Physicians’ Acceptance

Some authorities reject the notion that physicians’ acceptance of NPs, PAs, and CNMs indicates that the care they provide is good. Other

authorities believe that physicians’ acceptance of

such providers indicates good care to the extent

that physicians evaluate the care given by the

providers against the standard of physicians’ care.

Physicians’ evaluations of the care provided by

NPs, PAs, and CNMs in their employ, however,

might be affected by the physicians’ fiscal interests. Physicians pleased with the financial results

of employing NPs, PAs, or CNMs might view

these providers favorably, whereas physicians displeased with the financial results might show their

displeasure in negative assessments of the work

of these providers. Other subjective factors, such

as gender or personal acquaintance, might influence the degree to which physicians accept NPs,

PAs, and CNMs. Competition from NPs and CNMs

in independent practice, for example, certainly influences physicians’ acceptance of such practitioners.

METHODOLOGICAL PROBLEMS OF STUDIES

One 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 CNMs with the

include using small samples, focusing on short- processes and outcomes of care provided by house

term outcomes, using nonrandomized study pop- staff rather than by experienced physicians. Study

ulations, applying single evaluation criteria, using designs that compare only medical tasks as perincomplete and unstandardized medical records formed by physicians with tasks performed by

data, and choosing nonrepresentative samples or NPs and CNMs are incomplete because they igsites. Some studies, because they were conducted nore the advanced nursing responsibilities that

by educators and other proponents of NPs, PAs, NPs and CNMs also fulfill.

and CNMs, 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 their own

designs. The conclusions of these trials, as well

4N0 bias against NPs, PAs, and CNMs was apparent in the studies as other less rigorous studies, can be generalized—

examined for this review. applied to other populations and settings—but
19

only in a limited way. Many studies report on are more or less flawed. Problems include misinonly a few NPs, PAs, or CNMs in only one set- terpretation of questions by respondents, investing, which limits the applicability of the findings tigators’ bias in framing questions, and reliance

for other providers and other settings. on the respondents’ memories. Little attention has

Some of the studies of patients’ satisfaction and been given to the systematic development of the

physicians’ acceptance are opinion surveys that, questionnaires or measuring scales used by invesdepending on the rigor of design and execution, tigators.

QUALITY OF NURSE PRACTITIONERS’ CARE

Comparisons With Physicians

Reviews of comparison studies (230,242) and

individual studies comparing NPs and physicians

find that the quality of care provided by NPs functioning within their areas of training and expertise tends to be as good as or better than care provided by physicians (50,51,72,104, 186,199,231).

In some cases, the quality of NP care is equivalent to physician care (see table 2-1). For example, NPs generally resolve patients’ acute problems

as well as physicians (130,139), and the functional

status of patients treated by NPs and physicians

is equivalent (212). Spitzer (231) found no difference between NPs and physicians in the adequacy

of their prescribing practices. Other researchers

found that NPs prescribe and use medications less

frequently than do physicians, and that NPs tend

to prescribe only well-known and relatively simple drugs (29,204,225). The studies did not ascertain whether the differences in the prescribing

habits of physicians and NPs stem from differences in patient mixes, prescribing philosophies,

or other causes.

The quality of NPs’ care differs from that of

physicians’ care in other instances (see table 2-2).

NPs appear to have better communication, counseling, and interviewing skills than physicians

have (84,104,178), a conclusion reinforced by one

literature review citing a number of “variables for

which nurse practitioners received higher scores

than physicians. ” These variables include:

. . . amount/depth of discussion regarding child

health care, preventive health, and wellness; amount

of advice, therapeutic listening, and support offered to patients; completeness of history, including the recording of previous problems and followup of problems and therapies; completeness

of physical examinations and interviewing skills,

and patient knowledge about the management

plan given to them by the provider (187).

Table 2-2 also suggests that NPs are especially

good at assisting ambulatory patients with chronic

problems such as hypertension and obesity (189,

211). After clinic visits for chronic problems, NPs’

patients are less likely than physicians’ patients

to report that their activities are limited or that

they experience anxiety about their problems (139).

Whether NPs’ interpersonal skills contribute to

their ability to care successfully for patients with

chronic problems has not been determined. Physicians, however, appear to provide better care

in managing problems that require technical solutions (104).

Patients’ Satisfaction

Overall, patients are satisfied with the care they

receive from NPs (25,41,80,82,139,141,145,207,

231,265). Moreover, patients appear to be more

satisfied with the care they receive from NPs than

with care from physicians, in regard to several

factors: personal interest exhibited, reduction in

the professional mystique of health-care delivery,

amount of information conveyed, and cost of care

(41,145,190),

A few studies, however, indicate patients’ dissatisfaction with one or more aspects of NPs’ care

or show patient preference for physicians’ care.

Patients are concerned about long waits to see NPs

(145),5 about how well NPs communicate with pa5This finding was consistent across 10 settings, including solo practices, university student-health centers, public health-department

clinics, private-hospital outpatient clinics, and a health maintenance

organization.
20

Table 2-1 .–Equivalence in Quality of Care Provided by Nurse Practitioners (NPs) and Physicians (MDs)

Activity or measure Setting

Process measures:

Adequacy of pediatric physical

assessment . . . . . . . . Health center, low-income

neighborhood

Adequacy of prescribing

medication . . . . . . . Two MD family practice

Adequacy of the management of

episodes of care . . . . . . . . . . . . . HMO

Management of hypertensive

patients . . . . . . . . . . . . . . . . . . . Rural primary care center

Similarity of treatment plans for

pediatric patients . . . . . . . . . . . Military outpatient clinic

Short- and long-term compliance

by patients . . . . . . . . . . . . . . . . Emergency room

Outcome measures:

Patient’s physical, emotional, and

social functional status . . . . Two MD family practice

Resolution of acute problems . . . . Hospital ambulatory care

clinics

Resolution of acute problems Prepaid group practice

Reductions in pain or discomfort

among pediatric patients. . . . . . . Prepaid group practice

-. .

Study type Source

Retrospective chart review

Randomized controlled trial

Prospective; chart review, timing of

segments of patient visits

Retrospective chart review

Retrospective evaluation of NPs’ and

MDs’ treatment plans

Prospective study with data collection at

emergency room visit, short-term

followup, and long-term followup

Randomized controlled trial

Record review

Survey of providers and patients with

telephone followup of patients at 1

week

Survey of providers and patients with

telephone followup of patients at 1

week

Duncan, et al., 1971

Spitzer, et al., 1974

Spitzer, et al., 1974;

Salkever, et al., 1982

Watkins and Wagner, 1982

DiGirol and Parry, 1983

Powers, et al., 1984

Sackett, et al., 1974

Komaroff, et al., 1976

Levine, et al., 1976

Levine, et al., 1976

SOURCE Process meesures: M.T. DiGirol and W.H Parry, “Consultation to the Pediatric Automated Military Outpatient Systems Specialist (AMOSIST): A Comparison

of Consultation by a Pediatric Clinical Nurse Specialist and by a Pediatrician, ” Mi/itary Med. 146(4):364-367, April 1963; B. Duncan, AN, Smith, and H.K. Silver,

“Comparison of the Physical Assessment of Children by Pediatric Nurse Practitioners and Pediatricians, ” Am. J. Pub/ic Hea/th 60(6):1 170-1176, June 1971;

M J. Powers, A Jalowiec, and PA. Reichert, “Nurse Practitioner and Physician Care Compared for Nonsurgery Emergency Room Patients,” Nurse Practitiorrer 9(2):39-52, February 1984; W O Spitzer, D L. Sackett, J,C Sibley, et al , “The Burlington Randomized Trial of the Nurse Practitioner,” N. Eng/. J. Med.

290(5):251-256, Jan. 31, 1974; L.O. Watkins and E.H. Wagner, “Nurse Practitioner and Physician Adherence to Standing Orders Criteria for Consultation or

Referral,” Am. J Pub/ic f-fea/t/r 72(1):22-29, January 1982.

Outcome measures: D.M. Levine, L.L. Morlock, Al. Mushlin, et al., “The Role of New Health Practitioners in a Prepaid Group Practice: Provider Differences

in Process and Outcomes of Medical Care, ” Med. Care 14(4):326-347, April 1976; A.L. Komaroff, K. Sawyer, M. Flately, et al., “Nurse Practitioner Management

of Common Respiratory and Genitourinary Infections, Using Protocols, ” Nurs. Research 25(2) ’64-89, March-April 1976; D.L. Sackett, “The Burlington Randomized

Trial of the Nurse Practitioner: Health Outcomes of Patients,” Annals /nt Med. 80(2):137.142, February 1974, D.S. Salkever, E A. Skinner, D.M. Steinwachs,

et al., “Episode-Based Efficiency Comparisons for Physicians and Nurse Practitioners, ” Med Care 20(2):143-153, February 1982.

tients (139), and about whether NPs can care for

what patients perceive to be serious medical problems (131). Patients are dissatisfied with NPs who

do not consult with physicians about diagnostic

and treatment decisions (80,198). Some of these

findings, particularly those having to do with

waiting time and communication, contradict those

of other studies (41,71,104,178,195), suggesting

that some aspects of NPs’ care may require further research.

Additional research on patients’ satisfaction

would be especially timely now, when the Nation’s supply of physicians is growing, and more

physicians seem to be locating in small towns

(36,39,68,174,264), where a relatively large proportion of NPs have been providing health services. Any factors that might contribute to patients’

dissatisfaction with NPs’ care are likely to limit

the employment and use of NPs as the growing

supply of physicians allows more consumers to

choose between NPs and physicians.

Malpractice insurance premiums and the incidence of malpractice claims indicate that patients

are satisfied with NP care. Although insurance

premiums for NPs are increasing, successful malpractice suits against them remain extremely rare.

Not surprisingly, most of the estimated $1.4 billion in malpractice claims paid in the United States

in 1984 (62) resulted from suits against physicians,

particularly physicians in the surgical subspecialties. Physicians, however, far outnumber other

types of providers, generally deal with the most

complex cases, and have more financial resources

than other providers.
21

Table 2-2.—Difference in Quality of Care Provided by Nurse Practitioners (NPs) and Physicians (MDs)

Activity or measure

Process measure:

Number of diagnostic tests

Number of diagnostic tests

Thoroughness of documentation

of diagnosis and treatment

Information

Adequacy of a telephone

management of common pediatric

problems

Effectiveness of Interpersonal

management skills (Interviewing,

communicating)

Management of problems

requiring technical solutions

Outcome measures:

Rate of patient return to

employment

Reduction in number of

symptoms in patients

Level of patient awareness of

provider orders

Level of control of blood pressure

in patients with hypertension

Level of control of blood pressure

in patients with hypertension

Level of activity limitation and

anxiety m patients with chronic

problems

Amount of reduction in pain or

discomfort in adult patients

Amount of weight reduction in

obese patients —

Relative quality of

care by NPs and MDs

NP > MD

NP > MD

NP > MD

NP > MD

NP > MD

NP < MD

NP > MD

NP > MD

NP > MD

NP > MD

NP > MD

NP < MD

NP > MD

NP > MD

Setting

Hospital outpatient clinic

HMO

Preventive medicine department

of a multispecialty clinic

University pediatric clinic

University pediatric clinic

Jail health service

University hospital medical clinic

University hospital medical clinic

University hospital medical clinic

City hospital and health

department clinics

University hospital hypertension

clinic

Prepaid group practice

Prepaid group practice

University hospital hypertension

clinic

Study type

Random assignment of patients

record review, time and motion

studies, patient interviews

Prospective, chart review timing of

segments of patient visits

Cross sectional Patient survey and

chart review

Programed calls from a trained

person about selected pediatric

problems, calls recorded and

analyzed

Programmed calls from a trained

person about selected pediatric

problems calls recorded and content

analyzed

Record review and audit

Random patient assignment

interviews, chart reviews

Random patient assignment

interviews, chart reviews

Random patient assignment

interviews, chart reviews

Record review

Prospective record review

Survey of providers and patients with

telephone followup of patients at 1

week

Survey of providers and patients with

telephone followup of patients at 1

week

Prospective record review

Source

Flynn 1974

Salkever et al 1982

Brown et al 1979

Perrin and Goodman 1978

Perrin and Goodman, 1978

Hastings et al 1980

Hastings et al 1980

Lewis et al 1969

Lewis et al 1969

Flynn 1974

Runyon 1975

Ramsay, et al 1982

Ramsay et al 1982

Levine, et al 1976

Levine et al 1976

Ramsay et al 1982

SOURCE Process measures: J D Brown, M I Brown, and F. Jones, “Evaluation of a Nurse Practlt loner. Staffed Preventive Medlclne Program In a Fee.for.Service

Multlspeclalty Cllnlc.” Prev Med 8(1) 53-64, January 1979, B C Flynn, “The Effectiveness of Nurse Cllniclans’ Serwce Delivery, ” Am J PIJMIC Hea/th 64(6) 604-611,

June 1974, G E Hastings, L Vlck G Lee, et al “Nurse Practlt!oners in a Ja!lhouse Clinic, ” Med Care 18(7) 731.744, July 1980, E C Perrln and H C Goodman,

‘ Telephone Management of Acute Pedlatrlc Illnesses, ” N Errg/ J Med 298(3)130-135, Jan 19, 1978

Outcome measures: B C Flynn, “The Effectiveness of Nurse Cllnlcians’ Service Delivery, ” Am J Pub/fc Health 64(6)”604.611, June 1974; D M Levtne, L L

Morlock, A I Mushlln, et al., “The Role of New Health Practltloners In a Prepaid Group Practice Provider Differences in Process and Outcomes of Medical

Care, ’ &fed Care 14(4) 326-347 April 1976, C E Lewis, B A Resnlck, G Schmidt, et al , “Actlvltles, Events and Outcomes In Ambulatory Patient Care,’” N

Errg/ J Med 280(12) 645-649 Mar 20, 1989, J A Ramsay, J K McKenzie, and D G Fish, “Physlclans and Nurse Practlt!oners” Do They Provide Equivalent

Health Care?” Am J Pub/Ic F/ea/th 72(1 )’55.57, January 1982, J W Runyon, “The Memphis Chronic Disease Program Comparisons in Outcome and the Nurse’s

Extended Roles, J A M A 231(3 )”264-270, Jan 20, 1975 D S Salkever, E A SkInner, D M Stelnwachs, et al , “Episode-Based Efflclency Comparisons for Physlclans

and Nurse Practltloners Med Care 20(2) 143.153 February 1982

Physicians’ Acceptance

A variety of factors affect physicians’ opinions

of NPs. For example, physicians are more inclined

to approve NPs’ performance of relatively simple tasks, such as history-taking, than to approve

NPs’ performance of more challenging clinical

tasks (84,108). Another major factor influencing

physicians’ opinions of NPs is personal contact.

Physicians who work with NPs express more satisfaction with NPs’ performance and more willingness to delegate higher level tasks than do physicians whose contact is indirect or nonexistent

(21,134,223). This finding might indicate quality,

but it might also reflect physicians’ opinions about

such non-quality-of-care factors as the relatively

low cost of NP care or the freeing of time for physicians to see more patients or to spend in leisure.
22

Physicians in group practices and in institutional

settings are more supportive of NPs than are solo

practitioners. The level of physicians’ satisfaction

increases with the degree of their control over the

activities of NPs (21).

Many physicians who approve of the concept

of NPs have expressed only limited interest in actually employing them (134,223), although NPs

and PAs were introduced and established in the

United States largely because a minority of physicians chose to support, train, and hire them.

About 65 percent of the NPs in the United States

were employed as NPs in 1982, compared with

69 percent in 1974 (237).6 No documented reason

—

bMore recent longitudinal, nationwide data on NP employment

are not available.

is available for the decrease in the employment

rate, although some observers have attributed the

slight downward trend to lack of acceptance by

physicians, restrictive State licensing, and unfavorable reimbursement practices (135).7 Furthermore, the validity of these statistics is questionable, because they are based on a very small number

of NPs.

7Many other factors may also contribute to the lower employment rate. The number of Master’s programs preparing nurse practitioners has grown substantially (from 74 in 1977 to 124 in 1981),

and the number of certificate programs has decreased (from 124 to

84 during the same period) (262). The decrease in employment may

also partly reflect the increased number of NPs removing themselves

from the work force and seeking doctoral degrees.

QUALITY OF PHYSICIAN ASSISTANTS’ CARE

Comparisons With Physicians

Within the limits of their expertise, PAs provide care that is equivalent in quality to the care

provided by physicians (73,92,129,230,242). What

little evidence is available about how the quality

of PAs’ care differs from the quality of physicians’

care indicates that PAs provide more counseling

of obese patients than physicians provide (129),

that PAs spend more time educating patients than

physicians spend (159), and that PAs’ patients

generally are better able to resume their usual level

of functioning than are patients of physicians

(226).

Patients’ Satisfaction

The few available studies that directly address

patients’ satisfaction indicate that patients generally are as highly satisfied with the care they receive from PAs as with the care received from NPs

(127,173,179,207). One study found that patients’

satisfaction is tempered by the desire to see PAs

perform routine functions rather than make independent diagnostic and treatment decisions

(227).

/

,!I\\

Photo credit: American Academy of Physician Assistants

The care provided by PAs functioning within their areas

of training and expertise tends to be equivalent in

quality to the care provided by physicians for

comparable services.
23

Physicians’ Acceptance

Physicians initiated and developed the concept

of PAs and serve as instructors in PA training programs. PAs function as their name implies—as assistants to physicians. Thus, it is not surprising

that many physicians accept PAs and are satisfied with their work (125,129,179,208).

Physicians’ confidence in PAs extends beyond

routine care. One recent study found that although physicians generally delegate routine, uncomplicated cases to PAs, physicians also permit

PAs to treat walk-in patients with urgent problems if the physicians cannot treat those patients

and honor previously scheduled appointments

(57). Perry and Breitner (182) found that supervising physicians rate PAs higher than NPs on

tasks involving educating, counseling, or instructing patients.

The high level of physicians’ satisfaction with

PAs may help account for their continued high

employment rate. Employment rates provide the

most consequential expression of physicians’ acceptance, and nearly 86 percent of the Nation’s

PAs were employed as PAs in 1981 (45). By 1984,

the employment rate had increased slightly to approximately 88 percent; only 8.4 percent had not

been employed as PAs for more than a year (219).

QUALITY OF CERTIFIED NURSE-MIDWIVES’ CARE

Comparisons With Physicians

CNMs can manage normal pregnancies safely

and can manage them as well as, if not better than,

physicians (65,148,190,193,226). Studies show

that, in accordance with their training, CNMs recognize deviations from the norm and seek medical consultation promptly (65,210). The fact that

CNMs provide standard care has been documented

in a variety of settings, including hospital inpatient

services, hospital clinics, migrant health centers,

neighborhood health centers, and private practices (67).

As measured by such short-term indicators as

Apgar scores (a numerical expression of the condition of a newborn infant) and birthweight, comparable outcomes of normal, low-risk pregnancies

result from care by CNMs and care by physicians

(65,196,226). CNMs’ care and physicians’ care

also compare with regard to birth outcomes measured by fetal, perinatal, neonatal, and maternal

mortality (65,181). A randomized clinical trial of

uncomplicated deliveries showed no significant

difference in the outcome of care whether provided by CNMs or by the obstetric house staff,

except that CNMs kept more appointments and

performed fewer forceps deliveries (226).

Data on birth outcomes reveal that proportionately fewer low-birth-weight infants result from

deliveries managed by CNMs than from those

managed by physicians (253). Although this might

seem to indicate that CNMs provide better care

than physicians, it might reflect CNMs’ referral

of high-risk pregnancies to physicians. In one recent study, the low-birth-weight rate for CNMmanaged deliveries was 28 percent less than the

control group’s rate; the CNMs had also provided

prenatal care, whereas the control group received

prenatal care from State-supported maternal and

child-care clinics (184).

CNMs appear to differ from obstetricians in

some processes of care. CNMs order medications

less frequently than do obstetricians (65), low-risk

patients of CNMs have shorter inpatient stays for

labor and delivery than do low-risk patients of

obstetricians (65), more obstetrical patients of

CNMs are tested for urinary tract infections and

diabetes than are patients of house staff physicians

(226), and CNMs communicate and interact more

with their clients than do physicians (66,181,190,

265). The care given by CNMs differs from the

usual care given by the physicians in the personal

attention patients receive throughout labor and

delivery. Most physicians’ care is episodic, which

may contribute to the fact that they rely more

heavily than CNMs do on technology, such as fetal monitoring (265).

Although CNMs are trained to provide normal,

low-risk maternity services, some of them collaborate with physicians to participate in the care
24

of high-risk women during labor and delivery.

These CNMs perform such tasks as:

. . . applying internal uterine pressure monitoring devices or fetal scalp electrodes, obtaining fetal scalp blood samples, managing breech or multiple gestation deliveries, utilizing low or outlet

forceps, or utilizing vacuum extractors (10).

Little evidence exists about CNMs’ effectiveness

in performing these tasks, although one researcher

concluded that CNMs “can render safe, effective

services to about one-third of the high-risk obstetric population” (210). Rooks and Fischman

(203) found that most CNMs working in collaboration with physicians manage the care “of prenatal patients with some complications. ”

Patients’ Satisfaction

Women served by CNMs are satisfied with the

care they receive (65,181,190,209 ).8 Although obstetric patients from all socioeconomic strata are

satisfied with CNMs’ care, favorable feelings

toward CNMs increase with patients’ age, educational background, and number of births (59). Patients’ satisfaction has been recorded for a wide

range of family planning services and normal

maternity care provided by CNMs in a variety

of ambulatory care and hospital settings (209).

CNMs also appear to be readily accepted by new

patients—90 percent of the patients seeking obstetric services from a group practice of obstetricians accepted services from a CNM the practice

had recently employed (190).

When comparing their satisfaction with services provided by CNMs and obstetricians, patients

of CNMs express preferences for the greater ease

of communicating with CNMs and the chance

CNMs allow them to exercise more control during delivery (209). Perry found that none of the

patients whose babies had been delivered by

‘Perhaps the main problem with most studies of CNMs is the possible bias resulting from nonrandom assignment of patients to different types of providers. Self-selection suggests that those women who

accept care from CNMs are inclined to be satisfied with CNMs’ care

(just as it suggests that those women who choose care from an obstetrician are inclined to be more satisfied with physicians’ services).

Nevertheless, studies consistently find patient acceptance of CNMs

and some studies find that patients express relatively greater satisfaction with CNMs’ care than with obstetrician’s care.

CNMs would have preferred to have had them

delivered by obstetricians, although some of the

physicians’ patients said that in retrospect they

would rather have been cared for by CNMs (181).

Patients in a large health maintenance organization expressed satisfaction with the care they received from both obstetricians and CNMs, but the

CNMs’ patients were significantly more likely to

express great satisfaction with, and great confidence in, their providers (65). This study also

found that patients of CNMs were more satisfied

than those of physicians with the promptness with

which they could obtain their first prenatal care

visit and with the relatively short time they spent

waiting in reception rooms (65).

CNMs differ markedly from obstetricians with

respect to frequency of malpractice suits, a crude

gauge of patients’ acceptance. The number of

CNMs who obtained malpractice insurance under the auspices of the American College of NurseMidwives (ACNM) grew from 625 in 1976 to

1,400 in 1983. Between 1977 and 1982, 20 claims

(not all successful) were made against ACNM

group policyholders (55). A 1982 national survey

of CNMs found that 5.2 percent (55 of 1,065 respondents) had been named in malpractice suits

during their careers (55). By contrast, of the 1,915

members of the American College of Obstetricians

and Gynecologists responding to a recent survey,

31 percent said they had been sued once, 16 percent had been sued twice, and 20 percent had been

sued at least three times (55). Interpreting these

figures, however, is difficult, partly because they

do not reflect case-mix differences. CNMs send

patients with complicated or high-risk problems

to physicians, especially in emergencies. That relatively more obstetricians than CNMs are sued

may not reflect performance as much as the fact

that obstetricians deliver many more babies than

do CNMs and have higher incomes than CNMs.

Physicians’ Acceptance

CNMs may practice administratively and physically apart from obstetricians and gynecologists,

but by functioning “interdependently with” these

physicians, the CNMs retain the formal support

of the American College of Obstetricians and

Gynecologists. The American College of Obstetri-
--

cians and Gynecologists has agreed with the

American College of Nurse-Midwives that:

. . . the appropriate practice of the certified

nurse-midwife includes the participation and involvement of the obstetrician/gynecologist as

mutually agreed upon in written medical guideline/protocols (13).

The two colleges further agree that:

Quality of care is enhanced by the interdependent practice of the obstetrician/gynecologist

and the certified nurse-midwife working in a relationship of mutual respect, trust and professional

responsibility. This does not necessarily imply

the physical presence of the physician when care

is being delivered by the certified nurse-midwife

(13).

Nonetheless, CNMs have had difficulty in obtaining acceptance by practicing physicians, medical societies, hospital departments of obstetrics

and pediatrics, companies that provide malpractice insurance, State boards of health, and—not

infrequently—nurses, themselves (196). Obstetricians and gynecologists are thought to find competition from CNMs threatening to physicians’ position as the sole providers of a special type of

medical care (43,190). Opposition may also reflect the tightening market conditions facing obstetricians and gynecologists in urban areas (196).

In addition, other physicians, particularly general

and family practitioners, have resisted CNMs

(258).

SUMMARY

Within their defined areas of competence, NPs,

PAs, and CNMs generally provide care that is

equivalent in quality to the care provided by physicians for similar problems. Considerable evidence exists, particularly for NPs and CNMs, that

they are more adept than many physicians at communicating effectively with patients and managing patients who require long-term and continuous care. Such patients include chronically ill

patients and patients undergoing labor and delivery. Although the evidence is less voluminous concerning PAs’ supportive-care and health-promoting activities, data indicate they overlap with NPs’

activities of that nature.

Despite the reservations of many physicians as

to whether CNMs are needed, their employment

rate has been increasing in recent years. In 1976

and 1977, only about half of the Nation’s CNMs

were employed in clinical midwifery practice (9),

but by 1982, approximately two-thirds (67.2 percent) of the CNMs in the United States were employed in nurse-midwifery practice (10). The

CNMs' employment settings may better reflect the

extent of physicians’ acceptance. Although the

percentage of CNMs employed in private practice with physicians increased from 13 percent in

1976 and 1977 to 20 percent in 1982, most CNMs

in 1982 were employed in organizational settings

or in private nurse-midwifery practice (see table

2-3).

Table 2-3.—Percentage of U.S. Resident Certified

Nurse-Midwives by Type of Organization,

1976-77 and 1982

Type of organization 1976-77 1982

Hospital . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

2.4

13.8

7.6

8.2

3.4

5.0

35.8%

19.8

14.4

8.6

7.7

6.2

6.0

1.8

SOURCES” American College of Nurse-Midwives, Nurse+ 4/dwivery In the Unfted

States’ 1976-77 (Washington, DC 1978); and American College of

Nurse-M idwwes, Nurse-&f /dwivery In the Un/ted States 1982

(Washington, DC” 1964)

The findings for NPs and PAs apply primarily

to care provided in ambulatory settings, and the

activities of CNMs have been documented in a

variety of settings with favorable results. Although the findings are qualified by the methodological limitations of the techniques used to indicate quality, the weight of the evidence seems

to show that the health-care services provided by

these practitioners are equivalent in quality to

comparable services provided by physicians.

Although patients are generally very accepting

of care provided by NPs, PAs, and CNMs, patients are most satisfied with the services that re-
26

quire interpersonal skills. Patients seem to require

what might be called technical reassurance for

serious conditions and to prefer that NPs, PAs,

and CNMs consult with physicians when technical care is required.

Patients’ satisfaction with NP, PA, and CNM

care is affected by factors external to the actual

care provided. Satisfying a particular patient depends partly on the physician’s conveying to the

patient a sense of approval of the NP, PA, or

CNM (113). Patients’ judgments may also reflect

their past experiences with medical care and their

socioeconomic status. One study, for example,

found that an upper-middle-class population

accustomed to receiving care from fee-for-service

physicians evaluated providers mainly on the basis of technical competence (35). Patients’ age, sex,

and race also affect their opinions. Middle-aged

people, males, and blacks are more accepting of

NPs (80); whites are more accepting of CNMs

than are blacks, who are more likely to associate

the word midwife with untrained lay midwives

(201). The American Nurses’ Association (21) concluded that trust in NPs and PAs varies with the

options available to patients, and that satisfaction with NPs and PAs tends to be highest when

access to other sources of care, particularly physicians, is limited. Patients’ satisfaction with

CNMs, however, appears to be independent of

access to other sources of obstetrical care (201).

Based on historical data, physicians accept the

concept of NPs and PAs but remain concerned

about their practicing independently. Physicians

have been reluctant to accept CNMs, especially

those practicing independently. Physicians’ willingness to delegate tasks depends on the particular tasks. Most physicians who hire NPs, PAs,

or CNMs are satisfied with their performance.

Employment status, the most relevant indicator

of whether physicians accept NPs, PAs, and

CNMs, is satisfactory; PAs, in particular, apparently enjoy a high level of appreciation by physicians. Increasingly, CNMs’ employment is independent of physicians. A growing supply of

physicians and potentially heightened competition

may decrease physicians’ acceptance of these

health practitioners. Indeed, the American Medical Association resolved in 1985 to “oppose new

legislation extending medical practice to nonphysician providers” (136).
Chapter 3

Access to Care
Chapter 3

Access to Care

In the late 1960s and the 1970s, health policy

focused on making health care accessible to all

Americans; much effort went toward helping people enter the health care system (1). A particular

concern was geographic access to primary care,

because the geographic maldistribution of physicians and their patterns of specialization had left

many of the Nation’s inhabitants without adequate access to primary care.

Indeed, the creation and development of nurse

practitioners (NPs) and physician assistants (PAs)

occurred in large part in response to the limited

accessibility of basic medical services, especially

in rural and inner-city areas, where physicians

were disinclined to practice (74,169,183 ).1 The

stated purpose of the early training programs for

NPs was to improve access to primary care for

people in areas without enough physicians (236).

Similarly, PAs were intended to “help remedy the

shortage of primary care physicians, particularly

in medically underserved areas” (180). Much of

the impetus for the growth in the number of certified nurse-midwives (CNMs) during the 1970s

can be attributed to concern about the limited supply of obstetricians in the United States (180).

The various barriers to providing care must be

considered in assessing the success of NPs and PAs

in improving health care in medically underserved

areas. Legislation and regulations vary widely from

State to State but generally tie medical practice

by NPs, PAs, and, to some extent, CNMs to associations with physicians and limit such practice

where physicians are not present. Although NPs

may provide nursing services independently, for

the most part neither NPs nor PAs ‘can provide

medical services unless local physicians are willing to hire them. Medicare and Medicaid rules reIOther factors, including improved integration of nursing and

medicine, bolstered the NP movement, which signified a deliberate

move to expand the nursing role and to meet the health-care needs

of many underserved populations. Other factors that contributed

to the success of NPs, PAs, and CNMs are the consumers’ and

women’s movements, the new focus on self-help and self-care, and

other pushes for social and personal change that emerged during

the late 1960s and continue today (229).

garding payment also significantly impede NPs,

PAs, and CNMs by restricting payment for medical services to the supervising physician or institution. The Rural Health Clinic Services Act (Public Law 95-210) waived the restriction for direct

supervision of NPs, PAs, and CNMs practicing

in certified rural health clinics located in designated underserved areas (see app. B).

Whether NPs, PAs, and CNMs are needed to

improve access to primary medical care in underserved areas remains an issue, even though the

supply of physicians has increased, and some physicians have moved away from urban areas (174,

264). Some experts believe that competitive pressures will eventually remedy the maldistribution

of medical manpower (222) but, the proportions

of physicians in urban and rural areas have remained fairly constant since 1970 (255).

Furthermore, large overall increases in physician supply in a State may still leave some areas

in the State without adequate access to medical

care (112). The situation may worsen in those

areas as older physicians are not replaced by

younger ones. Indeed, the Bureau of Health Professions has predicted that unmet needs for primary care will persist in many currently designated shortage areas. Although the dispersal of

young primary-care physicians is expected to reduce overall shortages, reducing shortages in all

underserved areas may take an extensive period

of time (250).

Although the need remains for NPs, PAs, and

CNMs to provide care to underserved populations

and in underserved areas, interest has increasingly

focused on these providers’ abilities to deliver

good medical care in certain institutional settings,

such as jails, and to specific populations, such as

elderly people and poor women and their infants.

In addition, by functioning as case managers, these

providers can help patients find appropriate care

in our increasingly complex health-care system.

(The effect of NPs, PAs, and CNMs on access to

specific services, such as health education, counseling, and health promotion, is addressed more

completely in chapter 2.)

29
30

NURSE PRACTITIONERS’ CONTRIBUTIONS TO ACCESS TO CARE

Although legal constraints (such as requirements for supervision by physicians) have hindered NPs’ dispersal to isolated settings, NPs have

helped improve geographic access to primary care

(31,86,160,168,261). In 1977, 23 percent of NPs

worked in inner-city settings and 22 percent in rural areas (238)—the geographic areas of greatest

need (120). In 1980, the proportion of NPs working in these settings had increased to 47.3 percent

in inner cities but decreased to 9.4 percent in rural areas (255). In both inner cities and rural areas,

more than half of NPs’ patients had annual incomes of less than $10,000 (255).

NPs alone cannot entirely resolve the problem

of provider maldistribution, because the professional, social, and cultural attractions of the

suburbs and cities that appeal to many physicians

also appeal to many NPs. An early survey of NPs

in six States found that generally they “do not

work in the inner city or in rural areas” (81), but

a Pennsylvania NP-training program surveyed its

graduates through 1982 and found that 70 of the

102 graduates worked in urban programs with

low-income people (151).

NPs tend to view themselves as being able to

function effectively and appropriately not only

in settings with physicians, but also in practices

without physicians on the premises. Starting in

the mid-1960s a significant minority of NPs

worked in satellite settings as the sole providers

of services; they received medical supervision

from physicians working in other communities.

Often, the backup physicians would be available

for telephone consultations, would visit the satellite settings, and would be responsible for ensuring that the NPs adhered to the protocols guiding the provision of medical services. These NPs

increased access to care by working in places

where physicians had not located.

NPs’ extension role is no longer as significant

as it was in the 1960s and 1970s. A national sample of 44 rural communities identified in 1975 as

‘Requirements for physicians’ supervision of NPs vary from State

to State. In many States, physicians must be on the premises but

not necessarily in the same rooms as the NPs providing the services.

‘The communities had populations of less than 10,000, with an

average population of less than 2,000, and were at least ‘ 2 hour

in travel time from communities that had populations of more than

10,000.

having satellite practices (most of which were

staffed by NPs; some by PAs) illustrates this decline. By 1979, only 24 of the centers were staffed

by NPs or PAs alone (37). By 1984, 18 were staffed

only by NPs or PAs, 8 were staffed only by physicians, and 6 were staffed by a combination of

physicians and NPs or PAs. In all but 4 of the

remaining 12 communities, where satellite clinics

had ceased functioning, physicians’ practices had

been established (38).

More recently, NPs’ contribution to access has

been in nongeographic settings where not enough

physicians have been available. Case studies report the satisfactory performance of NPs in a wide

variety of settings. NPs act as team members in

home health and nursing home care for elderly

patients (220) and in correctional institutions

(104), and in home health care for children with

chronic illness (234). NPs also provide terminal

care in patients’ homes (268); ambulator y care in

large municipal teaching hospital units (30); and

primary care in inpatient units (224), in normal

newborn nurseries (188), and in occupational health

settings (26). NPs also deliver preventive care in

the workplace (216), in retirement communities

(109), and in industrial settings (47,162). These

descriptive reports are only a beginning; larger

scale studies are needed to evaluate the quality

of care NPs provide in these settings.

Whether NPs can improve access to health care

in schools has been carefully examined. A largescale study, involving 18 school districts in 5

States, reports that NPs working as part of healthcare teams in schools can have highly favorable

effects on school children’s health (197). NPs are

especially valuable in improving access to primary

care and supplementary care in rural areas and

in health programs for the poor, minorities, and

people without health insurance.

People over 65, a growing segment of the population, suffer serious gaps in their ability to obtain health care. Many physicians lack the expertise or time required for managing all aspects of

elderly patients’ health problems. Although private attending physicians provide most of the

medical care in nursing homes, many physicians

are unwilling to care for patients in nursing homes

(166).
31

NPs are trained to care for the older population. Indeed, 40 of the approximately 200 NPtraining programs focus on geriatrics, and 31 other

NP programs have gerontological components

(254). Furthermore, much of the care that institutionalized elderly people need is the kind that NPs

can best give—health maintenance, personal assistance, chronic-disease management, recognition

of acute or exacerbating chronic conditions, ongoing accurate and comprehensive health assessment, appropriate and expeditious referral to other

team members, medication management and review, coordination of daily services, family and

patient education and counseling, and so on. NPs

have the assessment skills to recognize complicated acute illnesses or serious exacerbations of

chronic diseases and to make medical referrals

(157).

The few available studies show that NPs have

the professional ability to assist with the care of

institutionalized elderly patients (124,220,262).

But of the more than 23,600 nursing homes in the

United States, only approximately 250 have geriatric NPs on their staffs providing patient care

(76). Interest in the effectiveness of NPs in nursing homes is growing rapidly, however, as evinced

by the number and size of current studies of the

issue. 4

NPs improve access for the general population

by acting as case managers, matching the needs

of patients with appropriate services (88). NPs are

effective in coordinating the care of many other

—.—

‘Ongoing studies include a large-scale research project measuring how geriatric NPs employed in nursing homes affect the quality and costs of care. This project is being conducted by the Mountain States Health Corp., the Rand Corp., and the University of

Minnesota School of Health Sciences and funded by the Health Care

Financing Administration and the R.W. Johnson and the W.K. Kellogg Foundations. The faculties of the Geriatric Nursing Programs

at the University of Arizona, the University of California at San

Francisco, the University of Colorado, and the Univeristy of Washington are examining the role of the geriatric NP in concert with

the study, and the Group Health Cooperative of Puget Sound has

received funding from the Fred Meyer Charitable Trust to evaluate

NPs employed by the health maintenance organization to serve

elderly enrollees living in nursing homes—if a Medicare waiver of

mandatory physician visits can be obtained (157), In addition, the

Health Care Financing Administration has granted a waiver under

Medicare and Medicaid to permit fee-for-service reimbursement for

the provision of medical services to residents of nursing homes by

physician-supervised NPs and PAs. A cost and utilization evaluation is being carried out by the Health Care Financing Administration’s Policy Center at Rand.

health professionals, interservice transfers, and

continuity of care, and in mobilizing family, institutional, and community resources (77).

NPs also are particularly effective in improving

access to care for groups that, for a variety of reasons, have difficulty in obtaining the care they

need. For example, NPs and PAs work well as

members of multidisciplinary teams in improving

access for chronically ill elderly people, whose

needs for health services are great and whose abilities to manage the health-care system are limited

(155). The NPs and PAs facilitate linkages between

the community and the nursing home. NPs, working as members of teams with physicians, are also

effective in educating couples about the nature of

treatment for infertility and in providing emotional

support to people seeking such treatment (175).

In general, NPs appear to improve continuity

of care. In institutional settings, their patients miss

fewer appointments than do physicians’ patients

(30). Studies have generally shown that patients

of NPs in fee-for-service settings (34,84), as well

as in clinics and health maintenance organizations

(225), have higher rates of completed followup

visits than do patients of physicians (213). These

findings may explain the special success NPs have

in caring for chronically ill patients and may reflect the adequacy (or inadequacy) of relationships

between the practitioners providing care and the

patients.

NPs affect access by expanding the scope of care

for their patients into dimensions that physicians

might ignore. For example, some studies show

that NPs provide greater amounts of health education than do physicians. NPs are more likely

than physicians to explain why medications are

administered and what side effects are possible,

and to discuss health-promoting behaviors with

patients (34,84). Unfortunately, these studies do

not say whether the need for health education is

greater among the patients seen by NPs or among

those seen by physicians.

NPs spend about 50 percent more time than

physicians spend on each encounter with a patient (143). The time an NP spends over the course

of an illness, especially a chronic illness, may be

less than that spent by a physician, however, because the NP has fewer encounters with the pa-
32

tient (143). The fact that NPs provide a more personal kind of care may account for the greater

time they spend with patients. One study found

that pediatric NPs are as efficient as physicians

in gathering historical data and suggesting therapy, and attributed the NPs’ greater time per encounter to greater communication with patients—

gathering more information from patients and

offering more advice to them (178). However, evidence from other studies is insufficient to support

or refute this study’s finding, and other factors

may play a role. For example, the greater amount

of time NPs spend with patients might be due in

part to management. When NPs are used efficiently

in practices, physicians might be able to spend less

time with patients.

PHYSICIAN ASSISTANTS’ CONTRIBUTIONS TO ACCESS TO CARE

PAs have also contributed notably to improving geographic access to care. A number of studies

have shown that they are more interested than

physicians in locating in nonaffluent, medically

underserved areas with high percentages of nonwhite populations (90,137,147,169). This willingness is reflected in statistics on where PAs practice in the United States. Whereas about 27 percent

of the general population and 14 percent of the

Nation’s physicians are located outside standard

metropolitan statistical areas (SMSAs), 32 percent

of PAs practice outside SMSAs (49). And the percentage of PAs working in communities with populations of 10,000 or less has remained constant

from 1974 to 1981 (45). The 1984 Masterfile Survey of Physician Assistants reports that 6.5 percent of PA respondents were located in rural areas

of fewer than 10,000 people and that 40 percent

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

More NPs than PAs have staffed rural satellite

health centers (38), perhaps because some NPtraining programs recruited students from rural

areas hoping they would return there as NPs.

Nonetheless, in States that permit satellite clinics

and permit PAs to practice apart from physicians,

a significant minority of PAs work in such settings (45),

As members of health-care teams, PAs have improved access to care in settings where sufficient

physician care is not always available. PAs are

employed in industrial organizations; community

clinics; drug and alcohol abuse clinics; nursing

homes and extended-care facilities; and Federal,

State, county, and city prisons (25).

Figure 3-1 .—Distribution of Physician Assistants

by 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 inadequacy of physician services

for the growing population of institutionalized

elderly patients is especially serious (122). Although more and better physician care for these

patients may be available in the future (122),

whether physicians can satisfy all the health-care

needs 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 provide

care in nursing homes—the same proportion as

in 1981 (6). The Federal Government has recognized this potential and requires an increased ger-
33

iatric content in the curricula of federally funded

PA-training programs. A survey of 34 federally

funded programs’ curricula, in fiscal year 1983,

reported that three-fourths had varying degrees

of geriatric content (254). Furthermore, the Federal Government (through the Administration on

Aging of the Office of Human Development Services of the U.S. Department of Health and Human Services) partly supported the American

Association of Physician Assistants in its report

on the assessment and improvement of PAs’ knowledge and skills in geriatrics (215). The report

found a fivefold increase in the number of required and elective experiences in geriatrics among

PA programs since 1980, which appear related to

the Federal funding rules. However, the report

noted the need for more uniform teaching of geriatric medicine in training programs. (The report

includes guidelines for standardizing geriatric curricula during the training period and in continuing education programs for PAs. )

PAs have also expanded the scope of care that

most patients receive. PA training programs require competence in interviewing, educating, and

counseling patients (93). Although research is limited as to the interpersonal components of care

that PAs provide, they appear to expand access

to patient education and counseling by mixing

competence in technical care with interpersonal

skills (182).

CERTIFIED NURSE-MIDWIVES’ CONTRIBUTIONS TO ACCESS TO CARE

Modern nurse-midwifery started in this country in 1925, when Mary Breckenridge established

the Frontier Nursing Service to serve rural Kentucky. As of 1977, 10 percent of CNMs worked

in communities with populations below 10,000

(9). CNMs still practice extensively in underserved

areas, such as the rural South, Indian reservations,

and inner cities, and significantly improve access

to health care in those areas. For example, in

Holmes County, Mississippi, the infant mortality rates dropped from approximately 38 per 1,000

live births to 20 per 1,000 live births 2 years after

CNMs began providing primary care to pregnant

women as part of a communitywide focus on the

health problems of mothers and babies (158).

CNMs have also reduced financial barriers to

access by providing care at relatively low cost,

particularly in short-stay, out-of-hospital births.

Many such births occur in birth centers not affiliated with hospitals. The number of these centers increased from 3 in 1975 to more than 100

in 1982 (33). They have made prenatal, labor and

delivery, and postnatal services increasingly accessible to poor patients (65,149,193). For example,

15 birth centers are accessible to families in New

York’s Lower East Side, a low-income area (150).

The relatively low cost of CNMs’ services may

result from shorter inpatient stays as well as lower

fees (53,65). One study, however, found that

CNMs’ fees exceeded physicians’ fees in urban

locations (200), but nearly a year had clasped between the measurement of physicians’ fees and the

measurement of CNMs’ fees, which may account

for the finding. Also, a disproportionately large

number of CNMs practice in academic medical

centers, which have higher costs than community

hospitals (200).

CNMs affect access (as well as quality) by providing person-oriented services, such as communicating thoroughly with patients, counseling,

promoting self-help, and attending to patients’

emotional needs (196). CNMs interact with patients more than physicians do (66,190,265). Patients feel more comfortable about asking questions of CNMs than of physicians (181,190). In

addition, CNMs’ patients obtain care relatively

early in their pregnancies and continue to receive

prenatal care relatively frequently (140,193,226).

CNMs tend to increase the amount of prenatal

care their patients receive.

In general, then, CNMs continue not only to

lower financial barriers to care, but to offer a considerable amount of care that includes both health

advisory and health-promotion services. This expertise is reflected in the valuable care CNMs on
34

SUMMARY

NPs and PAs have long

creasing geographic access

been recognized for into primary health care,

particularly for residents of inner cities and rural

communities. Although indications are that physicians are migrating to smaller communities (174),

the growing supply of physicians appears to be

affecting different communities differently (250).

Overall increases in the supply of physicians in

a State may still leave some areas in need of primary care services (112). In those areas where access to physicians’ services remains inadequate to

serve the population or has decreased (112), NPs

and PAs can continue to serve as a source of primary care. In areas where access to physicians’

services has increased, employment opportunities

for NPs and PAs might decrease. But the employment of NPs and PAs in rural areas has previously

been limited by the scarcity of physicians willing

both to practice in rural areas and to supervise

NPs and PAs. Thus, the growing numbers of physicians in previously underserved areas may well

increase employment opportunities for NPs and

PAs. The physicians moving into smaller communities are mainly young physicians, who are

multidisciplinary teams provide for high-risk pregnant adolescents (184), especially in clinic settings

(42). Indeed, the Institute of Medicine’s report on

preventing low birthweight calls for:

. . . more reliance . . . on nurse-midwives . . . to

increase access to prenatal care for hard-to-reach,

often high risk, groups. This recommendation is

based on the studies that indicate that CNMs can

be particularly effective in managing the care of

pregnant women who, because of social and economic factors are more likely to deliver low weight

babies (121).

Photo credit American College of Nurse-Midwives

CNMs are particularly effective in managing the care

of pregnant women who are not at risk of having

low-weight babies.

more likely than older physicians to accept the

team approach to health care and to use the services of NPs and PAs. Furthermore, a small town

might be able to support a physician-NP or a

physician-PA team but not two physicians. Whether

these factors or others reduce the role NPs and

PAs play in improving geographic access to care,

these practitioners will continue to be valuable,

especially in rural areas.

The evidence (primarily from case studies) is

that NPs and PAs are improving access to primary health-care services in settings not adequately

served by physicians. For example, NPs and PAs

are trained to provide primary care for elderly patients in nursing homes, a growing population

with poor access to standard health care. The effectiveness of NPs and PAs in this role is under

scrutiny. They are also helping people to obtain

primary care in an increasingly complex healthcare system.

Studies have shown that NPs are especially valuable in providing primary care in school settings

to previously unserved or underserved children,
35

and in expanding the content of available care to care by the personal orientation of their services.

include interpersonal and preventive care for all Studies have shown that CNMs’ communication

patients. skills and attention to the social and psychologiCNMs have not only made care more accessi- cal needs of pregnant adolescents, as- well as the

ble in underserved areas, they have also contrib- technical care CNMs provide, have reduced the

rate of low-birth-weight babies among this high- uted to making care financially available and have

contributed to social and psychological access to risk population.
Chapter 4

Productivity, Costs, and

Employment
Chapter 4

Productivity, Costs, and Employment

Several studies have examined the scope of

practice and productivity of nurse practitioners

(NPs), physician assistants (PAs), and certified

nurse-midwives (CNMs); how that scope relates

to the tasks usually undertaken by physicians; and

the implications of this evidence for the employment of these providers and for the costs of medical care.

Questions related to productivity include the

nature 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 much a

practice must spend to employ an NP, PA, or

CNM and how much society must spend to train

these types of practitioners. Questions related to

employment compare productivity with the costs

of employment to ascertain whether medical practices could gain from employing more NPs, PAs,

or CNMs, and whether society could gain from

training more NPs, PAs, and CNMs. Because of

the complexity of the issues involved and the lack

of data, these questions are seldom addressed together. The literature does, however, permit the

piecing together of some parts of this puzzle.

SCOPE OF PROFESSIONAL PRACTICE

Services Provided by Nurse Practitioners

and Physician Assistants

The tasks NPs and PAs are trained to perform

encompass a broad spectrum of primary care activities involving diagnosis and therapy (see ch.

1). Distinguishing between NPs and PAs on the

basis of task descriptions is difficult. NP training

may emphasize counseling and health promotion

activities to a greater degree than PA training

does, but the major difference lies in the practitioners’ relationships with physicians. By definition, PAs work under physicians’ supervision,

whereas NPs have collaborative relationships with

physicians and other health professionals.

Most observers conclude that most primary

care traditionally provided by physicians can be

delivered by NPs and PAs. Hausner and others

(105) conclude that 60 to 80 percent of the tasks

normally performed by primary care physicians

can be provided by NPs and PAs without consultation. Record and others (192) estimated that 90

percent of pediatric care can be provided by NPs

and PAs, and that NPs and PAs can substitute

for physicians in providing 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 of

primary-care activities.

of the primary care responsibilities to be considered 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 actual

roles depend on the settings in which they work.

Limited information exists as to how practicing

39
40

NPs and PAs actually spend their time. A 1979

review cites four reports indicating that “nurse

practitioners, in particular, emphasize preventive

services, ” including one report concluding that

NPs can provide as much as 75 percent of the wellperson care for both adults and children (218).

Other studies have found that NPs engage more

often than physicians in providing interpersonal

care (221) and chronic care (32). However, beyond

these sorts of indications and references to the NP

orientation to health education, counseling, and

preventive and chronic care, accurate descriptions

of the actual specific tasks performed by NPs do

not exist. Indeed, such information would be difficult to obtain, because the range of primary care

services provided by NPs in outpatient settings

is so broad.

Little information exists concerning trends in

the freedom of NPs to function independently of

physicians. Nearly two-thirds of the pediatric NPs

responding to a national survey in 1978 said that

a physician was always physically present when

they worked. Only 39 percent of the respondents

to a similar survey in 1983 noted that a physician

was always present (44). These findings suggest

some movement toward administrative independence, but more data on other types of NPs working in a variety of settings are required in order

to establish whether the trend is significant.

Although PA training programs also include

health education and counseling, relatively little

empirical evidence exists on how much healthpromotion and disease-prevention services PAs

actually provide. In general, PAs tend to focus

more than NPs on providing acute care services

(138). PAs place less emphasis on preventive services (218) and “provide selective patient services, ”

whereas NPs are oriented more “toward treatment

PRODUCTIVITY

If the tasks performed by NPs, PAs, and CNMs

overlap substantially with those performed by

physicians, an obvious potential exists for these

providers to substitute for physicians in the sense

of performing tasks typically and characteristically carried out only by physicians. NPs, PAs,

and CNMs can also complement physician care

of the ‘whole patient’ “ (160). These generalized

characterizations do not apply universally, but

they illustrate an important distinction between

PAs and NPs: PAs tend to function primarily as

substitutes for physicians, generally providing

only services that physicians provide, whereas

NPs are likely to provide both services usually

provided by physicians as well as services generally provided by nurses.

Services Provided by

Certified Nurse-Midwives

In 1982, the American College of Nurse-Midwives (ACNM) (10) conducted a survey of its members which obtained detailed information about

the specific tasks performed by CNMs in clinical

practice. Of the approximately 1,000 CNMs responding, over 75 percent delivered prenatal, labor, delivery, and postpartum care as well as family planning and normal gynecological services.

The CNMs’ responses to detailed questions about

tasks showed that they provide the full range of

services within their areas of expertise and they

assume specific responsibility for many of the

tasks which they perform without physician direction and supervision. CNMs clearly can substitute for physicians in performing a significant

share of the tasks normally carried out by physicians. A major difference between CNM care and

physician care is that CNMs are less likely than

physicians to prescribe drug treatments, which

may reflect both philosophical differences and legal restrictions. CNMs also tend to use less highpriced technology than physicians, and CNMs do

not perform major surgery. In collaboration with

physicians, however, CNMs manage high-risk patients during the prenatal, labor, and delivery

stages.

by providing some services, such as counseling

or health education, not currently provided by

many physicians or not carried out to the same

extent.

Whether a service is a substitute or a complementary service is often difficult to determine.
41

Technically, empirical measurement of substitutability is complicated by the need for large amounts

of accurate data on the prices and utilization levels

of resources used in the production process as well

as on the output of the production process. Therefore, studies of the role of NPs, PAs, and CNMs

have taken the more straightforward approach of

productivity analyses based on small samples,

case studies, or simulations.

Productivity, simply stated, is output per unit

of input. The productivity of medical practitioners

is frequently expressed in terms of the number of

patients seen per week or per hour of the practitioners’ time. In comparing physicians with NPs,

PAs, and CNMs, the appropriate method of measuring productivity depends on whether the NPs,

PAs, or CNMs are working under direct supervision by physicians or working interdependently

with physicians. For example, studies of PAs

directly supervised by physicians examine how

employing PAs marginally affects total practice

output (e. g., the additional number of patients

seen per week). Or time-and-motion studies of the

production process might examine the tasks performed by PAs and how long they take, as compared with the time physicians would take. To

evaluate the productivity of practitioners working in collaboration with physicians, as CNMs

work, studies could compare the number of patients seen per week in collaborative practice with

the number of patients seen for the same service

by an obstetrician. Physicians could also be compared with NPs, PAs, or CNMs with regard to

the number of minutes required per encounter for

a particular type of patient or medical service.

This approach attempts to control for case mix.

Comparing the productivity of physicians and

PAs is facilitated by the fact that the tasks they

perform overlap significantly. Indeed, PAs tend

to provide essentially the same services physicians

perform. The need to understand differences in

content of care, therefore, is not as great in comparing physicians with PAs as in comparing physicians with NPs, who generally provide a much

wider range of services.

Nurse Practitioners’ and

Physician Assistants’ Productivity

Studies of NPs’ and PAs’ productivity have generally taken one of three approaches:

1.

2.

3.

time per visit (comparing how much time

physicians and NPs or PAs take to complete

office visits);

average number of visits per unit of time

(comparing how many visits different types

of providers handle in a given period of

time); and

marginal product (assessing the effect of adding an NP or PA on a practice’s total number of patient visits).

Most studies of NPs and PAs indicate that these

providers spend more time per office visit than

do physicians (242). For example, Mendenhall and

others (160) found in a national survey of physician practices that NPs averaged 19.4 minutes per

direct encounter with a patient, PAs averaged 13.3

minutes per encounter, and physicians spent slightly

more than 11 minutes per encounter. A study by

Charney and Kitzman (52) yielded similar results,

but studies are not unanimous on this issue. In

a large health maintenance organization (HMO)

—a special setting—Record and others (191) reported that PAs spent less time per routine visit

(an average of 7.1 minutes) than physicians did

(8.9 minutes). The study noted, however, that:

. . . a sampling of medical charts revealed that

even where the presenting morbidity was the same,

physicians tended to get somewhat older patients

with a greater number of associated morbidities,

including chronic diseases, which might easily explain the time difference.

Also, Kane and others (129) found little difference in the amount of time physicians and physician assistants spent per visit. These data support

the conclusion reached by Record and her colleagues (192) in a review of more than a decade

of 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 spent

on an office visit. ”
42

The shorter average time physicians, as compared with NPs and PAs, spend with patients

translate into greater productivity over time. In

other words, the number of encounters with patients per hour or per work week is higher for physicians than for NPs or PAs. Mendenhall and

others (160) reported the following:

●

●

●

●

NPs average 7.9 direct encounters and 2.4

telephone encounters with patients per day;

PAs average 14.2 direct encounters and 2.6

telephone encounters with patients per day;

physicians who supervise NPs or PAs average 18.9 direct encounters and 3.4 telephone

encounters with patients per day; and

physicians who do not supervise NPs or PAs

average 21.4 direct encounters and 5.7 telephone encounters with patients per day.

Data from a recently completed national survey of rural health care delivery organizations indicated that primary care physicians saw an average of 105.6 patients per week and worked 48.6

hours per week, whereas NPs and PAs saw an

average of 75.0 patients per week and worked 40.7

hours per week (107). On the average, then, these

physicians, saw 2.2 patients per hour, compared

with 1.8 patients per hour for NPs and PAs. Romm

and others (199) found that, compared with PAs,

NPs spent more time per patient and, therefore,

saw fewer patients per week. Because physicians

work 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 number

of hours worked per week. Overall, the findings

indicate that, in terms of patients seen per unit

of time, NPs are less productive than PAs, who,

are less productive than physicians. However, this

result does not adjust well for severity of illness

(i.e., case mix), nor does it necessarily mean that

physicians are relatively cost-effective. For example, physicians might be three times more productive than NPs and PAs are, but cost six times as

much as they do.

The extent to which hiring an NP or PA increases the output of a practice has been the subject of some debate (110,111,153). LeRoy (138)

reported increases of between 20 and 90 percent

in the productivity of physicians’ practices that

added NPs. Hershey and Kropp (110) used a model

to estimate that the productivity gain maybe only

20 percent after calculating the “offsetting changes

in measures such as provider time available for

nondirect patient care activities, patients’ waiting time, waiting room congestion, practice hours,

and supervisor y requirements. ” The findings of

Mendenhall and others (160) indicate that even

though direct encounters between patients and the

supervising physician decline when an NP or PA

is hired, the practice’s total output increases. Record and others (192) reported “greatly varying results” in studies of how adding an NP or a PA

to a practice affected its productivity. Some studies

found NPs and PAs to have greatly increased

productivity, and other studies found that adding PAs or NPs actually decreased the number of

patients seen. The one fact about which researchers appear to agree is that the potential for increasing productivity is greater in large practices than

in small ones (111,192).

Three major problems arise in assessing productivity in terms of length of encounter or number

of patients seen per unit of time. First, these units

of measure do not reflect the content of the care

provided or the severity of the patients’ illnesses.

Because some visits require more skill than other

visits Holmes and others (114) applied a relativevalue measure of productivity, considering both

the number of visits and the complexity of those

visits. The researchers found that although physician-NP teams handled only 5.7 patient visits

more than physician-nurse teams handled each

day, the teams with NPs were 26 percent more

productive in terms of total value-weighted services (114). The difference in content of care is an

important consideration because NPs provide more

time-consuming services, such as health education and counseling, than do physicians and physicians are capable of providing some medical

services that NPs cannot provide. Measures unadjusted for content and complexity of work may

yield biased estimates of relative productivity.

The second major problem in basing productivity estimates on numbers of patients or lengths

of visits is that these measures inadequately reflect the ultimate objective of medical care. The

purpose of medical care is to treat and prevent

health problems rather than to provide individ-
43

ual services. Recognizing this fact, Salkever and

others (213) examined the productivity of physicians and NPs in terms of episodes of care, because episode-based assessments account for differences in referral, and because “the episode is

also a more appropriate unit for measuring differences in effectiveness of care, since the outcome

of the care process may be causally related not

only to a service received at a single visit, but to

any services received over the course of the episode.” The researchers found that the per-episode

costs were about 20 percent lower when NPs were

the initial providers than when physicians were

the initial providers.

A third major problem in ascertaining productivity is that existing studies reflect current substitution practices, which may not fully exploit

the potential for using NPs and PAs cost-effectively. The fact that NPs and PAs can safely perform numerous medical-care services suggests that

these practitioners have the capacity to be highly

productive as individuals and to contribute substantially to the productivity of the organizations

in which they work. But a key factor affecting

the productivity of NPs and PAs is the extent to

which their employers—often physicians—are

willing to delegate tasks to them.

The evidence about what physicians actually

delegate as opposed to what they can safely delegate is limited. A recent study of physicians in

a large HMO (125) found that physicians did not

delegate as many tasks as they thought NPs and

PAs could handle safely. General internists, pediatricians, and obstetrician/gynecologists indicated

that 49, 46, and 29 percent, respectively, of their

total office visits could be shifted safely to PAs

and NPs. The internists and pediatricians, however, were willing to shift only about 28.5 percent of their visits to NPs and PAs, and obstetrician/gynecologists were willing to shift only about

14 percent of their visits. Most pediatricians and

obstetrician/gynecologists cited their patients’

preferences for being treated by physicians and

the physicians’ own needs to maintain overall proficiency by seeing a full range of patients as the

primary reasons for not delegating more. The primary reasons most internists cited for not delegating more were that seeing only complex cases

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

In addition to reflecting physicians’ willingness

or unwillingness to delegate responsibilities, the

productivity of NPs and PAs depends on many

factors, including practice type (solo or group),

practice setting and size, case mix, how long the

NPs or PAs have been practicing, practice regulations, and how much autonomy the NPs or PAs

have. Many of these factors are beyond the control of NPs and PAs, however, which means that

the potential or capacity of NPs and PAs has a

limited effect on their productivity and, consequently, on their ability to affect the cost of care.

Indeed, most productivity analyses consider NPs

and PAs as part of physicians’ practices. Little evidence exists as to the productivity and cost-effectiveness of NPs and PAs as autonomous practitioners.

In sum, the studies of the productivity of NPs

and

●

●

●

PAs suggest that:

physicians can substantially increase their

practices’ output by employing NPs or PAs

who operate under the supervision of physicians;

although PAs, and, especially, NPs see fewer

patients per hour than physicians see, these

practitioners are capable of carrying substantial proportions of the workloads of primarycare physicians; and

practice setting may be an important factor

in NPs’ and PAs’ productivity, as evidenced

by the differences in the use and productivity

of NPs and PAs in HMOs and traditional

settings.

The potential suggested by these studies is limited by the reluctance of physicians to delegate

tasks. Evidence shows that physicians are reluctant to use NPs or PAs even to the extent that

physicians think feasible and safe, basing their

reluctance on patient preferences.

Certified Nurse= Midwives’ Productivity

Compared to the many studies of NPs and PAs,

much less information is available on the productivity on CNMs. Furthermore, “it is characteris-
44

tic of the nurse-midwifery studies that they concentrate on outcome” (67). This almost exclusive

focus on outcome rather than process limits information about CNMs’ involvement in producing services.

One study (253) indicated that CNMs were only

“about 23 percent as productive as obstetricians

when the number of deliveries was used as the

output measure. ” But the same study reported

when the volume of patient visits was used as the

output measure, CNMs were 98 percent as productive as obstetricians.

As with NPs, the content of care provided by

CNMs must be understood because they stress the

COSTS AND EMPLOYMENT

Although considerable scope exists for substituting of NPs, PAs, and CNMs in providing some

of the care traditionally provided by physicians,

the resulting increases in productivity are not

enough, by themselves, to justify greater employment of these practitioners in private practices.

From the standpoint of a private firm, the marginal value (as measured by the amount patients

would pay for the additional output) must compare favorably with the marginal cost (i.e., the

salary and related expenses) of hiring an NP, PA,

or CNM. From the perspective of a long-run investment in training, either by society or by the

trainees, the value (i.e., compensation) placed on

the output of the NPs, PAs, or CNMs must compare favorably with the costs of training to justify

expending the resources.

In 1983, annual salaries for NPs, PAs, and

CNMs averaged about $25,000, compared with

the $60,000 to $80,000 median salaries of primarycare physicians (18). This wage gap raises several

questions. What are the costs and benefits to society of using NPs, PAs, and CNMs rather than

physicians? And if NPs, PAs, and CNMs are costeffective substitutes, why isn’t their employment

increasing relative to the employment of physicians?

NPs, PAs, and CNMs, clearly could not completely replace physicians, because the scope of

the NPs’, PAs’, and CNMs’ professional activities is constrained by their more limited training,

interpersonal aspects of care, such as counseling,

health education, and patient interaction (103,

184). Such an understanding is necessary in order to specify what facet of the care provided by

CNMs contributes to the positive outcomes their

patients experience (226).

Data from the ACNM survey (1984) suggest

substantial possibilities for CNMs to substitute for

physician care. Many CNMs are already assuming responsibility for a wide variety of complex

tasks in prenatal, labor, delivery, and postpartum care.

reimbursement policies, legal barriers, and

tice setting characteristics. Furthermore,

pracNPs,

PAs, and CNMs sometimes compete with professionals other than physicians or operate independent practices. Nonetheless, given the large overlap of their practices, primary care physicians

provide an appropriate comparison group for considering the employment of NPs, PAs, and CNMs.

Although some information is available about salaries, the figures are imprecise enough that the

discussion must be carried out in approximate and

qualitative terms.

Costs and Benefits of Training Nurse

Practitioners, Physician Assistants,

and Certified Nurse-Midwives

Estimates of the social and private rates of return to investments in training and education indicate the value placed on these investments by

society and private individuals, respectively. The

best of such computations require large amounts

of data on earnings over the career of the individual. However, some conceptual issues can be

addressed qualitatively. In theory, the rate of return on investment in the training of NPs, PAs,

or CNMs can be calculated without reference to

the training or earnings of physicians. Society

must expend a certain amount to train a person

to be an NP, for example, and this investment

yields a return of about $25,000 per year (plus
45

fringe benefits) minus what the person would have

earned otherwise.

An alternative approach would be to consider

the costs and benefits of training someone to be

an NP, PA, or CNM instead of training the person to be a physician. The costs to society of training an NP, PA, or CNM are much less than the

costs of training a physician. The direct costs related to education such as payments for instructors, supplies, and facilities, are greater for physicians than for NPs, PAs, and CNMs, probably

on a yearly as well as overall basis. The indirect

costs, primarily what the individual would have

earned during the time spent in training, are also

greater for physicians, because more years of schooling are required.

Differences between the social and private rates

of return primarily reflect differences in the costs

of education. The more that government subsidizes training, the higher will be the private rate

of return, compared with the social rate. Little evidence exists as to what either rate of return is or

what the differential between the two is, but educational subsidies over the years have been considerable. Scheffler (217) provides an estimate of

the private rate of return as of the early 1970s,

arguing that “. . . the private rate of return is

sufficient to produce a relatively strong demand

for PA training; therefore, an increase in government support is unwarranted. ” He finds high rates

of return—over 20 percent—comparable to those

received by physicians. The available data are

probably insufficient to allow distinctions between

these two types of investment, but thinking about

them qualitatively is useful.

Nurse Practitioners and Physician Assistants

The most recent estimates of the costs of educating physicians and NPs, PAs, and CNMs were

made in 1979 by the Congressional Budget Office (CBO). CBO estimated the mean total costs

of educating NPs and physicians at that time to

be $10,300 and $60,700, respectively. Assuming,

conservatively, that these costs increased at an

average annual rate of 6 percent, the total educational costs would have been $14,600 for NPs and

$86,100 for physicians as of 1985.

A substantial portion of these direct costs are

borne by taxpayers, rather than by the trainees.

Society, through government support, has invested heavily in the training of NPs as well as

physicians. For example, between 1975 and 1982,

the Federal Government spent $65.9 million on

educating NPs. These funds supported approximately half the NP training programs in the

United States (251).

The indirect costs—primarily foregone earnings—are substantial, but they are difficult to estimate with any precision. Because a physician

spends about 6 more years in training than does

an NP, the indirect costs an individual must pay

to become a physician are much greater. Determining the value of the foregone earnings for

those individuals who become doctors versus

those who become NPs is a more complex empirical task. Clearly, however, several NPs could

be trained for the cost of educating one physician.

Extrapolating from’ CBO’s estimates of PA-training costs (242), the total direct costs of training

a physician assistant would have been $16,900,

compared with $86,100 for training a physician

as of 1985. The indirect costs for PAs are about

the same as for NPs. Thus, the total costs of training are higher for PAs than for NPs, but the average earnings of PAs are higher than those of NPs

($24,500 versus $23,500) (44,237). Although, a

more precise comparison would require some adjustment for the sex compositions of the two

groups, the chief implication of the studies is that

PAs, like NPs, are much less costly to train than

physicians.

Certified Nurse-Midwives

The tuition charges for nurse-midwifery education vary considerably among programs, but

an estimated average of the annual cost of educating a nurse-midwifery student is approximately

$12,000 (78). The total cost of training is increasing with the growing trend toward master’s degree programs, which last 2 years and are usually

twice as long as certificate programs. Approximately 40 percent of the Nation’s CNMs have

graduated from master’s degree programs. The

average total training cost for certificate and
46

master’s programs combined is about $16,800,

compared to the $86,100 cost of physician training as of 1985.

Costs and Benefits of Private

Employment of NPs, PAs, and CNMs

Because physicians or group practices sometimes must choose between hiring additional physicians and hiring NPs, PAs, or CNMs, the perspective of the physician as employer should be

considered in any attempt to understand the employment levels of these nonphysicians. Using

NPs, PAs, and CNMs to provide services that

would otherwise be provided by physicians can

benefit society with lower fees if the cost of providing services by the nonphysicians is less than

that of providing services by physicians and if the

savings are passed on to patients. The costs of employing an NP, PA, or CNM include salary, fringe

benefits, supervisory expenses, costs of any expansion necessitated by adding another provider

to the staff and costs of resources used by the additional provider. These costs must be compared

with the costs that would be incurred if a physician were added to the practice, The benefits a

practice receives by hiring an additional provider

are the additional fees the provider’s services generate for the practice.

Nurse Practitioners

How employing a nurse practitioner would affect the cost of a practice cannot be determined

with any precision, but the following simple calculation provides a rough picture of the effect.

The median salary of NPs in clinical practice in

1983 was approximately $23,500. If fringe benefits averaged 25 percent of salaries, total costs

would be about $29,500 per year. This is far below the $82,000 net income of young physicians

(19). Hiring a nurse practitioner or another physician might also result in indirect costs for such

things as new office space, new equipment, additional support staff, and additional resources.

Total practice costs would change in composition because physicians would spend some time

supervising the NP instead of providing visits, or

the NP might order more or fewer lab tests than

the physician would have. However, the basic

question is whether the total value of the practice output increases enough (i.e., would there be

enough additional revenue) to cover the additional

cost of the NP?

Denton and others (61) examined the effect of

the additional costs in a hypothetical calculation

of the savings that would have resulted in Canada in 1980 “had nurse practitioner time been substituted for physician time in the provision of all

services for which such substitution has been demonstrated to be safe and feasible. ” The researchers concluded that the savings from this widespread

use of NPs would have been from 10 to 15 percent for all medical costs (or from $300 million

to $450 million) and that the savings would have

amounted to between 16 and 24 percent of the

total costs for ambulatory care. Furthermore, the

researchers determined that their “estimates are

quite insensitive to demographic changes and will

be as valid in the future as they are today. ”

These findings are supported somewhat by the

findings of Salkever and others (213), who compared patterns of treatment for otitis media and

sore throat by three types of prepaid group practices—NP only, NP-physician team, and physician only. With respect to otitis media, the findings support the contention that NPs’ services are

less expensive than those of physicians. Services

provided by NPs alone are less costly than those

provided by physicians alone or by NP-physician

teams. The researchers found no difference, however, between the cost of treatments for otitis media by physicians alone and NP-physician teams.

The findings were similar for care of sore throats.

These results confirm earlier studies (81,141) comparing the costs of specific medical tasks conducted

by nurse practitioners with the costs of the same

tasks conducted by physicians.

Physician Assistants

The average salary of a PA is $24,500 and fringe

benefits probably amount to about 25 percent of

their salaries, making the average direct cost of

employing a PA approximately $30,600 per year

a sum much lower than the average income of

young primary-care physicians.

Accurately estimating the relative cost of employing a PA versus that of employing a physi-
.-,

4 /

cian requires an examination of the indirect costs

that result from the resources expended by the additional employees. Little information exists about

the extent of the costs PAs generate by using a

practice’s resources. For example, Wright and others

(266) found that PAs generate more laboratory

costs than medical residents but fewer than medical faculty. The calculations that Denton and

others (61) employed for determining that using

NPs would save 10 to 15 percent of the total cost

for medical care in Canada could apply to using

PAs, as well, because the researchers used the

term nurse practitioner in a broad sense to encompass “several different types of intermediate health

professionals. ”

Certified Nurse-Midwives

The average salary of CNMs was $24,800 in

1983. If their fringe benefits were 25 percent of

their salaries, the average direct cost of employing a CNM was approximately $31,000 that year.

The mean net income of obstetricians in 1983 was

$119,900 (before fringe benefits) but because most

CNMs have been practicing fewer than 15 years,

the most appropriate figure for comparison would

be the average salary of young—rather than all–

obstetricians. The average income of young obstetrician/gynecologists is $100,000 per year plus

$25,000 or more for fringe benefits.

As with the other types of health-care providers, the indirect costs a CNM generates by using

a practice’s resources need to be calculated to determine the full costs of employment. Evidence

exists that clients of CNMs have shorter hospital

stays than do clients of obstetricians (53,65). But

Dickstein (53) found that clinic prenatal and postpartum costs in a large HMO were higher for

CNMs than for obstetricians, “primarily because

midwifery visits are longer and more frequent, use

more RN educational time, and include the cost

of OB consultations and referrals. ” Generally, although existing data do not allow precise quantification of the costs of CNM care and physician

care, the salary differential probably ensures that

the total costs are considerably less for CNMs

than for physicians.

Costs Versus Benefits of Private Employment

The private physician’s firm that employs an

NP, PA, or CNM incurs extra costs for salary,

fringe benefits, capital improvements, and other

items. Productivity studies have shown that the

time a physician spends supervising the NP, PA,

or CNM reduces the number of patients the physician sees, although the reduction is more than

offset by the overall increases in practice volume

generated by the additional provider. Studies have

not, however, directly addressed whether the

value of the additional output exceeds the additional cost. In terms of rough magnitudes, the

comparison is between a $25,000 salary (plus

other costs) and a 20- to 50-percent increase in

the practice’s revenues, from a base of $150,000

to $200,000 annually. In view of the uncertainty

about the extent to which an NP, PA, or CNM

would increase marginal revenues, the marginal

revenues do not clearly exceed the marginal costs.

But the careful accounting by Denton and others

(61) in Canada suggests that significant savings

are possible for private practices that hire an NP,

PA, or CNM rather than an additional physician.

CURRENT EMPLOYMENT: SETTINGS AND TRENDS

The productivity studies suggest that hiring Nurse Practitioners’ and

NPs, PAs, and CNMs may provide private prac- Physician Assistants’ Employment tices a cost-effective alternative to hiring additional physicians. And although private markets Most of the pertinent studies have addressed

may be functioning as expected under existing le- the employment of NPs and PAs in primary-care

gal and market institutions, unexploited social settings, although NPs and PAs work at all levels

benefits may be available from the greater em- of health care in a wide variety of settings (154).

ployment of NPs, PAs, and CNMs. A 1982 national survey of pediatric NPs, for ex-
48

ample, revealed that 22 percent of the respondents

worked in hospitals, 20 percent in communityhealth agencies, 17 percent in private pediatricians’

offices, 10 percent in specialty clinics, 8 percent

in schools, 6 percent in HMOs, and the rest mainly

in nursing schools and military clinics (167).

NPs are increasingly being employed in home

health agencies (155,196,220,268), and finding

work in nursing homes (87,262). NPs are also

working in industrial settings (216), correctional

institutions (104), and schools (156,228).

Different types of practice settings have different implications for any economic analysis of the

benefits of hiring NPs or PAs. For example, comparing NPs with other nurses might be more appropriate than comparing NPs with physicians in

such settings as home health agencies, HMOs,

schools, and businesses, where NPs might be employed instead of, or in addition to, registered or

licensed nurses. In these settings, the NPs—the

more costly alternative—might be selected because they could provide a wider range of services. NPs employed in schools, for example, can

serve as liaisons among the various health-care

providers serving schools; NPs can also provide

backup support and in-house education to school

nurses and provide educational services to teachers, parents, and students (228).

Because of increases in the variety of settings

in which NPs work, their employment rates might

reasonably be expected to be higher than ever.

But, proportionately fewer NPs are working as

nurse practitioners in the 1980s than were doing

so in the 1970s (237). The extent to which this decrease reflects increased competition from the growing supply of physicians is unknown.

PAs also work in a wide variety of settings and

in every level of health care from primary to tertiary. Of all the Nation’s PAs, about one-third

work in office-based practices (about half of these

PAs work with physicians in solo practices); another

one-third or so are based in hospitals; and the remaining one-third work in prepaid groups, public health departments, drug and alcohol rehabilitation centers, industrial settings, nursing homes,

prisons and jails, and military facilities (45). Considerable change has occurred in the proportion

of PAs employed in various settings. For example, the proportion of PAs employed in hospitals

grew from about 10 percent in 1974 to more than

30 percent today.

Increasing numbers of NPs, as well as PAs, are

finding work in hospitals. This development may

not be due to the implementation of prospective

payment for hospitals based on diagnosis-related

groups (DRGs) and, in fact, maybe occurring despite DRGs. Instead, the trend is probably related

in part to the growth in the supply of physicians.

As the number of physicians increases in certain specialties, e.g., surgery, residency positions

are being decreased to contain the numbers and

PAs [are being] employed as ‘junior house staff’

to supplement patient care (262).

New employment opportunities for NPs and PAs

may also stem from the trend for hospitals to

establish community-based, ambulatory-care centers in order to broaden their patient bases and

to assure themselves of solid sources of inpatient

referrals. Hospital managers recognize that their

best interests are served by providing these services as efficiently as possible and, consequently,

by employing NPs and PAs.

Certified Nurse= Midwives’ Employment

According to the 1982 ACNM survey, 36 percent of the Nation’s CNMs worked in hospitals,

20 percent were in private practice with one or

more physicians, 14 percent were in private nursemidwifery practice, and the remainder worked in

public-health agencies, prepaid groups, and other

settings (10). Nearly 35 percent of the respondents to this survey revealed that they were not

working as nurse-midwives, and about half of

these said the reason was that “no nurse-midwifery positions are available in my community. ”

The data in table 2-3 indicate the changes that

have taken place in how CNMs are distributed

among the types of organizations in which they

work. In general, the shift has been away from

employment in hospitals, public health departments, and university health services and toward

private practice (9,10). In contrast to NPs and

PAs, proportionately fewer CNMs practice in hospitals now than did so in the 1970s: in 1984, only

6.7 percent of the Nation’s hospitals had CNMs
49

on staff (171). More than 14 percent of the Nation’s CNMs worked in private nurse-midwifery

practice in 1982, compared with 2.4 percent in

1976 to 1977 (9,10).

CNMs are finding increased employment where

they are not administratively responsible to physicians. Administrative independence must not be

confused with clinical independence, because

CNMs do not aspire to clinical independence.

They highly value their professional interdependence and collaboration with physicians (13).

Although most NPs and PAs in primary care

are supervised directly by physicians, only 48 percent of the CNMs practicing in the United States

who responded to the 1982 ACNM survey indicated that their immediate supervisors were physicians. All the responding CNMs, however, collaborated on clinical matters with physicians (10).

The proportion varied considerably depending on

the type of practice. For example, about 9 of every

SUMMARY

Studies show that NPs, PAs, and CNMs can

provide services that both substitute for and complement physicians’ services, depending on the

particular service or type of practice. Moreover,

hiring an NP, PA, or CNM increases a practice’s

total output and costs less than employing an additional physician. Because training is less costly

for these practitioners than for physicians, using

NPs, PAs, and CNMs rather than physicians for

certain services would presumably be cost-effective from a societal point of view, given that the

quality of care is equivalent to that provided by

physicians for comparable services (see ch. 2). Although additional cost savings might result from

greater employment of these providers, the evidence suggests that current employment levels and

practices more or less reflect existing market conditions.

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 were

supervised directly by physicians, whereas approximately one-third of hospital-based CNMs

were under the supervision of physicians. Almost

half the CNMs in private nurse-midwifery practice were not administratively responsible to anyone other than themselves, and an additional 22

percent reported to other nurse-midwives. In all,

nearly 36 percent of the respondents noted that

they were supervised directly by other CNMs (10).

The evidence suggests that CNMs–-especially

those in private nurse-midwifery practice—tend

to function organizationally more independently

of physicians than do NPs or PAs. Because of the

sixfold increase in the percentage of CNMs working in private nurse-midwifery practices between

1976-77 and 1982, the organizational independence of CNMs has increased markedly. This trend

shows no signs of slowing down, although all

obstetrics-related care may be decreased by the

liability-insurance crisis.

have not grown and diffused to a greater extent.

Although the private markets for NPs, PAs, and

CNMs as employees in physicians’ practices do

not suggest a current shortage, the removal of

payment barriers and limitations could greatly increase the demand for these alternative practitioners. Unless the barriers are altered, the potential savings from a greater use of NPs, PAs, and

CNMs will probably remain unexploited.

Continuing research and analysis is needed to

ascertain the cost savings that would result from

increased employment of NPs, PAs, and CNMs.

Many productivity studies have been conducted,

but few attempts have been made to compare how

NPs, PAs, or CNMs affect the revenues of individual practices with how they affect the practices’ costs. Changing market circumstances create a need for both types of studies, but those that

compare revenues and costs are especially important.
Chapter 5

Payment Issues
Chapter 5

Payment Issues

In their areas of expertise, nurse practitioners

(NPs), physician assistants (PAs), and certified

nurse-midwives (CNMs) can provide safe care

that meets generally recognized standards of quality, care that emphasizes personal and preventive

dimensions often underemphasized by physicians,

and care that would otherwise be unavailable in

inner cities, remote areas, and certain settings

where demand or ability to pay are insufficient

to support physicians’ practices. NPs, PAs, and

CNMs could also reduce costs in certain settings.

Nonetheless, professional attitudes and restrictive statutes, regulations, and policies have hindered the ability of NPs, PAs, and CNMs to obtain employment in some settings and to practice

at levels commensurate with their training (see box

l-A). One major constraint is that many thirdparty payers, including many Federal programs,

do not cover (authorize payment for) services provided by NPs, PAs, and CNMs in certain settings,

if the services are typically and characteristically

provided by physicians nor do they pay them

directly for such services (see app. B). Although

most third-party payers usually do not look beyond a physician’s claim for payment as to whether

the physician or NP, PA, or CNM have provided

a particular service, uncertainties about coverage

are partly responsible for some physicians’ reluctance to hire NPs, PAs, or CNMs. Lack of direct

payment limits the independent practice of NPs

and CNMs. Third-party payers have been more

generous in covering and directly paying for the

services of CNMs than NPs. Although PAs, as

well as NPs and CNMs, have actively sought coverage for their services, they differ from NPs and

CNMs in not wanting direct payment.

Observers have suggested modifying the current rules for payment of such services by requiring coverage for NP, PA, and CNM services and

by paying NPs and CNMs directly and not through

the employing physician. Requiring coverage would

be both an independent modification and a preliminary step toward direct payment. A third

modification —establishing a payment level—could

apply even if payment were indirect, i.e., to the

NPs’, PAs’, or CNMs’ employer. ] These modifications would have several implications for employment and the scope of practice of these practitioners2 and for the costs borne by third parties,

patients, and society.

Some Federal health programs and private insurers provide coverage and direct payment for

the services of NPs, PAs, and CNMs in some settings (see app. B). For purposes of analysis, this

case study assumes that coverage and direct payment for such services would be offered by all the

programs and insurers and that any new Federal

legislation would not override State laws or regulations governing the licensing and practice of

NPs, PAs, and CNMs.

The effect of the modifications would vary, depending on the setting in which the provider practiced and on the method of payment. Because

these two factors are interdependent—in that payment method is usually typical of a type of practice setting—they are considered together.

The effect of these modifications also depends

on the health-care environment, which is changing. The supply of physicians and the organization and financing of health care are changing in

ways that are likely to bring about a more competitive market for health-care services.3 These

trends have implications for the future of NPs,

] During the publication of this case study, the Omnibus Reconciliation Act of 1986 (Public Law 99-509) was enacted. The act modifies Medicare and authorizes payment for (covers) services of phy

-

sician assistants working under the supervision of physicians in

hospitals, skilled nursing facilities, intermediate-care facilities, and

as an assistant at surgery. The payment is indirect and at levels lower

than physicians would receive for providing comparable services.

2Many other factors affect the employment and practice patterns

of NPs, PAs, and CNMs. Several issues, especially malpractice insurance, are critical, but a discussion of them would be beyond the

scope of this case study.

‘The fact that the U.S. population is aging and consequently needing more health-care services would also affect the employment of

NPs and PAs and, to the extent that they provide gynecological services, CNMs. The aging of the population has been discussed in detail in a number of previous OTA reports, notably in Technology

and Aging in America (245).

53
54

PAs, and CNMs, regardless of whether payment ing health-care environment, however, would cerfor their services changes. Modifying payment for tainly affect their employment and use and might

the services of NPs, PAs, and CNMs in a chang- alter the costs of health care.

EFFECTS OF MODIFYING PAYMENT FOR SERVICES OF

NURSE PRACTITIONERS, PHYSICIAN ASSISTANTS, AND

CERTIFIED NURSE-MIDWIVES

Modifying the method of payment could be expected to have varying effects on the employment

and scope of practice of NPs, PAs, and CNMs,

depending on whether they were in independent

practices or worked in physicians’ practices, health

maintenance organizations, hospitals, nursing

homes, or other settings. Modifying the method

of payment might also affect costs.

Effects on Independent Practices of

Nurse Practitioners and

Certified Nurse-Midwives

Mandated coverage and direct payment to NPs

and CNMs for providing services typically and

characteristically performed by physicians would

dramatically increase NPs’ and CNMs’ ability to

establish fee-for-service practices that were administratively independent from physicians. Indeed, direct payment would be the most advantageous payment method for NPs or CNMs in

independent practices. As autonomous providers,

NPs and CNMs could provide the full range of

services for which they were trained and licensed.

Such practices would be administratively independent but according to current modes of practice, they would not be clinically independent

from physicians when NPs and CNMs were performing delegated medical tasks. ’ The nursing

profession has agreed to clinical collaboration. For

example, a joint statement of “practice relationships” calls for obstetrician/gynecologists and

CNMs to adhere to clinical-practice arrangements

that include the participation and involvement of

obstetrician/gynecologists with CNMs as mutually agreed on in written medical guidelines or

protocols. CNMs in administratively independent practice believe that they are adhering to the

4NPs and CF/Nls may legally be c1 in ical 1 y independent from phy

sicians when performing nursing tasks.

joint statement, because it permits interdependent

practice without calling for physicians to be present whenever CNMs are caring for patients (13).

In addition, the American College of Nurse Midwives requires that CNMs agree to work in clinical collaboration with physicians in order to obtain certification.

In addition to professional restraints, State laws

and regulations that limit NPs’ and CNMs’ scope

of practice and specify requirements for supervision by physicians serve as a formal control on

clinical independence. NPs and CNMs in independent practice are also accountable for their

mode of practice by the malpractice insurance

they carry.

Although a few NPs have attempted to establish administratively independent practices, most

NPs in such practices provide traditional nursing

care rather than primary medical care (138), Among

the barriers NPs face in undertaking independent

practices are the necessity of making substantial

financial investments and the lack of coverage and

direct reimbursement for their services. The American Nurses Association (ANA) believes that

many NPs would establish such practices if coverage and direct payment were more widely available (256).

CNMs are highly interested in administratively

independent practice. Indeed, the proportion of

CNMs in private midwifery practices increased

from 2.4 percent in 1976 to 1977, to 14 percent

in 1982 (9,10). During that period, the number

of third-party payers that provided coverage and

direct payment for CNMs’ services increased. If

additional third-party payers were to cover and

pay for these services, more CNMs probably would

be interested in independent practices

‘Problems with obtaining malpractice insurance coverage and high

malpractice premium costs are significant limitations on independent practice by CNMs.
55

How coverage and direct payment for NPs’

services would affect the establishment of administratively independent fee-for-service practices by

NPs partly depends on the extent to which NPs

seek and obtain direct payment. The impetus for

direct third-party payment of nurses, an ANA priority since 1948, increased for organized nursing

with the establishment of NPs as health practitioners (22). Indeed, the ANA has been actively

involved in seeking and sometimes obtaining such

payment at the State and national levels (23,232).

Little information is available as to how many

practicing NPs receive direct payment. A 1983

survey of NPs, conducted 4 years after the passage of a Maryland law providing direct thirdparty payment for services not directly supervised

by physicians, found that fewer than 1 percent

were paid directly (99). In 1986, however, 7 years

after the passage of similar legislation in Oregon,

a survey of NPs in that State found that 25 percent were receiving direct third-party payment;

42 percent had been issued provider numbers; and

38 percent were signing the claims forms for the

services they provided (102). The researcher who

conducted both surveys suggests that the disparate

findings might reflect the fact that more time had

elapsed between the passage of the legislation and

the survey in Oregon than had elapsed in Maryland (101).

The establishment of independent fee-for-service practices by NPs and CNMs could affect the

costs of third-party payers. If the total volume

of services by all providers did not increase, setting payment levels for services provided by NPs

and CNMs lower than levels for comparable services provided by physicians might decrease the

costs of third-party payers. Of course, the size of

any savings to third-party payers would depend

on the size of the gap between payment levels for

physicians and payment levels for NPs and CNMs.

Paying NPs and CNMs 10 percent less than physicians are paid would have a minimal effect on

third-party costs in the immediate future, in part

because the number of NPs and CNMs is so much

smaller than the number of physicians. Savings

to third-party payers would also depend on the

extent to which patients chose to patronize NPs

and CNMs in independent practices.

Patients’ costs might be lower if the NPs and

CNMs charged their patients lower fees than physicians charged for comparable services. For most

primary care services, e.g., office visits, savings

to most patients would be small, because fees for

such services are not high and third-party payments cover a large part of them. Savings for

maternity care could be appreciable however, because charges and patient liability for such services are high. Coverage and direct payment would

allow patients to choose NPs and CNMs as providers without being penalized financially by lack

of reimbursement.

Any savings to third parties and patients might

be decreased or negated by duplicative visits. Patients who sought care from NPs or CNMs in independent practices might also see physicians for

the same or related care, on their own initiative

or on referral by NPs or CNMs. Seeing both physicians and nonphysicians could result in duplication of examination and laboratory procedures.

Although NPs and CNMs in independent practices could lower societal costs for health care, the

extent of the savings is difficult to estimate. Societal costs would reflect, among other things, any

decreases in program costs and beneficiary costs

and any savings resulting from NPs’ and CNMs’

care that reduced the need for care in the future.

For example, although CNMs might not find it

feasible to charge patients lower fees than physicians charge (because CNMs spend so much more

time with patients than physicians spend), CNMs

might lower societal costs by decreasing the need

for expensive neonatal intensive care for infants

of women whose socioeconomic status puts them

and their infants at high risk (193).

Scant evidence is available as to how much NPs

in independent practices charge their patients. In

an exploratory phase of a survey of Maryland

NPs, Griffith (99) found that the median fees

charged by NPs in independent practice were lower

than the median fees charged by physicians for

most services. However, 59 percent of NPs’ fees

were the same as physicians’ fees for all types of

visits (99). Charging lower fees than physicians

charge for similar services appears to be the norm

for NPs in many types of settings other than independent practice. Brooks (36) reported that the
56

fees charged by NPs in rural satellite settings are

lower than those charged by a sample of rural

physicians. Several national studies of NPs in

organized settings confirm this finding (256). Patients were generally charged less for visits to Oregon NPs who received direct payment either in

independent practices or in physicians’ fee-forservice practices than for visits to salaried NPs

(102). The difference between the charges for short

initial visits and brief followup visits was statistically significant. Furthermore, charges for visits

to NPs were lower than for visits to physicians

in both Oregon and Maryland. The difference between charges for NPs and those for physicians

was greater in Oregon than in Maryland, perhaps

because the proportion of NPs receiving direct

payment was greater in Oregon than in Maryland

(102).

Whether NPs would increase their fees if they

were in independent practice and received direct

payment is unclear, although some evidence indicates that other groups that provide services

typically provided by physicians have gradually

increased their fees to the level of physicians’ fees

after receiving direct payment. The American Psychiatric Association (APA) has reported two

studies that found this phenomenon to be true of

psychologists and clinical social workers (256).

Some private insurers report that their total

costs from CNMs for maternity care are lower

than those from physicians. Of course, physicians’

care includes care for complex cases that require

more resources than normal maternity care. However, Mutual of Omaha has noted that CNMs

provide a “valuable service at a reduction in costs

from that charged by medical doctors or osteopaths, ” and the Blue Cross and Blue Shield Association found that CNMs were less costly than

physicians in normal maternity care (256), Indeed,

based on the current status of direct payment for

services, insurers of CNMs appear to be less resistant to coverage and direct payment than do insurers of NPs (see table B-l). Insurers, such as

Mutual of Omaha and Blue Cross, perceive that

NPs would provide services in addition to those

normally provided by a physician, whereas CNMs

provide services that substitute for physicians’

services (256).

Charges for CNM services in independent practice appear to vary by region—in some areas their

fees are lower than those of physicians, and in

other areas they are about the same (79). CNMs

charge slightly less than obstetricians for normal

maternity care (98) when services are provided

in independent birthing centers (103,149). The total costs of maternity care by CNMs may also be

less than total costs for care by physicians for similar cases, not necessarily because CNMs have

lower fees, but because the care they provide is

usually technologically less complex than physician care (98,201).

Costs to patients, third-party payers, and society would also be influenced by changes in the

volume of services provided as a result of coverage and direct reimbursement for new providers.

Historically, insurance companies have contended

that covering and directly paying additional provider groups in fee-for-service settings increases

the volume of services provided by the new providers, the physicians, or both and, consequently,

increases costs for third-party payers, beneficiaries, and society. The evidence to prove or refute this argument is equivocal (246). The recent

emphasis that public and private third-party payers

have placed on monitoring the volume of healthcare services may help to control potential increases in volume.

Direct evidence is unavailable as to how coverage and direct payment would affect the volume

of services provided by NPs and CNMs. Indirect

information, which consists only of anecdotal

reports of private insurers’ experiences with other

groups, is conflicting. Mutual of Omaha and other

insurers report that chiropractors increased their

provision of services to consumers after being authorized for direct reimbursement but that psychiatric social workers did not increase theirs (256).

Whether coverage and direct payment for services by NPs and CNMs would increase the provision of services by physicians is unclear. Physicians might change their behavior in response

to competitive providers. If NPs and CNMs charged

their patients lower fees, some physicians might

decrease their fees in order to compete but, to

maintain their incomes, might increase the number of services they provided to their patients (in-
57

ducing demand for services). Although research

on physicians’ influence on the volume of services has been conducted for many years, none of

the studies positively proves the magnitude or

even the existence of induced demand for services (246). In the past, however, physicians in the

United States and Canada have maintained their

income level even with substantial increases in the

supply of physicians (28).

Effects on Physicians’ Practices

In the 1970s, a major reason cited by physicians

as a disincentive to employing NPs, PAs, and

CNMs was that Federal payment policies did not

authorize payment for services provided by NPs,

PAs, and CNMs (138). Whether mandating coverage for such services would increase incentives

for physicians in fee-for-service practices to employ these practitioners and delegate more services to them depends on several factors, including physicians’ billing practices and the payment

levels for NPs’, PAs’, and CNMs’ services. The

higher the payment level, the greater the monetary incentive a physician would have to employ

an NP, PA, or CNM, but simultaneously the costsaving potential to the third-party payer would

decline.

Providing coverage and payment for the services of NPs, PAs, and CNMs (at any level) would

increase practice incomes for physicians who have

employed these practitioners without billing for

their services. Such physicians might increase the

range of services they delegate to NPs, PAs, and

CNMs. Third-party payers’ costs would probably

increase, regardless of whether the practices’ volumes of services increased. Whether increases in

practice income would be passed on to patients

in the form of lower fees is unclear.

If services by NPs, PAs, and CNMs were authorized for payment, physicians’ practices that

currently do not employ such practitioners might

be more inclined to employ them rather than hire

additional primary-care physicians. If the payment level was 100 percent of what a physician

would receive for providing a comparable service, third-party payers probably would incur higher

costs for such practices regardless of whether the

new employees were NPs, PAs, CNMs, or physicians. If the payment levels set for NPs’, PAs’,

or CNMs’ services were lower than those set for

physicians’ services, the costs to third-party payers

would be lower if NPs, PAs, or CNMs, rather

than physicians, were employed. ’

However, authorizing payment for NPs’, PAs’,

and CNMs’ services would not necessarily increase

the opportunities for these providers to become

salaried employees in physicians’ practices. Allegations have been made that many physicians’

practices, knowingly or unknowingly, submit bills

under the physicians’ provider numbers for uncovered NPs’, PAs’, and CNMs’ services. The bills

are seldom challenged by third-party payers. If

the payment levels were the same for the services of NPs, PAs, and CNMs as for the employing physicians, coverage of NPs’, PAs’, and CNMs’

services would not affect the revenues of physicians’ practices that were already billing for such

services. In these practices, coverage probably

would affect neither the employment opportunities for NPs, PAs, and CNMs nor the services

physicians delegated to such practitioners.

The revenues of these practices would decrease,

however, if the payment levels were significantly

lower for NPs’, PAs’, and CNMs’ services than

for physicians’ services, if the volumes of services remained the same for the practices, and if

the physicians billed for the services of NPs, PAs,

or CNMs under the NPs’, PAs’, or CNMs’ provider numbers. How physicians would respond

to decreases in their practices’ revenues is unclear,

but employment opportunities for NPs, PAs, and

CNMs might be jeopardized. The physicians

might increase the volumes of services provided

by their practices.

Coverage of NPs’, PAs’, and CNMs’ services

would not affect third-party costs if the number

of services provided by practices remained stable; i.e., if the practices had billed for services under the physicians’ provider numbers before coverage was expanded, and if the payment levels

were the same for NPs, PAs, and CNMs as for

the employing physicians. If the payment levels

were lower for NPs, PAs, and CNMs than for

‘It is not clear whether or not NPs would accept payment levels

lower than those of physicians. As noted earlier, PAs are willing

to accept levels of compensation lower than those of physicians.
58

physicians, third-party payers’ costs for such practices might decrease. For physicians’ practices, as

for NPs’ and CNMs’ independent practices, the

size of the difference between the payment levels

for services provided by NPs, PAs, and CNMs

and for comparable services provided by physicians would partly determine how lowering the

payment level would affect the costs of third-party

payers.

Because data do not exist as to how physicians

bill for the services of NPs, PAs, and CNMs, the

overall effect that required coverage would have

on NPs’, PAs’, and CNMs’ employment opportunities in physicians’ fee-for-service practices is

uncertain. Coverage might influence employment

indirectly. NPs have argued that coverage establishes a collegial professional relationship. Furthermore, they claim that coverage can cause physicians to see that NPs’, PAs’, and CNMs’ services

generate revenue as well as costs (98). This perspective might increase the employment potential

of these practitioners (98).

Direct payment would only indirectly affect the

employment of NPs and CNMs as salaried employees of physicians. Direct payment would allow NPs and CNMs to choose to work as salaried

employees, to undertake independent practices,

or to enter into joint practices with physicians

(i.e., partnership arrangements by NPs or CNMs

with physicians). Paying NPs in physicians’ practices directly, rather than indirectly, could be expected to decrease the

NPs (102).

Effects on Health

Organizations

fees for patients’ visits to

Maintenance

Because most third-party payers in the public

and private sectors currently provide coverage for

the services of these practitioners in health maintenance organizations (HMOs) (see table l-l), extending coverage is largely irrelevant to their employment in this setting. Also, most HMOs pay

NPs, PAs, and CNMs a direct salary, which makes

the issue of direct payment of little importance

in the HMO setting.

The data suggest that NPs, PAs, and CNMs

save costs for HMOs:

It is to their [HMOs] financial advantage to

produce services with the most efficient combination of inputs, substituting lower priced physician extenders for higher priced physicians whenever possible (138).

Furthermore, past experience with HMOs has shown

that:

. . . capitation7 plans do care for [non-Medicare]

enrollees at lower costs while maintaining quality at levels equal to or better than comparison

practices (246).

Effects on Hospitals

Payment for services delivered in inpatient hospital settings by NPs, PAs, and CNMs who are

hospital employees is most commonly made either retrospectively on the basis of cost or prospectively on the basis of diagnosis-related groups

(DRGs). There is no statutory permission or lack

of permission under Medicare or Medicaid for

payment of NPs’, PAs’, and CNMs’ services as

inpatient hospital services when the providers are

employed by the hospitals. Most other third-party

payers are also silent on this issue. Moreover, hospitals usually pay a salary to NPs, PAs, and

CNMs that they employ.

Medicare, Medicaid, and most other third-party

payers pay hospitals for total operating costs, and

most hospitals’ accounting systems simply lump

the costs of NPs’, PAs’, and CNMs’ services together with other types of operating costs. Nurses

contend that coverage and direct payment as well

as the identification of the services that coverage

and direct payment would require, would influence hospitals interest in them as employees. Delineating the costs of these services might facilitate internal management decisions. Nurses have

advocated the identification of the costs of nursing services in institutional settings, believing that

identification would increase nurses’ autonomy,

encourage economic decisionmaking, enhance

nursing efficiency, and spur hospital administrators to recognize that nurses generate revenue as

‘Cavitation is a method of paying for medical care, in which a

per capita amount is paid prospectively for all services received by

an enrollee or beneficiary during a given period of time. The payment is not related to the quantity of service provided. Cavitation

payment provides financial incentives to use resources more efficiently and even to underuse services.
59

well as costs (22,98,162). Nurses believe that recognition of their revenue-producing abilities could

increase their employment opportunities in hospitals (161).

Extending coverage and direct payment for the

services of NPs, PAs, and CNMs as hospital employees in the inpatient hospital setting most likely

would require that the costs of the services be paid

for as professional services, the category under

which Medicare and other third-party payers currently pay for physicians’ services. Such a move

would run counter to most current thinking, espoused in both the public and private sectors,

which is focused on containing costs by aggregating services. For example, some observers have

expressed interest in aggregating physician services by adapting the DRG approach,8 particularly

for hospital-based physicians (63,165). The Omnibus Reconciliation Act of 1986 (Public Law 99-

509), however, has extended direct payment for

anesthetic services rendered by certified registered

nurse anesthetists in hospitals. These services were

originally to be paid for under Medicare as a component of a DRG but were passed through as a

hospital cost.

Coverage of their services would affect the employment of PAs who are employees of physicians

or physicians’ practices but who work as surgical assistants in hospitals.9 PAs assist in performing surgical procedures and also provide preoperative and postoperative care (7). Medicare does

not cover PAs’ provision of such procedures and

care, although Medicare currently covers and

pays at amounts equivalent to 20 percent of the

surgeons’ fees for the services of physicians who

act as assistants at surgery. Some observers have

8Under the DRG approach, Medicare pays a fixed amount for the

operating costs associated with treating patients in each diagnostic

category. In applying the DRG approach to physicians, the payment unit would be a bundle of services rather than an individual

service. This approach could control both costs and utilization by

reducing the number of service units billed and encouraging the judicious use of services within packages.

9During the publication of this case study, the Omnibus Reconciliation Act (Public Law 99-509) was enacted. The act modifies

Medicare and authorizes coverage of a physician assistant services

furnished under the supervision of a physician as an assistant at surgery. The payment to the employer will be 65 percent of the reasonable charge for a physician when acting as an assistant at surgery 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-operative

care and assisting in performing surgical procedures.

expressed concern that the lack of coverage has

restricted PAs’ employment and the delegation of

appropriate services to PAs at surgery. Using PAs

rather than physicians as surgical assistants reduces practices’ costs, but whether the savings are

passed on to patients is unclear.

Effects on Nursing Homes

Because virtually all NPs and PAs working in

nursing homes are salaried employees, their employment would not be necessarily affected by

coverage of their provision of services typically

provided by physicians .’” With coverage, NPs and

PAs could supply primary-care services in nursing homes as employees of physicians’ practices

or as team members in group practices provid-

—. ——— IOSevera] other Medicare and Medicaid regulations specific to nursing homes limit the role of NPs and PAs and specify services that

must be performed by physicians in order for the nursing homes’

services to be covered (see app. B). Many States have passed laws

to “permit the delegation of these services by a physician to a physician assistant or nurse practitioner” (116). However, strict interpretation of these and similar rules prohibits the appropriate use

of NPs and PAs in nursing homes. In addition to permitting coverage under Medicare and Medicaid, amendments to these regulations

would be required in order for NPs and PAs to be used appropriately.
60

ing visits to nursing homes.11 If NPs were paid

directly, they could supply primary-care services

to nursing homes as independent practitioners,

similar to physical therapists.

Many nursing homes have difficulty supplying

primary-care services because few physicians are

interested in visiting patients in nursing homes to

provide services (166). Furthermore, most physicians are poorly prepared to care for seriously

ill elderly patients. The growing number of elderly

people in our society, particularly those over 85

who most frequently need nursing-home care, has

increased concerns about the quality and costs of

such care. Many residents are medically stable but

functionally impaired by chronic physical or mental conditions. Other residents are admitted from

hospitals for recuperation and rehabilitation following surgery, or are terminally ill and do not

require hospital care (245). NPs and PAs are

uniquely suited to provide the types of care needed

by nursing home residents with chronic conditions

and their associated disabilities (see chs. 2 and 3).

1 IDU~i~~ the Publication of this case study, the Medicare Iafi was

changed as a result of the enactment of the Omnibus Reconciliation Act of 1986 (Public Law 99-509) during October 1986. The act

authorizes the coverage of the services of PAs furnished under the

supervision of a physician in skilled nursing facilities and intermediate-care facilities in States where the physician assistant is legally

authorized to perform the services. The payment to the employer

is to be at 85 percent of the prevailing charge of physician services

for comparable services provided by a nonspecialist physician.

Except when more intensive care can be substantiated, the number of physician visits to nursing homes is limited under the Medicare program.

Extending coverage, therefore, might not increase

the costs attributable to nursing-home visits for

third-party payers, assuming payment levels were

the same, or lower, for the NPs and PAs as for

the physicians. When physician-NP teams, rather

than physicians alone, visited nursing homes,

however, total costs to third-party payers were

shown to decrease, mainly because of lower rates

of hospitalization and fewer visits to physicians

or clinics (128). A 1980 and 1982 study found that,

as compared with physicians alone, a group practice of salaried physicians, NPs, and PAs showed

substantially lower overall medical costs for nursing home residents even though the number of

visits to the homes were not limited. Savings were

realized from decreases in expensive hospitalbased emergency and outpatient services and in

the numbers of hospital days used (155,257). Furthermore, the quality of care increased, and the

NPs acted as patients’ advocates.

Although payment changes are a necessary

step, innovative approaches to improving the care

and reducing the costs associated with nursing

homes need to include modifications of regulations concerning visit limitations and changes in

other Medicare and Medicaid regulations that

limit the role of NPs and PAs in nursing homes.

THE CHANGING CONTEXT OF HEALTH CARE

Financing

A growing trend is to set payment rates for

health services before, rather than after, they are

delivered. Prospective payment has been adopted

in response to rapidly rising health-care costs and

the recognition that cost increases have been partly

caused by retrospective reimbursement. One of

the most innovative approaches is Medicare’s

method of paying for beneficiaries’ inpatient care

on the basis of DRGs.

riod. The health-care organization receives its

payment, the amount of which is not related to

the quantity of services provided, and must then

pay physicians and other providers. Cavitation

payment provides financial incentives to prevent

high-cost problems and to deliver services at low

cost. Acceptable standards of care, or at least patient satisfaction, are essential if capitated plans

are to maintain enrollment at sufficiently high

levels to maintain financial viability (246).

The other major trend is increased interest in Supply of Physicians the use of cavitation, in which a per capita amount

is set prospectively for all medical services received In the mid-1960s, public policy in the United

by an enrollee or beneficiary during a given pe- States began to focus on counteracting the short-
age and maldistribution of physicians. As a result, the number of medical schools increased

from 89 in 1965 to 127 in 1984 (255), and the number of first-year medical students nearly doubled

(240,255). Expected increases in the numbers of

graduates from U.S. medical schools, combined

with graduates of foreign medical schools, are resulting in physician surpluses, which the Graduate Medical Education National Advisory Committee predicts will be significant by 1990. Since

1982, enrollment in medical schools has declined

slightly, as the Federal Government has reduced

both its funding of subsidized loans for medical

students and its support of medical schools (58).

The growth rate in the supply of foreign medical

graduates also is expected to decrease (255), but

the effect of past efforts to increase the supply of

physicians will be felt well into the next century.

Observers expect increases in the number of

physicians to significantly outpace population

growth. For every 100,000 people in the United

States, there were 148 physicians in 1970 and 218

in 1983 (255). Estimates for 1990 range from 215

(240) to 224.4 (255) per 100,000. Estimates for the

year 2000 range from 240 (240) to 245.2 (255) per

100,000. ’2 From 1981 levels, the numbers of physicians in primary-care specialties, including obstetrics and gynecology, are expected to have increased 28 percent by 1990 and 53 percent by

2000, outpacing the growth in the total supply of

physicians (255). Although the need for physicians

is expected to increase, the supply of physicians

is expected to exceed the need by 1990, according to all estimates (94,240,251,255).

Delivery Sites and Organizations

In 1983, for the first time, the main practice arrangement of less than half (48.9 percent) of all

physicians in the United States was solo practice.

Only 8 years previously, more than 54 percent

of the Nation’s physicians practiced individually.

In 1984, the number of group practices (three or

more physicians) was over 15,000—up 44 percent

since 1980 (16). The number of physicians in group

practices during the same period increased from

“The total number of physicians in 1970 was 334,028 and in 1983

was 519,546 (255 ). Estimates for 1990 range from 537,750 (240) to

555,300 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 physicians join group practices because the practices

are established, they entail less financial risk than

solo practices, and they provide access to the capital required for purchasing and using sophisticated medical technology (16). Group practices

may be even more attractive to physicians in the

future for a number of reasons including the capital required to purchase expensive technology and

increased competition.

The types of organizations in which physicians

practice—with or without other health-care providers—have also increased. HMOs have been

growing rapidly in recent years. Enrollment in

HMOs grew by 25.7 percent in 1985 to a total enrollment of 21 million (123). Although Individual Practice Association (IPA) models outnumbered

all other kinds of HMOs combined, group-model

plans retained the lead in enrollment (123). That

enrollment is expected to increase rapidly in the

next 5 years. Estimates of total enrollment in

HMOs range between 25 and 50 million for 1990

(241). Part of the growth in HMOs has been attributed to the increased willingness of physicians

to be employed in them (240). Recent changes that

might affect the employment and use of NPs, PAs,

and CNMs in HMOs are the increasing involvement of for-profit corporations in HMOs, and the

joint purchasing and other cost-saving ventures

undertaken by groups of HMOs (246).

Preferred-provider organizations (PPOs) include several types of arrangements between thirdparty payers and health-care providers, including physicians, hospitals, or both. In these arrangements, providers contract with insurers or

employers to deliver care at reduced prices. The

first PPO was organized in 1978; by June 1985,

334 had been organized and 229 were operating

(118). Although PPOs were designed to reduce

expenditures, no evidence currently exists that the

care they deliver costs less than that delivered by

other types of organizations.

The delivery of health services is also affected

by the growth of the multihospital system—two

or more hospitals owned, leased, controlled, or

managed by a single for-profit or not-for-profit

corporation. Indeed, the multihospital system has

become an important component in the changing health-care-delivery system. Some 35 percent
62

of the Nation’s hospitals and 38 percent of all community hospital beds are now in multihospital systems (14). Since 1976, the number of multihospital systems has increased by more than 60 percent

(2). A few observers believe that the growth of

the for-profit component will eventually result in

most services being provided by a few nationwide

suppliers that might appropriately be labeled

“megacorporate health care delivery systems”

(85).

Another trend is toward increasingly diverse

sites for providing care (see table 5-1) .13 For example, the first free-standing center was established in Delaware in 1973. By July 1984, there

were an estimated 1,800 such centers in the United

States and the total is projected to grow to approximately 4,500 by 1990 (152). In late 1983,

about 9 percent of the Nation’s physicians worked

an average of about 13 hours per week in freestanding centers providing primary or emergency

care. Some of these centers were operated by hospitals or chains and others operated independently

(16).

1315ee Medjca] Technology and Costs of the Medicare program

(244) for a more detailed description of alternative sites of care.

Table 5-1 .—Selected Alternatives to Traditional

Health-Care Delivery

1. Alternative sites:

11.

Alcohol and drug abuse centers

Ambulatory care centers

Ambulatory surgical centers

Birthing centers

Diagnostic imaging centers

Freestanding emergency centers

Hospices

Mammography centers

Nurse-managed centers

Nutritional dietary centers

Oncology centers

Pain management centers

Psychiatric centers

Rehabilitation centers

Sports rehabilitation centers

Student health centers

Wellness programs

Alternative organizations:

Competitive medical plans

Extensive provider organizations

Health maintenance organizations

Independent practice associations

Preferred provider organizations

Social health maintenance organizations

SOURCE Office of Technology Assessment, 1986

Effects of Changes in the Health-Care

Environment on Nurse Practitioners,

Physician Assistants, and

Certified Nurse= Midwives

How changes in the health-care environment

will affect the integration of NPs, PAs, and CNMs

in the health-care system is unclear. The changes,

which generally reflect trends toward cost-containment and increased competition, are interdependent. For example, the increasing supply of

physicians has heightened competition among

medical-care providers (19,176,205,206), leading

many young physicians to accept salaried positions and to enter into contractual arrangements

with third-party payers (19,240). The number of

physicians in salaried positions is twice as great

for those in practice 5 years or less as for those

in practice 6 years or more (18). In effect, the increasing supply of physicians is an important factor in changing medical practice arrangements in

the United States and in fostering a willingness

to practice in fee-for-service groups and in capitated and institutional settings, which many physicians avoided only a few years ago.

Competition in the health-care system could either limit or expand employment opportunities

for NPs, PAs, and CNMs. Competition resulting

from the growing supply of medical-care providers

might reduce such opportunities, especially in

physicians’ office-based, fee-for-service practices.

Physicians with declining patient bases might not

have enough patients to justify employing additional providers (97). However, the American

Medical Association (15) notes that, faced with

increasing competition, rising practice costs, and

cost-conscious patients, physicians are concerned

about the cost-effectiveness of their practices and

might attempt to improve the practices’ productivity and increase the practices’ income by employing NPs, PAs, and CNMs. Compared with

practices that do not employ NPs and PAs, physicians’ practices that do employ NPs and PAs

have higher numbers of patient visits per hour and

per week and higher incomes for the employing

physicians (17). Because such practices charge

lower fees per office visit (17), they might be more

competitive with other practices. Physicians might

also attempt to attract more patients by expanding the range of the services provided by their
63

offices, which could enable NPs and PAs to practice the full range of services for which they were

trained.

Some physicians, however, might find it economically more advantageous to hire new physicians rather than NPs, PAs, or CNMs. The rate

of growth in physicians’ incomes has started to

decline, a trend that is expected to continue (20).

If new physicians’ incomes decline sufficiently,

and if their interest in salaried positions continue

to increase, they might be more attractive than

NPs, PAs, or CNMs to established physicians

who want to expand their practices.

Competition among different types of healthcare organizations might increase the employment

and responsibilities of NPs, PAs, and CNMs (15,

143,144). For example, the growth of risk-sharing

HMOs—which have used the services of NPs,

PAs, and CNMs extensively in the past—would

seem to ensure a larger role for these providers

in the health-care system. But like physicians’

practices, HMOs could turn instead to physicians,

if their incomes are reduced enough. Anecdotal

reports from California note “that clinics that had

intended to employ NPs and PAs were having

physicians arrive on their doorsteps saying they

would work for $30,000 or $40,000” (263). Clinic

administrators, then, must consider whether to

hire NPs or PAs at $25,000 or to hire physicians

for only $10,000 more. In addition to salary, however, other factors might enter into such decisions.

NPs, PAs, and CNMs save costs for capitated entities and provide the types of services—health

education, counseling, and preventive care—that

HMOs emphasize. Indeed, observers generally

agree that the opportunities for employment and

full use of NPs, PAs, and CNMs are highest in

capitated systems.

The increase in the numbers of IPA-model

HMOs is another trend that might adversely affect the employment and use of NPs, PAs, and

CNMs. Large group- and staff-model HMOs usually provide care at primary HMO sites and employ NPs, PAs, and CNMs because they are costsaving, and because they provide health education and preventive services that meet standard

levels of quality. The IPA model is less likely than

other models to employ these practitioners, because the “plan is primarily organized around

solo/single specialty group practices, ” (123) which

do not benefit as much from employing and using

NPs, PAs, and CNMs as do larger practices.

The trend toward alternative providers, most

of whom are profit-making entities, suggests possible new sources of employment. Anecdotal evidence indicates that ambulatory care centers are

employing PAs and NPs. A survey of 250 individual ambulatory care centers, owned by 142 private organizations, found that PAs’ salaries ranged

from $20,784 to $35,000, with an average of

$25,946 (172). Humana, Inc., owns 150 ambulatory care centers (Medfirst) and employs NPs

only in its high-volume centers, about 5 percent

of the total (163). NPs, who receive salaries or

hourly wages, have been found to provide standard care and to cost Humana one-third as much

as physicians. Nonetheless, the organization perceives a demand from its clients for physician care

and does not intend to change its staffing patterns.

The effects of payment changes, such as the

DRG approach, on the employment and use of

NPs, PAs, and CNMs in hospitals have not yet

been well documented. From individual reports,

the effects appear to vary among hospitals. Some

hospitals have reportedly cut their nursing staffs

and reduced the nurses’ work schedules because

of DRGs (163). Other hospitals reportedly have

hired PAs to increase efficiency (48). The different responses were to be expected and might be

attributed to differences in patient mix (and thus

differences in DRGs), in the costs of the hospitals with respect to specific DRGs, and in DRG

rates (based on geographic location—urban or rural). The aggregate effect on the employment and

use of NPs, PAs, and CNMs is thus difficult to

ascertain.

Reports also indicate that, as a result of DRG

payment, some hospitals are dismissing NPs and

PAs and shifting portions of their operations to

their outpatient departments, where fee-forservice physicians deliver care (117). PAs’ advocates suggest that eventually hospitals might seek

more efficient outpatient operations and use PAs

in an attempt to contain their costs (48). New roles

could also emerge for PAs as utilization review

specialists or DRG coordinators (48).
64

—

Nurses expect that prospective payment and its

related cost management will bring about increasing attention to the contribution of nursing services in critical care and transplant units and will

result in a much more realistic allocation of dollars for nursing services (233). Also, because prospective payment may result in the early discharge

of patients into the community, followup services for patients after they are discharged are assuming increasing importance. Nurse-managed

and nurse-owned organizations are emerging to

provide nursing services in the community, and

nurses are attempting to establish a mechanism

of payment for community, nursing services (233).

NPs are also assuming new roles in managing

cases and reviewing the use of hospital services

(96).

Studies are not available to show how the growth

of investor-owned hospitals and multi-hospital

systems has affected the employment and use of

NPs, PAs, and CNMs. Studies on the differences

in economic performance based on ownership (investor-owned or not-for profit) and system affiliation (affiliated or free-standing) found no significant difference in costs for delivering comparable

care to patients (260). Compared with other types

of hospitals, investor-owned chain-hospitals had

fewer employees per bed, but paid employees—

except nurses—more (260). The years studied

were 1978 and 1980, when payment methods creSUMMARY

The employment and use of NPs, PAs, and

CNMs would be affected by changes in the methods of payment for their services and by other

changes in the health-care system. Examining how

particular changes in payment would interact with

the other changes provides some indication of

what roles NPs, PAs, and CNMs might play in

particular health-care settings and how costs might

change for health-care providers, patients, and

society.

Despite anticipated changes in the methods of

paying for physicians’ services, fee-for-service will

probably remain a major form of payment in the

foreseeable future. Allowing coverage and direct

ated incentives for maximizing the costs of providing services. The adoption of prospective payment by Medicare, some Blue Cross plans, and

some State Medicaid programs has created incentives for minimizing such costs. In addition, private sector groups—HMOs, PPOs, employers,

and insurers—are contracting with selected hospitals on the basis of price.

Hospitals, especially investor-owned hospitals,

will need to lower their costs of production in response to the increasingly competitive new environment (194), but investor-owned hospitals are

not hiring lower priced personnel, such as NPs,

PAs, and CNMs, to substitute for physicians in

inpatient settings (95). Indeed, investor-owned

hospitals are not employing many physicians, either (170). Investor-owned chains are using department managers, who for fixed-price contracts

provide services, including personnel, for hospital departments (95). Because the managers are

at risk financially, however, they have incentives

to save costs and, therefore, might employ appropriately trained NPs and PAs.

The growth of investor-owned hospitals might

signal fewer opportunities for CNMs to be employed in hospital settings. Both system-affiliated

and free-standing hospitals treated proportionately fewer maternity patients than not-for-profit

hospitals treated (260).

payment for the services of NPs and CNMs would

significantly help them in administratively independent practices, could stimulate the growth of

such practices to the extent permitted by State

laws and regulations, and would increase opportunities for NPs and CNMs to provide the full

range of services for which they are trained and

licensed.

As independent providers, IPA-model HMOs

might engage NPs as contractors for primary-care

services (100) and CNMs as contractors for maternity services, PPOs also might treat these practitioners as contractors who agreed to provide services at a discounted fee. The opportunities for NPs
65

and CNMs to become contractors might be limited, however, by the increasing supply of primary-care physicians, including obstetricians, and

by competition from physicians, who are lowering the amounts for which they are willing to

work.

NPs’ and CNMs’ employment and the full use

of their skills in administratively independent

practices could decrease costs for programs, beneficiaries, and society. If the numbers of services

NPs and CNMs and physicians provided did not

greatly expand, and if the payment levels for NP

and CNM services remained lower than those of

physicians for comparable services, lower program costs would be likely, Furthermore, if the

fees to patients reflected the lower payment level,

costs to beneficiaries and society might be lower.

In any fee-for-service practice, including one

operated by NPs or CNMs, the degree to which

costs would decrease would depend on how much

lower the level of payment was for these practitioners than for physicians and on the particular

service. For example, the Congressional Budget

Office found that covering the services of PAs at

rates 10 percent below those of physicians would

have negligible effects on costs or savings for the

Medicare program or for society (177). Even if

the savings occasioned by the lower payment level

were passed on to beneficiaries, they would have

only small incentives to seek treatment from lower

priced PAs. At the margin, patients would pay

coinsurance of ‘only 20 percent. A reduction in

the charge for an office visit from $30.00 to $27 .00

would save a Medicare patient only $0.60, an

amount that might well be paid by Medicaid or

a private Medi-Gap policy and would not provide an incentive to use such services. Similarly,

most of the services provided by NPs are primary

care services, such as visits, and would likely not

provide much saving for a patient. Maternity

care, however, is costly and patients’ out-ofpocket costs could be high. If CNMs would accept lower payment levels than those of physicians, any savings passed on to the expectant

mother would be considerable.

How covering their services would affect the

employment and use of NPs, PAs, and CNMs in

physicians’ fee-for-service practices is unclear. Numerous variables could affect physicians’ decision

to employ and appropriately use these providers.

Such variables include the physicians’ billing practices; the payment levels for services of NPs, PAs,

and CNMs; the cost differentials between hiring

physicians or hiring NPs, PAs, or CNMs; the

competitive position of the physicians’ practices;

the practices’ interests in expanding the range of

services they provide in order to improve their

competitive positions; the abilities—as well as the

physicians’ perceptions of the abilities—of NPs,

PAs, and CNMs to improve the practices’ productivity and income, and the physicians’ perceptions

of the noneconomic benefits these providers could

bring to the practices.

Coverage might encourage fee-for-service practices, particularly group practices to use NPs and

PAs in settings and for certain populations and

settings where appropriate care currently is unavailable or inadequate. For example, physicians

have been reluctant to make nursing home visits,

and there is no evidence that an increased supply

of physicians will decrease their reluctance. The

increases in the elderly population and the growth

of nursing homes have exacerbated an unmet need

for services in this setting. Not only does the training of NPs and PAs enable them to provide the

older population with care whose quality is comparable to that of the care provided by physicians,

but evidence shows that teams of physician, NPs,

and PAs visiting patients in nursing homes provide standard care and reduce total expenditures. 14

Elderly people and children with disabling conditions and other individuals with chronic conditions would also benefit from NP and PA care

in the home setting.

The employment practices of HMOs, the healthcare setting with significant growth potential,

would not be directly influenced by changes in

the current methods of paying for the services of

NPs, PAs, and CNMs because most public and

private third-party payers cover such services in

HMO settings. Furthermore, whether payments

were direct or indirect to the NP, PA, and CNM,

“The Omnibus Reconciliation Act (Public Law. QQ-50QI enacted

during the publication ot this case study provides colerage t[~r wr\’-

ices of PAs provided i n n u rsing homes under hled Ica re.
66

would not be an issue for organizations paid prospectively by a capitated amount.

However, the increase in the number of IPAmodel HMOs does affect the employment of NPs,

PAs, and CNMs. In 1985, although group model

HMO plans retained the lead in total enrollment,

IPA model plans outnumbered all other kinds of

HMO plans for the first time (123). Because they

are primarily solo or single-specialty practices,

IPAs are less likely than group model HMOs to

employ these practitioners.

The data suggest that NPs, PAs, and CNMs

save costs for HMOs. In an increasingly competitive environment, the financial incentives promote

passing onto consumers the savings generated by

the employment and full use of NPs, PAs, and

CNMs. Thus, as the environment becomes more

competitive, the employment of these providers

in capitated HMOs could benefit society financially. To the extent these providers are used to

provide interpersonal care and preventive services, the types of services traditionally incorporated into the practice of these providers and of

HMOs, the quality of care will also benefit.

Third-party payers pay hospitals an aggregate

sum for operating costs, and the hospitals are responsible for paying salaried employees. Therefore, coverage and direct payment for inpatient

hospital services provided by NPs, PAs, and CNMs

would not directly affect their employment possibilities. This is especially applicable to Medicare,

which pays for inpatient services on a DRG-rate

basis. This payment method creates incentives for

lowering the cost of resources, and the costs of

NPs, PAs, and CNMs are included in calculating

the costs of resources. Although coverage and separate billing for their services could clarify their

revenue-producing abilities as well as their costs

to the employing hospital, the use of these practitioners to provide patient care as hospital employees is likely to decline under DRG-based payment. PAs and NPs could be used in new roles,

such as DRG coordinators.

In order for coverage and direct payment to affect the employment of NPs, PAs, and CNMs by

hospitals for providing inpatient services, the costs

of their services would be billed as professional

services. If the payment levels for the services they

provided were lower than those for physician’s

services, and if the volume of services were not

increased, savings might be likely for Medicare

and—if fees were lowered accordingly—for society. However, if Medicare paid NPs or CNMs

for providing services for which hospitals were

also paid under the DRG rate, paying for them

separately might increase program costs, if DRG

payment rates were not changed. Reducing DRG

rates to account for eliminating the costs associated with the NPs’ or CNMs’ services would be

extremely difficult because of the lack of data. In

any case, because the proportion of the DRG rate

ascribed to nursing costs is unknown, the effects

of direct payment on organizational, program, or

societal costs cannot be determined.

A major change in health-care delivery is the

growth of investor-owned hospitals, particularly

investor-owned chains of hospitals. These organizations are currently focusing their efforts on

attracting medical specialists to their staffs and

have evinced no interest in employing NPs, PAs,

and CNMs. The advantages of coverage for the

services of these providers do not appear to be

sufficiently significant to spark such interest.

In the final analysis, it seems that extending

coverage for the services of NPs, PAs, and CNMs

in at least some settings could benefit the health

status of certain segments of the population currently not receiving appropriate care. The immediate effects on third-party costs are unclear, although long-term effects could be a decrease in

total costs. The advantages of direct payment for

the services of NPs and CNMs are less obvious.

Direct payment might encourage qualified NPs

and CNMs to move into unserved and underserved 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 and

from individuals and organizations with relevant experience. An advisory panel of experts with backgrounds

in health policy, medical economics, health insurance, medicine, nursing and consumer advocacy defined the

goals for the study and suggested source material, subject areas, and perspectives to consider in presenting the

material. The drafts of the report were revised to reflect the thoughtful comments of the panel. OTA thanks

the panel for its assistance and the following people and organizations for supplying information and reviewing

drafts.

Joel J. Alpert

Boston City Hospital

Boston, MA

American Nurses Association

Washington, DC

American College of NurseMidwives

Washington, DC

American Academy of Physician

Assistants

Arlington, VA

David Banta

The Netherlands

James D. Campbell

University of Missouri

Columbia, MO

James F. Cawley

George Washington University

Medical Center

Washington, DC

Katherine H. Chavigny

American Medical Association

Chicago, IL

James Crouch

Utah Department of Health

Salt Lake, City, UT

M.L. Detmer

American Medical Association

Chicago, IL

Karen Ehrnman

American College of NurseMidwives

Washington, DC

E. Havey Estes, Jr.,

Duke University Medical Center

Durham, NC

Claire M. Fagin,

University of Pennsylvania

Philadelphia, PA

Carl Fasser

Baylor University

Houston, TX

William Finefrock

American Academy of Physician

Assistants

Arlington, VA

Loretta C. Ford

University of Rochester Medical

Center

Rochester, NY

Louis P. Garrison

Project HOPE

Millwood, VA

Archie Golden

Chesapeake Health Plan–South

Side

Baltimore, MD

Linda Golodner

National Consumers League

Washington, DC

Bradford Gray

Institute of Medicine

Washington, DC

Marie Hawk

Harvard Community Health Plan

Boston, MA

Anita Hegster

Health Care Financing

Administration

Baltimore, MD

Martha Hill

Johns Hopkins School of Nursing

Baltimore, MD

Ada Jacox

University of Maryland

Baltimore, MD

Jean Johnson

George Washington University

Washington, DC

Kerry Kemp

Office of Technology Assessment

Washington, DC

Cynthia P. King

American Medical Association

Chicago, IL

Karl Kronebusch

Office of Technology Assessment

Washington, DC

William Larson

Health Care Financing

Administration

Baltimore, MD

Kenneth Lease

U.S. Office of Personnel

Management

Washington, DC

Charles E. Lewis

University of California

Los Angeles, CA

Joan Lynaugh

University of Pennsylvania

Philadelphia, PA

Nancy March

American College of NurseMidwives

Washington DC

Lynn May

American Academy of Physician

Assistants

Arlington, VA

Kathy Michels

American Nurses Association

Washington, DC

Evelyn Moses

Health Resources and Services

Administration

Rockville, MD

69
70

Norbert Nelson

New York University Medical

School

New York, NY

Ronald Nelson

American Academy of Physician

Assistants

Arlington, VA

Robert Oseasohn

University of Texas

San Antonio, TX

Henry B. Perry

Mountain Medical Center

Clyde, NC

Elaine Power

Office of Technology Assessment

Washington, DC

Robert Ranney

National Rural Health Care

Association

Kansas City, MO

Ginette Rodger

Canadian Nurses Association

Ottawa, ON

Gretchen Schafft

American Academy of Physician

Assistants

Arlington, VA

Sherry Shamansky

Yale University

New Haven, CT

Jane Sisk

Office of Technology Assessment

Washington, DC

Julie Sochalski

Ann Arbor, MI

Sally Solomon

National League for Nursing

New York, NY

Brenda Splitz

George Washington University

Washington, DC

Margetta Styles

American Nurses Association

Kansas City, MO

Dan Thomas

Health Insurance Association of

America

Washington, DC

Marlent Ventura

Veterans Administration Hospital

Buffalo, NY

Judith Wagner

Office of Technology Assessment

Washington, DC

Jerry Weston

National Center for Health

Services Research

Rockville, MD

Judith Willis

Health Care Financing

Administration

Baltimore, MD

Sidney Wolfe

Health Research Group

Washington, DC

Susan Yates

American College of NurseMidwives

Washington, DC
Appendix B

Payment for the Services of

Nurse Practitioners, Physician Assistants,

and Certified Nurse-Midwives

Health-care services are paid for by individuals and

by third-party payers. Third-party payers in the private sector include commercial insurance companies;

hospital and medical plans, such as Blue Cross and

Blue Shield; prepaid group medical plans, such as

health maintenance organizations (HMOs); and others,

such as labor unions or employers of insured individuals (106). Specific benefits, exclusions, and limitations

on financial coverage vary from one third-party payer

to another and differ even among the policies and plans

offered by a particular payer. However, State and, to

a lesser extent, Federal laws and regulations require

private third-party payers to offer some benefits and

do not permit them to offer others.

The Federal Government plays a significant role in

paying for health-care services under four primaryhealth-care programs. The government acts as a thirdparty payer for health care under the Medicare and

the Medicaid programs. Although the Health Care

Financing Administration (HCFA) is the Federal agency

responsible for both Medicare and Medicaid, the two

programs differ considerably in their payment practices and covered populations. Medicare is a nationwide health insurance program for the 27.5 million

Americans who are at least 65 years of age and for

2.9 million disabled Americans, Part A, the Hospital

Insurance Program helps pay for hospital services, related institutional services, and other services. Part B,

the Supplementary Medical Insurance Program covers physicians’ services and many other medical services. Medicaid is a joint Federal-State program for 22

million low-income persons. The program is administered by individual States under general Federal

guidelines, which include mandatory minimum benefits that all States must provide to eligible recipients

and optional benefits that individual States may elect

to provide to recipients.

The Civilian Health and Medical Program of the

Uniformed Services (CHAMPUS), the third medicalbenefits program provided by the Federal Government, is administered by the Department of Defense

(DOD) (245), CHAMPUS covers nearly 8 million dependents of military personnel, retirees, and dependents of retirees inside and outside the United States

(60).

The fourth medical-benefits program provided by

the Federal Government is the Federal Employees

Health Benefits Program (FEHBP), a voluntary healthcare program that provides health insurance for approximately 10 million Federal employees and their dependents. Enrollees receive health-insurance services

from more than 300 health-benefit plans under contracts negotiated with the Office of Personnel Management 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 considerably, in part because of variations in the State laws

and regulations that govern these providers’ practices

and payment. Table B-1 provides a generalized overview of the payment practices of the major third-party

payers in the public and private sectors. These practices are described in greater detail below.

Nurse Practitioners and

Physician Assistants

Government-Sponsored Programs

Medicare.—Under Part B of the Medicare program,

coverage and payment for NPs’ and PAs’ services are

restricted to services not traditionally performed by

physicians, to services normally delegated by physicians, and to services performed under the direct supervision of physicians. This provision is commonly

termed the “incident to” provisional

Under this provision, services of nonphysicians may

be covered where they are of types which are commonly

performed by physicians’ office personnel, and are performed by employees of the physician under his or her

direct supervision, e.g., giving injections, taking temperatures and blood pressures, performing blood tests,

etc. Payment cannot be made, however, for services

performed by nonphysicians where the services are of

‘The relevant Medicare Part B regulation prohibits payment for

medical services rendered by someone other than a physician except for services that are “furnished as an incident to a physician’s

professional services of kinds which are commonly furnished in physicians’ offices and are commonly either rendered without charge

or included in physician’s bills. ” Sec. 1861(s)(2)(A) of the Social Security Act, 42 U, S.C. Sec. 1395(s)(2)(A), 20 CFR 405-231(b).

71
72 —.

Table B-1 .—Coverage and Direct Payment for Servicesa of Nurse Practitioners,

Physician Assistants, and Certified Nurse-Midwives

Nurse practitioners Physician assistants

—

— Certified nurse-midwives —

Third-party payer

Direct

Coverage payment Coverage

Medicare:

Part A . . . . . . . . . . . . . . . . . . No No No

Part B . . . . . . . . . . . . . . . . . . No No Nob

HMOs C . Yes NA Yes

State Medicaid programsd . . . .Some A few Some

programs programs programs

Medicare and Medicaid:

Rural Health Clinics. ., . . Yes No Yes

CHAMPUS e . . . . . . . . . . . . . . . . Yes Yes No

FEHBP f . . . . . . . . . . . ........7 plans 7 plans 6 plans

Private insurance . . . . . . . . . . . In some In some No

States States

NA = not available

aservices that are typically and characteristically provided by Physicians.

Direct

payment

No

No

NA

None

No

No

6 plans

No

Coverage

No

No

Yes

Almost all

programs

Yes

Yes

20 plans

In some

States

Direct

payment

N o

N o

N A

Almost all

programs

N o

Yes

20 plans

In some

States

.

bDuring the Publication of this case study, the Omnibus Rec~ricili~tlon Act of 19~ (publlc Law 99.509) was enactfjd The act modifies part B Of Medicare and authorizes

payment for (covers) services of physician assistants working under the supervision of physicians In hospitals, skilled nursing faclllties, Intermediate.carefacllltles,

and as an assistant at surgery. The payment is indirect and at levels lower than physicians would receive for prowdlng comparable services

cHealth maintenance organizations.

dstate Medicaid programs have the option of irl~luding NF’ and PA se~ices lfl their state MediCald plans. Congress rnarlctated coverage Of CNMS’ SerVICeS In 1980

As of January 1985, all States in which CNMS practiced either were complying with the law (Public Law 96-499) or were considering changes In their Medical plans

to comply with the law.

ecivilian Health and Medical Program of the Uniformed services

fFederal EmployeesHealthBenefitprogram.FEHBP has 21 fee-f or.service plans, some of which authorize PaYment to NPs PAs, and Cf’Jfvf S

gwhether State laws and regulations require or permit Insurance coverage and direct payment for the serwces of NPs, PAs, and CNMS

SOURCE Office of Technology Assessment, 1986

the kinds which are typically and characteristically rendered by physicians, e.g., prescribing medications, setting casts on fractures, assisting at surgery, and other

activities that involve an independent evaluation or

treatment of the patient’s condition even if the attending physician is directly supervising these services (64).

The “incident to” provision was partly intended to

reduce the possibility of physicians’ making excessive

profits by employing large numbers of assistants (162).

The provision has been refined over time, and its complexity has led to varied interpretation by physicians.

Strictly interpreted, the provision means that Medicare

only pays for physicians’ typical services when they

are actually provided by physicians. Knowingly or

unknowingly, however, some physicians bill for services irrespective of who performs the service. Unless

audits are performed, Medicare contractors have difficulty determining who has rendered services from the

Medicare billing form. One of the “incident to” provision’s effects has been to sharply limit the administratively independent practice of NPs who cannot bill

Medicare for medical services.

This provision was modified in 1980 (248) to permit

generally supervised nurses and other paramedical

personnel—such as NPs and PAs—to provide certain

services to the homebound in some medically underserved areas. The “incident to” provision is waived

only in areas that do not have certified home-health

agencies. In 1984, there were 5,247 Medicare certified

home-health agencies (164), and the number is growing

(115). Presumably, therefore, NPs and PAs provide

services to homebound patients only to a limited extent

and only in areas where home-health agencies do not

find it economical to function.

The Tax Equity and Fiscal Responsibility Act of 1982

(Public Law 97-248) allows for Medicare coverage of

NPs’ and PAs’ services in HMOs and competitive medical plans (CMPs) that have entered into certain contractual risk-sharing arrangements with HCFA.2 The

implementing regulations permit NPs and PAs in HMOs

and CMPs to furnish services without the direct personal supervision of physicians. ) The NPs and PAs

essentially can provide whatever services State law authorizes, including supervising or ordering services and

supplies incidental to the services.

During the publication of this case study, the Omnibus Reconciliation Act of 1986 (Public Law 99-509)

‘Calculations of cavitation rates do not include NPs’ or PAs’ salaries but are determined by the average adjusted per capita costs

which are based on the costs of past services received by beneficiaries who fall into particular sets governed by such factors as geographic location, age, sex, and eligibility.

3Federal Register, vol. 50, No. 7, Thursday Jan. 10, 1985, p. 1351.
73

—

was enacted. The act modifies Medicare and authorizes payment for (covers) services of PAs working under the supervision of physicians in hospitals, skilled

nursing facilities, intermediate-care facilities, and as

an assistant at surgery. The payment is indirect and

at levels lower than physicians would receive for providing comparable services.

Medicare’s payment for inpatient hospital services

under Part A does not specify coverage or payment

for NPs’ and PAs’ services, either under Medicare’s

former cost-based reimbursement method or the

current prospective-payment system. Hospitals usually pay for NPs’ and PAs’ services by salaries; the salaries and other costs of employing or contracting with

NPs and PAs are included in the hospitals’ formulas

for calculating operating costs. Under cost-based reimbursement, Medicare pays the hospital the total operating costs associated with Medicare beneficiaries.

Under the prospective-payment system, Medicare pays

a fixed amount for each patient admitted; the aggregated amount is intended to cover the hospitals’ total

operating costs for Medicare beneficiaries.

Medicaid.—Under Medicaid, each State has considerable discretion to design its program within broad

Federal guidelines. Covering and paying for the

services provided by NPs and PAs is one of the benefits a State may choose to include in its Medicaid Plan.

Data on the number of State Medicaid programs that

cover NPs’ services are not collected by HCFA’s central

office. Although the available data conflict, they

indicate that State Medicaid programs are cautious

about extending payment to NPs. A 1985 study noted

that NPs were authorized to receive direct payment

or indirect payment—i.e., to bill directly or through

physicians—in 21 State Medicaid programs (60). An

earlier study found that of the 26 State Medicaid

programs that covered NPs’ services, most paid indirectly. Nineteen of the twenty-six States adopted the

Medicare approach of allowing payment only for NPs’

services that were incidental to physicians’ services

(22).

A preliminary survey of State Medicaid programs

found that 26 of the 36 State Medicaid programs covered PAs’ services (5). Of those 26 programs, 18 reimbursed for PAs’ services at the same rates as physicians’, 4 reimbursed at lower rates, 2 reimbursed on

a cost basis, and the remainder did not respond to the

question. Most of the State Medicaid programs’ requirements for supervision by physicians were similar to the requirements contained in State laws governing PAs’ practice. (In most States, the scope of PAs’

practice is controlled under medical-practice acts and

regulations. ) Other State Medicaid programs require

that physicians review patients’ charts every 7 days,

that physicians be onsite, or that physicians be present.

The scope of services covered for PAs also varied from

the general (e.g., all the services cited in the PA law

governing scope of services) to the specific (e.g., examinations under the program Early and Periodic

Screening, Diagnosis, and Treatment; services in community health centers; and services in family planning

agencies). Three States specified that only “incident to”

services (i.e., services not traditionally performed by

physicians) were covered for payment (25).

Medicaid payment for inpatient hospital services

differs by State. Although 41 State Medicaid programs

paid for hospital inpatient services on a retrospective

cost basis at the beginning of 1980, 34 State Medicaid

programs had some form of prospective-payment

system as of December 1985 (133). Each State Medicaid program pays for operating costs—including salaries and other costs associated with NPs and PAs—

according to its unique payment method for inpatient

services (40).

Rural Health Clinics.—Access to primary-care

services by NPs and PAs in satellite settings in isolated

areas was hindered by the fact that payment for such

services was available under Medicare and Medicaid

only if a physician was on the premises when the

services were delivered. The Rural Health Clinic

Services Act of 1977 (Public Law 95-210) waived such

restrictions for NPs and PAs practicing in certified rural health clinics located in designated underserved

areas. The act permits payment for the services of NPs

and PAs even when they are not directly supervised

by physicians at all times. This allows rural clinics

staffed only by NPs and PAs backed up by physicians

to provide reimbursable primary care typically provided by physicians, so long as written plans of

treatment are periodically reviewed and approved by

physicians. Payment, which is based on reasonable

costs, is made to the employing clinic, not to the NP

or PA, and is restricted to services that State legislation authorizes NPs and PAs to perform.

Nursing Homes.—Various Medicare and Medicaid

regulations, in addition to coverage and payment

provisions, limit the provision of certain services by

PAs and NPs in nursing homes. In some States, the

laws permit physicians to delegate such services to NPs

and PAs.

Only physicians can provide certain services if a facility is to:

1.

2.

3.

be certified as a skilled nursing facility (SNF) in

the Medicare and Medicaid programs (42 CFR

405.1123,1124,1125,1126, and 1128);

be certified as an intermediate-care facility (ICF)

in the Medicaid program (42 CFR 311, 334, 343,

and 346);

obtain certification and recertification of a patient’s

need for care in an SNF in the Medicare program

(42 CFR 456.260, 270, and 280); or
74

4. obtain certification of a patient’s need for care in

an SNF and ICF in the Medicaid program (42 CFR

456.360, and 380).

The specific services that must be performed by physicians vary according to the type of certification and

the program. Under the Medicare and Medicaid programs, for example, patients can be admitted to SNFs

based only on physicians’ medical findings, diagnosis,

and orders. Patients’ care must be supervised by physicians, and patients must be seen by physicians at least

every 30 days for the first 90 days after admission.

Only physicians can prescribe drugs and order diagnostic and specialized rehabilitative services and therapeutic diets.

Unlike Medicare, Medicaid allows NPs and PAs to

recertify patients’ needs for institutional care. NPs and

PAs are authorized to recertify the necessity of

continuing medical care in SNFs (42 CFR 456.260) and

ICFs (42 CFR 456.360) where general supervision is

provided by physicians.

Civilian Health and Medical Program of the Uniformed Services. -The Federal Government, through

the Department of Defense’s CHAMPUS, has taken

the lead in treating NPs as autonomous and independent providers of care for payment purposes. CHAMPUS

began billing and paying for NPs’ services on an experimental basis in fiscal year 1980. When the experiment ended 2 years later, CHAMPUS continued coverage and direct fee-for-service payment of NPs, thereby

recognizing them as a distinct group of providers deserving direct compensation for services (60). Although

CHAMPUS does not cover PAs’ services, PAs are not

seeking coverage under CHAMPUS, because DOD has

indicated that CHAMPUS will begin contracting out

its services and cease paying on a fee-for-service basis

(83).

Federal Employees Health Benefit Program.—Like

CHAMPUS, FEHBP experimented with direct payment

and required that all FEHBP plans directly pay health

practitioners, including NPs and PAs, who were licensed under applicable State law in those States where

at least 25 percent of the population was located in

formally designated primary-medical-care manpower

-shortage areas (60). After the experimental period of

January 1980 to December 1984, FEHBP did not require

plans to compensate NPs and PAs directly.

Payment to providers of covered services currently

depends on the terms of the FEHBP’s contract with

each health-benefit plan and thus varies among the

plans. There is no statutory requirement that all plans

offer payment to NPs and PAs, but some plans currently authorize NPs and PAs to receive direct payment or reimbursement for covered services without

referral or supervision (see table B-1). Of the 21 feefor-service plans participating in FEHBP for the contract year 1986, 7 cover and offer direct payment for

services of NPs and 6 cover and offer direct payment

for the services of PAs4 (256). Only 14 percent of

enrollees in FEHBP are enrolled in plans that cover

NPs’ services and 11 percent of enrollees in FEHBP are

enrolled in plans that that cover PAs’ services. Direct

payment for NPs and other providers is now under

consideration by Congress.5

Private Insurance

Private third-party payment for NPs’ and PAs’ services is subject to State laws and health insurance regulations. Increasing numbers of States have passed

laws and regulations concerning payment for the services of NPs and PAs. Such laws and regulations must

accord with the States’ requirements governing the

scope of practice of these providers and, in some cases,

of physicians.

The State payment laws vary in a number of dimensions, including the types of insurers affected (forprofit, nonprofit, or both) and the types of insurance

policy (22). Some laws affect the services of all nurses;

others affect only special groups of nurses, such as

NPs. Some States require insurers to include nurses’

services as a reimbursable benefit (mandatory benefit), whereas other States require insurers to offer reimbursement for nurses’ services as an option in their policies (mandatory option) (232).

4The numbers do not include the more than 300 prepaid comprehensive medical plans in the FEHBP, because the organization of

medical delivery systems under these plans makes the issues of direct access, payment, supervision, and referral largely irrelevant.

5

In early 1986, President Reagan vetoed H. R. 3384 which contained a provision requiring direct reimbursements to nurses and

nurse-midwives who provide services to employees covered by the

FEHBP. Congress then passed new legislation, Public Law 99-251,

directing the Office of Personnel Management (OPM) to study and

report to Congress on the advisability of amending the law governing

FEHBP to provide mandatory recognition of additional health-care

practitioners, such as nurse-midwives, nurse practitioners, chiropractors, and clinical social workers. The legislation extended direct reimbursement for nonphysician providers in medically underserved

areas, which are determined by the Department of Health and Human Services to have at least 25 percent of the population living

in areas with inadequate numbers of medical providers. OPM’s study

advised against mandatory coverage on grounds specific to FEHBP

(e.g., mandating coverage would not increase the choice of practitioners available to plan members, nor would it necessarily increase

competition among the plans). Nonetheless, the Subcommittee on

Compensation and Employee Benefits of the House Committee on

Post Office and Civil Service remains interested in the topic. The

subcommittee held hearings on direct reimbursement for nonphysicians on Apr. 15, 1986, and indicated its intention to continue

studying the issue. H.R. 4825, introduced on May 14, 1986, would

authorize direct payment for services performed by NPs and CNMs

and other health-care providers. As of June 1986, the bill had been

reported favorably by the House Committee on Post Office and Civil

Service and was awaiting floor action. The bill did not pass the 99th

Congress.
Although direct third-party payment is the exception rather than the rule, 13 States currently permit

direct payment for NPs’ services (24). The wide variation in conditions for payment of NPs’ services is

apparent in the laws of Mississippi, Maryland, and

Oregon regarding supervision by physicians. In all

three States, insurers must pay for any service that is

within NPs’ lawful scope of practice, but Mississippi

requires the NPs to work under the supervision of physicians, whereas Maryland prohibits direct payment

to NPs who work under the direct supervision of physicians (101). In Oregon, supervision by physicians is

not a condition for reimbursement (2 I).

No State laws mandate coverage of PAs’ services.

Except in Wisconsin, State laws are silent even about

optional coverage of PAs’ services (83). None of the

States mandate direct reimbursement for PAs’ services;

indeed, 16 States explicitly prohibit it. Although there

is anecdotal information concerning third-party payers

who cover PAs’ services, sometimes under physicians’

billing, information concerning the extent of coverage

is not available.

Businesses in the United States are beginning to provide insurance that pays directly for NPs and PAs (as

well as CNMs). The Washington Business Group on

Health recently conducted a national survey of its

member organizations, all of which are large firms.

Of the approximately 200 respondents, 43 percent are

paying directly for the services of NPs, and 39 percent are doing so for PAs (91). The proportion of member companies reimbursing NPs and PAs (and CNMs)

has increased steadily over the past decade (91).

In many States, NPs’ and PAs’ services still must

be “incident to” physicians’ services, for payment purposes, and compensation for NPs’ and PAs’ services

must be made to their employing physicians or organizations. Nevertheless, the recent changes in some

States’ laws and in the policies of major corporations

suggest a movement away from requirements for direct supervision by physicians. Increasingly, NPs and

PAs can function administratively independently of

physicians and qualify for direct payment. Also, more

States are likely to pass legislation providing for the

direct compensation of NPs and PAs.

Certified Nurse-Midwives

Government-Sponsored Programs

Medicare and Medicaid.—Medicare’s policies concerning payment are the same for the services of CNMs

as for the services of NPs and PAs. Medicaid’s payment policies are much more permissive for CNMs’

services than for NPs’ and PAs’ services. In 1980,

Congress enacted legislation (Public Law 96-499) to

require that CNMs’ services be a mandatory benefit

75

under Medicaid. The Federal statute recognizes CNMs’

autonomous practice expressly stating that the mandated benefit shall be provided “whether or not he is

under the supervision of, or associated with, a physician or other health care provider” (60). HCFA issued

the regulations that implemented this law in May 1982.

As of January 1985, all States in which CNMs practiced either were complying with the statute and the

regulations or were considering changing their Medicaid plans to bring them into compliance. Currently

only four States and the District of Columbia do not

provide for direct Medicaid payment to CNMs, and

HCFA’s regional offices are working with these jurisdictions to bring them into compliance (235). Furthermore, the Medicaid statute was amended by Public

Law 98-369 to ensure that birthing centers operated

by CNMs need not be administered by physicians to

be eligible for coverage as Medicaid clinic services.

Rural Health Clinics.--CNMs are treated differently

from NPs and PAs under the Rural Health Clinics Act.

Only rural clinics employing NPs or PAs are eligible

for certification under the act (Title 42, Section 481.4).

Once a clinic is certified, however, it can receive payment for the services of the CNMs it employs.

Civilian Health and Medical Program of the Uniformed Services.—CHAMPUS singled out CNMs for

special consideration before it experimented with direct payment for NPs’ services starting in 1980. The

Defense Appropriations Act of 1979 (Public Law 95-

457) was the first Federal law to pay directly for services provided by CNMs without either referrals or direct supervision by physicians.

Federal Employees Health Benefit Program.—Of the

21 FEHBP fee-for-service plans, 20 cover CNMs without a contractual requirement for physicians’ referrals

or supervision. In addition, many prepaid plans in the

FEHBP employ CNMs. Roughly 90 percent of all Federal enrollees are in plans that cover CNMs (256).

Many of the insurance companies in the FEHBP offer

the same coverage of CNMs for their private sector

business.

Private Insurance

Private third-party payment for CNMs’ services has

also been mandated in a growing number of jurisdictions. As of 1983, 14 States had mandated direct reimbursement by private insurers for CNMs’ care (55), By

April 1986, the number of States had increased to 17

(11). In most States, direct supervision by physicians

is not a condition of reimbursement (22). In addition,

“in many other States insurers voluntarily have chosen to pay for nurse-midwifery care” (55). Fifty-seven

percent of the large corporations surveyed by the Washington Business Group on Health provide direct reimbursement to CNMs (91).
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