Association for Public Policy Analysis & Management

The labor supply response of medical providers to changes in compensation is an important policy parameter for estimating the effects of the Affordable Care Act (ACA) on access to care. Access to primary care for the newly insured is particularly important to policymakers. Nurse practitioners (NPs) provide a large and increasing share of primary care in the U.S. Current research does not provide a convincing answer to how medical providers respond to changes in payments. Some researchers have studied labor supply response of physicians based on the nature of the expansion of health insurance coverage and changes in fees (Staiger et. al. (2010); Garthwaite (2012); He and White (2013)). As NPs are predominantly female and have lower average income than physicians, NP labor supply response to an increase in reimbursement payments may differ from that of physicians and lead to different conclusions about how coverage expansion affects patient access to primary care.

A provision of the ACA required states to increase Medicaid primary care reimbursement rates temporarily to Medicare levels during 2013 and 2014. Aimed at increasing primary care capacity to meet demand from newly insured people, this federally-funded provision gave providers in some states significant increases in their Medicaid payments due to pre-existing variation in state Medicaid reimbursement rates. While most primary care physicians qualified for the increased payments, NPs qualified only if they practiced under the supervision of a physician. As a result, NPs providing primary care services either completely independently or in a collaborative rather than supervisory relationship with a physician could not receive higher payments.

There exists evidence that these higher payments increased access to care for Medicaid patients. Polsky et. al. (NEJM (2015)) find that the availability of primary care appointments for Medicaid enrollees increased after the higher payment provision and that this increase varied predictably by state according to the state’s prior Medicaid rate. The observed effect, however, may be confounded by other concurrent changes to Medicaid.

This paper investigates the effect of the temporary payment increase on the NPs labor supply as measured by weekly hours of work. A temporary payment increase may offer providers only a weak incentive to change overall work hours. Providers may also choose to see more Medicaid patients but spend less time with each of them, potentially lowering visit quality. Using a difference-in-difference approach, I exploit the fact that only NPs in states with scope-of-practice laws requiring physician supervision were differentially impacted by this provision whereas physicians in all states were affected equally. My individual-level data come from the American Community Survey (ACS) over 2008-2015. I take advantage of the large ACS sample size to study potential heterogeneous effects by state based on the state’s prior ratio of Medicaid to Medicare reimbursement rates and the share of population insured by Medicaid. Preliminary results indicate that NPs who received larger increases in reimbursement rates increased total hours of work following the provision and that this change was larger in states with lower prior Medicaid reimbursement rates.