Rural and urban Medicare beneficiaries use remarkably similar amounts of health care services.

Medicare payment policies for rural health care providers are influenced by the assumption that the limited supply of physicians in rural areas causes rural Medicare beneficiaries to receive fewer health care services than their urban counterparts do. This assumption has contributed to the growth in special payments to rural providers. As a result, Medicare pays rural providers $3 billion more each year in special payments than they would receive under traditional payment rates. To test the validity of the assumption that rural beneficiaries systematically receive less care, we analyzed claims data for all Medicare fee-for-service beneficiaries in 2008, stratified by rural/urban status and region. After adjusting for health status, we found no significant differences between rural and urban beneficiaries in either the amount of health care received or satisfaction with access to care. Although there were systematic differences in the amount of care used across regions of the country, there was very little difference within a region between rural and urban areas. To the extent that Medicare payment policies are designed to ensure access, they should be assessed on the basis of achieving similar service use rather than similar local physician supply. They should also be targeted to isolated rural providers needed to preserve access to care.