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1、medicare fees and the volume of physicians servicesacademy health june 28, 2009by jack hadley, jim reschovsky, catherine corey, and stephen zuckermanstudy questions1.do physicians provide more or fewer services to medicare patients in response to a fee reduction?2.is the magnitude and/or direction o

2、f the response the same for all services?3.do physicians financial incentives in their practice influence the volume of services provided?4.what are the implications for medicares physician payment system? changes to the sgrvolume offset assumptionsstudy designestimate physicians provision of specif

3、ic services to medicare patients as function of medicare fee differences (+ other factors) we use exogenous geographic and over-time payment variations to measure differences in feesdata:2000-01 and 2004-05 cts physician survey (n=13,707)linked with 2000 & 2005 medicare claims of their ffs pts.e

4、stimate 2-part models:probability of providing servicevolume of service provided, given anycalculation of medicare fee differenceswe measure slope of mc curve for physicians providing specific services to medicare patientsactual payments do not perfectly correspond to min. ac, as envisioned under rb

5、rvs due to data limitations and policy decisions.key measure is “medicare fee difference” (mfd):mfdijt = paymt paymtpaymttpayment formula adjustments to reflect rbrvs ideal more accurately (paymtgreater geographic detail in calculating gpcis:counties rather than medicare payment areasmore accurate p

6、ractice expense rvu assignment in 2000 eliminated “other policy goals” aspects of mfs to full work gpci adjustmentwork gpci floor medicare incentive program bonus paymentsaccounted for decline in real fees, 2000-2005annual updates input price increases (mei)qp-hiqpqp-loqlo qtot qhipmcrpmcr-hipmcr-lo

7、pprvmcacabcdmr dprv = arfigure 1. physician supply in a multi-market modelquantity of serviceprovidedpriceekey independent variables (hypothesized sign)medicare fee difference (+) physicians compensation incentives (+) strong/moderate (e.g., owners) vs. weak (e.g., straight salary with no bonuses),

8、etc.)generic cross-price variables (?)demand-shift variables (+)whether the practice accepts all/most new private patientswhether the practice treats medicaid patientspercentage of medicare patients with supplementary insuranceperception of a very competitive market environmentalso, physician specia

9、lty and other characteristics, site & time dummiessupply response to 10% reduction in feesa mfd coefficient statistically significant (p.10) in prob . of any provision equation; b mfd coefficient statistically significant (p.10) in the conditional volume equation.financial incentives: simulated

10、impact on volume if all physicians on fixed salariesserviceoffice visitshospital visitsconsultationsdiagnostictestscpt code/test 99213 99214 99232 99233 99243 99244ekgecho% change in volume -26a-42a-42a-44a-13b-28b-26a-7a financial incentive coefficient significant in both equations; b financial inc

11、entive variable significant only in first equation (probability of any provision).policy implications 1: medicare fee schedulefee schedule can be used to control costsno evidence of volume offset responseuniform fee updates (sgr) distort practice patternsvolume response differs across serviceslarge

12、payment areas distort practice patternscreate unintended differences between actual fee and ideal rbrvs-based feeneed better data on underlying costs if goal is to maintain incentive neutralitypolicy implications 2: move away from goal of payment neutralityresults imply altering fees in response to

13、value of service: pay more for services that should be encouragedpay less for services thought to be ineffectivetarget services with rapid volume growth not explained by new technologyfor more detailed cost assessment to adjust rvusfor comparative effectiveness reviewbetter yet, move away from ffs a

14、s payment model capitation, bundling, episode-based payment, etc.so why has service volume grown while real fees fell?many fees still too high costs may be falling faster than fees physicians profit-seeking behavior manifested through new practice arrangements, for instance, greater capture of profits through equipment/facility ownershi

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