Panel Paper:
The Consequences of Medicare Pricing: An Explanation of Treatment Choice
Thursday, July 23, 2020
Webinar Room 6 (Online Zoom Webinar)
*Names in bold indicate Presenter
Primary care physicians provide more specialty procedures in less urban areas, where specialists are fewer. This fact becomes particularly interesting in the US fee-for-service setting, as specialty procedures have been compensated increasingly more than typically primary-care procedures. This paper utilizes Medicare fees, as other fee-for-service contracts have been shown to follow Medicare fees in their fee settings, with a correlation greater than 80% among all fees and procedures. Using a structural random-coefficient model and the demographic and time variation in the data, this paper shows that changes in policy-set reimbursements lead to a reallocation of the suddenly-more-remunerative procedures away from specialists in favor of primary care physicians and the more so, the more rural the area. A reimbursement-unit increase for a given procedure leads to outside-metro primary care physicians gaining 7-15% market share more than metro primary care procedures in that procedure, at the expense of specialists. Small metropolitan areas (population>50,000) and very rural areas (population<10,000) are the most affected.
Full Paper:
