Physician Cost Shifting

Jason Shafrin summarizes a 1999 paper on physician cost shifting from Medicare to private payers: Thomas Rice, Sally C. Stearns, Donald E. Pathman, Susan DesHarnais, Michelle Brasure and Ming Tai-Seale (1999) “A Tale of Two Bounties: The Impact of Competing Fees on Physician Behavior“, Journal of Health Politics, Policy and Law 24(6):1307-1330.

Shafrin writes,

The study examines the impact of [reduced Medicare physician payment rates] … using data from 1988-1991. …

[T]he authors find that Medicare fee reductions increased the volume of privately insured service only in some cases.  “Of the seventeen procedures groups, twelve had the expected negative signs and seven of the twelve were statistically significant at the 5 percent or 10 percent level…”  Additionally, it appears that in some cases, a decrease in Medicare fees increases private-pay services even for procedures unrelated to those that experienced a Medicare fee decrease.  For instance, when Medicare cut cataract reimbursement rates, ophthalmologists supplied more services to private-pay patients, but not necessarily more cataract surgeries.

Shafrin didn’t state what the level of cost shifting was in the cases in which it was found. Perhaps the paper doesn’t explicitly say so either. (I haven’t read it, though it is in my pile.)

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