The effect of a thirty per cent reduction in physician fees on Medicaid surgery rates in Massachusetts

The Impact of Changes in Medicaid Provider Fees on Provider Participation and Enrollees' Care: a Systematic Literature Review

BACKGROUND

Changing Medicaid fees is a common approach for states to address budget fluctuations, and many currently set Medicaid physician fees at levels lower than Medicare and private insurers. The Affordable Care Act included a temporary Medicaid fee bump for primary care providers (PCPs) in 2013-2014 that recently led to both an increase and then subsequent decrease in PCP fees in many states.

OBJECTIVE

To conduct a systematic literature review on the effects of changing Medicaid fees on provider participation and enrollees' access to care and service use.

METHODS

We searched PubMed/Medline and JSTOR and identified 18 studies that assessed the longitudinal impact of provider fee changes in Medicaid on the outcomes of interest. We summarized information on study design, methods, and findings.

RESULTS

Seven studies examined the impact of fee changes on provider participation in Medicaid. Of these, three studies found that fee increases were associated with positive effects on providers' likelihood of accepting Medicaid patients or on their Medicaid caseloads. Five studies that examined the impact of fee changes on Medicaid enrollees' access to care found a positive association with one or more access measure, such as having a usual source of care or appointment availability. Lastly, eight of 14 studies that examined service use found positive associations between fee changes and at least one measure of use, such as changes in the probability of enrollees having any visit, the number of visits, and shifts in the site of care toward office-based care; others largely did not find significant associations.

CONCLUSIONS

There is mixed evidence on the impact of changing Medicaid fees on provider participation and enrollees' service use; however, increasing fees appears to have more consistent positive effects on access to care. Whether these improvements in access translate into better health outcomes or downstream cost savings are critical questions.

Financial impact of breast reconstruction on an academic surgical practice

BACKGROUND

The financial reimbursement for breast reconstruction is perceived to be low. The authors evaluated the financial impact of providing breast reconstruction for an academic medical practice and health care system.

METHODS

The authors examined the billing records for 97 patients undergoing postmastectomy breast reconstruction in 2006 at the University of Michigan. Professional net revenue was calculated by applying actual collection rates to procedural charges. Facility revenue was calculated by applying actual collection rates to charges from inpatient care and the operating room.

RESULTS

The payer mix was 70.1 percent private insurance, 22.7 percent health maintenance organization, 3.1 percent Medicare, 2.1 percent Medicaid, and 2.0 percent uninsured. The professional revenue and costs allocated to breast reconstruction were $242,078 and $177,411, respectively [net profit of $64,667 (27 percent)]. Health system facility revenue and costs were $1,109,678 and $943,892, respectively [net profit of $165,786 (15 percent)]. Physician reimbursement by surgical time was highest for delayed tissue expander placement ($1977.70/hour in the operating room) and lowest for immediate transverse rectus abdominis myocutaneous (TRAM) flaps ($327/hour in the operating room). The facility received the greatest average direct margin on TRAM flaps ($3471) and lost money on latissimus dorsi flaps (-$398 margin).

CONCLUSIONS

Postmastectomy breast reconstruction at this academic medical center is fiscally advantageous for both the surgical department and the health care system. However, reimbursement varies dramatically by type and timing of reconstructive procedure. Although immediate postmastectomy reconstructions with TRAM flaps provide superior aesthetic results with the greatest amount of patient satisfaction, poor physician reimbursement for these labor-intensive procedures may limit the ability of surgeons to provide these services because of poor financial return.

Primary physicians' response to changes in fees

The study examines how the service production of primary physicians in Norway is influenced by changes in fees. The data represent about 2,650 fee-for-service physicians for the years 1995--2000. We constructed a variable that made it possible to estimate income effects of fee changes on service levels. Service production was measured by the number of consultations per physician, the number of laboratory tests per consultation and the proportion of consultations lasting more than 20 min. Our main finding is that fee changes have no income effect on service production. Our results imply that fee regulation can be an effective means of controlling physicians' income, and therefore government expenditure, on primary physician services.

Physicians' responses to Medicare fee schedule reductions

BACKGROUND

Relatively little empirical research has addressed physicians' responses to fee changes under the Medicare Fee Schedule.

OBJECTIVES

We analyzed Medicare claims data for ophthalmologists and orthopedic surgeons for the years 1991 through 1994 to evaluate the relative importance of profit-maximizing and target-income theories in determining physicians' supply responses to specific Medicare fee reductions.

RESEARCH DESIGN

This study was designed to estimate the impact of fee reductions for cataract extractions and major joint repair/replacement procedures through pooled cross-section time series data.

RESULTS

The supply function for cataract extractions has both strong own-price and cross-price effects, as well as a highly significant negative income effect. Yet, the magnitude of the income effect is small; thus, the substitution effect dominates the income effect. Similarly, in the supply functions for joint procedures, the own price has the expected positive sign, implying that as the fee declines, orthopedic surgeons will perform fewer joint surgeries. However, the cross-price variable has the correct sign only if treated as exogenous, and the variables measuring the income effect have the wrong sign, although their magnitude is small.

CONCLUSIONS

These results suggest that the Medicare Fee Schedule does have the potential to influence physicians' supply decisions, but these effects may vary by specialty and service.

Evidence for the effectiveness of techniques To change physician behavior

STUDY OBJECTIVES

To understand the theory and results of how to improve physician performance, as part of overall health-care quality improvement. In particular, to study whether and how guideline production and dissemination affects physician performance.

DESIGN

Review of meta-analyses and structured reviews; review of behavior change theories implicit in interventions to change physician performance.

SETTING

Primarily the United States.

PATIENTS OR PARTICIPANTS

Various patients and physicians, determined by reviews.

INTERVENTIONS

None.

MEASUREMENTS AND RESULTS

There is no unifying theory of physician behavior change tested among physicians in practice. Attempts to affect individual physicians' performance have often met with failure. Mixed results are found for almost all interventions reviewed. Multiple interventions yield better results.

CONCLUSIONS

The answer to the question of what works to improve an individual physician's clinical performance is not simple. Emerging theory and evidence suggests that applications of behavior-change methods should not be focused on which tools (don't) always work. Instead, guideline development and implementation methods should be theory driven and evidence based (supported by evidence that proves the theory correct). In particular, the framework of evidence-based quality assessment offers some insight into past failures and offers hope for organizing attempts at guideline implementation.

Physicians' responses to financial incentives. Evidence from a for-profit ambulatory care center

Health Stop is a major chain of ambulatory care centers operating for profit. Until 1985 its physicians were paid a flat hourly wage. In the middle of that year, a new compensation plan was instituted to provide doctors with financial incentives to increase revenues. Physicians could earn bonuses the size of which depended on the gross incomes they generated individually. We compared the practice patterns of 15 doctors, each employed full time at a different Health Stop center in the Boston area, in the same winter months before and after the start of the new arrangement. During the periods compared, the physicians increased the number of laboratory tests performed per patient visit by 23 percent and the number of x-ray films per visit by 16 percent. The total charges per month, adjusted for inflation, grew 20 percent, mostly as a result of a 12 percent increase in the average number of patient visits per month. The wages of the seven physicians who regularly earned the bonus rose 19 percent. We conclude that substantial monetary incentives based on individual performance may induce a group of physicians to increase the intensity of their practice, even though not all of them benefit from the incentives.

Effects of different remuneration methods on general medical practice: a comparison of capitation and fee-for-service payment

There are severe methodological problems to be overcome in comparing the effects of different payment methods on general medical practice, not least because there are many factors which affect the pattern of service delivery. Also, the reliability and comparability of data may be poor. This article emphasises that the effects of capitation and fee-for-service payment methods on general medical practice should be carefully compared with factual information, especially numerical data. In so doing, it is shown that there are supporting data for the contention that a fee-for-service system encourages more consultations, more diagnostic tests, higher drug use, higher surgical rates and higher costs than a capitation system. On the other hand, a capitation system may lead doctors to hastier and less courteous care than a fee-for-service system. The geographical distribution of general practitioners (GPs) may be more even, and continuity of care may be better maintained, under a capitation system; but there may be excessive referrals from GPs to specialists under this system of payment. There is no evidence for the contention that a capitation system encourages preventive medicine, but the financial coverage for preventive procedures does encourage such procedures.

The diffusion of medical practice patterns in a community hospital

There has been some evidence which suggests that HMOs alter the hospitalization rate of the fee for service medical sector. If true, this spillover effect would have important implications for reducing hospital utilization, because HMO affiliated physicians use substantially less resource intensive in-patient services. This research investigates one possible mechanism, whether there is a diffusion of medical practice patterns from HMO affiliated physicians to non-HMO physicians when both groups share admitting privileges in the same hospital. Intervention analysis was used to test this hypothesis by comparing the time series of in-patient utilization, in a community hospital, before and after the hospital became affiliated with a HMO. The results of this analysis did not substantiate the theorized HMO spillover effect.