Medicare patients' use of overpriced procedures before and after the Omnibus Budget Reconciliation Act of 1987

Trends in Emergency Department Exam Medicare Reimbursements Between 2010 and 2018

BACKGROUND

As the Medicare population continues to grow, financial pressure is placed upon hospitals, physicians, and other providers as the payer mix has an increasing proportion of Medicare patients.

OBJECTIVE

The purpose of this study was to further the understanding of reimbursement trends surrounding the five levels of emergency department (ED) examinations (CPT codes 99281-99285) from 2010 to 2018 and determine how they have changed with respect to each procedure.

METHODS

CPT codes were filtered into the 2010 and 2018 Physician/Supplier Procedure Summaries from the Centers for Medicare and Medicaid Services' website to gather data on emergency physician submissions and Medicare denials and payments.

RESULTS

In 2010, 15,669,196 ED examinations were submitted to Medicare for $7,628,693,382 while in 2018, 16,432,184 ED examinations were submitted for $14,522,456,383. Despite an increase of $397/submission made by emergency physicians, Medicare paid 20.5% of the submitted charges in 2010 for ED examinations and 11.9% in 2018. The denial rate in 2018 was highest for level I ED examinations (11.3%), and the lowest for level V examinations (5.1%). The utilization of level V ED examinations increased 22.3% from 2010 to 2018, while the utilization of the others decreased. Of the five levels of ED examinations, only the level I examination did not exhibit a decrease.

CONCLUSIONS

From 2010 to 2018, emergency physicians charged a higher amount for ED examinations, yet Medicare reimbursement accounted for a smaller proportion of these charges, resulting in less payment per submission for the four most common levels. Downward trends in Medicare reimbursement may place financial burdens that could potentially hamper healthcare outcomes.

Medicare Part B Intensity and Volume Offset

Under Medicare Part B, adjustments to the fee schedule are made under the assumption that physicians and hospitals make up for fee reductions through increased service provision called 'volume offsetting'. While historically, researchers have found evidence of volume offsetting, more recent studies have called into question its magnitude and existence. This study is the first to propose and empirically evaluate an alternative hypothesis of offsetting, namely the alteration of billed or provided services as a means of 'intensity offsetting'. Evaluating both forms of offsetting, it finds strong evidence of intensity offsetting and little to no evidence of volume offsetting. Simulating a 10% reduction in the Medicare fee schedule, this study estimates that across different procedures between 22% and 59% of a fee reduction will be offset through alterations in service intensity.

Factors associated with geographic variation in cost per episode of care for three medical conditions

OBJECTIVE

To identify associations between market factors, especially relative reimbursement rates, and the probability of surgery and cost per episode for three medical conditions (cataract, benign prostatic neoplasm, and knee degeneration) with multiple treatment options.

METHODS

We use 2004-2006 Medicare claims data for elderly beneficiaries from sixty nationally representative communities to estimate multivariate models for the probability of surgery and cost per episode of care as a function local market factors, including Medicare physician reimbursement for surgical versus non-surgical treatment and the availability of primary care and specialty physicians. We used Symmetry's Episode Treatment Groups (ETG) software to group claims into episodes for the three conditions (n = 540,874 episodes).

RESULTS

Higher Medicare reimbursement for surgical episodes and greater availability of the relevant specialists are significantly associated with more surgery and higher cost per episode for all three conditions, while greater availability of primary care physicians is significantly associated with less frequent surgery and lower cost per episode.

CONCLUSION

Relative Medicare reimbursement rates for surgical vs. non-surgical treatments and the availability of both primary care physicians and relevant specialists are associated with the likelihood of surgery and cost per episode.

Siren song: physicians, congress, and medicare fees

Physicians' fees under Medicare are updated by regulation annually based on a formula called the Sustainable Growth Rate (SGR). Since 2003 Congress has reversed impending cuts to fees in response to physician calls for reform of the SGR, yet physician groups supported the SGR when fee increases outstripped medical inflation. Physician groups are partly culpable for the failure of cost containment because physician groups have resisted efforts to regulate their practice or link effectiveness research to coverage and reimbursement decisions. In the story of Ulysses and the Sirens, Ulysses has himself bound to the mast so that he cannot be seduced by the calls of the Sirens. Physician groups are like sirens because legislators cannot resist their songs. Future policy changes should consider physician needs alongside broader cost-containment goals, including linking reimbursement to comparative effectiveness research.

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.

Medicare fees and physicians' medicare service volume: beneficiaries treated and services per beneficiary

Using merged physician survey and Medicare claims data, this study analyzes how fee levels, market factors, and financial incentives affect physicians' fee-for-service Medicare service volume. We find that Medicare fees are positively related to both the number of beneficiaries treated (eta = 0.12 to 0.61) and service intensity (eta = 1.04-1.71). Physicians with apparent incentives to induce demand appear to manipulate the mix of services provided in order to increase the effective Medicare fee. Finally, several market factors appear to influence the quantity of Medicare services physicians provide. Results highlight limitations of the present system for compensating physicians in Medicare's fee-for-service program.

Differences in Medicare expenditures during the last 3 years of life

OBJECTIVE

To examine age, gender, race, and area income differences in Medicare expenditures in the 3 years before death.

DESIGN

Cross-sectional study.

PARTICIPANTS

A random sample of aged Medicare beneficiaries who died 1996 to 1999, N = 241,047.

MEASURES

We estimate differences in mean Medicare expenditures by year before death and by age, gender, race, and area income, adjusting for comorbidities and Medicaid enrollment.

RESULTS

Expenditures for blacks are lower in the second and third years before death and are not significantly different from whites in the last year of life (LYOL) (y3 = 70%, P <.0001; y2 = 82%, P <.0001; LYOL = 119%, P =.098). Differences in expenditures between decedents with area incomes over $35,000 compared to under $20,000 attenuate by the LYOL (y3 = 116%, P <.0001; y2 = 107%, P <.0001; LYOL = 96%, P <.0001). Expenditure patterns for women versus men vary by age. Among the younger cohorts (68 to 74 and 75 to 79), expenditures are higher for women in all 3 years before death. This difference attenuates among older cohorts; in the oldest cohort (90+), expenditures for men exceed those for women by 11% in the LYOL (P <.0001). Older beneficiaries have higher expenditures in the second and third years before death but lower expenditures in the LYOL. On average, the youngest cohort expended $8,017 more in the LYOL relative to the oldest cohort, whereas in the third year before death, the oldest cohort's expenditures were $5,270 more than those for the youngest cohort (P <.0001).

CONCLUSIONS

Age-associated differences in aggregate Medicare payments for end-of-life care are more substantial than other differences. The fact that other differences attenuate in the LYOL may reflect having overcome barriers to health care, or reflect an effective ceiling on the opportunities to provide services for persons with overwhelming illness.

Physician response to Medicare fee reductions: changes in the volume of coronary artery bypass graft (CABG) surgeries in the Medicare and private sectors

The demand inducement hypothesis predicts that physicians will respond to reductions in their income by increasing the volume of their services when the income effect is strong and negative. I test for such inducement in the market for coronary artery bypass grafting (CABG), using a longitudinal panel of physicians in New York and Washington states. The results show that physicians whose incomes were reduced the most by Medicare fee cuts performed higher volumes of CABGs, and they did so in both the Medicare and private markets.

Physician payment policies: impacts and implications

This paper reviews recent changes in physician payment policies, examines evidence on their impacts, and discusses their implications for researchers and policy makers. It first develops a conceptual framework to help explore the economic incentives inherent in different physician payment schemes. It then reviews evidence on the impacts of recent changes in physician payment methods; first, for free-for-service, and then for capitated systems like HMOs. It concludes that much more research needs to be conducted on HMOs to determine the impact of different physician payment incentives on utilization, expenditures, clinical outcomes, and patient satisfaction.

Prostates and profits: the social construction of benign prostatic hyperplasia in American men

Benign prostatic hyperplasia (BPH) is clinically diagnosed in approximately three-fourths of American men, a prevalence two to three times higher than that currently reported in Scotland and Japan. Prostatectomy is the most common operation performed on American men over 65. A critical medical anthropological analysis reveals that American urologists rely on prostatectomy to maintain their practices, and the growth of urology as a specialty is significantly related to the 50% increase in the rate of surgery since 1965. Marketing campaigns and studies funded by pharmaceutical companies promote the perception of urinary difficulties as problematic, encourage men to medicalize their symptoms, and create demand for drug therapy and urologist treatment. The social construction of BPH as a progressive age-related disorder and the profit orientation of American medicine account for the elevated prevalence of BPH.

Physician reaction to price changes: an episode-of-care analysis

Physicians may respond to fee reductions in a variety of ways. This episode-of-care analysis examines the impact of surgical fee reductions (mandated by the Omnibus Budget Reconciliation Acts [OBRAs] of 1986-87) on the overall pattern and cost of health care services provided in association with the surgical procedure itself. The study focuses on six procedure groups: cataract extractions; total hip replacement; total knee replacement; coronary artery bypass graft (CABG) surgery; upper gastrointestinal (GI) endoscopy; and prostatectomy. Only two of these procedures give significant evidence for the existence of a service volume offset to the fee reductions.