PMID: 9639334Jun 25, 1998Paper

Volume responses to Medicare payment reductions with multiple payers: a test of the McGuire-Pauly model

Health Economics
M Tai-SealeS C Stearns

Abstract

The effects of changing financial incentives on physician's practice behaviour have long been of interest to researchers and policy makers. We test a model of physician volume response within the context of multiple payers developed by Thomas McGuire and Mark Pauly. A panel data set covering discharges from about 200 hospitals in the US over 45 months is used to carry out the empirical investigation. A fixed-effect model with generalized least squares and instrumental variable specifications is used to compute empirical evidence of volume responses from eight specialties experiencing varying degrees of Medicare payment reductions following the implementation of Omnibus Budget Reconciliation Acts of 1989 and 1990. The empirical findings are compared with McGuire and Pauly's simulated predictions. We note that in examining physician responses to Medicare payment reductions in the context of a multi-payer environment, it becomes evident that only fixing one payer's reimbursement policy is at best a partial solution to cost containment. We echo observations made by other analysts that physician responses to payment changes can be quite complex. Physicians do not all respond to payment reduction in the same way.

Citations

Mar 23, 2011·The Milbank Quarterly·Austin B Frakt
Oct 16, 2014·Journal of Oncology Practice·Rena M Conti, Peter B Bach
Feb 11, 2005·Applied Health Economics and Health Policy·Steven Simoens, Antonio Giuffrida
Oct 6, 2000·Medical Care·J M MitchellD J Gaskin
Feb 22, 2001·Journal of Clinical Oncology : Official Journal of the American Society of Clinical Oncology·C C EarleJ C Weeks

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