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Changing physician behavior: does medical review of Part B Medicare claims make a difference?

This study attempts to determine whether the implementation of mandatory review of Medicare Part B claims for medical necessity has resulted in physicians submitting fewer medically unnecessary claims. After summarizing the literature on the effectiveness of various methods for changing physician practices, we compare the rate at which physicians submitted medically unnecessary claims before and after HCFA imposed mandatory review screens. We find that, consistent with expectations from the literature, the screens are only marginally effective (at best) in reducing the rate at which medically unnecessary claims are submitted. We make some suggestions for lowering this rate.

Cost Control

Carrier discretionary practices and physician payment under Medicare Part B: a preliminary report.

Although Medicare is a national program, administration of Part B payments to physicians is in the hands of insurance organizations in ten Medicare regions. The carriers follow varying practices in using actual charges within localities as the basis for determining reasonable charges for physicians' services. While some of these practices have already been shown to influence fee levels, reasonable charge determination involves many more whose influence has not been systematically studied. This paper reviews preliminary findings from a study which examines carrier differences in discretionary practices as to specialties, localities and other claims data that may be merged or compared with Medicare data in determining customary and prevailing prices used to set limits on Medicare payments, and other practices reported in an official questionnaire to carriers. The effect on fee levels and other measures of program performance is being studied after taking into account social, economic and health resource variables extracted from the Area Resource File, that are expected to influence local medical prices through the demand for and supply of physicians' services. Dependent variables representing fees are the 50th percentile of the distribution of weighted customary charges of individual physicians in an area and Supplementary Medical Insurance expenditure per enrollee. The preliminary findings in this paper concern discretionary practices, socioeconomic variables and fee distributions.

Decision Making

Medicare Part B: rising assignment rates, rising costs.

In this paper I examine the access, quality, and cost trade-offs of assignment under Part B of the Medicare program for both participating and nonparticipating practices, and discuss the impact of assignment on both physician and patient choices. I also discuss the assignment options, or variants of assignment, that have been pursued and that might be considered for future implementation to curb increases in physician costs. Although one frequently suggested alternative--mandatory assignment--would reduce much of the uncertainty surrounding physician costs and reduce some of the out-of-pocket costs of the elderly, it could promote a two-tier system of care by reducing quality for Medicare beneficiaries, and may produce increases in government expenditures.

Costs and Cost Analysis

Impacts of PPS on Medicare Part B expenditures and utilization for hospital episodes of care.

The universe of Medicare claims for four states from 1983 through 1986 is used to examine the impacts Medicare's prospective payment system (PPS) makes on hospital lengths of stay and on Part B expenditures for physician services associated with hospital stays. The descriptive results show that lengths of stay have fallen, while both inpatient and outpatient expenditures have risen. The regression results, on the other hand, show that PPS has reduced both lengths of stay and expenditures, and that other factors, such as increases in physician fees and patients' severity of illness, account for expenditure increases.

Diagnosis-Related Groups

Medicare--part B.

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Fees, Medical

Packaging physician services: alternative approaches to Medicare Part B reimbursement.

More than a quarter of the rapid growth in physician expenditures since the advent of the Medicare program can be ascribed to greater service intensity, generally through unpackaging of physician services, procedure inflation, and the involvement of multiple physicians. One way to achieve effective cost control is to restrain prices and the number of services simultaneously through redefining the payment unit from a narrow procedure to a comprehensive package of services. In this paper, we explore five means of packaging physician services: collapsed procedure, office visit, special procedure, ambulatory condition, and inpatient condition packages. While three packages hold promise for reining in the costs of physician services in the Medicare program, two raise important policy considerations that would have to be addressed before they could be given further consideration.

Ambulatory Care

Supply and demand factors in the determination of Medicare expenditures.

This article presents multivariate estimates of the effects of supply-side factors (e.g., provider reimbursement) and demand-side factors (e.g., beneficiary ability to pay) on state-level expenditures per enrollee in Medicare Part A and Part B. The results indicate that a 1 percent increase in elderly income significantly increases the propensity to use Medicare Part B services, resulting in a 0.45 percent increase in Part B expenditures per enrollee. By contrast, patients' ability to pay has a much weaker effect on Part A expenditures. Changes in provider reimbursement also exert a substantial effect on expenditures. A 1 percent rise in the Medicare Prevailing Charge Index raises Medicare Part B expenditures by 0.43 percent. Collectively, the findings of this study suggest that both limits on Medicare reimbursement to providers and increased beneficiary liability have substantial effects on Medicare costs. Whatever the merits of arguments for or against such controls, the responsiveness of Medicare expenditures to equal percentage changes in supply and demand factors appears to be of a similar order of magnitude.

Aged

What price, Medicare? Geographic variability in Medicare physician payment levels.

This study assesses the problems and prospects in developing one or more geographic indices of physician practice costs for Medicare Part B. I used a modified Laspeyres price index approach to compute practice cost indices, aggregated to the level of existing Medicare Part B payment areas and also created an index of Medicare payment levels. In comparing this prevailing charge index with the various geographic practice cost estimates, I found a considerable range in some individual localities' values within practice cost indices that in aggregate appear to be highly correlated. For the most part, estimated costs and prevailing charges appear to be comparable. However, results indicate that not every low paid area is underpaid relative to costs and not every highly paid area is overpaid.

Catchment Area, Health