Unbiased Analysis of Today's Healthcare Issues
The Medicare Economic Index (MEI) is a measure of practice cost inflation that was developed in 1975 as a way to estimate annual changes in physicians’ operating costs and earnings levels. Today, I review a timeline of how Medicare has paid physicians over time and also describe some adjustments CMS makes to the MEI to…
Much of my own research has focused on how physician financial incentives affect the quantity and quality of medical care. It should come as no surprise that I found a recent New York Times article on the topic stimulating. Dr. Sandjeep Jauhar examines how hospital and physician financial incentives affect the length of a patient’s…
In 1998, Medicare enacted the sustainable growth rate (SGR) which would slowly bring down Medicare physician compensation. However, each year, it gets reversed by Congress. Now, instead of a gradual decline, the implementation of SGR would result in a 21.2% pay cut for Medicare docs. Before the Thanksgiving holiday, however, Congress once again reversed the…
There is an interesting debate at the N.Y. Times discussing how to reform physician payment to increase quality and decrease cost. Below is an excerpt from a Seattle emergency room doctor. In this, they are half right: over-utilization is a driver of cost, and it is in part driven by doctors’ economic incentives. The underlying…
Joe Paduda of Managed Care Matters has a two great posts on Medicare’s new payment structure. The first post reports how exactly Medicare is changing its reimbursement for medical services. “It looks like reimbursement for cognitive services – the 99xxx codes for readers expert in CPT-4s…office visits and similar services for others – will…
How do financial arrangement between physicians within a medical group affect efficiency levels? This is the question Gaynor and Pauly (JPE 1990) attempt to answer. Theory The authors assume that the quantity of medical services is produced by the following production function: qi = f(hi, ti, ki, ei, θi) h: physician hours, t: non-physician hours,…
Patients generally believe that managed care systems are put in place to restrict their access to care. Many patients believe that physicians who receive capitation compensation will provide less care to their patients than physicians who are paid on a fee-for-service basis. A paper by Fang and Rizzo (2008) investigates whether or not this is really they…
Does physician compensation affect the quantity of medical care provided? My paper “Operating on Commission” claims that the answer is yes. I find that surgery rates increase 78% when patients switch from capitation to fee-for-service (FFS) specialists. A paper by Devlin and Sarma (2008) examines a similar question for Canadian family physicians. Since the inception…
Primary care physicians can be compensated in a number of ways. The most popular are capitation, fee-for-service, salary, or some mixture of the three. But how does the physician compensation method affect care levels? This is the question Gosden et al. (2000) try to answer in their Cochrane review. The authors search the literature for…
The controversy as to how much Medicare should pay doctors is continuing to brew (see N.Y. Times article). Congress passed a law overriding a pay cut to Medicare doctors. Although the president vetoed the bill, Congress garnered enough support to override the veto. Dr. Rich of The Covert Rationing Blog claims that the Medicare reimbursement…