Hospital volume responses to Medicare's Outpatient Prospective Payment System: Evidence from Florida
AbstractEffective in 2000, Medicare's Outpatient Prospective Payment System (OPPS) sets pre-determined reimbursement rates for hospital outpatient services, replacing the prior cost-based methods of reimbursement. Using Florida outpatient discharge data, we study the effect of OPPS on hospital outpatient volume. We find that on average Medicare rate cuts either decreased or had no significant effect on Medicare volume, but increased private fee-for-service (FFS) volume. We also find that responses vary with the hospital's “exposure” to Medicare payment changes, where exposure is measured as the baseline Medicare patient share. Compared to less exposed hospitals, highly exposed hospitals responded with larger increases in private FFS volume and with smaller decreases (in some cases, even increases) in Medicare volume when payment rates fell. Our results are consistent with provider demand inducement.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Health Economics.
Volume (Year): 31 (2012)
Issue (Month): 5 ()
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Web page: http://www.elsevier.com/locate/inca/505560
Outpatient Prospective Payment System; Medicare payment reform; Volume response; Substitution; Demand inducement;
Find related papers by JEL classification:
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
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- H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
- H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
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