Medicare Fees and Physicians' Medicare Service Volume: Beneficiaries Treated and Services per Beneficiary

June 2006
International Journal of Health Care Finance and Economics , Vol. 6, No. 2
Jack Hadley, James D. Reschovsky

Using merged CTS 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. The study finds that Medicare fees are positively related to both the number of beneficiaries treated and service intensity. 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

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