Hospital volume responses to Medicare's Outpatient Prospective Payment System: Evidence from Florida
Effective 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 outpatie...
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| Published in: | Journal of health economics Vol. 31; no. 5; pp. 730 - 743 |
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| Language: | English |
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Elsevier B.V
01-09-2012
Elsevier Sequoia S.A |
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| Abstract | Effective 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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| AbstractList | Effective 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. [PUBLICATION ABSTRACT] Effective 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. Effective 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. All rights reserved, Elsevier |
| Author | Mellor, Jennifer M. He, Daifeng |
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| BackLink | https://www.ncbi.nlm.nih.gov/pubmed/22854178$$D View this record in MEDLINE/PubMed |
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| Copyright | 2012 Elsevier B.V. Copyright © 2012 Elsevier B.V. All rights reserved. Copyright Elsevier Science Ltd. Sep 2012 |
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| Keywords | Volume response Substitution H51 H32 Medicare payment reform I11 Outpatient Prospective Payment System I12 Demand inducement |
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| SubjectTerms | Ambulatory Care - economics Demand inducement Empirical Research Evidence Florida Health administration Health insurance Health services Hospital costs Hospitals Hospitals - utilization Humans Medical care Medicare Medicare - economics Medicare payment reform Models, Theoretical Outpatient care facilities Outpatient Prospective Payment System Patients Payments Prospective Payment System - economics Prospective payment systems Reimbursement Studies Substitution United States Volume response |
| Title | Hospital volume responses to Medicare's Outpatient Prospective Payment System: Evidence from Florida |
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