Does Cutting Physician Fees Really Lower Costs?
If physicians increase utilization sufficiently in response to declining fees, total spending can increase. In fact, a large body of evidence suggests that cutting fees leads to higher utilization when the targeted services account for a large share of physician income.
Full study by Mireille Jacobson and Joseph P. Newhouse.
I think that the answer to the wuestion is: NO.
Providers game the system. What else is new?
1) It is the spending that physicians control, more than our salaries, which is the cost driver.
2) There is a lot more elasticity in physician services than most people, especially non-docs, realize.
Steve
Interesting comment Steve. What we get are unintended consequences — and they are not all good.
The study shows that physicians shifted the treatment site for Medicare lung cancer patients given chemotherapy to their offices in response to fee cuts. They also provided faster treatment. And it changed the drugs that were used as physicians shifted to a more expensive agent with better overall reimbursement. We don’t know how this compares to private sector lung cancer chemotherapy or reimbursement.
Whether patients were better off is unknown–they face higher out-of-pocket costs under Part B for treatment in physician offices.
The study says nothing about changes in overall expenditures or costs except to repeat the standard warnings about unintended consequences: “Policymakers need to be alert to behavioral responses that can undermine their ability to achieve savings through fee changes.”
Of interest is the fact that it simply assumes that Medicare spending for lung cancer chemotherapy can be cut without adverse consequences.
Would-be reformers run the risk of creating perverse incentives that raise rather than lower medical spending
Non-reformers risk rising health care costs.
Steve
Steve, I’ve never seen a health reform yet that didn’t add to health care spending.
Bruce- Then opt for the status quo, and costs running ahead of inflation.
Steve