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Medicare Part B Intensity and Volume Offset

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  • Christopher S. Brunt

Abstract

Under Medicare Part B, adjustments to the fee schedule are made under the assumption that physicians and hospitals make up for fee reductions through increased service provision called ‘volume offsetting’. While historically, researchers have found evidence of volume offsetting, more recent studies have called into question its magnitude and existence. This study is the first to propose and empirically evaluate an alternative hypothesis of offsetting, namely the alteration of billed or provided services as a means of ‘intensity offsetting’. Evaluating both forms of offsetting, it finds strong evidence of intensity offsetting and little to no evidence of volume offsetting. Simulating a 10% reduction in the Medicare fee schedule, this study estimates that across different procedures between 22% and 59% of a fee reduction will be offset through alterations in service intensity. Copyright © 2014 John Wiley & Sons, Ltd.

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  • Christopher S. Brunt, 2015. "Medicare Part B Intensity and Volume Offset," Health Economics, John Wiley & Sons, Ltd., vol. 24(8), pages 1009-1026, August.
    • Handle: RePEc:wly:hlthec:v:24:y:2015:i:8:p:1009-1026
    DOI: 10.1002/hec.3081
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    References listed on IDEAS

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    Cited by:

    1. Christopher S. Brunt & Joshua R. Hendrickson, 2021. "Geographic variation in Part B reimbursement and physician offsetting behavior: a physician matching approach," International Journal of Health Economics and Management, Springer, vol. 21(2), pages 115-188, June.
    2. Reo Takaku & Atsushi Yamaoka, 2019. "Payment systems and hospital length of stay: a bunching-based evidence," International Journal of Health Economics and Management, Springer, vol. 19(1), pages 53-77, March.
    3. Alice J. Chen & Elizabeth L. Munnich & Stephen T. Parente & Michael R. Richards, 2022. "Do Physicians Warm Up to Higher Medicare Prices? Evidence from Alaska," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(2), pages 394-425, March.
    4. Devlin, Aileen M. & McCormack, Grace, 2023. "Physician responses to Medicare reimbursement rates," Journal of Health Economics, Elsevier, vol. 92(C).

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