Physician Response to Medicare Payment Reductions: Impacts on the Public and Private Sectors
How have physicians reacted to provisions in the 1989 and 1990 Omnibus Budget Reconciliation Acts which reduced Medicare fees for 245 "overvalued" surgical procedures? Using data from the Commission on Professional and Hospital Activities, this study examined how physicians alter practices and billings in response to Medicare fee reductions not only for Medicare services, but also for services provided to privately-insured patients. The study explicitly analyzed the extent to which physicians "cost-shift" to the patients covered by private insurance. The findings are intended to assist policymakers in understanding how physicians will respond to Medicare's new fee schedule and the potential "spill-over" effects to the private sector.