Impact of Medicare Payment Reductions on Access to Surgical Services

Objective: This study evaluates the impact of surgical fee reductions under Medicare on the utilization of surgical services.

Data Sources: Medicare physician claims data were obtained from 11 states for a five-year time period (1985-1989).

Study Design: Under OBRA-87, Medicare reduced payments for 11 surgical procedures. A fixed effects regression method was used to determine the impact of these payment reductions on access to care for potentially vulnerable Medicare beneficiaries: joint Medicaid-eligibles, blacks, and the very old.

Data Collection/extraction Methods: Medicare claims and enrollment data were used to construct a cross-section time-series of population-based surgical rates from 1985 through 1989.

Principal Findings: Reductions in surgical fees led to small but significant increases in use for three procedures, small decreases in use for two procedures, and no impact on the remaining six procedures. There was little evidence that access to surgery was impaired for potentially vulnerable enrollees; in fact, declining fees often led to greater rates of increases for some subgroups.

Conclusions: Our results suggest that volume responses by surgeons to payment changes under the Medicare Fee Schedule may be smaller than HCFA's original estimates. Nevertheless, both access and quality of care should continue to be closely monitored.