Changes In Fees Research Articles

OBRA Fee Reduction and Physician Behavior

To the Editor. —In a recent article 1 inThe JOURNAL, I reported that the Medicare fee reductions for overpriced procedures under the Omnibus Budget Reconciliation Act of 1987 (OBRA 87) did not affect the use of physician services by Medicare patients. Drs Ginsburg and Hogan, 2 in an accompanying Commentary, disagree with my conclusions, alleging methodological problems with my study. They contrast my findings with those of the Physician Payment Review Commission (PPRC), 3 which found that the OBRA 87 fee reductions resulted in higher use of surgeons services (ie, a behavioral offset). Ginsburg and Hogan contend that the changes in Medicare fees that occurred during the period of my study (1987 to 1989) were driven largely by physicians' own pricing behavior rather than Medicare payment policy, rendering the interpretation of fee/utilization correlations problematic. Their assertion, however, reflects an incorrect reading of the available data. In 1989, Medicare fees

Effects of Lower Surgical Fees on the Use of Physician Services Under Medicare

The changes in physician fees that will occur under the resource-based Medicare Fee Schedule (MFS) are similar to those that took place under the Omnibus Budget Reconciliation Act of 1987 (OBRA 87), when Medicare fees for selected "overpriced" procedures and diagnostic tests were reduced. To gain insight regarding the changes in utilization that may occur under the MFS, this study examines the effects of the OBRA 87 fee reductions on the use of physician services by Medicare patients. The five specialties that were most affected by the OBRA 87 fee reductions were studied: ophthalmology, thoracic surgery, urology, orthopedic surgery, and gastroenterology. Medicare physician claims files for 1987 and 1989 were used to obtain data on utilization and fees. Multivariate regression analysis was used to assess the effect of changes in fees on changes in utilization. The best estimate of the effect of the OBRA 87 fee reductions on overall physician-services utilization, obtained by pooling the five study specialties, was that every 1% decrease in fees led to a 0.09% decrease in the volume and complexity of services (95% confidence interval, 0.49% decrease to 0.31% increase). This result was not sensitive to minor changes in the covariates included in the regression model. To calculate payment levels during the transition to the MFS, the Health Care Financing Administration assumed that physicians whose Medicare revenue declines under the MFS will increase service volume and complexity enough to make up one half of the lost revenue. The findings of this study suggest that the Health Care Financing Administration's assumption was, at best, extreme.

Physician Response to Fee Changes

THE PHYSICIAN Payment Review Commission, Washington, DC, has a long-standing interest in measuring physicians' response to changes in payment rates (called "behavioral offset"). A summary of our recent empirical work on this subject is included in the commission's 1993 report to Congress.¹ In this issue, Escarce²analyzes Medicare claims before and after the overvalued procedure fee reductions specified in the Omnibus Budget Reconciliation Act of 1987 (OBRA 87). He purports to show that the OBRA 87 cuts generated no net behavioral offset. See also p 2513. We disagree with Escarce's conclusion: we believe the Medicare data provide good evidence of a behavioral offset. We frame herein the policy issue, identify the important methodological differences between Escarce's analysis and our own, and summarize findings from our own studies of the OBRA 87 fee reductions and subsequent policy-driven changes in Medicare fees. The issue of the behavioral offset gained broad

The effect of per-item fees on the behaviour of general practitioners

The recent government White Paper ‘Working for Patients’ emphasised the use of financial incentives as a means of altering the behaviour of general practitioners (GPs) in the U.K. This paper examines the impact of financial incentives on GPs' behaviour with respect to maternity care and cervical cytology. Changes in per-item fees over the period 1966–1989 appear to have had little effect on the numbers of treatments; rather service provision was related to patient demand and the availability of GPs. However, target payments for cervical cytology introduced in 1990 appear to have had a major impact.

Supply decisions among dentists working within a fixed-fee system of dental care provision.

In Norway fees for dental treatment did not increase at the same rate as prices for other goods and services during the 1980s. The aim of this study was to examine how this decrease in fees in real terms has influenced dentists' work decisions with respect to supply of services. Data on characteristics of the dentist and the dental practice were collected for 1979, 1984, and 1986. The dependent variable was supply of dental services, measured as the number of patient care hours worked per annum. The hourly fee for dental care was equivalent to dentists hourly wage rate. Supply increased as fees decreased. This could be explained either as a response of the patient or the dentist to reduced fees. Although the data did not give conclusive evidence as to which effect was most important, the authors have put forward the view that the main effect was dentists' response to reduced fees. The main argument put in favor of this view is that dentists have an overall knowledge of the effect of a change in fees on their income. The impact of a change in fees is much greater on the provider who supplies the services to many individuals over a long period of time, than on an individual consumer who buys the services once or twice a year. It was concluded that, in the short run, a fixed-fee schedule may not be very effective in limiting costs for dental care.

School attributes, household characteristics, and demand for schooling: A case study of rural Peru

Educational expansion, long a goal of many LDCs, has become a difficult policy to pursue. Growing populations, shrinking national incomes and higher marginal costs of schooling as schooling reaches more rural dwellers have caused policy makers to take a hard look at factors which influence educational demand and expansion. This paper examines the case of Peru where rural areas have yet to attain the nearly universal enrollment of urban areas. The study examines 2500 rural households to explore reasons why children do not attend school, drop out of school, and begin school at later ages. The study finds that the monetary costs of schools (fees and other costs) have a substantial influence on parental decisions regarding school attendance and continuation. Sensitivity analysis reveals that mother's education has a bearing on their children's educational participation, particularly in low-income households. Sensitivity analysis also reveals that school attendance of low income and female children are most strongly affected by simulated changes in school fees.

Determinants of Fee Cutting on Initial Audit Engagements

This study extends Simon and Francis' [1988] estimates of average cross-sectional fee cutting on initial audit engagements by describing the distribution of percentage fee changes reported by 389 client firms which switched auditors from 1983 through 1987.1 In addition, this study attempts to explain cross-sectional variance in fee cutting for a subset of 163 client firms for which required data are available. Prior research suggests that cross-sectional variance in fee cutting may exist if (1) auditor low balling varies with the financial health of clients; (2) new auditors differ from old auditors on fee-relevant dimensions such as auditor class, industry expertise, and technological efficiency; and (3) the number of auditors bidding differs across engagements. Our results support the importance of these factors in determining percentage fee cuts, with the exception of the financial health of clients. Section 2 discusses background literature and identifies factors potentially associated with fee cuts. Section 3 describes the sample and variables. Statistical tests are presented in section 4, and section 5 summarizes the results.

The Resource-Based Relative Value Scale

To the Editor.— Hsiao et al 1 concluded that redistribution of 1986 Medicare physician payments according to their Resource-Based Relative Value Scale would have led to 56% increased payments for evaluation and management services and 42% reduced payments for invasive services. A physician with predominantly invasive work would assume a 42% reduction in fees and revenue; with a steady overhead (about 50% of current revenue), however, this would represent an 84% loss of income after expenses. The authors incorrectly assume that relative practice income, or overhead/revenues, would remain constant in any redistribution of fees and revenue. In fact, with a constant overhead, the relative practice income is inversely proportional to revenue. The change in fees would be less than is stated.

An Empirical Investigation of the Market for Audit Services in the Public Sector

This study investigates the structure of audit fees paid by the 100 North Carolina county governments during the period 1980-84. The data analysis is designed to document the characteristics of this specific audit environment and to facilitate two kinds of comparisons with prior results for other markets for audit services. First, we relate differences in audit fees to differences in the financial and political characteristics of the county governments. Second, we investigate the structure of audit fees in the years surrounding a change in auditor. The relations between fees and the financial and political factors are addressed by a cross-sectional analysis of the counties' mean audit fees. The results indicate statistically significant associations between audit fees and political factors, consistent with results reported elsewhere for state governments (Baber [1983]), and between audit fees and outstanding debt, consistent with results reported for municipal governments (Rubin [1987]). A cross-sectional, time-series analysis of audit fee changes indicates that audit fees for initial engagements that follow an auditor switch are significantly less than fees for engagements that do not follow an auditor switch. These results contradict prior results for

Performance Evaluation as an Integral Part of Dairy Health Programs

At this review meeting on dairy herd performance, areas where performance can be improved are defined, and goals and methods selected. Protocols for problem investigation can also be developed as necessary. Current herd health expenditures for supplies, pharmaceuticals, labor and services should be reviewed and justified, altered or eliminated. Involvement of other professionals (e.g., nutritionist, banker, CPA) is often desirable. Dairy "herd health" programs emphasizing disease prevention are evolving into health and production medicine programs. The adoption of production oriented programs will likely require changes in practice style, schedules and fees. New consultative activities will need to be integrated into practice routines. An essential component of production medicine programs is herd performance evaluation.

Bank Interchange of Transactional Paper: Legal and Economic Perspectives

Bank Interchange of Transactional Paper: Legal and Economic Perspectives

Agency Problems, Auditing, and the Theory of the Firm: Some Evidence

Agency Problems, Auditing, and the Theory of the Firm: Some EvidenceAuthor(s): Ross L. Watts and Jerold L. ZimmermanSource: Journal of Law and Economics, Vol. 26, No. 3, (Oct., 1983), pp. 613-633Published by: The University of Chicago PressStable URL: http://www.jstor.org/stable/725039Accessed: 29/06/2008 23:14

Change in fees for the American Board of Orthodontics

Change in fees for the American Board of Orthodontics

Change in Fees for Private-Duty Nurses

Change in Fees for Private-Duty Nurses