Of the many -physician decisions that have been studied, pricing of specific medical procedures is of particular interest, given the recent inflationary trend in medical care prices and the widely held view that medical care is a merit want. The national experience with such demand-shift medical care programs as Medicare and Medicaid has shown quite clearly the unfortunate consequences of not taking into account the potential price responses to such programs. Moreover, the debate over alternative national health insurance systems, with their varying implications for medical care costs and prices, adds to the current policy importance of an examination of how physicians set their fees. The present study has two broad objectives. The first is to develop and test hypotheses concerning potential determinants of physicians' fees. The study will not attempt to develop a single theory of physician price setting, but will respond to alternative theories advanced in the literature. Findings of the current analysis will be related to these theories, and likely paths of future efforts to improve upon the theoretical foundation of research on physicians' fees will be suggested. The second objective is to determine the specific effects of different types of insurance coverage and methods of reimbursing physicians on fees. Past research in this area has most often considered medical insurance solely in terms of extent of coverage. Given increasing levelsbut variable types-of insurance coverage and increasing diversity in methods of reimbursing physicians, it seems apparent that a more thorough analysis of the relationship between medical insurance and physicians' fees is warranted. Data on fees and other attributes of physicians' practices come from a mailed questionnaire survey conducted by the American Medical Association during fall 1971. Mailed questionnaires (with six follow-up mailings) were sent to a sample of U.S. physicians with questions pertaining to the year 1970 and to current periods during 1971. The