Pay Docs More For Better Services

Commercial health plans should pay physicians in Medicare Advantage plans more to provide the sort of services the insurers want patients to utilize, and pay less for services that they don’t want patients to utilize as much, according to a recent study.

“If there are services that Medicare or private insurers want to encourage … they should increase the fees paid to physicians for those services,” says Jack Hadley, professor and senior health services researcher in George Mason University’s College of Health and Human Services.

“Conversely, if they think a service is overprovided, they should reduce the fee for that service.” He was the lead author of the study “Medicare Fees and the Volume of Physicians’ Services,” published in the February issue of Inquiry.

Researchers analyzed Medicare claims to determine whether they could identify any volume-offset behavior, the belief that physicians respond to lower Medicare fees by increasing service volume to make up for potential lost revenue.

“We tried to estimate how the volumes of eight specific services change when Medicare fees are lowered,” says Hadley. “Many policymakers believe that if Medicare reduces fees, the volume of services will increase. We did not find any evidence to show that lowering Medicare fees leads to an increase in the volume of services,” says Hadley.