The Consequences of Medicare Pricing: An Explanation ofTreatment Choice

Board of Governors of the Federal Reserve System (U.S.), Elena Falcettoni, Board of Governors of the Federal Reserve System (U.S.)
2020 Finance and Economics Discussion Series  
Primary care physicians (PCPs) provide more specialty procedures in less-urban areas, where specialists are fewer. Using a structural random-coefficient model and the demographic and time variation in the data, this paper shows that changes in policy-set reimbursements lead to a reallocation of the suddenly-more-remunerative procedures away from specialists and toward PCPs, and this effect is stronger, the more rural an area is. A reimbursement-unit increase for a given procedure leads to
more » ... dure leads to outside-metro PCPs gaining 7-15% market share more than metro PCPs in that procedure, at the expense of specialists. Small metropolitan areas and very rural areas are the most affected. JEL codes: I18; I13; J2; R12.
doi:10.17016/feds.2020.063 fatcat:aakegrlnkjhl3kvjbj5v5723ky