Reimbursement Cut Led to Higher Volumes, Reducing Actual Savings

Tags: hospital reimbursements | Medicare

Reimbursement cuts can prompt physicians to increase their volume of services to make up for the loss in earnings, thereby reducing the money-saving effect of the cut, according to a study reported in Health Affairs.

The study looked at volumes of chemotherapy drugs for lung cancer patients after Congress cut Medicare reimbursements for them in 2003 as a cost-saving measure. The action was an attempt to close the gap between the Medicare reimbursement and the discounted rates physicians paid for the drugs.

Researchers had predicted Congress' action would prompt physicians to avoid necessary use of the drug, but instead the study found volume of chemotherapy prescriptions rose significantly, particularly for the higher-cost drugs reimbursed at higher rates.

"The ultimate message is that payment reforms have real consequences and should be undertaken with caution," the researchers said.

Read the Health Affairs report on reimbursements.

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