Physician Fee Policy and Medicaid Program Costs

36 Pages Posted: 20 Sep 2000 Last revised: 21 Aug 2021

See all articles by Jonathan Gruber

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Kathleen Adams

Emory University - Department of Economics

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: July 1997

Abstract

We investigate the hypothesis that increasing access for the indigent to physician offices shifts care from hospital outpatient settings and lowers Medicaid costs (the so-called offset effect'). To evaluate this hypothesis we exploit a large increase in physician fees in the Tennessee Medicaid program, using Georgia as a control. We find that beneficiaries shifted care from clinics to offices, but that there was little or no shifting from hospital outpatient departments or emergency rooms. Thus, we find no offset effect in outpatient expenditures. Inpatient admissions and expenditures fell, reducing overall program spending eight percent. Because the inpatient reduction did not occur in ambulatory-care-sensitive diagnoses, however, we cannot demonstrate a causal relationship with the fee change.

Suggested Citation

Gruber, Jonathan and Adams, Kathleen and Newhouse, Joseph P., Physician Fee Policy and Medicaid Program Costs (July 1997). NBER Working Paper No. w6087, Available at SSRN: https://ssrn.com/abstract=226492

Jonathan Gruber (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Kathleen Adams

Emory University - Department of Economics

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Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS) ( email )

Department of Health Care Policy
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United States

National Bureau of Economic Research (NBER)

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United States

Harvard University - Harvard Kennedy School (HKS) ( email )

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