Physician Agency and Competition: Evidence from a Major Change to Medicare Chemotherapy Reimbursement Policy

71 Pages Posted: 27 Jul 2013 Last revised: 30 Jul 2013

See all articles by Mireille Jacobson

Mireille Jacobson

RAND Corporation

Tom Chang

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Joseph P. Newhouse

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

Craig Earle

Cancer Care Ontario

Date Written: July 2013

Abstract

We investigate the role of physician agency and competition in determining health care supply and patient outcomes. A 2005 change to Medicare fees had a large, negative impact on physician profit margins for providing chemotherapy treatment. In response to these cuts, physicians increased their provision of chemotherapy and changed the mix of chemotherapy drugs they administered. The increase in treatment improved patient survival. These changes were larger in states that experienced larger decreases in physician profit margins. Finally while physician response was larger in more competitive markets, survival improvements were larger in less competitive markets.

Suggested Citation

Jacobson, Mireille and Chang, Tom and Newhouse, Joseph P. and Earle, Craig, Physician Agency and Competition: Evidence from a Major Change to Medicare Chemotherapy Reimbursement Policy (July 2013). NBER Working Paper No. w19247. Available at SSRN: https://ssrn.com/abstract=2298959

Mireille Jacobson (Contact Author)

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

Tom Chang

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

Joseph P. Newhouse

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

Department of Health Care Policy
Boston, MA 02115
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Craig Earle

Cancer Care Ontario ( email )

Cancer Care Ontario/Action Cancer Ontario
620 University Avenue
Toronto, Ontario M5G 2L7
Canada

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