Do Physicians Engage in Offsetting Behavior? Empirical Evidence from Medicare Part B

29 Pages Posted: 1 Dec 2016  

Christopher Brunt

Georgia Southern University - Department of Finance and Economics

Joshua R. Hendrickson

University of Mississippi; American Institute for Economic Research

Date Written: November 29, 2016

Abstract

Historically, Medicare has operated under the assumption that health care providers respond to reductions in reimbursement through increased provision of services to offset declines in practice revenue; however, recent empirical work has found either small offsetting effects or evidence supporting a traditional supply response. Using multiple identification techniques and datasets, including distance matching a sample of physicians in close proximity but subject to distinct reimbursement rates and approximating physician practice costs, this study finds strong evidence in support of the offsetting assumption.

Keywords: Medicare Part B, Fee-For-Service, Offsetting, Supplier Induced Demand

JEL Classification: I11, I18

Suggested Citation

Brunt, Christopher and Hendrickson, Joshua R., Do Physicians Engage in Offsetting Behavior? Empirical Evidence from Medicare Part B (November 29, 2016). Available at SSRN: https://ssrn.com/abstract=2877310 or http://dx.doi.org/10.2139/ssrn.2877310

Christopher Brunt

Georgia Southern University - Department of Finance and Economics ( email )

P.O. Box 815s
Statesboro, GA 30460
United States

Joshua R. Hendrickson (Contact Author)

University of Mississippi ( email )

Oxford, MS 38677
United States

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

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