Christopher S. Brunt

CPT fee differentials and visit upcoding under Medicare Part B

Medicare Part B pays outpatient physicians according to the billed Current Procedural Terminology (CPT) codes, which differ in procedure and intensity. Since many performed services merely differ by intensity, physicians have an incentive to upcode services to increase profitability of a visit. Using nationally representative data from the 2001 to 2003 Medicare Current Beneficiary Survey, this paper explores the effect of Medicare Part B fee differentials on the upcoding of general office visits (i.e. for established patient visits with CPT codes of 99212-99215). It finds strong evidence that these fee differentials influence physicians coding choice for billing purposes across a variety of specialties. For general office visits, Medicare outlays attributable to upcoding may sum to as much as 15% of total expenditures for such visits. Medicare has much to gain financially by clarifying its classification rules. Until the distinctions between types of Medicare visits are redefined in a way that eliminates ambiguity, upcoding under Medicare Part B is likely to continue.

MEDICARE SKILLED NURSING FACILITY REIMBURSEMENT AND UPCODING

Post-acute care provided by skilled nursing facilities (SNFs) is reimbursed by Medicare under a prospective payment system using resource utilization groups (RUGs) that adjust payment intensity on the basis of predefined ranges of weekly therapy minutes provided and the functionality of the patient. Individual RUGs account for differences in the intensity of care provided, but there exists significant regional variation in the payments SNFs receive from Medicare due to the use of geographic adjustment factors. This paper is the first to use this geographic variation in the generosity of Medicare reimbursement to empirically test if SNFs respond to payment differences between RUG categories. The results are highly suggestive that SNFs upcode patients by providing additional therapy minutes to increase revenue, whereas we find no evidence of upcoding related to patient functionality scores. Simulating how different payment differentials affect RUG selection, we predict that reducing the financial incentive to upcode could result in significant savings to Medicare.

The Effects of Antipsychotic Quality Reporting on Antipsychotic and Psychoactive Medication Use

OBJECTIVE The objective of this study is to examine how nursing homes changed their use of antipsychotic and other psychoactive medications in response to Nursing Home Compares initiation of publicly reporting antipsychotic use in July 2012. RESEARCH DESIGN AND SUBJECTS The study includes all state recertification surveys (n = 40,415) for facilities six quarters prior and post the initiation of public reporting. Using a difference-in-difference framework, the change in use of antipsychotics and other psychoactive medications is compared for facilities subject to public reporting and facilities not subject to reporting. PRINCIPAL FINDINGS The percentage of residents using antipsychotics, hypnotics, or any psychoactive medication is found to decline after public reporting. Facilities subject to reporting experienced an additional decline in antipsychotic use (-1.94 vs. -1.40 percentage points) but did not decline as much for hypnotics (-0.60 vs. -1.21 percentage points). Any psychoactive use did not vary with reporting status, and the use of antidepressants and anxiolytics did not change. CONCLUSION Public reporting of an antipsychotic quality measure can be an effective policy tool for reducing the use of antipsychotic medications--though the effect many only exist in the short run.

Payment generosity and physician acceptance of Medicare and Medicaid patients

Using 2008 physician survey data, we estimate the relationship between the generosity of fees paid to primary care physicians under Medicaid and Medicare and his/her willingness to accept new patients covered by Medicaid, Medicare, or both programs (i.e., dually enrolled patients). Findings reveal physicians are highly responsive to fee generosity under both programs. Also, their willingness to accept patients under either program is affected by the generosity of fees under the other program, i.e., there are significant spillover effects between Medicare and Medicare fee generosity. We also simulate how physicians in 2008 would have likely responded to Medicaid and Medicare payment reforms similar to those embodied in the 2010 Affordable Care Act, had they been permanently in place in 2008. Our findings suggest that “Medicaid Parity” for primary care physicians would have likely dramatically improved physician willingness to accept new Medicaid patients while only slightly reducing their willingness to accept new Medicare patients. Also, many more primary care physicians would have been willing to treat dually enrolled patients.

Medicare Part B reimbursement and the perceived quality of physician care

The maximum amount physicians can charge Medicare patients for Part B services depends on Medicare reimbursement rates and on federal and state restrictions regarding balance billing. This study evaluates whether Part B payment rates, state restrictions on balance billing beyond the federal limit, and physician balance billing influence how beneficiaries rate the quality of their doctor’s care. Using nationally representative data from the 2001 to 2003 Medicare Current Beneficiary Survey, this paper finds strong evidence that Medicare reimbursement rates, and state balance billing restrictions influence a wide range of perceived care quality measures. Lower Medicare reimbursement and restrictions on physicians’ ability to balance bill significantly reduce the perceived quality of care under Part B.

Pricing Distortions in Medicare’s Physician Fee Schedule and Patient Satisfaction with Care Quality and Access

Medicare adjusts its payments to physicians for geographic differences in the cost of operating a medical practice, but the method it uses is imprecise. We measure the inaccuracy in its geographic adjustment factors and categorize beneficiaries by whether they live where Medicares formula is favorable or unfavorable to physicians. Then, using the 2001-2003 Medicare Current Beneficiary Survey, we examine whether differences in physician payment generosity, that is, whether favorable or unfavorable, influence the satisfaction ratings Medicare seniors assign to their quality of care and access to services. We find strong evidence that they do. Many beneficiaries live in payment-unfavorable areas and receive a less satisfying quality of care and less satisfying access to services than beneficiaries who live where payments are favorable to physicians.

Competitive Spillovers and Regulatory Exploitation by Skilled Nursing Facilities

Abstract Typically, research on the effect of ownership has considered health care providers in isolation of competitive interaction from other firms. This analysis considers how the selection of Medicare reimbursement codes for skilled nursing facilities varies by ownership and is influenced by the competitive spillovers from market dominance of for-profit institutions. We find evidence that not-for-profits are less likely to code patients into the highest reimbursement categories. Further, as the market becomes dominated by for-profits, both for-profit and not-for-profits increase the share of patients in these high reimbursement categories.

Health IT Adoption, Productivity and Quality in Primary Care

Within the last decade, there has been a growing push towards the use of electronic medical records and health information technology (IT) within primary care physician practices. Despite financial subsidies, smaller practices remain reluctant to adopt these information systems. Using a nationally representative survey of physicians, this study explores the relationship between physician, practice and area attributes and the adoption of health IT systems. Controlling for these attributes, the analysis subsequently studies the relationship between health IT, physician productivity and perceived quality of care. It finds that smaller practices and physicians with lower incomes are less likely to adopt health IT systems and that adoption varies with the type of medical conditions the practice typically treats. With regards to productivity, health IT adopters are more likely to see fewer patients and spend a larger amount of time on each visit with marginal increases in time on administrative tasks and no differences in perceived ability to deliver quality health care.

Ownership Status and Length of Stay in Skilled Nursing Facilities: Does Endogeneity Matter?

In 1998, Medicare implemented the Prospective Payment System for post-acute care provided by skilled nursing facilities. This system paid a fixed price per day above the cost of care, creating an incentive to provide longer length of stays to increase revenues. In this paper, we examine whether there are systematic differences in length of stay for post-acute care patients between for-profit and not-for-profit skilled nursing facilities. Based on the financial incentives inherent in the reimbursement system, we develop a conceptual framework that argues for-profits will provide a greater number of days of care to increase profits relative to not-for-profits. We find significant differences in length of stay by ownership, but once patient selection into a facility is accounted for using two-staged residual inclusion, there is no statistical differences in length of stay between for-profit and not-for-profit facilities.

An evaluation of the relationship between minimum wage and unemployment: does the local cost-of-living matter?

ABSTRACT This article examines the relationship between federal, state and municipal minimum wage laws, local cost-of-living (COL) and the unemployment rate. It finds a strong statistically significant positive relationship between minimum wages and unemployment once COL is taken into account. Our results suggest that federal minimum wage policy is likely to have more harmful effects in rural/low cost areas.