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Using physician time and complexity to identify mispriced procedures.

J Cromwell¹, J B Mitchell, M L Rosenbach

¹Center for Health Economics Research, Needham, MA 02194.

Inquiry : a Journal of Medical Care Organization, Provision and Financing

|January 1, 1989

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Physician fees are analyzed for fairness based on effort. While time and complexity explain most Medicare payments, some services like surgeries may be overpaid, and visits underpaid.

Area of Science:

Health Economics
Medical Policy

Background:

Policymakers are scrutinizing physician fees to control Medicare spending.
Understanding the drivers of physician reimbursement is crucial for policy development.

Purpose of the Study:

To test if physician effort (time and complexity) explains relative Medicare fees.
To identify potentially mispriced medical services within the Medicare system.

Main Methods:

Regression analysis was used to correlate Medicare allowed charges with physician time and procedure complexity.
A methodology was developed to identify services with fees deviating from effort-based predictions.

Main Results:

Physician time and procedure complexity significantly explain the variation in Medicare allowed charges.

Related Experiment Videos

Some surgical procedures were found to be relatively overpaid, while services like physician visits appeared underpaid.

Conclusions:

The study provides a framework for identifying "mispriced" medical services based on physician effort.
Findings suggest potential inequities in Medicare fee allocation that warrant policy review.