Fee cuts for radiology and low-value imaging

Based on the belief that fee-for-service reimbursement contributes to the overuse of costly medical procedures, policymakers have sought to cut payments for low-value services. Using a difference-in-differences model and Medicare claims linked with cancer registry records, we evaluate the impact of a large payment reduction for an imaging procedure commonly used in prostate cancer patients. We find that the payment cut did not affect imaging use, even in low-risk patients for whom imaging is not recommended. Our results suggest that supply may be relatively insensitive to fee levels when decisions about the use of a service are made exclusively by referring physicians, not the physicians who deliver and receive payment for it.