Medicare Part B Intensity and Volume Offset
Article first published online: 22 JUL 2014
Copyright © 2014 John Wiley & Sons, Ltd.
Volume 24, Issue 8, pages 1009–1026, August 2015
How to Cite
2015), Medicare Part B Intensity and Volume Offset. Health Econ., 24, 1009–1026. doi: 10.1002/hec.3081.(
- Issue published online: 2 JUL 2015
- Article first published online: 22 JUL 2014
- Manuscript Accepted: 16 JUN 2014
- Manuscript Revised: 28 FEB 2014
- Manuscript Received: 13 MAY 2013
- service intensity;
- Part B;
- volume offset
Under Medicare Part B, adjustments to the fee schedule are made under the assumption that physicians and hospitals make up for fee reductions through increased service provision called ‘volume offsetting’. While historically, researchers have found evidence of volume offsetting, more recent studies have called into question its magnitude and existence. This study is the first to propose and empirically evaluate an alternative hypothesis of offsetting, namely the alteration of billed or provided services as a means of ‘intensity offsetting’. Evaluating both forms of offsetting, it finds strong evidence of intensity offsetting and little to no evidence of volume offsetting. Simulating a 10% reduction in the Medicare fee schedule, this study estimates that across different procedures between 22% and 59% of a fee reduction will be offset through alterations in service intensity. Copyright © 2014 John Wiley & Sons, Ltd.