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Keywords:

  • Medicare coverage;
  • Medicare services;
  • local coverage decisions (LCDs);
  • Medicare utilization

Objective. To determine whether Medicare coverage policies affect utilization of services in Medicare.

Data Sources. We constructed an analysis data set for eight different procedures using secondary data obtained from Medicare claims (1999–2002) and Medicare coverage policies posted on Center for Medicare and Medicaid Services website.

Study Design. We analyzed the impact of coverage policies using difference-in-difference approach in a regression framework.

Principal Findings. We found that in only one case (transesophageal echocardiography) out of eight did utilization change (reduced by 13.6 percent) after the effective date of the local policies. There is no systematic pattern that policies affect utilization, and the type of coverage policy does not seem to play an important role in its impact.

Conclusions. Coverage policies have the potential but do not consistently impact utilization as policy makers intend and expect them to do. These findings raise significant policy questions about the effectiveness of Medicare coverage policies, which deserve further study.