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Do Reimbursement Cuts Affect Treatment Patterns?

Physicians may modify their treatment and prescribing patterns to offset cuts in Medicare payments, according to findings from a study published in Health Affairs, which cautions that payment reform has "real consequences" and should be undertaken carefully.

Physicians may modify their treatment and prescribing patterns to offset cuts in Medicare payments, according to findings from a study published in Health Affairs, which cautions that payment reform has “real consequences” and should be undertaken carefully.

The study assessed how reductions in reimbursement rates affected treatment patterns for lung cancer patients, beginning in 2005. Mireille Jacobson, senior health economist at the RAND Corporation and a faculty research fellow of the National Bureau of Economic Research, and colleagues found that, contrary to concerns about access, changes in payment rates “actually increased the likelihood that lung cancer patients received chemotherapy.”

The type of agents administered also changed, as physicians switched from dispensing the drugs that experienced the largest cuts in profitability—carboplatin and paclitaxel—to other high-margin drugs such as docetaxel. These changes, say researchers, “may have offset some of the savings projected from passage of the legislation.

Jacobson and colleagues found no evidence that the Medicare Modernization Act’s reduction in reimbursement rates decreased beneficiaries’ access to chemotherapy drugs, and determined that chemotherapy treatment rates increased among lung cancer patients in response to the new payment system.

Although further study is warranted to “determine the implications of these findings for Medicare spending and the health of Medicare beneficiaries,” the researchers do believe that their findings urge “caution for health care payment reform. Any redesign requires an understanding of both the value of services and the impact of changing reimbursements on the use of those services.”