Changes in Follow-Up Care for Medicare Surgical Patients Under the Prospective Payment System

In this study, changes in the number, site, and source of follow-up visits and allowed charges were examined for follow-up visits provided to Medicare surgical patients between 1984 and 1986. Among the 21 surgical procedures studied, follow-up visits decreased by 5.2 percent, after adjusting for case mix. Despite the physician fee freeze during most of the study period, total allowed charges increased by 8.1 percent, indicating that the average intensity of visits increased by 14.0 percent. Inpatient visits decreased 6.7 percent, while outpatient visits increased 3.9 percent. Thus, while some substitution of outpatient visits occurred, prospective payment system-related reductions in inpatient length of stay were associated with reductions in both the total visits and total allowed charges. Holding other factors constant, the 9.5 percent overall reduction in length of stay produced a 6.4 percent reduction in total allowed charges. The authors concluded, then, that the prospective payment system had a significant effect in reducing the growth of Medicare expenditures for physician visits. The reduction in submitted claims for inpatient follow-up visits and the absence of a strong substitution effect suggest that some inpatient visits may not have been necessary. These results also raise several issues concerning Medicare's global fee for surgical procedures, and provide additional evidence in support of a uniform global fee policy under the new Medicare fee schedule.