Does Treatment Respond to Reimbursement Rates?

Evidence from Trauma Care

Paul Heaton, Eric Helland

Published Jan 29, 2009

Some models of provider behavior predict that physicians, like other experts, may respond dysfunctionally to financial incentives by recommending unnecessary treatment. The authors empirically test this relationship using data from inpatient hospitalizations surrounding a 2003 Colorado auto insurance reform. The reform shifted a large fraction of auto injury patients from coverage through auto insurers to less generous sources of reimbursement, such as health insurance and self-pay. Despite negligible changes in auto injury characteristics during this period, treatment supply increased following the reform. Procedure use rose by 5-10% and billed charges rose by 5%, and these increases are specific to auto but not other types of traumatic injury. These changes appear to reflect an increase in real resources devoted to treatment, but do not improve mortality outcomes. The findings are consistent with models of physician-induced demand.

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Document Details

  • Copyright: RAND Corporation
  • Availability: Web-Only
  • Year: 2009
  • Pages: 40
  • Document Number: WR-648-ICJ

Citation

RAND Style Manual
Heaton, Paul and Eric Helland, Does Treatment Respond to Reimbursement Rates? Evidence from Trauma Care, RAND Corporation, WR-648-ICJ, 2009. As of September 12, 2024: https://www.rand.org/pubs/working_papers/WR648.html
Chicago Manual of Style
Heaton, Paul and Eric Helland, Does Treatment Respond to Reimbursement Rates? Evidence from Trauma Care. Santa Monica, CA: RAND Corporation, 2009. https://www.rand.org/pubs/working_papers/WR648.html.
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