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Schroeder Center will study impact of Medicare system on health services

Jennifer Mellor

Jennifer Mellor:  Director of the Schroeder Center and principal investigator of the project.

Under a grant from the Robert Wood Johnson Foundation (RJWF), researchers from William & Mary’s Schroeder Center for Health Policy and Department of Economics will study the impact of Medicare’s Outpatient Prospective Payment System (OPPS) on health services. The $117,000 grant will allow researchers at the Center to look at the growth of outpatient services since the August 2000 implementation of OPPS and the potential impact of cuts proposed in the Patient Protection and Affordable Care Act of 2010.

Jennifer Mellor, director of the Schroeder Center and the principal investigator of the project, noted that in recent years Medicare’s outpatient spending per beneficiary has grown more than twice as fast as inpatient care spending, and that it now constitutes more than 20% of Medicare’s total payments to hospitals according to a 2010 MedPAC study.

“Officials at the Centers for Medicare and Medicaid Services, Office of Management and Budget, and the Congress itself need to know what effects reductions in outpatient services payments will have on hospital’s provision of services to  Medicare and non-Medicare patients,” she said.

Medicare’s Outpatient Prospective Payment System is the way that Medicare pays for outpatient services at hospitals under Medicare Part B.

Researchers will use data from Florida ambulatory and inpatient discharge records from 1997 – 2008. These data will be combined with data from the U.S. Census Bureau, Medicare Cost Reports, American Hospital Association Annual Survey data, and data on private sector prices.

According to economics professor Daifeng He, the study’s lead author, this project is unique in several ways.

“This study is the first to look at OPPS’ effect on Medicare volume. It’s also the first study to test whether this Medicare payment change led healthcare providers to change how they treat other types of patients or where they treat patients in general – in the inpatient setting or the outpatient setting.”

The study is expected to be complete by Feb. 2012.

The grant is being funded through RWJF’s Changes in Health Care Financing and Organization (HCFO) Initiative. According to the Foundation’s web site, the goal of the program “is to bridge the health policy and health services research communities” and “support investigator-initiated research and policy analysis and evaluation projects examining major changes in health care financing and organization, and their effects on cost, access, and quality.”

The Schroeder Center for Health Policy was established in 2003 for the purpose of informing and educating current and future decision makers on a broad array of public policies related to healthcare and public health. The Center is housed within the Thomas Jefferson Program in Public PolicyIdeation