title: Do changes in hospital outpatient payments affect the setting of care?
abstract: OBJECTIVE
  To examine whether decreases in Medicare outpatient payment rates under the Outpatient Prospective Payment System (OPPS) caused outpatient care to shift toward the inpatient setting.
  
  
  METHODS
  Hospital inpatient and outpatient discharge files from the Florida Agency for Health Care Administration from 1997 through 2008.
  
  
  METHODS
  This study focuses on inguinal hernia repair surgery, one of the most commonly performed surgical procedures in the United States. We estimate multivariate regressions of inguinal hernia surgery counts in the outpatient setting and in the inpatient setting. The key explanatory variable is the time-varying Medicare payment rate specific to the procedure and hospital. Control variables include time-varying hospital and county characteristics and hospital and year-fixed effects.
  
  
  RESULTS
  Outpatient hernia surgeries fell in response to OPPS-induced rate cuts. The volume of inpatient hernia repair surgeries did not increase in response to reductions in the outpatient reimbursement rate.
  
  
  CONCLUSIONS
  Potential substitution from the outpatient setting to the inpatient setting does not pose a serious threat to Medicare's efforts to contain hospital outpatient costs.
authors.affiliation: Department of Economics, College of William and Mary, Williamsburg, VA.
authors.forename: Daifeng
authors.initials: D
authors.lastname: He
authors.forename: Jennifer M
authors.initials: JM
authors.lastname: Mellor
mesh_terms: D000556:Ambulatory Surgical Procedures / Q000191:economics*; D004469:Economics, Hospital; D005431:Florida; D006552:Hernia, Inguinal / Q000601:surgery*; D059685:Herniorrhaphy / Q000191:economics*; D006801:Humans; D006278:Medicare / Q000191:economics*; D011445:Prospective Payment System / Q000191:economics*; D014481:United States
keywords: Medicare payment reform; Outpatient prospective payment system; setting of care; substitution