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Health Serv Res. 1989 April; 24(1): 33–66.
PMCID: PMC1065551

Medicaid policy and the substitution of hospital outpatient care for physician care.


This article explores the effects of reimbursement and utilization control policies on utilization patterns and spending for physician and hospital outpatient services under state Medicaid programs. The empirical work shows a negative relationship between the level of Medicaid physician fees relative to Medicare and private fees, and the numbers of outpatient care recipients, suggesting that outpatient care substitutes for physician care in states with low fee levels. In addition, it shows a positive relationship between Medicaid physician fees and outpatient spending per recipient, suggesting that in low-fee states outpatient departments are providing some types of care that could be provided in a physician's office. Finally, the analysis demonstrates that reimbursement and utilization control policies have significant effects in the expected directions on aggregate Medicaid spending for physician and outpatient services.

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Selected References

These references are in PubMed. This may not be the complete list of references from this article.
  • Gold M. The demand for hospital outpatient services. Health Serv Res. 1984 Aug;19(3):383–412. [PMC free article] [PubMed]
  • Hadley J. Physician participation in Medicaid: evidence from California. Health Serv Res. 1979 Winter;14(4):266–280. [PMC free article] [PubMed]
  • Held PJ, Holahan J. Containing Medicaid costs in an era of growing physician supply. Health Care Financ Rev. 1985 Fall;7(1):49–60. [PubMed]
  • Knickman JR, Foltz AM. A statistical analysis of reasons for East-West differences in hospital use. Inquiry. 1985 Spring;22(1):45–58. [PubMed]
  • Lion J, Altman S. Case-mix differences between hospital outpatient departments and private practice. Health Care Financ Rev. 1982 Sep;4(1):89–98. [PubMed]
  • Sloan FA, Steinwald B. Physician participation in health insurance plans: evidence on Blue Shield. J Hum Resour. 1978 Spring;13(2):237–263. [PubMed]
  • Wennberg J, Gittelsohn A. Variations in medical care among small areas. Sci Am. 1982 Apr;246(4):120–134. [PubMed]
  • Zuckerman S. Medicaid hospital spending: effects of reimbursement and utilization control policies. Health Care Financ Rev. 1987 Winter;9(2):65–77. [PubMed]

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