Volume 48 | Number 5 | October 2013

Abstract List

Daifeng He Ph.D., Jennifer M. Mellor Ph.D.


To examine whether decreases in edicare outpatient payment rates under the utpatient rospective ayment ystem () caused outpatient care to shift toward the inpatient setting.

Data Sources/Study Setting

Hospital inpatient and outpatient discharge files from the lorida gency for ealth are dministration from 1997 through 2008.

Study Design

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 edicare payment rate specific to the procedure and hospital. Control variables include time‐varying hospital and county characteristics and hospital and year‐fixed effects.

Principal Findings

Outpatient hernia surgeries fell in response to ‐induced rate cuts. The volume of inpatient hernia repair surgeries did not increase in response to reductions in the outpatient reimbursement rate.


Potential substitution from the outpatient setting to the inpatient setting does not pose a serious threat to edicare's efforts to contain hospital outpatient costs.