MEDICAID PHYSICIAN FEES AND USE OF PHYSICIAN AND HOSPITAL SERVICES

This paper examines how physician fees affect use of physician and hos pital services under the Medicaid program. Using data from the 1987 Na tional Medical Expenditure Survey (NMES), it examines how Medicaid phy sician fee levels affect beneficiaries' probability of using ambulator y physician services, the site at which ambulatory physician care is u sually received, and how that site affects level of use and probabilit y of hospital admission. The results indicate that low Medicaid fees h amper access to office-based physicians and encourage use of hospital outpatient departments and emergency rooms. They also indicate that ha ving an office-based doctor as a usual source of ambulatory physician care is associated with a higher frequency of visits and a lower proba bility of having an inpatient hospitalization.