Medicare Managed Care Spillovers and Treatment Intensity

Evidence suggests that the share of Medicare managed care enrollees in a region affects the costs of treating traditional fee-for-service (FFS) Medicare beneficiaries, however little is known about the mechanisms through which these ‘spillover effects’ operate. This paper examines the relationship between Medicare managed care penetration and treatment intensity for FFS enrollees suffering from an acute myocardial infarction (AMI). I find that increased managed care penetration is associated with a reduction in the average length of a hospital stay for AMI patients, a decrease in the probability of receiving an invasive surgical intervention, and a decrease in the probability of receiving a number of diagnostic procedures.