Managed care and the diffusion of endoscopy in fee-for-service Medicare

Objective. To determine whether Medicare managed care penetration impacted the diffusion of endoscopy services (sigmoidoscopy, colonoscopy) among the fee-for-service (FFS) Medicare population during 2001 2006. Methods. We model utilization rates for colonoscopy or sigmoidoscopy as impacted by both market supply and demand factors. We use spatial regression to perform ecological analysis of county-area utilization rates over two time intervals (2001-2003, 2004 2006) following Medicare benefits expansion in 2001 to cover colonoscopy for persons of average risk. We examine each technology in separate cross-sectional regressions estimated over early and later periods to assess differential effects on diffusion over time. We discuss selection factors in managed care markets and how failure to control perfectly for market selection might impact our managed care spillover estimates. Results. Areas with worse socioeconomic conditions have lower utilization rates, especially for colonoscopy. Holding constant statistically the socioeconomic factors, we find that managed care spillover effects onto FFS Medicare utilization rates are negative for colonoscopy and positive for sigmoidoscopy. The spatial lag estimates are conservative and interpreted as a lower bound on true effects. Our findings suggest that managed care presence fostered persistence of the older technology during a time when it was rapidly being replaced by the newer technology. Key Words. Endoscopy utilization, spatial regression analysis, Medicare population trends, managed care spillovers, cost-effectiveness