Medicare's demonstration of expanded coverage for chiropractic services: limitations of the demonstration and an alternative direct cost estimate.

OBJECTIVE: The purposes of this study were to examine the direct costs associated with Medicare's 2005-2007 "Demonstration of Expanded Coverage of Chiropractic Services" (Demonstration) and their drivers, to explore practice pattern variation during the Demonstration, and to describe scenarios of cost implications had provider behavior and benefit coverage been different.

METHODS: Using Medicare Part B data from April 1, 2005, and March 31, 2007, and 2004 Rural Urban Continuum Codes, we conducted a retrospective analysis of traditionally reimbursed and expanded chiropractic services provided to patients aged 65 to 99 years who had a neuromusculoskeletal condition. We compared chiropractic care costs, supply, and utilization patterns for the 2-year periods before, during, and after the Demonstration for 5 Chicago area counties that participated in the Demonstration to those for 6 other county aggregations-urban or rural counties that participated in the Demonstration; were designated comparison counties during the Demonstration; or were neither participating nor comparison counties during the Demonstration.

RESULTS: When compared with other groups, doctors of chiropractic in 1 region (Chicago area counties) billed more aggressively for expanded services and were reimbursed significantly more for traditionally reimbursed chiropractic services provided before, during, and after the Demonstration. Costs would have been substantially lower had doctors of chiropractic in this 1 region had responded similarly to those in other demonstration counties.

CONCLUSION: We found widespread geographic variation in practice behavior and patterns. Our findings suggest that Medicare might reduce the risk of accelerated costs associated with the introduction of a new benefit by applying appropriate limits to the frequency of use and overall costs of those benefits, particularly in highly competitive markets.