Topic: The Economics of Medical Procedure Innovation
Time：Nov. 10, 2021年11月10日（Wed）10:00-11:30am Beijing Time
Speaker：Bingxiao Wu, Assistant Professor, Rutgers University
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Summary：This paper explores the economic incentives for medical procedure innovation. Using a proprietary dataset on billing code applications for emerging medical procedures, we highlight two mechanisms that could hinder innovation. First, the administrative hurdle of securing permanent, reimbursable billing codes substantially delays innovation diffusion. We find that Medicare utilization of innovative procedures increases nearly nine-fold after the billing codes are promoted to permanent (reimbursable) from provisional (non-reimbursable). However, only 29 percent of the provisional codes are promoted within the five-year probation period. Second, medical procedures lack intellectual property rights, especially those without patented devices. When appropriability is limited, specialty medical societies lead the applications for billing codes. We indicate that the ad hoc process for securing billing codes for procedure innovations creates uncertainty about both the development process and the allocation and enforceability of property rights. This stands in stark contrast to the more deliberate regulatory oversight for pharmaceutical innovations.
Bingxiao Wu is an Assistant Professor in the Economics Department at Rutgers University. She is an applied microeconomist and her research focuses on health economics, industrial organization, and development economics. Her studies primarily involve medical innovation, physician reimbursement and incentives, and the market structure of health care industry. Her work has appeared in journals such as Management Science, Journal of Health Economics, Journal of Development Economics, JAMA Internal Medicine, and etc. She received her PhD from Northwestern University’s Kellogg School of Management and BS from Tsinghua University.
