On April 9, both the Wall Street Journal and the New York Times made waves with articles on transparency and Medicare.
Here’s the NYT:
A tiny fraction of the 880,000 doctors and other health care providers who take Medicare accounted for nearly a quarter of the roughly $77 billion paid out to them under the federal program, receiving millions of dollars each in some cases in a single year, according to the most detailed data ever released in Medicare’s nearly 50-year history.
And here’s the WSJ:
The top 1% of 825,000 individual medical providers accounted for 14% of the $77 billion in billing recorded in the data.
The long-awaited data reveal for the first time how individual medical providers treat America’s seniors—and, in some cases, may enrich themselves in the process. Still, there are gaps in the records released by the U.S. about physicians’ practice patterns, and doctors’ groups said the release of such data leaves innocent physicians open to unfair criticism.
The impact on the healthcare industry will be felt for years to come. In fact, we can predict that, in all likelihood, this represents a game changer for the industry:
Fraud investigators, health insurance plans, researchers and others will spend weeks poring over the information about how many tests were ordered and procedures performed for every provider who received Medicare payments under Part B, which excludes payments to hospitals and other institutions. The Centers for Medicare and Medicaid Services is making the data publicly available on Wednesday. While total Medicare spending — including hospitals, doctors and drugs — is approaching $600 billion a year, payments to individual doctors have long been shrouded in secrecy. For decades, the American Medical Association, the powerful doctors’ group, and others have blocked the release of the information, citing privacy concerns and the potential for misuse of the information. But a federal judge ruled last year that the information could be made public.
According to The New York Times, 2 percent of doctors account for about $15 billion in Medicare payments, roughly a quarter of the total.
And the best paid specialties are as follows:
The American Medical Association, which chose not to try to block the release of the information, questions the “usefulness of these payments to assess doctors.” Dr. Ardis Dee Hoven, AMA president asserts: “It’s raw claims data. This gives us no window into quality or anything of that nature.” While patients may know who performs a high number of procedures, like hip replacements, for example, they will not be able to tell anything about whether the patients needed the surgery or whether they benefited from the surgery.”
According to the reports, Dr. Hoven also cautions that doctors were not able to review the data, and some of the information being made public could be wrong. Specifically, the AMA points out several reasons why the data should not be taken too literally:
Data being released may contain errors because there is currently no mechanism for physicians and other providers to review and correct their information.
The data does not include explicit information on quality of care provided or quality measurement. It solely focuses on payment and utilization of services so it cannot be used to evaluate the value of care provided.
Number of Services
Residents, physician assistants, nurse practitioners and others under a physician’s supervision can all file claims under that physician’s National Provider Identifier (NPI); the data may not properly detail the services performed and who performed them. Additionally, there are several instances in which it can appear that two surgical procedures were done when in fact there was only one. For example, when there are co-surgeons or an assistant at surgery, the procedure should be counted as only one surgery, not two.
Charges vs. Payment
Medicare and other payers pay fixed prices for services based on fee schedules; therefore the amount paid to physicians is generally far less than what was charged and is not an accurate portrayal of payment.
The data being released is an incomplete representation of the services physicians provide, as it is not risk adjusted. Additionally, it does not include care for private insurance patients or Medicaid beneficiaries, making it a limited view of the patients a physician cares for.
Site of Service
Payment amounts vary based on where the service was provided. To reflect a difference in practice costs, Medicare pays physicians less for services provided in a hospital outpatient department than for services in the physician’s office. However, for services in the outpatient department, another payment is made to the facility to cover its practice costs so that, in reality, the total costs to Medicare and to the patient may be higher when a service is provided in a facility setting.
There is a lack of specificity in specialty descriptions and practice types in the data, which could be misleading when making comparisons between physicians. In some cases, physicians who appear to have the same specialty can serve very different types of patients, thus impacting the mix of services provided.
The data does not account for patient mix and demographics or drug and supply costs.
Coding and Billing Changes
Any analysis using the data should take into account changes in Medicare’s coding and billing rules that may be different over time and across regions of the country (e.g., local coverage determinations).
What does this mean going forward? This is a time for leadership.
A few thoughts:
We have a choice: we can react or we can lead. Transparency is here to stay. The healthcare industry is going to have to prepare itself to face radical transparency the likes of which it has not faced before. Like other industries that were transformed because of transparency, we can expect more of this in our industry. It will be best to not fight it, but rather to champion it. Physician leaders will work hard to demonstrate the entire value equation, not just focusing on costs, but showing outcomes and lifetime value.
Leading institutions including the AMA and AMGA must get better at creating self-regulating metrics and benchmarks that are meaningful in terms of outcomes, not merely costs. This is a key flaw in the current measurement regime.
Physician leaders must embrace and lead the focus on value delivery. As we pointed out in a previous blog post, achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent.
The Rx is Physician Leadership. In the words of Harry Truman – “Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.”