Transparency of healthcare pricing is a hot topic and it just got hotter. On April 9th, 2014 CMS released Medicare provider-specific payment data for the first time and the Internet is en fuego.
Kept private by court-order since 1979, this publicly-relevant data, about care paid for with tax-payer money, demonstrates a lot of things and, also, probably a lot of nothings. Doctors fought against CMS’ release of the database of all claims paid by CMS to physicians, vowing it would be released over their dead bodies. Some of these doctors may have gotten their wish, as I suspect there are more than a few physicians worrying about the death of their careers right about now.
One of the most notable findings on a quick review of the data is that 2% of physicians who billed Medicare in 2012 received…ready for it?….$15.1 billion of the $60 billion paid by Medicare in that year to physicians (total spend was $77 billion including labs and ambulance services). In other words, 2% received about 25% worth of the money. Man, those guys must be SUPER productive. Yeah, right.
About 75% of the money went to the top quartile of doctors, which isn’t that shocking if you believe in the 80-20 rule. But the top 2% receiving 25%? Woah. That is some serious concentration bias.
But that is not the truly shocking number, believe it or not. There were more than 880,000 providers who billed CMS, and of those, the top 100 providers received an aggregate $610 million. That would amount to about $6 million apiece if it weren’t for the very top guy, who himself received $21 million. For real. I am definitely in the wrong line of work. And yet, if I were a doctor, I would not really want to be on the Hot 100 list right now.
The release of this data sent Dr. Farzad Mostashari (@farzad_MD), former Former Head of the Office of the National Coordinator of Health IT, and now Brookings Institution Fellow, on a Twitter frenzy last night. Among his tweets:
- Chiropractor in St. Louis that did 1,800 manipulations … On 12 patients. #ThingsYouCanDoWithCMSData
- Clinical social worker in Detroit billed for 2,693 group psychotherapy visits on 15 patients #ThingsYouCanDoWithCMSData
- One more.. Ambulance service in NJ that did 5,000 ambulance runs… On 26 patients. ($1,150,000)
- Here’s one: avg #days in 2012 that the provider offered same svc to their patients- eg home hlth lab that did 5,000 glucose tests on 29 pts
- Kentucky family practitioner that billed for 10,000 medication management episodes … On 61 patients ($430k)
On that last one, this means those patients were having med checks 3x per week on average. Pretty atypical if you ask me and, apparently, also Farzad. 3x is apparently the charm, as that is also the same number of times per week that those 29 glucose test patients got tested in his prior tweet. Wow, that is a lot of doctor visits. And that ambulance service? You could have bought each of those patients a nice car and driver, at $44k/each to take them back and forth to the hospital 4x/week in 2012. Good work if you can get it.
I mentioned to Farzad that he would probably never have to work again if he could convince CMS to pay him just 10% of the money saved by his one night of work finding these outliers and getting the government’s fraudulently spent money back. I have not heard from him, so I hope he was successful in this pursuit and is now in Fiji.
Another of Farzad’s points was this, as a huge proponent of open data: “crowdsourcing allows for much larger number of small anomalies to be unearthed and examined- CMS/OIG can only go after the big fish.” That is definitely true, but I have to believe that CMS is now going to be joined by the large private insurers in double-checking on those particular physicians who have behaved questionably in the CMS sandbox. Right now there are a lot of physicians waiting for the virtual colonscopy of a lifetime as the nation’s payers comb through reams of data previously unavailable to the masses.
Here are a few searches I hope someone runs on this data:
- Number of times a physician amputated more than 2 legs from the same patient
- Number of times a physician billed for gynecological services which would be entirely unnecessary after a women had a hysterectomy
- What is the max number of office visits one provider had in a day and how often did the aggregate time of those visits exceed 24-hours in a day
- Number of prostate exams performed on female patients
I bet you find more than 1 of these in the data.
To be fair, the vast majority of physicians and other providers have no reason to be concerned because they practice appropriately, ethically and in the intended best interests of their patients. There are no doubt high dollar figures in these reports that are perfectly legitimate for many reasons (high cost of drug pass-throughs included, covers billing for physicians/nurses working under others, etc). But the thing about transparency is it brings all darkness into the light, especially those who use darkness to hide wrongdoing.
The fact that physician-oriented lobbying organizations have fought against the release of this and other cost data is one of the many reasons that trust is somewhat broken in the medical system. Most people now believe that cost data must be open and clear so people can make good choices about how to spend their now very substantial out-of-pocket dollars. It would be hard to imagine a world where say, grocery stores, hid their pricing from consumers. One of the reasons people like the CVS and Walgreens clinics is that the pricing is hanging on the wall, just like in the rest of the pharmacy.
A few other interesting off-the-cuff observations from the newly released CMS data:
- Opthamologists were the top physician winners in the Medicare spending lottery. This is not the type of physician most people think of when assuming who fares best out there. I am sure if you asked the average person what kind of doctor has the highest income, you would hear neurosurgeon or cardiovascular surgeon or oncologist—in other words a physicians who typically saves lives every day. But because of the high prevalence of age-related macular degeneration and its high cost, high frequency treatment (which consists of an injection in the eye every month, god help us), they received $3.3 billion of the take, and perhaps deservedly so. Helping people see is equally life-saving to those who are losing their ability to view the world.
- Outpatient office visits paid an average of $57/provider. If the average provider sees 4-6 patients/hour, the average family practitioner or internist provider is making less than the average partner in a large law firm by half.
- One of the most oft-cited positive uses of this data is for consumers to find physicians who do lots of procedures in situations where practice definitely makes perfect (heart surgery, brain surgery, etc.). For complex medical procedures it has been proven time and again that you are better off seeing a physician who does high volumes of those procedures than those who do them rarely. #don’tbeaguineapig
I suspect we will be hearing a lot about this data over the next few weeks. FYI, here is a nice roundup of stories on the release of the CMS data if you are interested in more: CLICK HERE
All good points and transparency will help weed out the bad eggs who are over billing. It is important to note that medical oncologists are responsible for purchasing chemotherapy and supportive care drugs (they average ~ $2.75M/year in purchases and then submit a claim to medicare for the Average Sales Price (ASP) + 6%. As such, what the data shows as billing does not reflect what they are clearing. They also have unreimbursed costs associated with managing the patient and administering the drugs. One hematologist was having all the drugs billed under his medicare number for his 5 partners. It thus made him look like an outlier when in reality, he was just average. The data needs careful analysis before judgement is made.
Agreed Warren, there are definitely many situations where the data and billings are totally legitimate and the report itself doesn’t tell the story. Nonetheless, there are other situations where you just gotta wonder….
Warren – good friend of mine is an oncologist working at Dana Farber here in Boston. He recently told me that it is a bit of a “racket” how private practice oncologists will prescribe expensive and often unnecessary treatments to collect on the 6% pass through. Also, the 6% pass-through encourages oncologists to prescribe the most expensive treatments – there is no incentive to prescribe equally effective, but less costly medications.
John, The ASP methodology is clearly flawed and had the unintended consequence of incenting more expensive treatments. As is usually the case, there is a bit more to the story. Since ASP is an average, half the community oncologists are paying more and half are paying less. Thus the pass through is not always 6%, an advantage to larger and better managed practices. Sequestration has reduced the 6% to 4.3%. Additionally, the physicians actually acquire the drugs from a distributor (average purchases around $2.8M/md/year), then manage the inventory, administer to a patient and then submit a claim to the insurance company (50% of the time it is Medicare). The cost of capital, managing inventory, unreimbursed claims are all costs for the private practice. The private practice oncologists also have lots of other un-reimbursed services funded by the 6% (4.3%). Prior to the 2005 Medicare Modernization ACT which changed reimbursement from Average Wholesale Price to Average Sales Price, I would agree with the term racket (full disclosure: I was with several companies servicing these physicians and also benefited). There are many more subtleties to this issue and too many for this post.