Medicare reimbursement change meant to save money has opposite effect
Increased Medicare payments to physicians for outpatient surgeries for bladder cancer have led to a dramatic rise in the number of these procedures being performed and an overall increase in cost to the healthcare system. That is the conclusion of a new study published early online in Cancer, a peer-reviewed journal of the American Cancer Society. The findings indicate that some Medicare policies aimed at decreasing costs may instead be contributing to an increase in healthcare expenditures. Because bladder cancer is the most expensive cancer to treat, its management places a significant economic burden on the United States healthcare system, which costs two to four times that of healthcare systems in any other industrialized nation. In an attempt to reduce costs, in 2005 Medicare increased physician reimbursement for office-based endoscopic bladder procedures, such as biopsies. Moving these procedures from the more expensive inpatient hospital setting to the presumably less expensive outpatient office setting could cut costs provided that they are performed for the same indications, are equally efficacious, and are tolerable to patients.
The reimbursement change was expected to alter physician incentives, leading to increased use of outpatient endoscopic surgery, a decline in hospital-based endoscopic surgery and, consequently, a reduction in healthcare-related costs. To evaluate this hypothesis, Micah Hemani, MD, and Samir Taneja, MD, of the Division of Urologic Oncology at the New York University Langone Medical Center and their colleagues assessed treatment patterns in their practice before and after the Medicare change in physician reimbursement.
The investigators found that the number of outpatient bladder surgeries doubled after Medicare reimbursements rose, but the number of hospital-based surgeries did not significantly decline. As a result, there was a 50% increase in overall Medicare costs. While there was an increase in patient referrals for outpatient surgeries, it was not sufficient enough to account for the increased use of these procedures. There was, however, a rise in the redundant use of outpatient surgery on patients who also underwent hospital-based surgery for the same condition. Also, while the number of outpatient procedures increased, the likelihood that a procedure would lead to a bladder cancer diagnosis declined. "We believe these trends are disturbing as they may reflect both diagnostic and therapeutic over-utilization of office-based endoscopic bladder surgery," the authors wrote.
The reasons for this surge in use of outpatient procedures are unknown but might include improvements in office-based equipment for surgery, improved physician comfort and skill with these operations, and the incentive of receiving increased financial reimbursement. Whatever the cause, these findings suggest that Medicare financial incentives for the outpatient treatment of bladder cancer may actually increase overall costs without improving care.
Dr. Hemani noted that the study's results illustrate a need for clinical guidelines for these office-based surgeries, as well as a need for policy measures that ensure accountability for physicians who perform them.
"Given the ongoing healthcare debate in Congress regarding reforming the current system, one wonders if many of the changes currently being proposed in Washington might not have similar effects to what we are seeing in this one isolated example," said David Penson, MD, MPH, of Vanderbilt University in Nashville, who was not involved with the study but wrote an accompanying editorial. "Sometimes, policies have the exact opposite effect of what was intended," he cautioned.
The source of
the above posted article is NOT the American Cancer Society, but the journal
"Cancer."
The referenced article appears here:
http://www3.interscience.wiley.com/journal/123273162/abstract?CRETRY=1&SRETRY=0
I checked the American Cancer Society's website, and found a post
from Dr. Len Lichtenfeld that raises questions about this study. You can read
Dr. Lichtenfeld's detailed response that appears at the American Cancer Soceity
website, at this link:
http://www.cancer.org/aspx/blog/Comments.aspx?id=341
Excerpts
from Dr. Lichtenfeld remarks:
" . . . it’s time for the rest of the story…
I happen to be very familiar with how Medicare pays doctors for what they do. Since 1992, I have sat on a committee called the Relative Value Update Committee, or RUC, which works with Medicare to establish payments for physicians’ services. . . .
For starters, Medicare did not start paying urologists more money in 2005 to “incentivize” them to do office based procedures for their patients . . . .
. . . Medicare . . . noted a dramatic increase in the number of these fulguration procedures being performed, almost immediately. . . . and as a result certain “trigger switches” were flipped, requiring further review to see what was going on.
When that review was done, in April 2008, what we found was that when the practice expenses were calculated we had included two forms of expensive equipment in the calculation. Not only was Medicare paying for the expensive laser machine, but they were also still paying for the old electrocautery machine. The problem was that since the introduction of the laser, almost no one was using the Bovie yet its cost was still included in the value of the service.
So the
unnecessary and risky machine was taken out of the calculation, and the payment
dropped from 69.86, to where it is now: 0.87. If the doctor
does the procedure in an outpatient surgery center, he only gets 6.
The extra 4 is to compensate him for the legitimate costs of the
laser, the disposable tip used on the laser, and the other direct and indirectly
accountable costs of doing the operation. . . .
. . . I certainly don’t think we can take this paper and in any way use it to inform us going forward about how Medicare makes its decisions to pay doctors for what they do.
So what happens now?
I do believe that someone needs to address the questions I have raised about this article and correct the record. At the very least, there needs to be a further explanation of the facts as they exist today, and explain whether that impacts the conclusions of the article. In my personal opinion, this needs to be done quickly before this paper starts making the health policy rounds where it may well go unchallenged in its current form.
That’s tough talk in the research world. But the facts are what the facts are. If you tell only half the facts, you may only get half the story. If you get only half the story, you may get some really bad health policy. And bad health policy has a habit of hanging around a really, really long time.
Now is the time to quickly set the record straight and tell the rest of the story.
What Every Physician Should Know About the RUC
A small group of physicians has a big say in what you get paid.
Kent J. Moore, Thomas A. Felger, MD, Walter L. Larimore, MD, and Terry L. Mills Jr., MD
To paraphrase Winston Churchill, never have so many physicians and other health care professionals owed so much to so few. The “few” in this case are the 29 members of the American Medical Association/Specialty Society Relative Value Scale Update Committee, or RUC (rhymes with “truck”) for short. The RUC's recommendations to the Centers for Medicare & Medicaid Services (CMS) significantly influence the relative values assigned to physician services and, as a result, how much physicians are paid. CMS expects allowed expenditures under the Medicare physician fee schedule to exceed billion this year, and the RUC will be instrumental in determining how those dollars are parceled out.
CMS has historically accepted 90 percent or more of the RUC's recommendations.1 Given that the average family physician's patient mix is 22-percent Medicare,2 the RUC is likely to have a direct influence on one-fifth of your income. The real impact of the RUC is even bigger when you consider that many other payers tie their fee structure to Medicare's – 85 percent of private payers and 69 percent of Medicaid programs, according to one recent survey.3
Payment for the surgery procedure discussed in your first post is now 0.87.