On April 9th, the Centers for Medicare and Medicaid Services (CMS) released the 2012 Medicare billing information for individual doctors. Overall, the data cover $77 billion in billing involving 880,000 practitioners. Every major publication spotlighted the story, and most coverage focused on the physicians with the very highest payments. Medicare paid Dr. Salomon Melgen, an ophthalmologist in West Palm Beach, Fla., the most—$20 million in 2012. Given his questionable ties to Sen. Robert Menendez (D-NJ) and recent troubles with the FBI, Melgen was an easy target.
CMS released their data in a dozen giant, difficult-to-read spreadsheets. Simultaneous with the news coverage, however, several national publications created user-friendly databases for the public to explore. The New York Times and Washington Post seemingly had their "Find a Doctor" tools ready the minute CMS released the payment data. The Wall Street Journal's database allows users to search by doctor name, company, specialty, city, or state. In the first days of the service, we noticed discrepancies between the databases.
Soon after the national news outlets covered the release of Medicare payments, regional newspapers began to seize the opportunity as well. For example, the Columbus Dispatch—covering seven counties in Ohio—even pieced together its own database, and ran an article about highly reimbursed area physicians. Indeed, countless articles across the country ran variations of "Find Out How Much Your Doctor Receives from Medicare."
Context for Medicare Reimbursements
Proponents of transparency argue that the public release of Medicare data could put pressure on healthcare providers to rein in overtreatment and the use of unnecessarily expensive procedures. The data could also potentially steer patients to the most "experienced" doctors, if judged purely on the number of Medicare-paid procedures. However, without more context, the data is both unclear and unduly prejudicial to many physicians—especially those who practice in high-cost, specialized areas or who simply see a lot of patients.
The American Medical Association (AMA) voiced its concerns about Medicare's decision to release the payment information. "What we don't want to happen here is that patients be misinformed by raw data," said Ardis Dee Hoven, president of the AMA. Raw claims numbers give the public "no window into quality."
While the public may learn who performs a high number of procedures, they will not be able to tell whether the patients needed the surgery, or whether they benefited from the surgery. In light of the data, physicians may be inclined to blindly choose cheaper alternatives, even if they believed through their expertise that patients would benefit by a more expensive drug or procedure. Lower costs are good, but physicians don't really need the government or journalists who haven't studied medicine questioning their treatment practices.
Medicare Payments Do Not Equal Doctor Income
Most obviously, the Medicare payment data show revenues, not earnings. Cost of service is an elementary business concept, but very easy to twist in an article. Some news outlets framed their stories to suggest that the dollar number you see goes straight into doctors' pockets. This is not the case.
Many physicians spend a large portion of their billings simply to acquire their cutting-edge drugs or devices. Radiation oncology was called out as the top Medicare earner in many reports. Among the procedures that contributed to the high billing was intensity-modulated radiation therapy, where doctors aim beams directly at tumors to reduce exposure of healthy tissue. The procedure is not cheap.
Ophthalmology also got a bad rap, even though treatment of macular degeneration (the most common cause of vision loss in Medicare-aged patients) requires doctors to buy expensive drugs upfront. While a small number of ophthalmologists have abused the system, the truth is that many of these doctors are operating at low margins. FierceHealthFinance interviewed a California ophthalmologist, W. James Gealy, MD. Not only did CMS' excel spreadsheet incorrectly list his payments, but he had to personally put his $2.5 million Medicare payments into context:
"Sixty-eight percent of those payments covered the administration of drugs for the treatment of macular degeneration, many of which he injects directly into his patient's eyeballs. It's a procedure so delicate that Gealy is the only member of his seven-member practice who is willing to do so. Some, such as Eylea and Lucentis, cost between $1,800 and $2,000 a dose. Medicare pays about 4 to 6 percent above cost, which covers the cost of administering the drugs and related overhead."
Another ophthalmologist, John Welch of Hastings, Nebraska, said the vast majority of the $9.5 million that Medicare paid him went straight to drug companies for the expensive macular degeneration medication. "I'm concerned that people in the community will get the wrong idea of how these billings reflect doctors' income," said Welch, who ranked No. 8 in Medicare payments (Boston Herald). "Instead of blaming us, they need to have a serious discussion with the drug companies about lowering the cost of these drugs. If they want us to stop taking care of patients, then tell us that – but don't blame us for costs."
Furthermore, doctors have to do more than pay for drugs. Casual readers likely don't realize how much money it takes to staff a practice, pay employee salaries, and simply pay building rent. Due to new compliance requirements and the expensive shift to electronic health records, the costs of maintaining a practice have also been increasing rapidly.
Multiple Doctors Using a Single NPI Number
Another issue with the Medicare database showed up for number four on the national payments list, Dr. Franklin Cockerill, chairman of the pathology department at the Mayo Clinic. The database showed he received around $11 million from Medicare. However, "like all Mayo clinic physicians, Dr. Cockerill receives a salary," stated Bryan Anderson, a Mayo Clinic spokesman. The Washington Post quoted Mayo Medical Laboratories marketing administrator Andy Tofilon, who stated: "When anything is billed out to Medicare, it will have Dr. Cockerill's name on it…He is the chair of a large laboratory medicine practice and the buck stops at his desk."
The third physician on the list faced a similar plight. Michael McGinnis is the medical director for New Jersey-based PLUS Diagnostics, which uses McGinnis' National Provider Identifier (NPI) to do all the billing. The $12.6 million in Medicare funds billed in McGinnis' name actually represents the work of nearly 30 pathologists, each of whom can complete hundreds of tests per day. Niall Brennan, the acting director of the CMS Offices of Enterprise Management stated that CMS "encourage[s] providers to use their own NPI numbers." But physician assistants and others who administer treatment are required to use that physician's NPI number in billing Medicare (cnbc reports). Our guess is that doctors will not be so generous with their NPI number in the future.
Some of the national news provided some rational perspective to the sudden influx of data. The Washington Post, in particular, seemed to make an effort to provide balanced reporting. Many local news outlets, however, simply scanned the Medicare database, looked for high billers, and churned out an article. Thus, doctors were instantly on the defensive. This led to articles with leading titles like "Top-Paid Medicare Doctors Say They Have Reasons."
What is especially strange is that these articles leave readers with the mistaken impression that Medicare is doctors' golden ticket to riches. One doctor, Cedric Dark, MD, took to the internet to voice his rebuttal, via Policy Prescriptions:
"Let us — for a moment — look at how much I got paid by Medicare. [Specifically], let us look at the care of the 60 sickest critical care patients that rolled into my ER in 2012. To care for those patients, which according to Medicare rules requires a minimum time commitment of 30 minutes, I got paid a whopping $181 per patient. Today I took care of a similar patient who, but for the grace of God and the skilled hands of myself and several emergency nurses, would have died. That's only worth $181?"
Window into the Sunshine Act: Manufacturer Payments to Physicians
The Medicare release data foreshadows two aspects of the Physician Payments Sunshine Act release later this year.
Issues in CMS' Roll-out
Former U.S. Health and Human Services Secretary Kathleen Sebelius stated on April 9: "The data released today afford researchers, policymakers and the public a new window into the health care spending and physician practice patterns."
However, the data CMS released was neither clear, nor entirely accurate. Physicians had no opportunity to review the data before it was released. CMS suggests physicians will have the opportunity to view their data under the Sunshine Act, but the current timeline doesn't allow much time for this important process.
FierceHealthFinance pointed out five ways CMS "screwed up last week's release of Medicare payment doc data." Most notably, CMS' Excel data had significant practice gaps. The article stated that "glaringly absent from these spreadsheets was Salomon Melgen, M.D., Florida ophthalmologist who is the nation's largest recipient of Medicare largesse, Minh Nguyen, M.D., who was the single-biggest recipient in California, and many others." The author noted: "When I asked CMS spokesperson Rachel Maisler why there were discrepancies, she told me that the agency doesn't comment on specific providers. When I asked if CMS was denying there were discrepancies, she told me to check the methodology sheets provided with the data--something I had already done. When I asked a third time for a specific statement from the agency regarding its position on the Excel data, I got no response at all."
We will keep you posted on any CMS updates to its Open Payments timeline.
2. Media Coverage
It's fair to speculate that Sunshine Act media coverage will be similar to the recent Medicare payment data. CMS has promised an easily-searchable database for the Open Payments system. We aren't expecting that, but we were amazed with how quickly many news outlets offered easily searchable tools. We expect the media will seize the opportunity again later this year.
Furthermore, some manufacturer payments for royalties or ownership interests could be larger than Medicare payments. News articles focused on the highest doctor payees, and clearly that trend will continue. We expect news outlets will provide an even less balanced view for Sunshine payments. While Medicare is a topic of constant discussion, few casual readers understand the important relationship pharmaceutical companies have with physicians. Plus, "industry" is an easy target for sloppy journalism.
We hope the dispute resolution process provides physicians and companies the opportunity to resolve issues in data before the public release. Incorrect industry payments may be even more painful for physicians than with the Medicare release. We will provide updates for physician registration with Open Payments. CMS is also offering a webinar on its timeline next week.