President, Dallas County Medical Society
In a stated effort to be “more transparent” and “help patients make informed decisions about the care they receive,” the Center for Medicare & Medicaid Services (CMS) has released information on its payments to physicians. This made the headlines of every news show and newspaper last week. Headlines reveal staggering dollar amounts paid out to the physicians who serve the elderly and disabled, and highlighted a handful of physicians who collected millions. Conventional wisdom among physicians is to avoid the topic of compensation, but this information release and the headlines that followed necessitate a response to inject some balance and perspective.
Is this raw payment data helpful to the public in making informed health care decisions? It is highly unlikely and is more likely to deceive and inflame the public. To start, the number of physicians who collected millions of dollars from Medicare — the focus of the headlines — is represents less than 0.4% of physicians in the U.S., with a similar percentage in Texas. And, the dollar amount a physician collects tells nothing about that physician’s net income, quality of the care they provide, or whether there is any waste, fraud or abuse associated with those payments. The vast majority of physicians collects much smaller amounts and is in fact poorly compensated for the work they do by these government insurance programs.
The reality is that payments from Medicare are meager and barely cover expenses. On average, 61 percent of Medicare’s payment goes towards the treatments’ overall cost —expensive drugs, medical supplies and other expenses of running a business. The problem starts with how Medicare payments are determined. In medicine, unlike other businesses, charges don't reflect what physicians are ultimately paid for the services they provide. The amount physicians are paid by CMS for a service they perform is derived by a formula adapted by congress in 1997 with the express purpose of controlling costs. These fees have not been increased, despite inflation and increasing medical costs, since its inception. In fact, using this formula, Medicare payments to physicians would have been cut 24.1 percent this year had Congress not stepped in to avert it. This unfair payment formula has been slated for overhaul for over a decade, but instead it was kicked down the road for the 17th time with a short-term patch. The unwillingness to permanently address this important payment issue has caused great concern among physicians, further limiting patient access as physicians often limit the number of new Medicare patients they accept into their practices.
CMS admits that this data has limitations as it acknowledges that the information has not been verified, does not account for the disease severity of patients being treated, does not account for overhead costs of the treatments, and cannot possibly asses the quality or, more importantly, the value of care. In fact, due to the potential for inaccuracies and lack of context, this raw data is more likely to mislead the public rather than aid them in making an informed decision about their health care.
Despite this poor reimbursement, most physicians continue to treat the Medicare community out of a deep feeling of commitment to serve their patients. There is almost certainly waste, fraud, and abuse in any system as large and with as much money in play as Medicare. As a taxpayer, when waste is found, I absolutely want CMS to root it out and develop ways to avoid it. When fraud and premeditated abuse are uncovered, I expect it to be prosecuted to highest degree allowed by the law. But, this raw data — unverified and lacking in perspective — has garnered headlines and unfairly portrays the physician as at best, excessively compensated, and at worst, criminal. Rather than focus on the few who collect large sums, this information release should shed light on how inadequately most physicians are compensated under Medicare. Only a more detailed analysis of the typical physician’s Medicare compensation will provide patients and policy makers with a more accurate picture.