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Another View - Ahad Fazelat: How Medicare reimbursement numbers are misleading

April 19. 2014 8:14PM

The Centers for Medicare and Medicaid Services (CMS) released the largest collection of data about the services rendered by individual physicians and health care facilities in our country's history, which were widely reported last week. Although this data set is robust without appropriate contexts, the interpretation of this data is at best incomplete and at worst misleading. I thought it would be appropriate to clarify some important facts that are integral to making meaningful conclusions about data within these files from a practicing physician's viewpoint.

Reimbursement does not equal compensation. Physicians who treat the disabled and elderly patients with Medicare entitlements bill for office visits and services rendered at the time of a patient's visit. The reimbursements collected from Medicare represent what the physician was allowed for the level of visit, an allotment for diagnostic testing if performed, an allotment for a procedure if one was performed and a separate allotment for drugs delivered during the procedure. As ophthalmologists are among the top of the Medicare reimbursement scrolls, I think it makes perfect sense to use an example of a typical ophthalmology patient to illustrate this point.

Patient X is referred to me for consultation of age-related macular degeneration, a common cause for blindness in the elderly. I perform a new patient exam and the appropriate diagnostic tests to confirm that she has "wet," age-related macular degeneration. After consultation, she opts for treatment of her disease with Drug X. My billing department then submits a claim for the visit, the test, the act of injection of the medication and for the medication itself.

The amounts allowed from Medicare and subsequently received are approximately $160, $25, $300 and $1,900, respectively. So 80 percent ($1,900) of the Medicare reimbursement for this patient is going to cover the cost of the medication used in this case. That is, almost all of the reimbursement received from Medicare for Drug X will be passed from the physician directly to the pharmaceutical vendor. The remaining 20 percent will help pay the overhead required to generate the claim. Overhead costs specific to this claim would include the staff, injection supplies, peri-operative medications and cost of diagnostic testing, just to name a few. Clearly, equating Medicare physician reimbursement to physician compensation is more than just misleading. It is flatly wrong.

Reimbursements are dependent on the type of patients the doctor sees. The amount of Medicare reimbursement you receive is linked to your patient demographic. Let's stick to my specialty for yet another example. It's likely that a general ophthalmologist will have approximately 65 percent of patients who have Medicare. Retina specialists may see even greater percentages above age 65. Specialists and sub-specialists, like orthopedists, who see a more varied array of patients, may receive less from Medicare and more from private insurance.

Releasing data without context is a problem. Confusion about what these data represent was inevitable. Too easily radio talk show hosts and articles would toggle back and forth from discussing Medicare fraud to discussing physicians on the reimbursement lists. Large news outlets used sensational and misleading titles in articles covering the CMS release like "Medicare Millionaires." We have to ask if the release of this data really "shed light on Medicare fraud, waste and abuse," as Medicare deputy administrator Jonathan Blum has written. Did the government really think the release information to the public would help them identify "abusers" of our system that were as yet unknown to Medicare?

I think we have charged Medicare and other governmental agencies with this responsibility, and I would be surprised to learn that we have uncovered new accounts of waste and abuse by the release of the CMS data. If the goal was, however, to mislead and inaccurately portray a direct relationship betwixt reimbursement and compensation, then consider it mission accomplished. Especially in an environment that has already seen significant cuts in physician reimbursement and a perennial 30 percent sustained-growth cut looming, it may serve the administration well to provide the public with this data, without context, such that it potentially casts honest, hard-working physicians as being overly compensated. It would be a lot easier to get public support for cutting physician reimbursement. I am just hypothesizing, of course.

All practicing physicians know that data, data collection and interpretation are central to the practice of medicine in our generation and have the potential to improve our efficiencies and outcomes for our patients. The power of this data, as evidenced by the CMS release, is great. However, with great power comes great responsibility. We must do everything to ensure that our patients derive meaningful conclusions from this data that allows them to become informed medical "consumers" and discourage misleading, confusing and irresponsible handling of this information that may damage the all so important patient-doctor relationship.

Dr. Ahad Fazelat is a Manchester opthalmologist.

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