How is it that a few doctors take in millions of dollars from Medicare?
Explanations for Wednesday’s eye-popping numbers from Medicare’s massive claims database ranged from straightforward to what the government considers suspicious, as the medical world confronted a new era of scrutiny.
The long-sought release of Medicare data revealed just how much the program paid individual doctors in 2012. An analysis by The Associated Press found that a tiny group, 344 out of more than 825,000 doctors, received $3 million or more apiece – a threshold that raises eyebrows for the government’s own investigators. Overall, about 2 percent of clinicians accounted for one-fourth of payments.
Deputy administrator Jon Blum said Wednesday that Medicare will now take a closer look at doctors whose payments exceed certain levels. Blum told reporters he did not want to reveal those thresholds because that would tip off people trying to game the system.
“We know there is waste in the system, we know there is fraud in the system,” he said. “We want the public to help identify spending that doesn’t make sense.”
Blum said an even bigger goal in making the data public is to help find more cost-effective, quality-conscious pathways for America’s $2.8-trillion health care system. Medicare, a $600-billion program for seniors and disabled people, sets the tone.
In rural Hastings, Neb., ophthalmologist John Welch said the vast majority of the $9.5 million that Medicare paid him went straight from his practice to drug companies, for expensive medications used to treat patients with macular degeneration.
“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. “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.”
As for No. 4 on the payments list, the Mayo Clinic in Minnesota says a large number of tests are billed under the name of its Dr. Franklin Cockerill, chairman of laboratory medicine and pathology. According to the Medicare database, Cockerill was paid more than $11 million.
“Dr. Cockerill is a salaried employee of Mayo Clinic and is not making big money from Medicare,” said spokesman Bryan Anderson. Medicare officials said multiple providers should not be using a doctor’s identification number to bill.
The American Medical Association has expressed concern that laypersons may draw wrong conclusions from seeing large dollar signs next to a physician’s name.
But another case, from Michigan, suggests that following the money can turn up potential problems. Detroit-area cancer doctor Farid Fata, among the top billers, is awaiting trial on federal charges that he intentionally misdiagnosed patients and ordered unnecessary treatments. Fata says he’s innocent.
The overall top-paid doctor in 2012 was Florida ophthalmologist Salomon Melgen, who received $20.8 million.
Last year, Melgen was in the news after revelations that Sen. Robert Menendez, D-N.J., had used the doctor’s personal jet for trips to the Dominican Republic. Menendez’s relationship with Melgen prompted Senate Ethics Committee and Justice Department investigations. The senator reimbursed the doctor more than $70,000 for plane trips.
Early last year the FBI conducted a search of Melgen’s West Palm Beach offices. Agents carted away materials, but law enforcement officials have refused to say why. Authorities declined to comment on the open investigation.
Melgen’s lawyer said the doctor’s billing conformed with Medicare rules and is a reflection of high drug costs.
Overall, Medicare paid individual physicians nearly $64 billion in 2012.
AP picked the threshold of $3 million in payments for its analysis of individual doctors because that was the figure used by the Health and Human Services inspector general in an audit last year. The report recommended Medicare automatically scrutinize total billings above a set level.
Of the 344 top-paid doctors, 87 practice in Florida, a state known both for high Medicare spending and widespread fraud. Rounding out the top five states were California with 38 doctors in the top group, New Jersey with 27, Texas with 23, and New York with 18.
In the $3 million-plus club, 151 ophthalmologists – eye specialists – accounted for nearly $658 million in Medicare payments, leading other disciplines. Cancer doctors made up the next three specialty groups, accounting for a combined total of more than $477 million in payments.
The high number of ophthalmologists and cancer doctors in the top tier may reflect the expensive medications the doctors use to treat their patients.
The Medicare claims database is considered the richest trove of information on doctors, surpassing what major insurance companies have in their files. Although Medicare is financed by taxpayers, the data have been off-limits to the public for decades. Physician organizations went to court in an effort to block its release, arguing it would amount to an invasion of doctors’ privacy.
Employers, insurers, consumer groups and media organizations pressed for release, arguing that the data could help guide patients to doctors who provide quality, cost-effective care. A federal judge last year lifted the main legal obstacle, and the Obama administration recently informed the AMA it would open the claims data.
Doctors’ decision-making patterns are of intense interest to researchers who study what drives health care costs. Physicians’ decisions about how to treat are critical.
The AMA, however, says the files may contain inaccurate information and, even if correct, do not provide meaningful insights into the quality of care.
Over time, as researchers learn to mine the Medicare information, it could change the way medicine is practiced in the U.S. Doctor ratings would be driven by hard data, like statistics on baseball players. Consumers could become better educated about the doctors in their communities.
For example, if your father is about to undergo heart bypass, you could find out how many operations his surgeon has done on Medicare patients in the past year. Research shows that for many procedures, patients are better off going to a surgeon who performs them frequently.
Medical practice would have to change to accommodate big data. Acting as intermediaries for employers and government programs, insurers could use the Medicare numbers to demand that low-performing doctors measure up.
Such oversight would probably accelerate trends toward large medical groups and doctors working as employees instead of in small practices.