CMS released new data, shrouded thus far in needless secrecy: how much it pays individual physicians.
Unlike the Shroud of Turin, no one will question its authenticity. But authenticity doesn’t guarantee the data won’t intrigue, confuse, anger, perplex, confound and burn a few innocents at the stakes. That is before we conclude that more research is needed, or more colloquially stated, we still don’t have a clue.
Medicare bounty hunters, the modern day witch finders, are licking their lips for their share of the looted spoils. Academic researchers will be dissecting both wings of the bell-shaped curve of variation in payment to set the next battle between good and evil. But all eyes (pun intended) are upon Florida; specifically one particular provider.
The provider, an ophthalmologist, (you can look up the name) billed CMS for $21 million.
Take a deep breath now. The treatment of one organ in over 65 year old American citizens is equal to the GDP of one African nation. Gini would have turned beetroot with embarrassment.
Diabolical? Scandalous? Shocking? Surprising?
None of the above, actually. If you think about it.
As we age, and age we do thanks to our lives being constantly “saved” by prevention, regulation and cures, arteries harden, brain atrophies and bones thin. And eyesight falters. Lens fog. Macula degenerates, reducing central vision making it difficult to read.
As we age, we consume more medical services. Yes, take that as an economic truism. And no, I’m not applying for membership of the Death Panel.
Here’s the thing. It’s nice to be able to see when you’re 75. It’s also nice to see when 85, and damn essential when 90.
Otherwise you might trip over the walking stick, fracture the neck of the femur, develop a clot in the deep veins, then a clot in the pulmonary arteries, then a raging pneumonia in ICU, followed by septic shock and a cardiac arrest. Then perhaps you may rest in peace. But not before a few interns have fractured half a dozen ribs during a well-intentioned but hopelessly misguided cardiopulmonary resuscitation that family members lobbied for to assuage their guilt for never visiting you in your nursing home.
So you see having vision is not just ontologically nice but economically smart.
Here’s another thing. Whereas you die only once from a massive myocardial infarction from a calcified coronary artery, you can live for a pretty long time with macular degeneration. So long as you don’t trip over your walking stick. This means you are reminded of your handicap every day, most painfully when your great grandson hits his first home run which you can hardly hear and barely see.
This also means that the $$$$ spent on eyes will barely move the dial of average life expectancy. I’m just preparing you for that inevitable powerpoint from a miserable health economist that will state “we spend more than Burundi’s GDP on eyes and we have nothing to show for it”. Please don’t gasp with that intrigue of Archimedes. Eureka: you’re smarter than that.
Nevertheless, questions should be asked and avenues should be pursued.
Here are a few.
1) Why are we using the $2000 Lucentis not the $50 Avastin to treat macular degeneration?
Perverse provider incentives, you say. Sorry this trite accusation of towering banality is not going to cut it anymore.
Avastin is off-label for macular degeneration. Why? What regulatory barriers exist that make Avastin off-label? What’s the rationale for these barriers? Who created these barriers? Why? Can they not be reversed? Or are regulations like entropy, irreversible?
2) Why has CMS not demanded substantial discounts from manufacturer of Lucentis?
Rather than bullying physicians might CMS not stand up to big pharma and be a man, I mean a monopsony? Perhaps CMS might ask, actually demand, that Genentech reveal its marginal costs of producing Lucentis. Chuck in a few extra dollars for research and development and use their economy of scale and sales from all that advertising for a fair and rational graded annual reduction in price.
Your cousins across the pond, the NHS, act as a monopsony. And the former administrator of CMS, Donald Berwick, did say he admired the NHS. So perhaps imitation might be in order. Imitation is the best form of flattery.
3) Must everyone see an ophthalmologist?
CMS spends nearly $700 million on eye exams. This is a fertile area for proliferation of mid-level providers. Where are they? Every time I need an eye test I see an MD. Why? Actually I know why, it’s covered in my insurance at no marginal cost, so a better question is, why not?
Why aren’t primary care physicians doing basic eye examinations? Might we consider reducing some of their clinically irrelevant form-filling and complying and directing their time to clinical relevance such as this? Just a thought.
4) Don’t demonize monopolists. Analyze their practice.
This is going to be difficult, I know, since demonization is so much more fun than analysis.
Rather than send the Medicare fraud squad to the offices of the high billers send a team comprising a management consultant from McKinsey, an academic researcher and a journalist.
Find out the fixed costs and marginal costs. See how the marginal costs are related to the procedural volume. Decide whether it is worthwhile encouraging monopolies for procedures that nearly everyone is going to need. Then reduce the reimbursement for the procedure by an amount that is reflective of a reduction of marginal costs owing to the monopolistic nature of the practice.
The tragedy, or absurdity, of high billing providers in US healthcare, is that their economies of scale are neither realized nor appropriated for the benefit of payers. It’s like the industrial Cheesecake factory charging the prices of a quaint village café in the French Riviera. Or having your cheesecake and eating it.
5) Consider vouchers.
Yes, I know you are cringing with the “V” word with visions of Paul Ryan throwing grand ma off the Medicare Advantage cliff. But steady on your sanctimonious high horse for a moment and hear me out.
Why would I care about using the $2000 Lucentis over the $50 Avantis for macular degeneration?
Why would I bother seeing a mid-level provider over an ophthalmologist?
Why would the high billing provider cut its rates owing to reduction of marginal costs of doing the procedure?
Hell, I don’t even know Lucentis costs 40 times Avastin. Responsible citizenry, you say. Stop being naïve.
Give me a voucher for the health of my eyes and then watch how I make the providers dance to my tunes. So long as I can use what’s left over for gambling in Vegas, or whatever else catches my fancy.
To paraphrase Kevin Spacey from Usual Suspects “the greatest trick capitalism every pulled was to convince the world that competition between insurers is capitalism”.
It’s not. Competition between insurers is competitive managerialism and competitive cherry picking. This will not reduce the healthcare costs.
Medicare Advantage is no advantage if the providers are not competing. Providers won’t compete if they do not deal directly with the person with the purse.
Indeed, prices for lasik eye surgery have fallen, arguably as a result of competition. The market doesn’t work in all areas of healthcare but this is one area it can work.
The release of payment to providers marks a potentially new epoch for analysis of healthcare costs. Let’s call it Analysis 2.0. Policy wonks are urged to move away from the in-box thinking of perverse provider incentives to out of box thinking of absurd payer infrastructure. CMS is a great starting point to gauge this absurdity.
Saurabh Jha, MD (@RogueRad) is an Assistant Professor of Radiology at the University of Pennsylvania. His scholarly interests include the value of imaging and dealing with uncertainty in clinical decision making. Jha views most problems in medicine as problems of imperfect information. He trained in the UK and migrated to USA for more predictable weather and a larger yard.