Fairfax, VA, USA. Do physicians provide more services to Medicare patients to make up for lower Medicare fees? With almost 42 million people enrolled in Medicare in the United States in 2008, it’s a question that could have a very costly answer.

Investigators analyzed thousands of physicians and their patoents' Medicare insurance claims to investigate the degree of volume-offset behavior, the belief that physicians respond to lower Medicare fees by increasing their service volumes to make up for potential lost revenue. The study results were published in the health-policy journal Inquiry.

In recent years, Medicare fees have fallen after accounting for inflation, while overall physician costs and the volume of physician services have grown. Although this is suggestive of volume-offset behavior, national trend data do not necessarily reflect how physicians respond to variations in specific fees.

"Since alternative policies will require considerable time to develop and properly calibrate, focusing on fixing current distortions in Medicare fees should be a high-priority objective for the short term.”Jack Hadley, professor and senior health services researcher in the College of Health and Human Services at George Mason University, led the team, joined by co-authors James Reschovsky of the Center for Studying Health System Change (HSC), Catherine Corey of the New York City Department of Health and Mental Hygiene, and Stephen Zuckerman of The Urban Institute.

The researchers found no evidence of volume-offset behavior by physicians, but did find that the relative profit a physician receives for providing a service is positively related to the quantity provided. In other words, if the cost of providing a service falls more than the reduction in the Medicare fee, the service actually increases in profitability and physicians will have an incentive to increase its volume.

Moreover, the strength of this incentive varied by type of service. Thus, the study’s results suggest that in the face of falling overall fees, physicians are likely to provide the most profitable services more often and least profitable services less often. This helps explain why overall costs are rising in the face of declining fees.

The researchers also note that these findings have implications for influencing the mix of services. According to Hadley, the study suggests that the uniform annual changes in Medicare physician fees under current Medicare policy tend to distort physician practice patterns, not necessarily to the benefit of patients. Policymakers instead might consider modifying Medicare fees to encourage services believed to be effective but underused and discourage services believed less effective and overused.

“Medicare’s current fee change policy has probably contributed to distorting physicians’ financial incentives to provide some services more frequently than others. For example, we found that echocardiograms were much more sensitive to fee variations than office visits."

"This means that more generous payments for these services, relative to their true underlying costs, have probably created a strong incentive for physicians to provide more of those services. These types of distortions can lead to the overprovision of profitable diagnostic services at the expense of basic primary care,” Hadley said.

Although many blame Medicare’s fee-for-service system for rewarding quantity rather than quality, the researchers believe that until workable alternatives can be developed, strategic use of the fee-for-service system can remain a potentially powerful policy tool for influencing physicians’ practice patterns to improve quality as well as to control costs.

“Changing Medicare fees to incorporate the clinical value of services, or their contribution to improving health, as well as the cost of providing different services, will make fee-for-service payment an important complement to other payment reforms being considered, such as bundled payment and pay for performance.

Since alternative policies will require considerable time to develop and properly calibrate, focusing on fixing current distortions in Medicare fees should be a high-priority objective for the short term,” Reschovsky said.

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A friend in the bussiness, just wrote me, to the same ef

13 February 2010     

just wrote me, to the same effect: After I had responded to an article he sent me about the catastrophic overdosing of radiation therapy patients, I talked about software reliability or the lack thereof. (I'm a programmer, so I obviously focused on the computer glitch mentioned in the article.) Now my friend said he figured that of the potential problems in his field (he's been a radiation therapy treatment planner for over 25 years) computer/software problems were way down the list. At the top of his list were complacent treatment techs, but right behind that was doctors insisting on doing as complicated a procedure as they could justify. . . His bosses have frequently complained to him about making treatment plans, which while effective, wouldn't produce as much revenue as a more complicated plan which would be no more effective. So I'd say they've hit the nail on the head here: Doctors recommend often unnecessarily complicated procedures to optimize their own income. The intractable problem is that patients have confidence in their doctors and are suspicious of bureaucrats (whether insurance company or government) telling them they don't need a procedure their doctor says would be best.

Janet L

..., Could a part of the problem be that the government

14 February 2010     

Could a part of the problem be that the government has cut and announced plans to further cut the Medicare payments to Doctors? There seems to be a disconnect in the government that doesn't allow them to see that the Doctor don't operate in a vacuum, but must also have front desk help (at least one, usually two people minimum); then there's the people that file the records, organize them, pull them when a patient is there for a visit and let us not forget those involved in filling out the Insurance and Medicare paperwork for reimbursement and the sometimes long wait for THAT payment. I haven't yet mention office space rental or property payments, federal, state, county and city taxes. I think too you have to remember all the medical supplies like gloves, swabs, tongue depressors, band aides, etc. As for me, I would trust my Doctor and common sense a whole lot more than ANY government bureaucrat or insurance lackey. In regard to CT Scans and excess radiation, I think back to a recent period where after the first CT Scan, I had one every six months for two years and then another to look at the Adenoma on my right Adrenal gland. Let's through in a Mammogram in that period too. I skipped my last two mammograms for fear I might start to glow in the dark. I recently had an MRI on my neck to asses damage from a rear end collision three years ago, but hopefully, my understanding is correct that radiation isn't involved. SO, If they would dump the people out of the emergency rooms and doctor's offices that are there for sniffles, hang nails and over indulgence, perhaps costs would come down, and Doctors would have more time to spend with each patient and be better able to evaluate their illness rather than a shot gun approach.

Pamela Dunn

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