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Medicare Millionaires Emerge in Data on Doctor Payments

By Shannon Pettypiece, Alex Wayne and Caroline Chen
April 09, 2014 12:23 PM EDT 285 Comments
An occupational therapist helps a patient to a physical therapy session in Novato, California.
Photographer: Justin Sullivan/Getty Images
An occupational therapist helps a patient to a physical therapy session in Novato, California.

Medicare paid almost 4,000 doctors and medical providers more than $1 million apiece in 2012, including seven who received more than $10 million. Eye doctors were among the highest compensated, including one Florida ophthalmologist who received $21 million.

The listing, gleaned from 880,000 providers paid by Medicare, was released this morning. The data, the first look at physician payments by the agency in more than 30 years, showed that most spending fell to a small group of doctors, with less than 3 percent taking in about 28 percent of the $64 billion paid out to individual providers.

While consumer groups have urged the release of payment details to spotlight fraud or the overuse of services, some doctors today said the data incorrectly showed them as making millions of dollars from Medicare when their billing codes were shared by others, unfairly putting them in a bad light.

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“This is an enormous event,” said Bob Kocher, a former special assistant to President Barack Obama for health care policy, in an interview. “What it’s going to help us do for the first time is figure out what these doctors actually do and what kinds of patients they actually see.”

While drug and hospital costs have been scrutinized, less attention has been paid to doctor fees, which accounted for about 12 percent of Medicare’s budget in 2012. Making the data available may allow the public and researchers to better monitor waste within the $604 billion system run by Medicare, the health plan for the elderly and disabled.

List Toppers

Cancer doctors specializing in blood work and radiation received the most compensation, according to the data, averaging over $360,000 in annual payments. Ophthalmologists were second on the list released today by the U.S. Centers for Medicare and Medicaid Services.

The data filed released today showed a concentration at the top. Doctors who made more than $1 million received at least 13 times the $77,000 average paid by the program. The top 3 percent among doctors who received payments collected more than $17.6 billion, or about $788,000 on average. The remaining 802,711 individual providers collected $46 billion, or less than $58,000 each on average.

The data could bring more scrutiny on doctors who engage in self-referral -- ordering up tests and procedures that are performed in their own clinics or in those in which they have a financial interest. There have already been signs that some doctors are over utilizing certain tests and procedures.

In an investigation last year by Bloomberg News, a review of court records showed about half of 700,000 stent procedures in the U.S. annually are elective-surgery patients in stable condition where use of the tiny mesh tubes to prop open arteries can lead to unnecessary proceedures, death and injury.

Injunction Lifted

Graphic: Which Medical Specialties Cost Medicare the Most?

Medicare payments to doctors were kept from the public after medical associations argued in the early 1980s that their release would violate physicians’ privacy. Last May, a federal judge lifted a 33-year-old injunction on the data following a lawsuit by Dow Jones & Co. The Obama administration decided last week to make all payment information public.

Consumers can now see aggregate sums paid to a doctor, how that amount compares to their peers and which doctors made the most from the program. They can also see the type and how many procedures a doctor billed Medicare for.

The information “will benefit not just consumers and the taxpayers but ultimately the health-care sector because it will shine some light in some dark corners where, frankly, health-care providers should improve the way they practice,” said Joe Antos a scholar at the American Enterprise Institute.

AMA Concerns

The American Medical Association, which fought to keep the information private, criticized the data release. Some doctors may make more than the average because they see a disproportionately high number of elderly, or because they have expertise in a certain area or better outcomes, said Ardis Dee Hoven, the group’s president, in a telephone interview.

“The broad data dump today by CMS has significant shortcomings regarding the accuracy and value of the medical services rendered,” Hoven said. “Releasing the data without context will likely lead to inaccuracies, misinterpretations, false conclusions and other unintended consequences”

Michael McGinnis, a New Jersey pathologist who was the third highest paid in the Medicare data, said that payments made to multiple doctors may be recorded under just one in the Medicare data released, making that person look like they were receiving a suspect amount of money.

Provider Codes

McGinnis’s provider code was used for about 27 doctors at Plus Diagnostics in Union, New Jersey, where he is the medical director, he said in a telephone interview today.

“I don’t really work directly at the facility, I’m doing administrative work,” McGinnis said, “I’m not offended by it, but it’ll need to be interpreted correctly so the wrong ideas and wrong statements won’t be made.”

Franklin Cockerill, listed as the fourth-highest paid physician listed within the Medicare data, is in a similar situation, said Bryan Anderson, a spokesman for the Mayo Clinic where Cockerill is employed as chair of the Departmenet of Laboratory Medicine and Pathology.

Cockerill’s “name is listed as the billing physician for claims submitted for payment under the clinical lab fee schedule,” Anderson said. While he clinic’s labs performed more than 23 million lab tests in 2013, Cockerill is a salaried physician who doesn’t receive Medicare payments.

Medicare, which covers 49 million people, spent $5.6 billion on payments to ophthalmologists, driven by new treatments for blindness. That was second only to internal medicine doctors, generalists who were paid a total of $8.7 billion in 2012. Cardiologists, third in Medicare’s classifications, received $5 billion.

Payments Vary

Payments to the more than 800,000 doctors in the Medicare program varied widely with the top 25 highest paid doctors receiving between $21 million and $6.5 million. A dozen of the top 25 highest paid doctors were ophthalmologists.

Medicare officials would not discuss specific doctors, Aaron Albright, a spokesman for the U.S. Centers for Medicare and Medicaid Services, said by telephone. He didn’t immediately answer other questions about the data and Medicare’s use of it.

The spending in opthalmology is being driven, in part, by new medicines administered in doctors’ offices to treat macular degeneration, the leading cause of blindness in the elderly.

Also included were payments to laboratories, group practices, ambulance services, and mobile x-ray providers. Multiple entities with Quest Diagnostics (DGX) in their names collected a total of $669 million from Medicare, and listings for Laboratory Corporation of America Holdings totaled $717 million. The data generally are totaled by location, not by parent company, so it’s not possible to be certain that all those with a common name are owned by the same company.

California, Florida

California and Florida received the largest payments with each getting more than $7 billion from Medicare followed by Texas and New York, with $5 billion a piece.

The Centers for Medicare and Medicaid Services is hoping that by releasing the data it can help cut waste from the Medicare system and improve cost-effectiveness, Jonathan Blum, deputy administrator for the Medicare agency, said today in a blog post on the decision.

“For too long, the only information on physicians readily available to consumers was physician name, address and phone number,” Blum said. “This data will, for the first time, provide a better picture of how physicians practice in the Medicare program.”

Senior Politics

The move has been welcomed by health research firms and consumer groups who’ve been looking for insight into how Medicare spends its money.

“I think by and large it’s really important for government to release these kinds of data,” said Dan Mendelson, founder of consulting firm Avalere Health LLC. “It’s good government practice. You want to have an informed consumer thinking about cost and quality. That’s the goal.”

Political considerations may discourage Medicare officials from more aggressively mining payment data for evidence of fraud and waste, said Kirk Ogrosky, a partner at the law firm Arnold & Porter in Washington and a former federal prosecutor who led a Medicare fraud unit. His current clients include a doctor who is suing to overturn a ruling that he over-billed Medicare.

“Running Medicare is a political hot potato. It’s a lot of money,” Ogrosky said. “And every time granny doesn’t get her walker someone’s up on Capitol Hill complaining to their congressman.”

Fine Line

The agency has walked a fine line between going after abuse by doctors and ensuring they don’t make doctors less likely to take Medicare or high risk patients, said Kocher.

“Medicare has this tension between putting in controls to mitigate the risk that there’s fraud with stifling the growth of small business and doctors trying to innovate,” he said. “Medicare should use this data to identify outliers and people who have patterns that are exceptional, to be better. Frankly, by making this data public maybe there will be some innovations in how this data can better be used by Medicare.”

To contact the reporters on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net; Alex Wayne in Washington at awayne3@bloomberg.net; Caroline Chen in New York at cchen509@bloomberg.net

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net Gary Putka

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