The Medicare program is the source of a small fortune for many U.S. doctors, according to a trove of government records that reveal unprecedented details about physician billing practices nationwide.
The government insurance program for older people paid nearly 4,000 physicians in excess of $1 million each in 2012, according to the new data. Those figures do not include what the doctors billed private insurance firms.
The release of the information gives the public access for the first time to the billing practices of individual doctors nationwide. Consumer groups and news outlets have pressured Medicare to release the data for years. And in doing so Wednesday, Medicare officials said they hope the data will expose fraud, inform consumers and lead to improvements in care.
The American Medical Association and other physician groups have resisted the data release, arguing that the information violates doctor privacy and that the public may misconstrue details about individual doctors.
Among the highest billers were: a cardiologist in Ocala, Fla., who took in $18.1 million, mainly putting in stents; a New Jersey pathologist who received $12.6 million performing tissue exams and other tests; and a Michigan vascular surgeon who got $10.1 million.
Some of the highest billing totals may simply reflect a physician who is extremely efficient or who has an unusually large number of Medicare patients.
The highest numbers also may reflect a physician who specializes in procedures that require costly overhead, and in those cases, a large portion of the money may wind up not with the doctor but with pharmaceutical companies or makers of medical devices.
But in some instances, the extremely high billing totals could signal fraudulent doctor behavior, as government inspectors have previously found.
Indeed, three of the top 10 earners already had drawn scrutiny from the federal government, and one of them is awaiting trial on federal fraud charges.
The greatest tallies also may signal that the Medicare payments for some procedures are too high for the amount of work involved or that perverse incentives lead doctors to overuse a procedure.
The specialties most common at the top ranks of the Medicare payments were ophthalmologists, oncologists and pathologists.
This information gives the public “unprecedented access to information about the number and type of health-care services” doctors provided during the year, Jonathan Blum, principal deputy administrator of the Centers for Medicare and Medicaid Services, said in a blog post.
The Medicare program is the nation’s largest medical insurer. By virtue of its breadth, the forthcoming billing data are expected to shed light on an array of questions that have arisen about health-care costs as the nation has confronted decades of rising medical bills.
Overall, the data cover $77 billion in billing involving 880,000 practitioners in 2012.
The AMA has warned that the data could contain errors, and in some cases, one doctor’s billing number may have been used by multiple support personnel for billing purposes.
In addition, the billing figures reflect what a doctor receives in payment but does not show the actual profit after paying for equipment, support personnel and malpractice insurance. For some procedures, the overhead can reach three-quarters or more of the payment amount.
Many of the highest billers, for example, were in fields with unusually high expenses, and that was likely to limit their personal share of the money. Using the assumptions that Medicare and the AMA make when setting payment rates, only 23 of the 4,000 biggest billers personally earned $1 million or more, according to a Washington Post analysis.
Gerald Ho, 50, a rheumatologist who runs three offices in the Los Angeles area, said he had been “sort of dreading” the release of the Medicare payment data. Ho received nearly $5.4 million in reimbursements in 2012. Of that, he said, probably about $5 million covered the cost of genetically-engineered drugs to treat patients with rheumatoid arthritis. He also has to pay a staff of 40.
“People are going to see these numbers and people aren’t going to understand,” he said. “I am not pocketing $5.3 million. To tell you the truth, I know there’s been lot of Medicare fraud, and I understand the government wants to provide a measure of transparency. But when they throw out numbers like this without any context, it’s going to be misconstrued by the public.”
“The AMA is concerned that CMS’ broad approach to releasing physician payment data will mislead the public into making inappropriate and potentially harmful treatment decisions and will result in unwarranted bias against physicians that can destroy careers,” Ardis Dee Hoven, president of the AMA, said in a statement. “We have witnessed these inaccuracies in the past.”
But consumer and public interest groups argued that the information will help consumers make better decisions.
“This data is important because it will make it possible for consumers to identify physicians that will best meet their needs,” said Robert Krughoff, president of Consumers’ Checkbook, a group that began seeking the release of this information in 2005 and eventually sued for it.
For example, it will allow consumers to know which doctors are most experienced in a given operation. Studies have shown that in several types of surgery, volume matters: Surgeries by doctors who have performed the procedure enough times are less likely to end with the patient’s death.
As for the potential that the data might misrepresent a physician’s practice, Krughoff said, “The consumer organizations that have pushed for release of this information have a strong obligation to make sure that the information is used properly. But I believe in the marketplace of ideas.”
Opting for expensive
The doctor at the top of the list of largest Medicare billers is Salomon Melgen, an ophthalmologist in West Palm Beach, Fla., who took in $20 million from Medicare in 2012, according to the data released Wednesday.
Most of Melgen’s take — about $11.8 million of it — came from injecting patients’ eyes with Lucentis, a drug used for macular degeneration, according to the data.
For each shot, Medicare and the patient pay a doctor about $2,000, but the drug is very expensive and the doctor must then pay most of that money to the drug’s manufacturer, Genentech.
What may be most interesting about Melgen’s practice, however, is that he could have used a much cheaper drug than Lucentis — one called Avastin that many ophthalmologists consider an equivalent.
Had he used the cheaper alternative, his bill to Medicare for the shots would have dropped from $11.8 million to less than $500,000.
But physicians have a financial incentive to use more expensive drugs. Medicare pays a doctor more for injecting the more expensive drug — the physician’s fee is based on the drug’s price — and Genentech offered doctors its own incentive to use the expensive drug: The firm gave discounts to those who use high volumes.
Melgen’s name appeared in headlines in 2012 as result of his connection to Sen. Robert Menendez (D-N.J.), a friend who received campaign contributions from the ophthalmologist. Menendez has been accused of improperly raising concerns with federal health officials on his behalf.
Melgen’s attorney issued a statement before the data release to try to put his client’s billing in perspective.
“At all times, Dr. Melgen billed in conformity with Medicare rules,” Kirk Ogrosky said. “While the amounts in the CMS data release appear large, the vast majority reflects the cost of drugs. . . . Responsible analysis requires looking beyond the raw data to what was paid for pharmaceuticals and expenses.”
The use of the more expensive eye drug helps explain why so many of Medicare’s top billers are ophthalmologists.
Of the doctors who were paid at least $1 million by Medicare in 2012, 879 were ophthalmologists, who — like Melgen — relied on using the more expensive drug, Lucentis.
Some physicians have suggested that using Lucentis is wasteful because a much cheaper alternative exists.
“There is no advantage of using Lucentis over Avastin — as six randomized clinical trials have shown they’re equivalent,” said Philip Rosenfeld, a Miami ophthalmologist who has pioneered the use of the less-expensive drug.
Top billers
Melgen, like some other doctors among the top billers, already has drawn scrutiny from Medicare investigators.
Indeed, government inspectors have noted that instances of billing disputes and potential fraud may occur more frequently among the highest Medicare billers.
A December report from the Department of Health and Human Services, for example, analyzed the records of 303 physicians who were paid more than $3 million by Medicare in a year. It found that 13 were responsible for overpayments totaling $34 million, six faced payment reviews, three had their licenses suspended and two were indicted.
In releasing the data, Medicare officials forbade news outlets to share any of the data until 12:01 a.m. Wednesday. This provision meant that reporters could not solicit responses from any doctors beforehand.
The second-highest biller in 2012 was Asad U. Qamar, a cardiologist in Ocala. Qamar made headlines last year after a Reuters report detailed large donations the doctor had made to the Obama administration’s agenda and a detailed federal review of his billing practices.
He told Reuters that he had seen “tremendous harassment of the physician community.”
The seventh-highest biller is Farid Fata, a cancer doctor in the Detroit area. He received $10 million in Medicare payments in 2012. Fata was arrested in August and is awaiting trial in a Medicare fraud case, accused of intentionally misdiagnosing illnesses and ordering unnecessary treatments, including chemotherapy for patients who did not have cancer.
Federal authorities say that Fata, who owned and operated two health-care companies, fraudulently billed Medicare from August 2007 to July 2013. He also is accused of conspiracy to pay and receive kickbacks to providers of home health services and hospice services in return for referring patients.
He has denied any wrongdoing.
Not all of the highest billers have faced such scrutiny, however. The fourth-highest biller on the list is a department chairman at the Mayo Clinic in Rochester, Minn.
Doctors Respond
Several physicians worried the data release would mislead the public.
The database, for instance, lists Minh Nguyen, a hematologist-oncologist at Orange Coast Oncology in Newport Beach, Calif., as having received more than $9 million in reimbursements, ranking him as number 10 on the list of top billers of Medicare in 2012.
Nyugen explained the high total was because all the chemotherapy drugs for his five-physician practice are billed under his name.
“It looks like I’m getting paid $9 million. . . but it’s a pass through,” he said. “The majority of the billing goes to pay the drug companies.”
Nguyen said the data could illuminate the challenge experienced by oncologists around the country who are struggling with rising drug costs. Typically, the practice must purchase drugs up front – at a cost of about $25,000 per treatment – and then wait weeks or months for Medicare or insurance companies to reimburse them.
Jean Malouin, a family practitioner in Ann Arbor, Mich., said her perch at number 16 of top billers was because she was the medical director of an experimental University of Michigan initiative that sought to improve care and cost-efficiency at nearly 400 clinics across the state.
Due to the project, Medicare paid out $7.6 million to her for work done with more than 200,000 patients.
"I am most definitely not a high volume Medicare biller," she said. “I am one of the ‘good guys’ trying to save [Medicare] money.”
Answering questions
The data release is expected to answer a much broader array of questions than who billed the most.
One of the persistent mysteries of U.S. health care, for example, is why some surgeries are performed much more frequently in some areas of the country than in others, as researchers at Dartmouth College noted.
Why, for example, is the rate of bypass surgery more than five times as high around Hattiesburg, Miss., and Slidell, La., as it is in Grand Junction, Colo.? Why is the rate of heart-valve replacement in Paterson and Camden, N.J., more than twice that of New Orleans and Albuquerque?
The data may allow researchers to take a closer look at individual doctors to find answers.
Jonathan S. Skinner, a Dartmouth economist, acknowledged that some doctors “may feel that their privacy has been compromised” with the dissemination of their billing records.
But, he said, “as earlier reporting has shown, there are people who are operating in the gray area of health care who are causing Medicare to spend enormous amounts on health care that may be harmful to their patients.”
Amy Brittain, Alice Crites, David S. Fallis, Carol D. Leonnig, Steven Rich and Sandhya Somashekhar contributed to this report.
This investigative report first appeared in The Washington Post on April 9, 2014.
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