Hassan Saleh: Medicare’s flawed reimbursement structure
Earlier this month, Medicare, for the first time in its nearly 50-year existence, released comprehensive data on the compensation paid out to health care providers in 2012. The data has shown that nearly 2 percent of providers accounted for about a quarter of Medicare’s non-commercial payments — small clinics and family doctors. That quarter figure translates into $15.1 billion, enough to fund the city of Toledo’s 2014 proposed budget 61 times. While these numbers may seem staggering, there are many misconceptions that people can draw from this data. A superficial look at the data suggests doctors are using Medicare as a source of personal gain.
There are undoubtedly doctors taking advantage of the system — The New York Times reported on two of them, Doctors Salomon Melgen and Asad Qamar, who both are from Florida. These two topped the list of Medicare reimbursements issued in 2012, and upon looming federal investigations, both made political contributions, which preceded the cessation of these federal inquiries. However, two rotten apples cannot be used to generalize an entire field. Rather, the target of any belief of Medicare fraud lies more justly on pharmaceuticals.
The New York Times provides an online database where a user can access information on a physician’s Medicare payments from 2012. However, this information is a lump sum figure, reflecting total reimbursements, which could include everything from latex gloves used to medication administered during a visit. And while latex gloves represent pennies in total cost, some in-office treatments administered during visits can amount to thousands of dollars, from cancer therapy to multiple sclerosis treatment. These are tacked onto the total reimbursements health care providers receive, which artificially inflate their compensation numbers, while these payments are ultimately ending up in the hands of pharmaceuticals.
The problem lies in the design of Medicare; while Medicaid has a rebate program with pharmaceuticals, Medicare Part B lacks this same type of structure. Thus, there is no incentive for pharmaceuticals to develop cheaper drugs. Furthermore, using the same drug for different treatments has substantial cost differences.
In the case of the drugs used to treat macular degeneration— Avastin and Lucentis — according to a 2012 Department of Health and Human Services report, there is a dichotomy in reimbursement depending on the drug. Avastin has a reimbursement rate of 53 percent above physician acquisition cost, $55 and $26 respectively; while Lucentis has a reimbursement rate of 5 percent above physician acquisition cost, $2,024 and $1,928 respectively.
What these reimbursement differences and the overwhelming trove of Medicare data represent is a systematically flawed reimbursement structure that inherently fosters abuse. There is no doubt that our health care system is flawed; however, these flaws typically lie out of Medicare, residing with insurers, pharmaceuticals and large health care systems that collectively outspent “big oil” on the lobbying front over the last decade. The disappointing part is Medicare’s inadvertent fueling of a system that views patients as an income source rather than as people with problems. It should be obvious that the notion of a healthcare overhaul should begin with Medicare. And this overhaul should not be in the form of vouchers or caps; rather, it should be in reimbursement rates, more stringent oversight and incentives. As long as Medicare continues to overcompensate it will remain a target of abuse. Until then, Medicare only has itself to blame.
Hassan Saleh is a biomedical science master’s student.
