JAMA Forum: We Are the 98%

Andrew Bindman, MD

Andrew Bindman, MD

The Occupy Movement against social and economic inequality popularized the slogan, “We are the 99%”—a phrase highlighting the enormous income disparity in the United States between the top 1% of earners and the other 99%. The 1% of highest income earners, defined in 2011 as an adjusted income of more than $389 000, includes many physicians, but it also turns out that physicians have their own version of “payment inequality.” And this payment inequality, particularly when it is done with public dollars, has important social implications.

Medicare’s first-ever public release of physician payments in April revealed that 2% of physicians accounted for approximately a quarter (23.6%) of the $63.9 billion total Medicare payments to physicians in 2012. The largest portion ($3.3 billion) was paid to the 2995 ophthalmologists who received average Medicare payments of more than $1.1 million dollars each that year. Several other specialties were disproportionately represented among the 2% highest earners, including hematologists-oncologists, cardiologists, radiation oncologists, and dermatologists.

Medicare comprises about 20% of most physicians’ revenue, which varies by specialty and individual practice. Medicare payments are not equivalent to net income, as some portion would typically be used to cover office expenses. Some cases of high payments, for example, may involve physicians who specialize in procedures that require expensive drugs or medical devices, and a substantial portion of Medicare payments for those procedures may ultimately end in the pockets of drug companies or device makers. But it is reasonable to assume there’s often a strong correlation between payment and net income.

Raising Questions

The extraordinary size of the Medicare payments to a small number of physicians raises questions about the legitimacy of this reimbursement and whether all the care that was provided was appropriate. One also has to wonder whether the Medicare population is best served by investing 23.6% of its physician resources in 2% of the physicians and whether concentrating so much of Medicare’s physician payments in specialty areas such as ophthalmology and dermatology is the best way to derive value in this publicly financed program.

Primary care might offer a better return on investment, but the payment differential between primary care and specialty care prevents many students from choosing this career path. The more than $15 billion paid to the 16 485 of highest-paid physicians in Medicare would have entirely erased Medicare’s portion of the pay differential with specialists for the more than 160 000 primary care physicians participating in the program.

Some physicians might wonder if it is their place to question the amount Medicare pays their colleagues, but they need to realize that they have a shared interest in how Medicare’s payments are distributed. Because Medicare’s Sustainable Growth Rate (SGR) formula used to set physician payments establishes a fixed pool of resources for this purpose, the disproportionately high payments to 2% of physicians come at a cost to the other 98%. A payment amount beyond the fixed pool established by the SGR formula triggers an across-the-board payment cut. Congress has always passed legislation to prevent payment cuts from occurring, but it is a source of recurring tension in the physician community.

Physician organizations frustrated by the uncertainty in Medicare payment have lobbied Congress to replace the SGR with a more dependable revenue stream. Congress seemed poised to do this prior to the end of March this year, but it failed when Republicans and Democrats could not agree on a source of savings in the budget to offset the increased amount it would require to pay physicians.

After seeing the distribution of Medicare payments to physicians, one has to wonder whether the recurrent showdowns between physicians and Congress regarding the SGR is mainly for the benefit of the highest paid 2% of physicians. It’s not possible to examine trends in physician payments based on the data released by Medicare, but if payments to physicians parallel what is observed in our society at large, the largest growth in Medicare spending over time is most likely among those who are also among the highest paid. Perhaps the SGR problem could have been fixed some time ago had the medical community overseen the distribution of payments by Medicare and recognized that the amount paid to the 2% in 2012 was 50% greater than the amount needed to patch the SGR shortfall for that year.

The medical profession should have an interest in ensuring that physician resources are used to maximize benefits for the population. But when the American Medical Association (AMA) spent 35 years in court fighting the release of Medicare physician payment records, it may have put the interests of the highly paid 2% ahead of the other 98%.

Before releasing the information on physician payments, the Centers for Medicare and Medicaid Services requested public input about taking this action. Among the dozens of public comments from professional organizations, there was a mix of opinions among physician organizations that were concerned about physicians’ privacy, the data’s accuracy, and the public’s ability to understand it. But none stated an interest to work with Medicare to help identify physicians whose billing practices might be threatening the reputation of the profession and undermining the capacity of the overwhelming majority of physicians to meet the health challenges of the Medicare population.

Collective Actions Needed

Although lawyers inside and outside of the government line up to identify whether the information contained in the Medicare physician payment database reflects fraudulent billing by those who are several standard deviations beyond the average provider, physicians who are committed to their patients, to upholding the integrity of the profession, and to restoring the public’s trust in our ability to self-regulate and behave in a socially responsible manner might pursue a series of collective actions through their professional organizations in response to these data.

First, the physician community should establish standards and methods for regularly reviewing physician practice patterns. A high level of payment by itself is not proof that a physician has done anything wrong. But there needs to be a means to identify physicians who derive excessive payments for care of questionable value so that corrective action can be taken to conserve resources and protect patients from unnecessary care.

Second, the profession should encourage payers aside from Medicare to be similarly transparent with their physician payment data. This would eliminate the secrecy that can allow a minority of physicians to abuse different payment systems.

Third, the profession should examine the role that the American Medical Association /Specialty Society Relative Value Scale Update Committee (RUC)  in setting the prices Medicare pays physicians. The RUC wields enormous power, and it has been criticized for its part in creating an imbalance in payments among different specialties. Given the physicians who are among the highest earners in Medicare are so disproportionately concentrated in just a few specialties, it is reasonable to question whether the RUC is serving the broad interests of all physicians or only a select minority.

Finally, the profession should reflect on whether the fee-for-service system continues to be the best way to meet the interests of both physicians and patients. It should do all it can to support the development of payment models that reward physicians for their hard work and for using health care’s limited resources in the most effective and efficient ways.

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About the author: Andrew Bindman, MD, is Professor of Medicine, Health Policy, Epidemiology and Biostatistics at University of California San Francisco (UCSF). He is the founder and Director of the University of California Medicaid Research Institute, a multicampus research program that supports the translation of research into policy.

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

 

JAMA Forum: On Medicine and Money

Eli Adashi, MD, MS

Eli Adashi, MD, MS

US consumers have always had limited information about how physicians and other health care professionals practice medicine. Now, however, the April 9 release by the Centers for Medicare and Medicaid Services (CMS) of data on medical services and procedures provided to Medicare beneficiaries will help fill that gap “by offering insight into the Medicare portion of a physician’s practice,” said Health and Human Services Secretary Kathleen Sebelius in an accompanying statement. The newly released data, she added, will “afford researchers, policy makers and the public a new window into health care spending and physician practice patterns.”

All told, the newly released CMS data set provides information about more than 880 000 health care professionals who received $77 billion in Medicare payments in fiscal year 2012 for 6000 different types of services and procedures under the Medicare Part B Fee-For-Service program. Additional data releases may well follow before too long, with an eye towards enhancing transparency.

“Data transparency is a key aspect of the transformation of the health care delivery system,” said CMS Administrator Marilyn Tavenner. In addition to the new information about clinicians, CMS made hospital charge data available last May, thereby apprising consumers of the wide-ranging hospital costs for common inpatient and outpatient services.

 

Medicare Millionaires

As might have been anticipated, much of the media coverage of the release of the CMS data focused attention on health care professionals dubbed “Medicare millionaires” and their practice patterns. Tantalizing as such details might be, more profound issues were being sidestepped. In particular, little has been said with respect to the uncomfortable relationship between medicine and money.

This is an unfortunate state of affairs, because the ethical and moral challenges associated with the juxtaposition of medicine and money are highly deserving of our attention. A clear-eyed recognition of this age-old subject and of the all-too-common frailty of human nature were articulated as early as the 12th century by Moses Maimonides, the philosopher and physician, in the Prayer of Maimonides: “Do not allow thirst for profit, ambition for renown and admiration to interfere with my profession . . . .”

But there are no easy answers to this conunundrum.

Many see the pairing of money and medicine as a nonissue, and instead view it as capitalism at its best, with medicine being just another market in which competition reigns supreme. For proponents of this point of view, health care professionals might be seen as operatives in a retail business, wherein the volume of sales (of health services) carries the day, creating a vibrant health care market that sparks the scientific innovations upon which we have all come to depend. They see the business model of medicine as no different than that of any other field of pursuit, naturally rooted in foundational libertarian principles. Viewed in this light, the intersection of medicine and money is as American as apple pie. Exemplified by the time-honored “private practice” of medicine, this all-out embrace of the business principles of a market economy remains undiminished—if increasingly untenable.

 

No Fail-Safe Firewall

But there’s a potential flaw in this line of reasoning: the presumption of a fail-safe firewall between financial considerations and clinical decision making. Sadly, that may not always be the case.

Indeed, Congress has frequently seen fit to shield consumers from untoward practices. Examples of this include the Stark Law (which prohibits clinicians from “self-referring” a Medicare or Medicaid patient for services), the Emergency Medical Treatment & Labor Act (which ensures public access to emergency services regardless of ability to pay), and the Affordable Care Act (which expanded requirements for physician-owned hospitals).

Moreover, as recently as February 26, according to the annual Health Care Fraud and Abuse Control (HCFAC) Program report, the US government “recovered a record-breaking $4.3 billion in taxpayer dollars in Fiscal Year 2013 from individuals and companies who attempted to defraud federal health programs.” In that same year, 718 defendants were convicted of health care fraud–related crimes. Defendants who were charged and sentenced are facing an average of 52 months in prison. Regrettably, many of those involved were physicians, nurses, and other licensed medical professionals.

Clearly, opinions vary widely as to the ethical and moral wisdom of mixing medicine with money. Some would favor a lightly regulated, self-policing field, wherein unfettered entrepreneurship and Medicare millionaires are bound to thrive. According to this outlook, infractions perpetrated by a select few do not warrant the imposition of blanket, heavy-handed oversight.

But those who consider medicine and money to constitute a volatile mix may express preference for another model, such as a national health care system buttressed by a single governmental payer, in which value rather than volume of services determine provider compensation. Under this system, Medicare millionaires are unlikely to flourish.

Will the push for transparency into health care spending and how clinicians practice medicine foster change that addresses the intersection of medicine and money?

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About the author: Eli Y. Adashi, MD, MS (Eli_Adashi@brown.edu) is a professor of medical science and a former dean of medicine and biological sciences at the Warren Alpert Medical School of Brown University in Providence, Rhode Island. A member of the Institute of Medicine, the Association of American Physicians, and the American Association for the Advancement of Science, Dr Adashi has focused his writing on domestic and global health policy at the nexus of medicine, law, ethics, and social justice. A former Franklin fellow, Dr Adashi served as a senior advisor on Global Women’s Health to the Secretary of State office of Global Women’s Issues during the first term of the Obama Administration.

About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

 

 

Author Insights: Leaders at Academic Centers Often on Drug Company Boards

Walid F. Gellad, MD, MPH, of the University of Pittsburgh and staff physician at the Pittsburgh VA Medical Center and colleagues, found many leaders at academic medical centers are paid to serve on pharmaceutical company boards. Image: iStock.com/graffoto8

Walid F. Gellad, MD, MPH, of the University of Pittsburgh and colleagues, found many leaders at academic medical centers are paid to serve on pharmaceutical company boards. Image: iStock.com/graffoto8

Many leaders at academic medical centers are doing double duty, serving on the boards of pharmaceutical companies and being paid handsomely for it, finds an analysis published in JAMA today.

Nearly half of the top 50 pharmaceutical companies worldwide have leaders from top academic medical centers on their boards. Of the 17 US drug companies, 16 count academic center leaders. These individuals, who included 2 university presidents, 6 deans, 6 hospital system executives, and 7 department chairs or directors. The average compensation they received for board service was $312 564. By comparison, the average dean of medicine earns $445 781, and the average associate dean at a medical school makes $196 212, according to a 2012-2013 survey by the College and University Professional Association for Human Resources.

Walid F. Gellad, MD, MPH, assistant professor of medicine at the University of Pittsburgh and staff physician at the Pittsburgh VA Medical Center, discussed the study’s findings with news@JAMA:

news@JAMA: Why did you and your colleagues decide to do this study?

Dr Gellad: There’s a lot of interest in identifying potential conflicts of interest in medicine. There is the Physician Payment Sunshine Act, which reveals payments companies make to physicians. The issue is of great interest to medical trainees, especially because there are limits on receiving free pens or lunches. The issue of dual leadership at academic centers and on corporate boards has received less attention.

news@JAMA: Do you think this is a new phenomenon?

Dr Gellad: I don’t think it is new at all. One study in 2007 in JAMA looked at the corporate relationships of department chairs.

news@JAMA: Were you surprised by the number of administrators serving on pharmaceutical company boards?

Dr Gellad: Yes. There are different grades of leadership represented. They are not all deans or chief executives, but all have some leadership role. This is about individuals holding dual leadership responsibilities at academic and pharmaceutical companies.

news@JAMA: What about the magnitude of the compensation?

Dr Gellad: I think it is pretty standard for someone who serves on a corporate board. This is from public data. It also includes stock and charitable donations made on behalf of these individuals. These numbers are striking when the salaries of most academic center leaders are not that much higher than what they are receiving for serving on a corporate board. It is way greater than the average salary of most people in the country.

news@JAMA: What do you think can or should be done?

Dr Gellad: Our hope is that this paper gets people to ask that question. It’s up to university ethicists and other university leaders to decide what should happen. We need to understand the risks and benefits of these relationships. I think a lot of people are not aware these relationships exist.

news@JAMA: Is there anything you’d like to add?

Dr Gellad: We wanted to make clear in putting this together that we wanted this study to focus not on individuals but on the topic.

Author Insights: Drug and Device Companies Give Millions of Dollars to Groups Offering Online CME

Sheila M. Rothman, PhD, of Columbia University, New York City, and colleagues found that some organizations offering online continuing medical education courses have received millions of dollars in grants from drug and device companies and may share physician information with unnamed third parties. (Image: Columbia University)

Sheila M. Rothman, PhD, of Columbia University, New York City, and colleagues found that some organizations offering online continuing medical education courses have received millions of dollars in grants from drug and device companies and may share physician information with unnamed third parties. (Image: Columbia University)

Some medical communications companies such as Medscape/WebMD that offer online continuing medical education (CME) programs receive millions of dollars from pharmaceutical and device manufacturers and share information such as a physician’s licensing number and specialty with unnamed third parties, warn researchers whose findings appear today in JAMA.

In 2010, for the first time, 13 pharmaceutical companies and 1 medical device company posted grant registries on their websites, as a result of legal settlements in some cases and voluntarily in others. These registries included the names of health care organizations, including medical communication companies, that received at least 1 grant; the grant’s purpose; and the grant’s dollar amount. These postings go beyond the provisions of the Sunshine Act, which require reports of payments only to physicians and teaching hospitals.

A medical communications company was defined as an organization whose primary mission is to disseminate information about disease states, disease prevention or management, medical devices, or drugs and other therapies. In addition, to be classified as a medical communications company, the organization may not be a subsidiary of other recipient organizations, such as an academic medical center.

The 14 companies offered grants totaling $657.6 million in 2010. About 26% ($170.8 million) was given to medical communication companies, followed by 21% to academic medical centers and 15% to advocacy organizations targeting specific diseases. Of the 363 medical communication companies, 18 received more than $2 million each and were approved by the Accreditation Council for Continuing Medical Education to deliver CME courses. Medscape/WebMD received the most grant money ($20.3 million).

Of the 18 medical communications companies receiving the largest grants, 17 offered online CME courses, which gave them the opportunity to collect personal data and create digital profiles of physicians without the latter’s explicit consent. The researchers wrote, “It is possible that physicians using [medical communication company] websites do not appreciate the full extent of [medical communication company]-industry financial ties or are aware of data sharing practices.”

Lead author Sheila M. Rothman, PhD, Columbia University, New York City, discusses her team’s findings.

news@JAMA: Why did you do the study?

Dr Rothman: I’ve been very interested in the issue of conflict of interest. Then pharmaceutical and device companies put all their grant registries online, and for the first time, we could look at not just grants to physicians but also to institutions.

news@JAMA: How do medical communications companies work?

Dr Rothman: These organizations are fairly obscure and haven’t been studied. They essentially are groups that provide information they get from pharmaceutical companies and give it to consumers and physicians. They also take information from consumers and physicians and “give” it back to pharmaceutical companies.

news@JAMA: What should physicians take from your findings?

Dr Rothman: These companies are involved in online CME, and what surprised us, when we looked more thoroughly, were the privacy policies. Not only do they ask for a physician’s e-mail address, they want license numbers and specialty information. It became clear to us they shared and sold this information.

news@JAMA: Are these online CME courses then suspect?

Dr Rothman: We showed how much CME is online, but we analyzed the number of physicians going online, not the content. We want physicians to be aware of the privacy issues, that in the process of taking an online course to maintain your professional status, the group giving it may be selling your information to someone else.

Author Insights: Reimbursement Systems May Hinder a Hospital’s Ability to Reduce Postsurgical Complications

Atul A. Gawande, MD, MPH, a surgeon at Brigham and Women’s Hospital in Boston, and colleagues found hospitals may benefit financially if a patient with private insurance or Medicare develops a postsurgical complication. (Image: Fred Field)

Atul A. Gawande, MD, MPH, a surgeon at Brigham and Women’s Hospital in Boston, and colleagues found hospitals may benefit financially if a patient with private insurance or Medicare develops a postsurgical complication. (Image: Fred Field)

A complication after surgery is something patients and physicians want to avoid, but certain types of payments to hospitals appear to reward suboptimal care and penalize quality care, according to study findings appearing today in JAMA. The study found that postsurgical complications were associated with higher hospital “contribution margins” (revenue minus variable costs) among patients covered by private insurance or Medicare; among patients covered by Medicaid or who paid out of pocket for their care, postsurgical complications were associated with a reduced contribution margin. The findings suggest hospitals with many private insurance and Medicare patients might make considerably less money caring for surgical patients if they succeed in reducing postsurgical complications.

The researchers found that compared with absence of postsurgical complications, complications were associated with about a $39 000 higher contribution margin per patient with private insurance and about a $1700 higher contribution margin per patient with Medicare. Medicaid coverage was associated with a loss of about $24 000 in the contribution margin for a patient with Medicaid coverage who had a complication and a loss of about $27 000 for a patient paying out of pocket.

The findings are based on retrospective analysis of administrative data for all inpatient surgical discharges during 2010 from a nonprofit 12-hospital system in the southern United States. The analysis included data for 34256 surgical discharges with 1820 patients experiencing 1 or more postsurgical complications.

Coauthor Atul A. Gawande, MD, MPH, a surgeon at Brigham and Women’s Hospital in Boston, discusses his team’s findings:

news@JAMA: Why did you do this study?

Dr Gawande: We are trying to unravel why simple quality measures have been so slow to penetrate into health care, and finances are clearly part of the picture. The incentive is to pay for quantity, not quality.

news@JAMA: Were you surprised by the results?

Dr Gawande: It was no surprise that we are paying for quantity of care and not quality of care, but the magnitude was eye-popping. Complications resulted in massively higher profit margins for those with commercial insurance. It is now becoming apparent that the financial system is a serious barrier to implementing quality programs.

news@JAMA: Don’t private, commercial insurers know the financial incentives are askew and that they are rewarding quantity care over quality care?

Dr Gawande: It hasn’t been clear to commercial insurers. They will hear hospitals complain that they’re not compensated for quality, but it’s been hard to quantify. This study points a pathway forward. It clearly shows there is a substantial loss of money for the payer to have a complication. But since the hospital doesn’t get any significant benefits from investing in quality control, it’s very difficult for anyone to succeed.

news@JAMA: How can this be fixed?

Dr Gawande: Hospitals need to work with their insurers to renegotiate their contracts to not be penalized if they reduce complications. They want to make sure there are not losses in implementing quality-control programs.

Academic Training Policies Can Affect Brand-Name Prescribing Patterns, Says Study

New research shows that strict conflict-of-interest policies in academic medical centers influenced psychiatrists who trained there to prescribe lower rates of brand-name antidepressants than psychiatrists who trained earlier, before such policies were adopted. (Image: Chad McDermott/iStockphoto.com)

New research shows that strict conflict-of-interest policies in academic medical centers influenced psychiatrists who trained there to prescribe brand-name antidepressants at lower rates than psychiatrists who trained earlier, before such policies were adopted. (Image: Chad McDermott/iStockphoto.com)

Strict conflict-of-interest policies in academic medical centers may help resident physicians resist pharmaceutical company persuasion to prescribe expensive brand-name medications, according to a new study.

Researchers at the University of Pennsylvania’s Perelman School of Medicine analyzed data from 2009 about the antidepressant prescribing patterns of 1652 psychiatrists from 162 US residency programs. “Our study focuses on antidepressants because they have been among the most heavily marketed drug classes,” said lead author Andrew J. Epstein, PhD. He noted that antidepressant use increased by nearly 400% from 1988 to 2008. Continue reading

Survey: Some Physicians Not Always Honest or Frank With Patients

A survey of US physicians finds that some are less than completely honest or forthcoming with information when talking with their patients. (VisualField/iStockphoto.com)

Not all physicians are as truthful or open in their communications with patients as the latter may expect, behavior that is in conflict with at least some of the tenets of the Charter on Medical Professionalism, according to new findings appearing today in Health Affairs.

The Charter on Medical Professionalism, which is endorsed by more than 100 professional groups worldwide and the US Accreditation Council for Graduate Medical Education, requires openness and honesty in physicians’ communication with patients. In 2009, to see if physicians adhered to the charter, a research team led by Lisa Iezzoni, MD, MSC, a professor of medicine at Harvard Medical School in Boston, surveyed (via an 8-page questionnaire) US physicians from 7 specialties; 1891 of the 2938 physicians who met the eligibility criteria (about 64%) responded. Continue reading