The late Supreme Court Justice William O. Douglas famously stated, “Sunlight is the best disinfectant.” Last week, the Centers for Medicare & Medicaid Services (CMS), in a historic move, applied the transparency disinfectant to the ailing Medicare program by publishing comprehensive physician payment data for the first time in nearly 35 years. Release of this information is a boon for taxpayers, a treasure trove for researchers, and a nightmare for physicians involved in demonstrably wasteful, fraudulent or abusive Medicare billing practices. It is a triumph for transparency that I applaud wholeheartedly.
The Medicare database, called the Carrier Standard Analytic File, contains information on health care providers who are paid by Medicare on a fee-for-service basis. It contains physician names and addresses, summaries of services provided, and the amount providers were paid for those services, but excludes patient specific information.
The data show wide variations in how much physicians are paid, and this is to be expected. Some physician specialties, in particular ophthalmologists and oncologists, bill significantly more per patient than other specialties because Medicare includes in the billing totals the high costs of the medications these doctors use to treat their patients. The real power of the Medicare database will be unlocked when researchers are able to analyze the data within specialties, identifying best practices and establishing evidence-based standards of care. This will soon benefit taxpayers by helping drive unnecessary care out of the Medicare program.
While it appears that the vast majority of the 880,644 health care practitioners that billed Medicare for services in 2012 acted in good faith, much of the national attention focused on the seven physicians who billed Medicare more that $10 million in 2012, the most notable being ophthalmologist Salomon Melgen of West Palm Beach, Fla., who billed $21 million for services to around 900 patients. Melgen’s situation demonstrates the need for full transparency in Medicare physician payment data.
Of the $21 million Melgen billed Medicare in 2012, nearly $12 million was for a drug called Lucentis, which effectively treats those people with age related “wet” macular degeneration. Lucentis, which is produced by Genentech, costs $2,000 per dose and must be injected monthly into the eye for maximum effect. Melgen applied around 6,000 doses of Lucentis to his 900 Medicare patients in 2012.
But there is another drug on the market, also produced by Genentech, called Avastin that many ophthalmologists are using to treat the same condition, even though it was approved by the FDA as a cancer treatment drug. Lucentis and Avastin, according to studies, are virtually the same in effectiveness, but Avastin costs $50 per dose rather than $2,000. Had Melgen used Avastin rather than Lucentis, Medicare would have saved over $11.5 million.
So why did Melgen choose to use Lucentis over Avastin? It’s difficult to determine for sure. He argues that he was only acting in the best interests of his patients, that they responded better to Lucentis and that Avastin is less convenient to dose. He neglects to mention that Medicare pays him an additional 6 percent of the average cost of a drug to cover “overhead” and that he made more than $700,000 in extra income in 2012 by using Lucentis over Avastin.
The only folks who are truly qualified to evaluate Melgen’s Medicare billings are his physician peers who understand age-related “wet” macular degeneration and the most appropriate treatment for the condition. With the Medicare database finally available, health care providers, for the first time, can actively participate in the policing of their peers, developing evidence-based standards and improving overall value. This is progress indeed.
Dan Liljenquist is a former state senator and former U.S. Senate candidate.