Transparency is good medicine for medicare

The federal government sends out nearly $77 billion each year to physicians participating in the Medicare program. The taxpayers footing those bills deserve to know where the money is going. And data about Medicare payments can be crucial in rooting out organized fraud or poor oversight of Medicare spending.

That’s why last week’s release of a massive payment database by the Centers for Medicare and Medicaid Services is so valuable. For the first time, Americans can see where Medicare dollars are being spent in their community.

But the raw data lacks context. While some of the payments included in the Medicare database released last week are jaw-dropping, high payments don’t always equal high profits. For laboratories, high payments to a single physician might reflect the work of many professionals billing under a single Medicare number. Some specialists — such as oncologists and ophthalmologists — are required by Medicare’s rules to purchase expensive medications for their patients and then seek reimbursement. Dr. William J. Dunn of Daytona Beach describes one such drug that costs $2,000 per dose, with patients being treated for macular degeneration receiving at least three doses each. Some bills include the cost of medical devices, such as stents used in heart surgery.

Understanding these costs is crucial to interpreting the data, and CMS should continue its effort to make more detailed information available.

It’s also an essential next step to determining if, and where, Medicare money is being misspent. For example, an Associated Press investigation found that a tiny handful of doctors — 344 out of more than 825,000 in the database — received $3 million or more annually. Of the top 10 biggest billers, three — including a South Florida ophthalmologist who billed Medicare for nearly $21 million in 2012 — are already under investigation by the federal government.

The treasure trove of data should also lead to questions about why doctors in some parts of the country are more likely to prescribe expensive procedures or medications. For example, Florida has about one-fourth of Medicare’s “$3 million club” members, more than twice as many as California, despite Florida’s smaller population. It could help answer the question of whether patients who receive less expensive therapies do just as well.

Finally, the data can shine a light on out-of-control costs in other areas — like the rationale behind the prices of those ultra-expensive medications. Drug companies “hide behind the doctors,” Dunn says, questioning why Medicare doesn’t require drug companies to bill directly for their products. Not all physicians are as willing to challenge drug companies; more transparency could further illuminate relationships between doctors and drug companies that could lead to over-prescribing of costly therapies. Private insurance companies, including those providing coverage under the Affordable Care Act, will be able to use this data to scrutinize their own billing.

The release of information that many physicians considered proprietary has been a bitter pill for the medical establishment to swallow. But in the long run, making payments more transparent should prove to be healthy — not just for Medicare’s bottom line, but for the efficiency of the larger American health care system.