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Researchers Identify Institutional Patterns in Medicare Reimbursement Favoring Procedures

In a recent study, Fox Chase Cancer Center researchers uncovered that fee-for-service Medicare Part B physician payments made to academic otolaryngologists within a single geographic region varied significantly by institution. These inconsistencies could not be accounted for by differences in patient volumes or hospital case complexity.

"In recent years, Medicare spending—and health care costs in general—have been increasing, despite cuts in reimbursements to hospitals and physicians for specific services," says Miriam N. Lango, MD, an associate professor in the department of surgical oncology at Fox Chase Cancer Center and the Head and Neck Institute of the Temple University Health System. "The rise in health care costs has been attributed in part to the fee-for-service payment system used by Medicare and other insurers that compensates physicians based on the number of services and procedures they perform."

In 2014, the Centers for Medicare and Medicaid Services (CMS) publically released billing and reimbursement data related to Medicare Part B physician payments and utilization through the Medicare Provider Utilization and Payment Data: Physician and Other Supplier Public Use File.

Lango and colleagues examined data available through this CMS database to determine if physician practice arrangements were associated with differences in Medicare physician payments. Specifically, they compared payments to physicians who were either self-employed or part of a self-employed group versus payments to physicians employed by hospitals, who are typically salaried.

The study included a total of 67 otolaryngologists who offer specialized physician services to address complex problems relating to the ears, nose, and throat, providing a relatively standardized menu of physician services. The study was limited to physicians from one metropolitan area because the cost of providing care differs from region to region.

Within the designated region, 66% of otolaryngologists were employed by one of three academic centers. On average, otolaryngologists who were self employed received similar payments from Medicare as those employed at referral hospitals treating more complicated cases.

However, Lango and colleagues did find that there were significant differences in Medicare payments to physicians at different referral hospitals, with two-fold higher reimbursements per physician at one facility in particular, even after adjusting for patient volume, physician subspecialty, and other factors.

"We investigated why specialists at one center might collect so much more in Medicare payments," Lango says. "The differences in payments appeared to be almost entirely due to a greater number of services and procedures per patient."

Lango pointed out that although data were available on the specific procedures being billed, the CMS database contained no patient-specific information, making it possible that physicians at certain institutions are seeing more complicated patient cases. However, the researchers found the hospital Medicare Case Mix Index—a standardized method that can be used to assess the complexity of services provided at a hospital—did not correspond to the level of reimbursement.

"The vast majority of physicians in this study received similar payments from Medicare, so it's curious that so many of the outliers were concentrated at one facility," Lango says. "Part of the problem may be the fee for service payment model, which compensates physicians for each service or procedure. But it's important to note that there is remarkably little research on the effect of alternate payment models on quality health care delivery."

These data were published in the June 2015 issue of Otolaryngology-Head and Neck Surgery.

Source: Fox Chase Cancer Center