
Medicare Millionaires Emerge in Data on Doctor Payments - adventured
http://www.bloomberg.com/news/2014-04-09/first-data-in-33-years-shows-4-000-medicare-millionaires.html
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bhousel
Does any one have a link to the actual data being discussed? They are big
numbers but it doesn't necessarily seem to be (except in a handful of cases)
outrageous. The numbers are just annual billings, not annual take-home pay,
right?

For example, I just had a surgical procedure last week to have an otologist
repair my eardrum. The breakdown in cost is:

    
    
       Surgeon charge:   7,043
       Facility charge: 10,200
       Anesthesiology:   1,000
    

Now, the surgeon is very good at what he does and I feel he certainly deserves
that $7000. His surgical schedule has him doing procedures twice a week,
probably some more complicated than mine, and I'm sure he easily brings in
several million dollars to his practice, some non-trivial amount of which
comes from Medicare. Other specialties (like oncology and ophthalmology) are
obviously going to make up a bigger share of the amount paid by Medicare
because they are disproportionately treating older patients.

Until we know more, I think it's silly to be outraged about this.

~~~
refurb
The numbers being discussed are the physician fees, not the facilities or
supplies charges. This is the cash going directly to the docs to compensate
them for their time.

~~~
Retric
They still need to pay malpractice insurance etc and more than one person is
often billing to that same number so it's not really direct to doctor pay.

~~~
refurb
True! It's not a straight salary and docs do have expenses they need to pay
out of that money.

I was just trying to call out that the cost of supplies and facility fees are
paid by Medicare separately.

~~~
riahi
This does not include cost of injectable or infused drugs. These are not paid
separately by Medicare.

~~~
refurb
Sure they are! If you're an in-patient then drugs are paid for via the DRG
payment (all costs associated with treating the patient). If you're an out-
patient, they are reimbursed through ASP.

The physician fee is separate from these payments.

~~~
riahi
I'm skeptical for these ophthalmologists to be billing those numbers and NOT
include the average sales price (ASP) of their injectable drugs.

For those looking in, ASP is how medicare reimburses outpatient drugs. The
physician practice buys the drugs up front, then bills Medicare the "average
sales price" \+ 6%. The issue at hand is that Lucentis runs $2120 per
injection. If you have a decent or large sized macular degeneration patient
population, you'll be doing a lot of these injections. However, the number the
practice collects is $320. Out of that number, you have to pay overhead /
office staff / supplies etc.

~~~
refurb
I just downloaded one of the excel sheets and I only see procedures on the
list, no drugs, but your suspicion is warranted.

The other thing to remember is that if it did include ASP reimbursement,
ophthalmologists wouldn't be at the top, oncologists would. If a cancer doc
saw 200 HER2 positive breast cancer patients in one year (16/month), treating
them with Herceptin alone would cost $14,000,000. Most docs I've spoken to see
100-200 cancer patients per month (of course not all get treated with
expensive drugs).

~~~
riahi
Yes, but you have to remember that these are Medicare data. The prevalence of
65+ patients getting Her2+ breast cancer AND getting treatment with Herceptin
is probably lower than the number of 65+ patients getting ARMD and going on
treatment with Lucentis.

Unfortunately, I don't have a good source. The above is merely my speculation.

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arbuge
I am curious about that one opthalmologist who made $21m in a single year from
Medicare alone. That's top hedge fund manager or Fortune 500 CEO territory...

Is it possible that this is a businessman with many clinics collecting
payments in his name, or is that really one individual who somehow billed this
much?

~~~
riahi
The way Medicare for these high-reimbursement specialties (Ophthalmology,
Radiation Oncology, and Medical Oncology) is that the Doctor's practice will
pre-purchase the medications/injections/treatments before administering to
patients and then Medicare will reimburse the practice. These doctors are
certainly not taking home anywhere near a fraction of that number.

See:
[http://oig.hhs.gov/oei/reports/oei-03-10-00360.pdf](http://oig.hhs.gov/oei/reports/oei-03-10-00360.pdf)

The executive summary discusses how two injections used for treatment of Age-
Related Macular Degeneration are purchased.

~~~
refurb
That's called "buy and bill" and that is paid separately from the physician
fees discussed in the article.

If you did include the cost of drugs, you'd be correct that physician salary
is only a small fraction of the cost of treating a patient. Since some cancer
drugs cost over $10,000/month, some clinics spend 90%+ of their revenue just
on drugs.

~~~
riahi
I'm pretty sure they are including buy-and-bill numbers here. The #1 doctor,
Salomon Melgen, is a retinologist who is currently being investigated by CMS
for suspected Medicare fraud. The numbers in this article match the numbers
from the CMS data dump.

See [http://www.breitbart.com/Big-
Government/2013/02/14/Medical-E...](http://www.breitbart.com/Big-
Government/2013/02/14/Medical-Expert-on-Alleged-Practices-of-Melgen-It-Doesn-
t-Seem-Possible-You-Could-Get-4-Doses-Out-of-a-Single-Vial)

~~~
refurb
Turns out you were correct! I wouldn't have imagined that Lucentis would have
such a impact on the numbers.

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pmorici
This isn't the first article I've seen on this and they all seem to imply that
something unscrupulous is going on because some doctors make so much from
medicare. In some cases there probably is but is data on total payments
received alone enough to tell people anything meaningful?

I would think you would also need to know what their percentage of elderly
patients were vs. private insurance patients. You would also need some measure
of their operating costs. Absent that kind of information this seems only
useful as a political tool to plant the idea in people's minds that hey these
doctors make a lot of money and some of it might be fraudulent.

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fredgrott
does the AMA realize that if we follow their objections a to a logical
conclusion that the American Public and Gov will ask to release more data not
less?

Some context, Medicare rates and fess are not adjusted on a timely basis to
adjust for changes in medical procedures and technology ..procedures become
less time consuming to complete and things become less costly to have
completed..

But that is only one context of many that has to be exposed and we need more
data to do that

This is why the overhaul of Medicare data via the billing system is so vital
to improving the benefit the government gets per dollar it spends on Medicare.

A very complex CS and Engineering problem that no statup has adequately
tackled yet

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jaymon
Medicare and medicaid have traditionally underpaid regular commercial
insurance with the result that more and more doctors have dropped it over the
years.

So it makes sense that payments would concentrate around certain doctors that
are still accepting it because more people on medicare will go to them simply
because they don't have any other choice, especially in areas that have high
concentrations of the elderly, like Florida.

~~~
orky56
Great point. It should be stipulated (perhaps speculatively) that doctors have
left Medicare to go with private insurance to make more. Thus some of the ones
who still accept Medicare do so since it is still worth their time and effort
(i.e. still making the big bucks).

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grantlmiller
I'm not a data scientist but I'm guessing this data is somewhat normally
distributed with a long tail on the right side. I would also venture to guess
that if we looked at individual patient spending we'd see some patients
spending millions per year. (Though w/ HIPPA maybe anonymized data isn't even
available.) Both patients/doctors that are outliers should draw additional
attention as the chances of fraud are increased, but the distribution is
probably somewhat normal.

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vinhboy
This is a really cool tool:

[http://projects.wsj.com/medicarebilling/](http://projects.wsj.com/medicarebilling/)

Does anyone here know much about Ophthalmology?

What is a "Ranibizumab injection"? It's making bank!

The top guy does 37,075 of these are year, at $320 a pop.

That's about 100 a day....

~~~
riahi
Ranibizumab is the generic name of Lucentis, an injection into the eye that is
used to treat age-related-macular-degeneration. The way Medicare works is that
Lucentis is pre-purchased by the ophthalmologist and then reimbursed by
Medicare. The doctor is taking home only a fraction of that reimbursement, as
the majority of that reimbursement is going directly to the manufacturer.

I posted this elsewhere, but the way Medicare for these high-reimbursement
specialties (Ophthalmology, Radiation Oncology, and Medical Oncology) is that
the Doctor's practice will pre-purchase the medications/injections/treatments
before administering to patients and then Medicare will reimburse the
practice. These doctors are certainly not taking home anywhere near a fraction
of that number.

See:
[http://oig.hhs.gov/oei/reports/oei-03-10-00360.pdf](http://oig.hhs.gov/oei/reports/oei-03-10-00360.pdf)

~~~
vinhboy
Ok. That makes sense. I'll put away my pitchfork. But a follow up question.
Why are some offices doing so many of these? 100/day. That's like a
Ranibizumab assembly line.

~~~
HillRat
The standard treatment protocol is monthly injections on an indefinite
schedule; given the prevalence of age-related macular degeneration, it's easy
to see how a clinic in a high-retirement area could profitably optimize to do
hundreds of these. Lasik clinics operate on a similar principle. (I'll spare
you my argument that medicine is basically the last outpost of the Marxian
labor theory of value, but suffice it to say that when capital investments in
an industry don't improve profit, then Taylorist labor optimizations will step
in to fill the void.)

riahi might be able to answer this -- any idea what the cost is of ranibizumab
these days? A single injection used to run about $2K, but I don't know what
the price is now.

~~~
riahi
Yes. If you download the April ASP data from CMS [1], you can search for
"Ranibizumab injection". CMS has calculated a $397.014 payment per 0.1 mg.
Each dose injection is 0.5 mg, so 5 * 397.014 = $1985.07. If you add 6% to
that, you get $2104.17.

Your memory was correct.

1: [http://www.cms.gov/Medicare/Medicare-Fee-for-Service-
Part-B-...](http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-
Drugs/McrPartBDrugAvgSalesPrice/2014ASPFiles.html)

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inthewoods
We're still only talking about 12% of total Medicare spend - so there's no
doubt some fat in there, but you're not going to significantly affect the
overall system working on a 12% slice.

~~~
saraid216
Do you never change your salary unless it's by more than 12%?

~~~
inthewoods
Are you ignoring the simple math that you can't change the Medicare picture on
the back of a 12% allocation?

~~~
saraid216
Changing pictures isn't math, dude.

~~~
inthewoods
"Changing picture" = "Make a significant difference in the current financial
health or structure of Medicare". In other words, let's say you can change
that number to lower it by 25%. Now you've affected 3% of Medicare's cost -
hardly the main problem.

~~~
saraid216
How is it that you're incapable of recognizing that 3% is larger than 0%?

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viggity
I wrote a neat visualization of medicare spending last year. It doesn't go
down to the physician level, but I think it is a cool way of viewing the data:

[http://stonefinch.com/Projects/Medicare](http://stonefinch.com/Projects/Medicare)

It'll take a while to load, there is a 19MB file that gets loaded into your
browser. Chrome suggested.

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hoopism
I have a question. Seems like the practice of billing for a single physician
is problematic in understanding potential fraud/inefficiencies. Is there a
reason why it can't be mandated that the physician responsible for care not be
the one who is on record for payment?

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fsk
This is one problem with the current healthcare system. Doctors get paid based
on the amount of stuff they do to you, and not based on whether you get better
or not.

~~~
zaroth
The problem with sysops is they get paid for the number of CVEs they respond
to, and not based on whether CVEs stop being issued.

