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Health Care Costs

Are Doctors Driving Up Medical Costs?

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Last month, a study of Medicare data published in the journal JAMA Internal Medicine came out with a startling finding: The doctors earning the most from Medicare Part B dollars aren't the ones who treat the most patients. They're the ones who order the most tests.

Study coauthor Jonathan Bergman, a physician and  health researcher at the University of California-Los Angeles, examined 2012 data from the centers for Medicare and Medicaid Services to come to that conclusion. If doctors are contributing to the high costs of medical bills in the US­ by ordering unnecessary tests —costs which drive many Americans into bankruptcy—Bergman says reforms are needed.

He spoke with Sound Medicine News about what his team found, and what can be done about it. 

Sound Medicine News: There’s a huge debate surrounding this issue of unnecessary medical services in the U.S. health care system. What did this study show that we didn’t know before?

Jonathan Bergman: What it brought to light is that in Medicare fee-for-service, the clinicians who earn the most are the ones who also order the most number of services per unique beneficiary. And there's significant variation across providers and across regions, and that is almost certainly not appropriate. 

SMN: Why does this matter?

JB: Medicare spending accounts for about 16 percent of the federal budget, and total Medicare spending is projected to increase over the next several decades, and that crowds out investment in all other competing societal priorities. 

SMN: For the doctors who order the most services, how much money are we talking about?

JB: We're talking in the millions. The highest decile of doctors was in the millions. And this is just Medicare fee-for-service, which is only a part of what doctors make because they bill other insurance companies, as well. 

SMN: So taxpayers should upset about this, right?

JB: Absolutely, because it's Medicare, and every dollar we spend on Medicare is a dollar we don't spend on pre-K education, it's a dollar we don't spend on other health care priorities that we know have higher value, like depression screening, smoking cessation, or obesity programs. Because it's federal dollars, every dollar we spend on health care that isn't necessary is a dollar we are adding to the debt or not spending on competing societal priorities. 

SMN: And it’s not just about saving money, but some tests are extremely uncomfortable…

JB: And they can be dangerous. If you order for a CT scan on someone, they have an increased risk of getting cancer down the line, so almost everything we do is not benign, it has a potential harm to the patient. 

SMN: So what's the solution to this problem?

JB: I think the first step would be to have a better understanding of what things cost and why we charge what we charge. My mother in law manages a bottle cap distribution company, and she can tell you exactly how much it costs to make each bottle cap and why they charge what they charge. 

In health care, it's seemingly random and it affects individuals. It's not only payments by insurance companies, which eventually get paid by individuals, but it directly affects individuals that are uninsured. We know that about 23 states chose not to expand Medicaid and about 16 percent of the American public remains uninsured, and for them, what we charge matters a lot because they can't negotiate the way insurance companies do. 

We also know that about 60 percent of bankruptcies in the US are medical, so whether people are insured or uninsured, the overall costs of health care end up being pretty debilitating for families. And the burden of health care costs on families is really disproportionate to everything else in our society. I think the other thing we can do is we can better align reimbursement to clinicians with what would benefit patients the most. and that’s probably not by how many procedures a physician does. What our findings suggest is that fee-for-service may not be the most reasonable way to pay doctors. 

SMN: What is the most reasonable way to pay doctors?

JB: I think it's hard to evaluate the appropriate compensation for doctors much like it is for teachers, but there are ways of doing it. There are ways of evaluating which doctors deliver high-value care, which deliver patient-centered care, how doctors can have high quality and low cost in the care they deliver. If we use some of those methods, that might be an opportunity to reduce cost within Medicare and also improve the value of care. 

[In the mid-nineties the VA] adopted a system that distributed resources by unique number of patients seen, and it has worked really well in the VA. When you compare the VA to other parts of the US health care system, the VA has favorable results, compared with both Medicare fee-for-service and national samples. 

I think the bottom line is that the proof that we're not doing things the way we should, is that the US health care system is an outlier in both cost and quality among all industrialized nations. If you compare us to the other industrialized countries, we spend almost twice as much as any other industrialized country on health care, and our outcomes are almost by far the worst. 

So we know we're doing something wrong, and we need to make some fundamental changes to the system. 

Photo Credit: The B's/Flickr