More than 1,000 physicians on the North Coast received upward of $114 million in Medicare payments in 2012, according a new federal database that gives consumers an unprecedented look inside their doctors' practices.
The amount is part of $77 billion Medicare paid out to more than 880,000 doctors across the United States under the Medicare Part B fee-for-service program. The federal government says release of the data is aimed at giving the public, policymakers and researchers a detailed view of government health care spending and physician practice patterns.
While consumer groups applaud the release of the data, doctors say the numbers are likely to cause more confusion than benefit because the cost of services is only one aspect of a complex health care system.
“The data could mislead patients,” said Dr. Stephen Steady, president of the Sonoma County Medical Association. “I agree with good data. We're all in favor of showing good data to have better outcomes. But we have to do it in the right format.”
Steady, a Petaluma gastroenterologist, said the data does not take into account a patient's degree of illness, medical outcomes of procedures and the possibility that more than one doctor in a practice billed Medicare using a single physician's Medicare provider number. The data also does not account for a physician's cost of drugs, which in some cases accounts for a significant portion of the Medicare reimbursement.
Most local doctors do not receive anywhere near the multimillion-dollar Medicare payouts that made national headlines earlier this month when the data was first released — such as $21 million that went to a Florida ophthalmologist in 2012.
Consumer advocates say release of the data by the Centers for Medicare & Medicaid Services is a major victory for patients, who now have a tool that can help them gauge the health care market.
“Consumers are in a health care system that our country's decision makers have decided is going to be market-based. In markets, buyers and sellers both need information and in health care consumers have virtually no information about what they're buying,” said John Santa, medical director at Consumer Reports Health.
Santa acknowledged the data is “tricky” and that it will take some time to organize and analyze. Once that happens, Santa said, consumers will have a window they've never had into a local physician's practice.
“Have their doctors done this procedure once or 100 times? Both are of concern,” he said. “It will give people an idea of how much their doctors charge. If we do a really good job, eventually we'll see which doctors are playing games with this and which aren't.”
With the Medicare data now made public, physicians and their medical associations are trying to provide what they say is much-needed context and a better understanding of the federal government's historic data release.
The $114 million in Medicare payments to the North Bay only includes payments to doctors in the 15 cities in Sonoma, Mendocino and Lake counties. Payments to doctors in unincorporated communities, such as Gualala or Guerneville, were not included in the total because most physicians are centered in the North Bay's larger communities.
Also, for privacy reasons, the federal database excluded procedures performed on 11 or fewer patients.
About a third of the 1,000 North Coast physicians received an average Medicare reimbursement of more than $85,000 in 2012. Nationally, about 25 percent were reimbursed more than $85,000.
Of the North Coast's 1,000 physicians, 14 were paid a combined $23.5 million, or 20 percent of the $114 million regional total. These physicians were predominantly specialists in ophthalmology and oncology.
Dominating the top of the list of Medicare reimbursements in the North Coast are the four physicians with the North Bay Vitreoretinal Consultants, who were each reimbursed between $1.8 million and $2.3 million.
Dr. Patrick Caskey, the senior partner at North Bay Vitreoretinal Consultants, said his practice likely receives more Medicare revenue per physician than any other Sonoma County group. The reasons, however, illustrate the limitations with the Medicare data release.
Caskey said that almost two-thirds of Medicare reimbursements coming into his practice actually “passes through” to pharmaceutical companies Genentech and Regeneron, which produce expensive drugs used to treat age-related macular degeneration.
A dose of Genentech's drug Lucentis, for example, brings a $2,000 Medicare reimbursement. But the practice only keeps $40 as payment, he said.
“The rest — 98 percent — is sent directly to Genentech in payment for the drug,” Caskey said in an email detailing the flow of payment. “That gives us a profit margin of 2 percent which is not enough to cover our costs for documentation, refrigerated storage and maintenance of sterility.”
Caskey said that unlike other physicians, who have in recent years been taking fewer Medicare patients, the government insurance covers 70 percent of the practice's patient population.
The reason is that retinal specialists are primarily responsible for treating age-related macular degeneration, which occurs almost exclusively in people older than 60. In the United States, almost all seniors have at least Medicare insurance.
Those two factors result in about 42 percent of the practice's revenue — Medicare and all other payment sources — going directly to drug companies.
Steady, the local medical association president, said the data may contain errors. In 2012, Medicare reimbursed the Petaluma internist $198,517. Steady actually billed Medicare $647,310, a sum that represents the actual cost of services he provided to Medicare patients.
Steady pointed out that a table containing his Medicare billings lists a line item twice with different numbers. The data do not “risk-stratify” his patients, even though he does not get paid more for complicated patients.
Doctors have long said Medicare underpays them for their services. As a result, the column in the Medicare physician data that describes what a doctor bills can be seen as an example of the doctor's cost of doing business.
Some consumer advocates agree that more information is needed if patients are to make better assessments of what doctors charge and the number of times they perform a certain procedure.
Carmen Balber, executive director of the national advocacy group Consumer Watchdog, said the data related to the number of times a doctor performs a particular procedure would be more useful it were accompanied by comparisons to national averages.
“If the average is 100 times for a procedure and a doctor did it 2,000, that tells you something,” said Balber.
Santa of Consumer Reports Health said the data will require more time and a trained eye to determine whether physicians are abusing the Medicare system. The fee-for-service model sometimes is an incentive for physicians to “do more and bill more,” he said.
“Ultimately, this data will give some suggestion, if analyzed well, who is abusing that privilege and who is not,” Santa said. “The numbers themselves aren't going to tell that whole story.”
