The Truth Behind the Numbers

Category: Miscellaneous Articles Published on Tuesday, 13 May 2014 Written by Yong Tsai, MD

I would like to take this opportunity to weigh in on the recent controversy surrounding the release of Medicare Part B reimbursement amounts to physicians and facilities in Volusia and Flagler Counties.  I, and the vast majority of ethical physicians practicing in the medical community, certainly support the concept of transparency in Medicare payments and accurate analysis, documentation, and dissemination of healthcare spending information. However, data in and of itself tends to be a tool easily manipulated and often misleading.

It is paramount to note that gross revenue is not, especially in the delivery of medical care, remotely near net revenue.  As is often the case in any industry, those who do not work within its complex inner workings may not readily grasp the intricacies at hand.  For example, the largest part of Medicare payout for my rheumatology practice is, in fact, the infusion biologic drugs used to treat patients severely affected by rheumatoid arthritis and other autoimmune disorders.  These biologic drugs are extraordinary, effective, and, most significantly, outlandishly expensive.  On average, it costs approximately $14,000 annually to treat one severe rheumatoid arthritis patient, $32,500 for one lupus patient, and $27,000 for one Wegener’s granulomatosis patient.

Most Medicare beneficiaries choose IV biologic infusion when available rather than the subcutaneous injection of biologic drug due to the substantial advantage in coverage. The regulations being what they are, I am required to pay for the biologic drugs prior to infusion therapy for patients.  The Medicare reimbursement rate in 2014 is drug cost + 4.3%, leaving approximately 5% of total expenses per treatment to cover all associated costs with the delivery of biologic medications including the risk of denied claims and reimbursement delay as well as unpaid copays. Additionally, Medicare institutes a post-payment review system that affords the retrieval of funds after payment should claims review reveal an issue.

Furthermore, along with the delivery of medication, a safe and secure office-based infusion center requires much professional assistance and overhead, including a rheumatologist, a nurse practitioner, certified IV nurses, and billing staff, each with adequate training to manage possible reactions during infusion. While office infusion is a less costly procedure than using the hospital setting for therapy, many physicians opt for the more expensive hospital infusion service because of the cost, risk, and regulations of providing this service.

Ultimately, physicians want excellent care for their patients, using the most effective treatment options available, which currently include ground-breaking biologic medications.  Even factoring in the cost of research and development of biologic drugs, these costly medications provide pharmaceutical companies a financial windfall.  Sadly, often some companies do an end-run around patent laws, avoiding competition by delaying generic alternatives to the marketplace.

There is a place for great scrutiny in the healthcare industry; however, caution should be exercised when assuming the patient-based doctor is the lynchpin to waste, fraud, overcharging, and Medicare program abuse.

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