Medicare has had an interesting few weeks: Not only did Congress manage to pass another one-year “fix” to the (unsustainable) sustainable growth rate reimbursement scheme, but planned Medicare Advantage cuts magically turned into a marginal increase (at least for some insurers) after deftly applied political pressure. This behind-the-scene politicking set the stage for CMS’s second massive release of provider data last Wednesday. Although the data release may further codify extant evidence of some specialists being more richly compensated than their primary care colleagues, coupled with the potential pursuit of fraudulent claims, unfiltered transparency reveals Medicare’s weakness in providing useful transparency for beneficiaries.
CMS formally released data detailing the 100 most common inpatient services, 30 most common outpatient services, and all physician and other supplier procedures and services performed on 11 more Medicare beneficiaries. The data included information on the doctor who performed the procedure, as well as the city and zip code where the procedure was performed. The biggest related take away seems to be a rather intuitive one: specialists, particularly cardiologists, ophthalmologists, and oncologists, are the biggest recipients of Medicare reimbursements: The three groups of specialists accounted for 7% or $5.6 billion of reimbursements in 2012.
Some in the medical community have responded to the perceived public scorched earth exercise circumspectly: hell hath no fury like scorned ophthalmologists. Valid questions, however, have emerged not only regarding the veracity of released data, but also the lack of context: some individual provider numbers may serve as a pass-through for entire practices, and a longitudinal release of data might allow for a more accurate picture of how service and drug utilization has changed as the country’s demographic profile has grown older.
In response, CMS and politicians have responded that the benefits of “transparency” would likely drive more cost-effective care with less waste. Putting aside concerns of what transparency actually means in this context, an economist might ask a more apposite question: while the literature shows that public excoriation (in limited doses) may be effective in reducing price variance in an established legislative framework on the supply side, where are equivalent measures to empower consumer (demand–side) decision making?
To perhaps put a finer point on it: while variance in the pricing of procedures by hospitals and providers is certainly a problem, an equal problem is the variance in treatment across patients using non-cost effective treatments and medical devices that add little or no value to outcomes. On this critical point, CMS and their data are silent. While further data releases may address this critical lacuna in consumer information, it is not likely: statute prevents the agency from making drug and procedure approval decisions explicitly based on costs. Thus, an odd dichotomy has emerged in Medicare’s transparency campaign: exposure of the downstream cost equation (doctors), while leaving the curtain back on the furtive upstream costs including the RUC committee and other important input prices that would help consumers to make more informed decisions.
The conflation of releasing big data with transparency is not a fatal error. Numerous useful data products may ultimately be developed as a result of CMS’s efforts. A bigger problem, however, may be the asymmetrical use of moral suasion to expose doctors to the glare of public scrutiny without giving consumers information on the cost and outcomes related to technology and drugs use. If transparency does not result in more informed decision making, some would argue it is not transparency at all.