Medicare Compliance & Reimbursement

Legislative effect on quality of care is unclear.

Physicians may have benefited from Part B drug payments more than Medicare's enrollees, a new report claims.

The Medicare Payment Advisory Commission (MedPAC) recently released the second of two Congressionally mandated reports on the "Impact of Changes in Medicare Payments for Part B Drugs."

The MedPAC report makes this startling disclosure: "Physicians responded to the changes by cutting costs and increasing efficiency (particularly with respect to drug purchasing activities), finding new sources of revenue (e.g., imaging), and selecting more profitable patients." While increasing efficiency and finding new revenue sources appear to be rather harmless effects of the 2005 Part B changes, physicians' tendency to look for patients who are more profitable undermines the Medicare program, MedPAC warns.

"Some practices ask patients to show that they have the funds available for an entire course of treatment before it begins," the report continues. Such practices send patients who are unable to access sufficient financial resources to the hospital for treatment, where billing departments regularly write off such expenses as bad debt.

Although several hospitals reported only marginal increases in the number of patients they received from physicians' offices, at least one hospital reported a 20 to 25 percent increase in such patients. This influx carries with it the potential to overwhelm hospitals' financial resources. The shifting of patients also raises worries that quality of care may be slipping, and the report indicates concern that the practice "may be damaging the coordination of care for their patients who must receive drugs in multiple settings."

Unfortunately, MedPAC also acknowledges its inability to assess quality of care accurately. "We have limited ability to assess the quality of drug administration services received by Medicare beneficiaries. There are few consensus quality indicators, although the specialty societies are working to develop more measures," the report concedes.

Despite these quality-of-care issues, the changes to Part B legislation have reduced costs significantly. "Overall, total Part B drug spending (taking into account price and volume changes) fell from $10.9 billion in 2004 to $10.1 billion in 2005," MedPAC finds.
 
This savings may even compensate for any decreases in quality of care, MedPAC hints. "Case managers at a national patient-assistance foundation found that most beneficiaries who contacted them were concerned about costs rather than the quality of care they received," the report concludes.

If recommended policy changes can successfully improve the payment system and promote beneficiary access, concerns over profiteering physicians may well prove to be overblown. But this report has also served to point out Congress' inability to measure quality of care. Unless Congress or the Centers for Medicare & Medicaid Services develops a reliable measure for quality control, the impact of future Medicare legislation will be similarly hazy, and those who need care most might suffer.