The federal government spent a lot of money in 2012 on specialty eye care at 7760 France Av. S., Suite 310 — $13 million to be exact.
Seven ophthalmologists practicing at that location received more than $1 million apiece from Medicare — an amount matched by only five other Minnesota doctors — according to Wednesday’s first-ever release of data showing payments from the traditional Medicare Part B program to the nation’s doctors.
The reimbursement to VitreoRetinal Surgery in Edina is one of many surprising nuggets in Wednesday’s data release, which also paints a detailed picture of the medical care used by the nation’s 49 million Medicare patients and how the program pays doctors and other providers to deliver it.
In the case of the Edina ophthalmologists, for example, payments were high largely because of their frequent use of ranibizumab, an injectable drug used to treat age-related macular degeneration and prevent blindness.
“The drugs that we use are very expensive,” said Dr. David Williams, a partner at VitreoRetinal Surgery, “but they are actually miraculous in the benefits that they have.”
The historic release by the U.S. Centers for Medicare and Medicaid Services (CMS), after a prolonged lawsuit by various news organizations, revealed some startling patterns. While the average Minnesota ophthalmologist received $172,000 from Medicare Part B, the average family practice doctor received just $21,000 — largely for office visits and routine care. And there were huge gaps between what doctors sought to charge Medicare and what the program actually paid them.
While the data might offer gossip for the curious, health care analysts said it holds greater potential to inform the public about wide variations in health care costs and practice patterns.
“You can bet we will be looking at it and drawing some conclusions and talking to our members about it,” said Carolyn Pare, president and CEO of the Minnesota Health Action Group, an advocacy group representing businesses and other organizations paying Minnesotans’ health care bills. “There is a level of transparency here that we have never been able to achieve.”
Low costs in Minnesota
One of the most startling lessons is that Minnesota remains a low-cost state for Medicare, the federal health benefit program for the nation’s elderly. Part B, the portion that pays doctor bills, paid on average $29,971 to doctors, nurse practitioners and other health care providers in Minnesota in 2012. That was the lowest average in the nation and less than one-quarter of the $133,209 paid to the average provider in Florida.
Those figures reflect long-standing inequities in Medicare’s payment system that have penalized Minnesota’s health care efficiency.
“Someone who has the same skin cancer surgery in Arizona or Florida — their physicians will be reimbursed more in those states than a physician in Minnesota,” said Dr. Cindy Smith, president of the Minnesota Medical Association.
Smith is a Willmar, Minn., dermatologist who received more than $263,000 in Part B reimbursements in 2012, which she attributed to the accumulated skin cancer risk that comes with aging and a large Medicare population in her practice.
Smith cautioned people from reading too much into the variations in Medicare payments or getting too incensed by million-dollar amounts to specialists. An orthopedic surgeon focusing on hip replacements in the elderly will receive much more from Medicare than a colleague who provides trauma care to all ages and receives more money from private insurers, she noted. The data also doesn’t differentiate doctors by the complexity of their patients.
“The data is raw,” she said. “It doesn’t say anything about what I’m doing or the patients that I’m caring for.”
Limitations of information
Dr. Franklin Cockerill, chairman of pathology at Mayo Clinic, is a good example. He appeared to receive a whopping $11 million from Medicare in 2012 — one of the highest amounts in the nation. But that is because his name was on every lab test ordered at Mayo, which can run into the millions of lab procedures. Part B revenues in his name were passed through to the Rochester-based health care system.
“Dr. Cockerill is a salaried employee of Mayo Clinic and is not making big money from Medicare,” spokesman Bryan Anderson said.
The data reflects only payments from Medicare’s Part B fee-for-service system and not for the Medicare Advantage program, which allows the elderly to enroll in managed-care plans. That is significant in Minnesota, where 47 percent of the state’s more than 800,000 elderly Medicare enrollees purchased Advantage plans from health insurers.
And the data reflects revenues — not take-home profits — because doctors use it to pay for their offices, equipment, prescriptions, nurses and other expenses. Depending on the specialty and practice, 50 percent to 70 percent of revenues could go toward expenses.
Where the value is
Despite the limitations of the data, health care experts believe it will provide value to the public. While doctors are paid by Medicare at fixed rates, the database lists what they charged — their sticker prices for services. And that could be useful to patients along with data showing which doctors performed the most procedures.
The data could also help identify doctors who are performing outdated procedures or ordering excessive tests. The Associated Press reported Wednesday that 344 U.S. doctors received more than $3 million from Medicare Part B, and that 2 percent of physicians accounted for one-fourth of payments.
“We know there is waste in the system, we know there is fraud in the system,” said Jon Blum, deputy CMS administrator. “We want the public to help identify spending that doesn’t make sense.”
That said, much of the money goes for garden-variety health care. In Minnesota, more than $98 million of the $449 million in Part B payments to doctors was for office visits.
Municipal and private ambulance services also were major recipients. Gold Cross in Rochester and Allina Health in Minneapolis each received more than $6 million for emergency medical transportation and life support care.
Ophthalmologists in general were among the highest-paid by Medicare in Minnesota. Dr. Alan Downie of Stillwater received $1.8 million from Part B in 2012 — 87 percent of it was to administer the injectable ranibizumab, which is sold under the brand name Lucentis.
Williams, the Edina ophthalmologist, said he wasn’t surprised to see specialists in his profession receiving so much from Part B. At least 60 percent of his clinic’s revenues come from Medicare because retinal conditions such as macular degeneration are most common in the elderly; physicians treating younger patients would receive more of their revenue from private insurance and less from Medicare. In addition, he said, his group mostly takes referrals of patients who are already on the path to blindness.
Costs have increased with the advent of brand-name drugs that treat these conditions, but Williams said the payoff has been obvious.
“A lot of these elderly people who were losing their vision, we did our best, but after a while they would lose their vision,” he said. “Today, using this medication, it basically stops the disease in its tracks.”