Friday, June 02, 2006

Medicare's Hospital Payment Disclosure

Yesterday, the Center for Medicare and Medicaid Services (CMS) released a listing of the 30 highest-reimbursed Medicare payments made to hospitals in the U.S. (Excel spreadsheet, 1.2 Meg). The data also contain volume information by hospital and reimbursement ranges by geography for all to see. The implications for this disclosure are already being felt from many angles.

Because I am a cardiac electrophysiologist who performs implantation of implantable cardiac defibrillators (ICDs), I recompiled their data for all 50 states for just the ICD procedures (Excel spreadsheet, 880K) and will limit my discussion to just this procedure because it simplifies important issues raised for patients, doctors, hospitals, insurers, the device industry, and CMS. For those unfamiliar with a few terms, a DRG is a "Diagnosis-Related Group" where payments made my Medicare were for a primary diagnosis and therefore "bundled" into one payment, irrespective of a person's length of stay in the hospital (it incents hospitals to discharge patients sooner and limits costs to Medicare). DRG's 515 and 536 are commonly used for ICD implantation.

Regarding these payments made by Medicare to hospitals in the case of ICD's:

For patients: I would want to know why there are "charges" typically three times those of "payments" and wonder if Medicare (part A) only overs the lower amount, what part of the remainder do I have to pay? (This area remains unclear to the patient).

For doctors: Now you can see patient volumes regarding the same procedures you may be performing at other area hospitals (your competition). It gives doctors an appreciation of their marketability. Additionally, doctors can understand what hospitals receive for their skills versus what you are paid and realize that the cost of the implantable device from industry (20-30K) is the most a significant cost to the hospital in the case of ICD reimbursement.

For the device industry: They now can see what each hospital performs for TOTAL volume each year in the Medicare population, and check their database to see what percentage of the business they garner from an individual hospital system each year. This may permit them to construct a more or less powerful negotiating position with the hospital system each year.

For hospitals: They observe a snapshot of volume of these expensive procedures and can plan for recruiting efforts in areas that are weak compared to their competition.

For insurers: Negotiated payments might be simpler to negotiate with hospitals.

For CMS: They can review why most hospitals bill predominently for DRG 515 in one geographic area for an ICD implant while others ONLY bill for DRG 536 (the higher reimbursing code). (Hmmm, could there be a billing descrepency here?).

These items (and I'm sure more) can be gleaned from these data. You can bet there will be more to come, and it's likely to be good for all in the long run.

But will patient's select their hospital based on this data? I doubt it. Convenience (and circumstances) will win out in the majority of cases (if you have a heart attack or cardiac arrest, are you going to check this list first?). Nonetheless, I think its long overdue.


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