Editorial:  Medicare’s real doctor payment problem

The news that a small percentage of the country’s physicians collected billions of dollars from Medicare in a single year may or may not be a testament to individual greed; some of the top recipients are under investigation for allegedly bilking the system, while others work long hours delivering costly care. But it is a powerful reminder that the program needs to stop rewarding doctors for the quantity of care they deliver rather than the quality. Happily, there’s a bipartisan plan to do just that; unhappily, lawmakers haven’t been able to agree on how to cover its cost. If Congress needed any further incentive to settle its differences, the fact that 1,000 doctors raked in $3 billion from Medicare should provide it.

The Obama administration released details Wednesday on $77 billion worth of payments made in 2012 by Medicare Part B, which pays for doctors and other healthcare professionals. Part B is financed mainly by the government, so taxpayers have a keen interest in the program’s financial integrity. The new data, however, reveal some alarmingly large payouts. For example, more than a dozen physicians each collected more than $10 million from Medicare in 2012, and thousands of specialists in four disciplines — three cancer-related fields and ophthalmology — averaged more than $300,000.

It’s risky to leap to conclusions just from the numbers, given that the payments may include reimbursements for expensive drugs that doctors provided or services by multiple members of a team. Yet the concentration of payments — a mere 2% of the doctors participating in the program took in almost a quarter of the fees — exemplifies the problem with Medicare’s “fee for service” payment system. This system ignores the value and effectiveness of the care provided, paying attention only to how many treatments are rendered. That gives doctors an incentive to provide the most expensive and intensive forms of care, not necessarily the treatments that work best.

Earlier this year, the top Republicans and Democrats on three influential congressional committees came up with a plan that would have encouraged Medicare doctors to switch from fee-for-service to alternative payment plans that reward quality and efficiency. It also would have replaced an ineffective formula for slowing the growth in Part B costs by cutting the fees paid for most doctors’ services. Unfortunately, the plan stalled because of a dispute over how to pay for the measure, and Congress enacted minor Medicare reforms that left the fee-for-service system intact for at least another year. The new disclosures about enormous Medicare payouts should send lawmakers back to work on the bill to steer doctors into payment plans that yield better results for patients — and taxpayers.