No Association Between Centers for Medicare and Medicaid Services Payments and Volume of Medicare Beneficiaries or Per-Capita Health Care Costs for Each State
Authors: Gavin C. Harewood, Omar Alsaffar
Journal: Clinical Gastroenterology and Hepatology (2014)

The Centers for Medicare and Medicaid Services recently published data on Medicare payments to physicians for 2012. We investigated regional variations in payments to gastroenterologists and evaluated whether payments correlated with the number of Medicare patients in each state. We found that the mean payment per gastroenterologist in each state ranged from $35,293 in Minnesota to $175,028 in Mississippi. Adjusted per-physician payments ranged from $11 per patient in Hawaii to $62 per patient in Washington, DC. There was no correlation between the mean per-physician payment and the mean number of Medicare patients per physician (r = 0.09), there also was no correlation between the mean per-physician payment and the overall mean per-capita health care costs for each state (r = -0.22). There was a 5.6-fold difference between the states with the lowest and highest adjusted Medicare payments to gastroenterologists. Therefore, the Centers for Medicare and Medicaid Services payments do not appear to be associated with the volume of Medicare beneficiaries or overall per-capita health care costs for each state. The Centers for Medicare and Medicaid Services recently published data on Medicare payments to physicians for 2012. We investigated regional variations in payments to gastroenterologists and evaluated whether payments correlated with the number of Medicare patients in each state. We found that the mean payment per gastroenterologist in each state ranged from $35,293 in Minnesota to $175,028 in Mississippi. Adjusted per-physician payments ranged from $11 per patient in Hawaii to $62 per patient in Washington, DC. There was no correlation between the mean per-physician payment and the mean number of Medicare patients per physician (r = 0.09), there also was no correlation between the mean per-physician payment and the overall mean per-capita health care costs for each state (r = -0.22). There was a 5.6-fold difference between the states with the lowest and highest adjusted Medicare payments to gastroenterologists. Therefore, the Centers for Medicare and Medicaid Services payments do not appear to be associated with the volume of Medicare beneficiaries or overall per-capita health care costs for each state. Over the past 2 decades, health care costs have continued to spiral upward at almost twice the rate of annual inflation, with costs expected to account for almost 20% of the gross domestic product of the United States by the end of this decade.1Cuckler G.A. Sisko A.M. Keehan S.P. et al.National health expenditure projections, 2012-22: slow growth until coverage expands and economy improves.Health Aff (Millwood). 2013; 32: 1820-1831Google Scholar In the field of gastroenterology, multiple factors have contributed to this exponential growth in costs. A growth in the performance of colonoscopy for colorectal cancer screening, along with the resultant increase in detection of both neoplastic and preneoplastic lesions (which in turn require subsequent surveillance), novel nonsurgical therapeutic options for dysplastic Barrett’s esophagus, and the wider array of expensive biologic treatments for patients with inflammatory bowel disease are just some of the factors that have contributed to this increase in costs in gastroenterology. Along with these spiraling expenses, greater attention has been focused on regional variations in health care pricing. Again, in the context of gastroenterology, the New York Times has described 4-fold price differentials depending on in which part of the country one receives a colonoscopy.2Rosenthal E. The $2.7 trillion medical bill: colonoscopies explain why U.S. leads the world in health expenditures. New York Times, June 1, 2013.Google Scholar The scientific literature also has provided evidence to support large geographic cost disparities for colonoscopy, in large part owing to the varying utilization rates of propofol anesthesia,3Liu H. Waxman D. Main R. et al.Utilization of anesthesia services during outpatient endoscopies and colonoscopies and associated spending in 2003-2009.JAMA. 2012; 307: 1178-1184Google Scholar and studies also have described significant regional variations in surveillance follow-up intervals.4Stock C. Hoffmeister M. Birkner B. et al.Inter-physician variation in follow-up colonoscopies after screening colonoscopy.PLoS One. 2013; 8: e69312Google Scholar, 5Saini S.D. Nayak R.S. Kuhn L. et al.Why don’t gastroenterologists follow colon polyp surveillance guidelines? Results of a national survey.J Clin Gastroenterol. 2009; 43: 554-558Google Scholar, 6Goodwin J.S. Singh A. Reddy N. et al.Overuse of screening colonoscopy in the Medicare population.Arch Intern Med. 2011; 171: 1335-1343Google Scholar, 7Ko C.W. Dominitz J.A. Green P. et al.Utilization and predictors of early repeat colonoscopy in Medicare beneficiaries.Am J Gastroenterol. 2010; 105: 2670-2679Google Scholar One factor that is considered important in both reducing health care costs and reducing regional variations for equivalent services is to provide greater transparency surrounding these costs. Recently, the Centers for Medicare and Medicaid Services (CMS) published data on physician payments for 2012.8Medicare provider utilization and payment data: physician and other supplier. Baltimore: Centers for Medicare and Medicaid Services 2014.Google Scholar One of the goals of this initiative was to focus attention on Medicare physicians’ practice patterns and to prompt further debate on this issue, leading, perhaps in time, to delivery of higher-quality care at a lower cost. The aim of this study was to describe regional (state-by-state) variations in CMS payments to gastroenterologists and to evaluate whether these physician payments correlated with the volume of Medicare patients in each state. On April 9, 2014, the CMS released extensive data for the year 2012. This information detailed the payments to more than 880,000 health care providers for 6000 procedures and services in all 50 states, for which Medicare paid $77 billion. This analysis focused on payments to gastroenterologists. All gastroenterologists were categorized by state, and the mean per-physician payment was calculated. To adjust for the differing concentration of Medicare patients in each state, the per-gastroenterologist ratio of Medicare beneficiaries in each state was calculated. The mean physician payment then was divided by this patient-per-doctor ratio to yield the adjusted Medicare physician payment for each state. Physician payments per state were presented as means and SD measurements. Overall health care costs for each state also were sourced.9Around the Nation: A breakdown of health-care spending state by state. Available: http://online.wsj.com/news/articles/SB10001424127887323884304578328173966380066. Accessed June 15, 2014.Google Scholar Correlations between per-state physician Medicare payments and overall health care costs were described using the Pearson correlation coefficient. There was a 5-fold difference in the mean per-gastroenterologist payment across states, ranging from $35,293 (Minnesota) to $175,028 (Mississippi); the overall mean payment was $104,939 (SD, $30,273). There was also a 5-fold difference in the prevalence of Medicare beneficiaries per gastroenterologist across states, ranging from 1495 per physician (District of Columbia) to 7009 per physician (Wyoming); the overall mean was 3950 per physician (SD, 1186). When per-physician payments were adjusted for Medicare patient prevalence (ie, payment was divided by Medicare patients per doctor), there was still a 5.6-fold difference across states, ranging from $11 per patient (Hawaii) to $62 per patient (District of Columbia). There was no correlation between the mean per-physician payment and the mean number of Medicare patients per physician (r = 0.09) for each state, and there was no correlation between the mean adjusted per-physician payment and the overall mean per-capita health care costs for each state (r = -0.22). Table 1 illustrates the mean per-physician billings and payments for Medicare patients in each of the 5 least expensive states: Hawaii, Oregon, Minnesota, Vermont, and New Mexico (based on the mean physician payment per patient). Payments were subdivided into component categories: outpatient visits, inpatient visits, colonoscopy (both diagnostic and therapeutic), esophagogastroduodenoscopy/endoscopic ultrasound (diagnostic and therapeutic), endoscopic retrograde cholangiopancreatography (diagnostic and therapeutic), and miscellaneous services (such as infliximab infusions, motility testing, and capsule endoscopy). As shown, there were significant disparities between payments and billings for each state. Across all states, colonoscopy services consistently accounted for the largest proportion of payments; outpatient visits or upper endoscopy services represented the second largest proportion of payments for each state.Table 1Mean Medicare Billing and Reimbursement for Gastroenterology Services per Patient Provided for the Five Least Expensive StatesHIORMNVTNMPaidBilledPaidBilledPaidBilledPaidBilledPaidBilledMean payment/MD$60,345$265,885$49,952$268,657$35,293$147,575$64,679$488,167$81,453$295,049Mean no Medicare patients/MD (total no Medicare patients/no of MDs)5274 (195,138/37)4104 (533,533/130)2638 (683,121/259)4794 (91,078/19)5793 (272,255/47)Mean payment/patient$11.44$50.41$12.17$65.46$13.38$55.94$13.49$101.83$14.06$50.93 Inpatient$0.83$2.09$1.11$3.71$1.81$4.79$0.82$2.53$0.86$2.05 Outpatient$4.21$10.66$2.82$9.93$2.13$4.87$2.13$4.36$3.78$8.97 ColonoscopyaBoth diagnostic and therapeutic procedures.$4.83$26.55$5.35$33.21$4.87$23.61$7.37$62.06$5.96$24.44 EGD, EUSaBoth diagnostic and therapeutic procedures.$1.35$9.37$2.00$14.70$3.08$15.93$2.60$27.76$2.42$11.55 ERCPaBoth diagnostic and therapeutic procedures.$0.20$1.68$0.19$1.24$0.77$4.09$0.40$4.35$0.21$1.29 MiscellaneousbMiscellaneous services (eg, infliximab infusions, motility testing, capsule endoscopy).$0.01$0.06$0.70$2.66$0.72$2.66$0.17$0.77$0.83$2.63NOTE. Mean payment/MD represents the mean amount that was both billed and reimbursed per gastroenterologist in US dollars. The mean payment/patient represents the mean amount (both billed and reimbursed) per Medicare patient for each gastroenterologist—each payment comprises inpatient, outpatient, colonoscopy, esophagogastroduodenoscopy/endoscopic ultrasound, endoscopic retrograde cholangiopancreatography, and miscellaneous services (ie, the sum of these 6 components equals the mean payment/patient for each physician).EGD, esophagogastroduodenoscopy; ERCP, endoscopic retrograde cholangiopancreatography; EUS, endoscopic ultrasound.a Both diagnostic and therapeutic procedures.b Miscellaneous services (eg, infliximab infusions, motility testing, capsule endoscopy). Open table in a new tab NOTE. Mean payment/MD represents the mean amount that was both billed and reimbursed per gastroenterologist in US dollars. The mean payment/patient represents the mean amount (both billed and reimbursed) per Medicare patient for each gastroenterologist—each payment comprises inpatient, outpatient, colonoscopy, esophagogastroduodenoscopy/endoscopic ultrasound, endoscopic retrograde cholangiopancreatography, and miscellaneous services (ie, the sum of these 6 components equals the mean payment/patient for each physician). EGD, esophagogastroduodenoscopy; ERCP, endoscopic retrograde cholangiopancreatography; EUS, endoscopic ultrasound. Table 2 shows the mean per-physician billings and payments for Medicare patients in each of the 5 most expensive states: Mississippi, Florida, New Jersey, District of Columbia, and Maryland. As shown, there were again significant disparities between payments and billings for each state. Across all states, colonoscopy services followed by outpatient visits again accounted for the largest proportion of payments for each state.Table 2Mean Medicare Billing and Reimbursement for Gastroenterology Services per Patient Provided for the Five Most Expensive StatesMSFLNJDCMDPaidBilledPaidBilledPaidBilledPaidBilledPaidBilledMean payment/MD$175,028$737,037$17,0679$559,000$141,667$456,395$92,971$344,435$106,955$367,002Mean no Medicare patients/MD (total no Medicare patients/no of MDs)4090 (380,407/93)3721 (3,259,602/876)2411 (1,185,993/492)1496 (68,809/46)2375 (707,642/298)Mean payment/patients$42.79$180.20$45.87$150.23$58.77$189.30$62.15$230.23$45.04$154.53 Inpatient$7.75$15.69$10.33$24.90$14.89$31.13$11.11$24.52$6.82$13.96 Outpatient$9.68$19.50$14.12$35.89$20.04$40.76$18.55$38.76$15.22$32.30 ColonoscopyaBoth diagnostic and therapeutic procedures.$13.59$79.06$11.41$47.21$14.27$68.33$18.96$94.30$14.82$64.36 EGD, EUSaBoth diagnostic and therapeutic procedures.$8.43$51.51$7.08$32.17$7.56$41.90$9.47$52.76$6.70$36.73 ERCPaBoth diagnostic and therapeutic procedures.$0.32$1.97$0.41$2.25$0.46$3.13$2.81$15.80$0.66$4.36 MiscellaneousbMiscellaneous services (eg, infliximab infusions, motility testing, capsule endoscopy).$3.01$12.48$2.52$7.82$1.55$4.04$1.25$4.09$0.82$2.81NOTE. Mean payment/MD represents the mean amount that was both billed and reimbursed per gastroenterologist in US dollars. The mean payment/patient represents the mean amount (both billed and reimbursed) per Medicare patient for each gastroenterologist—each payment comprises inpatient, outpatient, colonoscopy, esophagogastroduodenoscopy/endoscopic ultrasound, endoscopic retrograde cholangiopancreatography, and miscellaneous services (ie, the sum of these 6 components equals the mean payment/patient for each physician).EGD, esophagogastroduodenoscopy; ERCP, endoscopic retrograde cholangiopancreatography; EUS, endoscopic ultrasound.a Both diagnostic and therapeutic procedures.b Miscellaneous services (eg, infliximab infusions, motility testing, capsule endoscopy). Open table in a new tab NOTE. Mean payment/MD represents the mean amount that was both billed and reimbursed per gastroenterologist in US dollars. The mean payment/patient represents the mean amount (both billed and reimbursed) per Medicare patient for each gastroenterologist—each payment comprises inpatient, outpatient, colonoscopy, esophagogastroduodenoscopy/endoscopic ultrasound, endoscopic retrograde cholangiopancreatography, and miscellaneous services (ie, the sum of these 6 components equals the mean payment/patient for each physician). EGD, esophagogastroduodenoscopy; ERCP, endoscopic retrograde cholangiopancreatography; EUS, endoscopic ultrasound. These findings provide valuable insight into CMS payments and gastroenterologist practice patterns across the United States. Our results show regional variations in Medicare payments and also indicate that, perhaps unexpectedly, these differences do not appear to be associated with each state’s relative prevalence of Medicare beneficiaries per gastroenterologist. Also, interestingly, Medicare payments do not appear to correlate with overall health care costs when analyzed per state. One of the more surprising findings in this study was the absence of an association between the relative prevalence of Medicare patients per physician and physician payments. One might expect that these two variables would be associated closely. This suggests that individual practice behaviors for clinicians may account for much of the regional disparity in resource utilization rather than patient factors. Granted, there may be patient-related factors along with variable penetrance of commercial insurance contributing to this state-by-state variation. Also, Medicare payment systems (which vary up to 10% above or below a set reference point) are adjusted for local market conditions using measures such as the area wage index and geographic practice cost indexes, which inflate Medicare payments in high-wage markets and reduce payments in low-wage markets. Although these may be contributing factors to the regional variations we observed, they are unlikely to be the only cause. For example, it is improbable that each Medicare patient in the District of Columbia requires, on average, 5 times as much care as patients in Hawaii. Adjusted Medicare physician payments already have been shown to vary by region. According to the Dartmouth Atlas, per-capita Medicare reimbursements in Miami are more than twice as those in Minneapolis.10The Center for the Evaluative Clinical Services and Dartmouth Medical School, The Dartmouth Atlas of Health. American Hospital Publishing, Inc, Chicago1996Google Scholar In the lay press, Gawande11Gawande A. The cost conundrum: what a Texas town can teach us about health care. New Yorker, June 2009.Google Scholar also has shed light on this topic by reporting that variations in individual physician behavior was the likely driver of differences in Medicare spending between 2 cities in close proximity to each other, citing the example of McAllen and El Paso in Texas. Our findings corroborate this theory that the intensity of per-capita spending on Medicare beneficiaries varies from region to region. One aspect of this regional cost variation that deserves further comment relates to whether this phenomenon is unique to the Medicare population or applies equally to privately insured patients. In the article by Gawande11Gawande A. The cost conundrum: what a Texas town can teach us about health care. New Yorker, June 2009.Google Scholar in the New Yorker, the author speculated that a likely explanation for the large differences observed in Medicare spending between McAllen and El Paso, TX, was a culture shift in McAllen during the mid-1990s, leading to physicians adopting a greater “entrepreneurial spirit” and a “culture of money.”11Gawande A. The cost conundrum: what a Texas town can teach us about health care. New Yorker, June 2009.Google Scholar Franzini et al12Franzini L. Mikhail O.I. Skinner J.S. McAllen and El Paso revisited: Medicare variations not always reflected in the under-sixty-five population.Health Aff (Millwood). 2010; 29: 2302-2309Google Scholar focused on these 2 Texas cities and assessed whether a similar spending pattern was observed among privately insured patients younger than age 65. In contrast, they found that per-capita spending was less divergent for the non-Medicare population. For example, although Medicare spending was 86% higher in McAllen, the total spending for patients insured by Blue Cross and Blue Shield of Texas was 7% lower in McAllen than in El Paso. The investigators concluded that physicians likely respond differently to the incentives in Medicare compared with those in private insurance programs; lucrative Medicare services appear to be used liberally, whereas similar widespread use may be restricted by private insurance plans that scrutinize utilization more closely. Therefore, one must be careful not to extrapolate physician behaviors with Medicare patients to their practice patterns in general. Some noteworthy limitations of this study relate to the CMS data set. First, the data set may not be representative of each individual physician’s entire practice. Only fee-for-service Medicare claims were analyzed, although most physicians will care for other patients not covered by Medicare such as those covered by Medicaid, those with private insurance, and also patients without insurance. Second, the data make no attempt to describe the quality of care provided to patients. Although efforts have increased to place some metrics of quality in the public domain such as the Physician Quality Reporting System, this study did not capture any of these measures. Third, the cost data are not risk adjusted to account for any differences in the severity of disease or the presence of comorbid illnesses in each respective physician’s Medicare patient population. Fourth, the degree to which these data truly reflect physician activity is questionable in several circumstances. For example, in some cases the billing levels of gastroenterologists were found to have been inflated artificially by trainee fellows and/or midlevel providers in the same practice who had billed under the name of that provider. Similarly, there have been reports of physician billing being increased artificially as a result of pathology services billing under a provider in the same practice. In conclusion, these findings provide evidence to support significant regional disparity in physician practice. Whether the release of this CMS data will lead to reduction in health care spending remains to be seen. However, shedding light on Medicare spending and gastroenterologist practice patterns is a useful first step in providing insight for health care providers, patients, policymakers, and other stakeholders regarding the distribution of Medicare payments. Future studies will be helpful in further characterizing factors that influence health care spending among the Medicare population.