The Medicare spending we should be concerned about

“Do patients care about how much money their doctors make?”

This is the headline of a recently published post by Trudy Lieberman, and was written in response to the recent New Your Times’ coverage of Medicare disclosing payments to individual providers.

Now, I found the Times story fascinating on many levels, but I’ll admit it hadn’t occurred to me that the main value of this data release is that patients can find out how much their particular doctors are making off of Medicare.

It’s true that the Times’ main angle — that 2% of doctors receive almost a quarter of Medicare’s payments to providers — is disturbing and gripping. Apparently 100 doctors received a total of $610 million in payments. Who wouldn’t be captivated by that statistic. (Bring out the high rollers for a public flogging, or at least a billing investigation!)

But it was other aspects of the Medicare spending data that I think is more important.

The Medicare spending we should be concerned about

Here are the payment figures that really caught my eye:

  • $12 billion spent on outpatient visits in 2012, with average reimbursement of $57 per visit. This is out of a total Medicare spending of $600 billion for the year.
  • $77 billion overall paid to doctors and health care providers. (Unclear to me whether this is just Part B, or also includes payments to doctors during hospitalizations.)
  • $13.5 billion spent on “commercial entities like clinical laboratories and ambulance services.”

Look at that. Outpatient visits are 2% of Medicare spending. And at $57/visit, is it any wonder that primary care for seniors is often woefully inadequate?

We spend more on laboratory services and ambulances than we do on outpatient visits.

This data makes me a bit mad, because whenever people like me mention that we need more time with older patients, if we are to do the work society needs us to do, other people start telling us that it costs too much money. For instance, it is widely pronounced that primary care physicians need to learn to do more with less.

We can spend $1 billion/year injecting an expensive medication for macular degeneration (and that was for 143,000 of Medicare’s 47-50 million beneficiaries), but we don’t pay for clinicians to assess caregiver burden and well-being.

Now, it’s true that if we simply increased the reimbursement for Medicare outpatient visits, we likely wouldn’t see much improvement in health care for seniors. To seriously improve primary care and outpatient care for seniors requires not only more money, but changing the way money — and patients — flow through the system. (I’d like to see patients and families having a greater say in how their Medicare money is spent; many might prefer home assistance to an extra echocardiogram. Right now we have payor-centered care rather than patient-centered care.)

Still, on the whole these data reveal that Medicare’s investment in outpatient care — and primary care clinicians — is pitiful.

Surely we can afford to redirect some of that Medicare spending into primary care?

What should patients care about, when it comes to doctors and money?

Let’s return to the question of what patients care about, when it comes to doctors and money.

Trudy Lieberman points out that this information — knowing how much an individual doctor was paid by Medicare — seems unlikely to be valued by patients. For instance, it doesn’t help people know which doctors are better (as if it’s easy to get an appointment with the good doctors, but that’s another issue).

This is probably true. But when I read the following, I find myself wincing: “Still, I keep returning to the question: What will the data do for the average person? Can a person really use it to make decent health decisions?”

Herein lies the rub. No, this data does not really help an individual make decent health decisions about his or her own health.

But what about the process by which we — a collection of individual citizens residing in this country — decide how we will spend our collective health care dollars?

Every week, I have someone ask me how they can find a geriatrician to provide primary care for their elderly loved one.

Every month I have someone ask me why don’t more doctors make housecalls.

The answers to these questions lie in part in the spending data, because money makes the world go round. We spend 2% on outpatient care. We reimburse clinicians much better for doing procedures than for helping older patients with their primary care problems.

If the average person knew this, then perhaps they’d understand why right now it’s so hard to find a doctor to make housecalls, or to discuss prognosis, or to thoughtfully manage pain and other symptoms.

But most people don’t understand this. Getting people to think about how reimbursement affects health care is tough because:

  • The average person doesn’t want to think about it as long as he or she is healthy.
  • When sick, the average person just wants the problems fixed.
  • Whether healthy or sick, the average person is unlikely to be interested in understanding the financial underpinnings of our health care system. There is little immediate benefit plus it’s a complex thorny topic that easily is politicized.

In my experience, when faced with illness, patients care quite a lot about what kinds of health services and supports are available. But when faced with illness, people are lacking the time and energy to focus on long plays, like advocating for a better primary care system.

I firmly believe that most people would value and appreciate a more robust system of primary care and supportive care for older adults.

But if they don’t know or care that Medicare only spends a piddly 2% on outpatient visits, or that clinicians are strongly incentivized to avoid engaging in substantive primary care work, then it will be hard for them to exert their citizens’ influence in demanding the primary care infrastructure they deserve.

Leslie Kernisan is an internal medicine physician and geriatrician who blogs at GeriTech.  She could be reached on .

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  • NewMexicoRam

    Infuriating, to say the least.
    Until someone, some miracle worker, comes forth and straightens out this mess, it will remain a mess.
    To require more and more from primary care, yet refuse to back up those demands with cash infusion, is an absolute crime.

  • southerndoc1

    Good post, and agree completely with NewMexicoRam. The AAFP has been carrying water for every anti-physician initiative from CMS for the past three decades, and gets squat in return.
    Does anyone know what percent of the $12 billion went to primary care?

    • Leslie Kernisan, MD

      You mean, what % of the 2% spent on outpatient visits? Good question…I don’t know but would love to find out.

  • 1775concord

    You twice mention primary care doctors and bemoan their fate. This is promoting the “divide and conquer” plan that had Canadian primary care docs allow socialized medicine. Point: Lousy pay goes equally to speciaists. When I operated upon a Medicare brain tumor….preop H+P, surgery, say 5 days of ICU care, another 9 days of inpatient care, then all care to 90 days postop…my allowed (and Medicare pays only 80% of what they label as “usual and customary” charges)…reimbursement was $1,760. And my overhead for the office was $130 per hour. Please be aware of this as this data does not seem to fit you twice mentioning the poor primary care doctors. We are all in the boat together as the govt tries to completely take us over.
    The NY Times (a 527 for Democrats and Obama) stated in that article that a 15 to 25 minute office visit paid $57. We were paid $23 for the 15 minute visit, somewhere in the low $30s for a 30 minute visit. But all postop visits in that 90 day window were free, included in the surgical fee. Neurosurgeons billed the same office code as did primary cares. You would soon go broke with your $130/hour overhead.
    My own primary care doc of 25 years stoped seeing me when I wen on Medicare, as his accountant had pointed out to him that he lost money on every office visit.

  • Bob

    Truth is nobody knows where Medicare starts and Medicaid begins, but together they are very costly. For instance how much do states pay for Medicare Premiums that come out of State Budgets, or for Medicaid “Claw Backs” for the drugs their “quimbies” over 65, blind and disabled whose ranks are rising fast.
    Unless and until we make Medicaid 100% state based and removed from Medicare waste, fraud and abuse of $1.2 trillion a year will continue to flourish without end or until we are too far in debt to continue!