Medicare test, procedure growth under scrutiny

When are hospitals providing necessary healthcare services, and when are they padding the bottom line? That's a question more hospitals might want to examine given recent news reports documenting rapid Medicare spending growth--and recent actions by the U.S. Department of Justice (DOJ) to pursue False Claims Act (FCA) allegations that increasingly focus on whether hospitals "put profits ahead of sound medical judgment" as described by Tony West, assistant attorney general for the DOJ's Civil Division, in the May 18 announcement [1] of a nine-hospital, $9.4 million settlement to resolve FCA cases involving inpatient claims for the spinal procedure kyphoplasty.

Medicare spending has escalated at a rapid pace in formerly cost-efficient regions of the United States, reports Kaiser Health News via the Washington Post. Provo, Utah, offers a case study of what is happening. From 2000 to 2007, Medicare spending in Provo rose by an annual average of 8.6 percent compared to a national annual average growth rate of 4.7 percent, according to the Dartmouth Atlas of Health Care. By 2007, average per-beneficiary Medicare spending in Provo's hospital market had reached $8,064, bringing a region once heralded for its cost-efficiency almost in line with the national average of $8,682. Other former bastions of cost control that saw average annual Medicare spending grow at 7 percent or more during that time period include Oxford, Miss., Wausau, Wis., and Durham, N.C.

The spending growth is tied to corresponding growth in the number of procedures and tests that Medicare beneficiaries receive in these markets, and the common denominator (at least in Provo) underpinning the explosion in tests and procedures appears to be hospital and clinic expansions that have added new diagnostic and treatment capabilities. While many hospitals and physicians attribute the cost growth to either an increase in patients or better, more aggressive care, others aren't so sure.

Provo providers "appear to be succumbing to the same forces that have led to high costs elsewhere," Paul Ginsburg, president of the Washington, D.C.-based Center for Studying Health System Change, tells Kaiser Health News.

Provo physicians performed 17.3 percent more procedures per Medicare beneficiary in 2008 compared to 2000--growth that was substantially higher than the median national increase of 13.7 percent, according to an August 2009 Government Accountability Office (GAO) study. In addition, the growth rates for some treatments (e.g., aortic-aneurysm surgeries, hospitalizations for hypertension and asthma) are increasing faster in Provo than the national pace. And in 2005-2006, Provo had the highest rate of shoulder replacement surgeries in the nation, according to the recent Dartmouth study, Trends and Regional Variation in Hip, Knee, and Shoulder Replacement. At a rate of 3.0 replacements per 1,000 Medicare beneficiaries, Provo ranked roughly 10 times higher than the region with the lowest rate (Syracuse, N.Y., at 0.3 per 1,000).

State governments are taking notice of these types of growth rates. The Wyoming Division of Workers Compensation will soon launch a study examining the impact of high rates of back surgeries in the state, reports the Cowboy State Free Press. Wyoming has an average of 9.6 back surgeries per 1,000 Medicare beneficiaries, more than 50 percent higher than the national average of 4.3 percent, according to Dartmouth statistics.

To learn more:
- read this Kaiser Health News article [2] via the Washington Post
- read the GAO report [3]
- read the Dartmouth report [4] on joint replacements
- visit the Dartmouth website [5]
- read this Cowboy State Free Press article [6]