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MDs Get Rich Off Medicare

Medicare data long suppressed by the American Medical Association is out, and it contains one especially eye-popping fact. A very small number of doctors took a huge chuck of the Medicare reimbursements in 2012. The NYT has the story:

In 2012, 100 doctors received a total of $610 million, ranging from a Florida ophthalmologist who was paid $21 million by Medicare to dozens of doctors, eye and cancer specialists chief among them, who received more than $4 million each that year. […]

Much of Medicare spending is concentrated among a small fraction of doctors. About 2 percent of doctors account for about $15 billion in Medicare payments, roughly a quarter of the total, according an analysis of the data by The New York Times.

It’s not clear why these doctors captured so much of the reimbursement funds. They may have prescribed pricier drugs instead of the cheaper alternatives, or over-billed for services. Watchdog groups and other agencies will comb through the data to see whether doctors inflated the number of tests and procedures they did in order to rake in more money. A past FBI investigation of one of the high-earning doctors may suggest that doctors have engaged in creative forms of over-billing.

It’s important to point out, however, that this isn’t just a question of greedy doctors; the U.S. health care system itself provides incentives for over-billing. When you pay people per service, they will naturally gravitate toward increasing the number of services they provide. The bigger problem is the American Medical Association, which, like other modern-day guilds, wants to preserve the system that keeps this incentive structure in place. By restricting the number of care providers in the system, seeking rents, and opposing other reforms, the AMA is ensuring that doctors continue to have an incentive to inflate their payments, as the Medicare data shows they have been doing all along.

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  • rheddles

    No doubt there may be some cases of fraud and abuse, but what you’ll probably find is that most of these doctors figured out how to play the Medicare system and then focused their practice on pumping through large numbers of the elderly. They game the system, just like Archers Daniels Midland or General Electric. What do you expect financially motivated entrepreneurs to do? If you don’t like it, get rid of the game. Give the elderly a stipend, if you must, to buy their own health insurance for their own doctors. But get the government out of it.

    • lord acton

      You are right. Will never happen.

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