A study that explored variations in Medicare payments for surgical care revealed that surgeons who are paid the most bill for five times as many services as do those who are paid the least.

The researchers sought to determine whether surgeons who receive greater compensation from Medicare treat more patients or bill for more services per beneficiary. Using Medicare Part B data from 2012 for participants in the fee-for-service program, they calculated two ratios for each provider: number of services provided to unique beneficiaries, and total submitted charges to total Medicare payments. 

What they discovered was that the number of services billed rose as the level of compensation increased. Specifically, for the 20th, 40th, 60th and 80th deciles of provider pay, the respective services-per-beneficiary ratios were 1.6, 2.2, 3.1 and 5.

They also found that Medicare charges were greater than payments by a ratio of three to one, regardless of compensation level. The inflated costs resulted primarily from less-expensive outpatient procedures performed in clinics, rather than higher-cost procedures performed in the operating room.

“That high-earning physicians achieve high reimbursement by ordering disproportionate services … suggests that consideration should be given to implementation of alternative payment models, with a subsequent move away from fee-for-service,” the authors remarked, offering the Veterans Administration and safety net models—wherein physician pay is not tied to service billing—as examples of payment systems that might more effectively contain costs.

The results of the study were published online Feb. 26 by the journal Surgery. 

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