2010 June 17 Thursday
Medicare Drives Oncologists To Push More Chemo

Unintended consequences can take many forms. Faced with lower US federal government payments for their time oncologists restored some of that lost income by selling more expensive chemotherapy treatments. Keep this in mind if you or a loved one comes down with cancer. Objective expertise is hard to buy.

Boston, MA (June 17, 2010) In healthcare, less money doesn't always mean less service.

The 2005 Medicare Modernization Act, which substantially reduced Medicare payments to physicians for administering outpatient chemotherapy drugs, has had a somewhat paradoxical effect. Rather than resulting in fewer treatments, as one might expect, a new study finds that the Act has actually increased chemotherapy treatment rates among Medicare recipients.

"This sort of dynamic runs contrary to what most people would expect, but economists often encounter this sort of thing," says Joseph Newhouse, the John D. MacArthur Professor of Health Policy and Management at Harvard University and faculty member at Harvard Medical School, Harvard Kennedy School, Harvard School of Public Health, and the Faculty of Arts and Sciences, who carried out the study with colleagues Mireille Jacobson, now at RAND, Craig Earle, now at Sunnyside Medical Center, and Mary Price.

Chemo was prescribed at higher rates and more expensive forms of chemo were used.

In the first-ever study to test this critique, Newhouse and his team looked at Medicare claims for 222,478 beneficiaries who between 2003 and 2005 were diagnosed with lung cancer. The researchers found that on average, within one month of diagnosis, chemotherapy treatment increased 2.4 percent after the Medicare Modernization Act, from 16.5 percent to 18.9 percent. What's more, use of more costly chemotherapy drugs increased, while use of less expensive drugs declined.

"Physicians don't always respond to incentives the way most people expect," says Mireille Jacobson of RAND, the study's first author, "but in this case they do respond in a way that makes sense to economists. It seems logical on the one hand that when you pay less you get less. However, in this case, since a high proportion of an oncologist's income depends on prescribing, paying less per drug results in more drugs."

My advice: When faced with a serious illness use your own cash to pay the best medical expert you can afford to analyze what other doctors are trying to sell you.

Share |      By Randall Parker at 2010 June 17 10:05 PM  Economics Health


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