After Medicare slashed payments to doctors, doctors simply "treat" more patients to make up for the shortfall of revenue

Saturday, October 30, 2010 by: David Gutierrez, staff writer
Tags: Medicare, doctors, health news

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(NaturalNews) When Congress cuts Medicare reimbursements to doctors, doctors may simply respond by ordering treatments for more patients, according to study conducted by researchers from Harvard University and published in the journal Health Affairs.

"Hospitals and doctors will respond to changes in how they are paid," researcher Joseph P. Newhouse said.

In 2003, Congress reduced Medicare reimbursements to doctors for certain chemotherapy drugs out of concern that excessive markups -- in some cases, as much as 20 percent more than what doctors were paying for the drugs -- provided a financial incentive for doctors to prescribe the drugs in cases where they were not, in fact, the best treatment. But some critics of the cuts warned that they might remove too much of the profit motivation, causing specialists to stop treating many patients.

"At the time, I think we were legitimately concerned about that," said oncologist Craig C. Earle of the Ontario Institute for Cancer Research.

But an analysis of Medicare claims for 22,478 patients who were diagnosed with lung cancer found that within a month of diagnosis, chemotherapy was prescribed for 18.9 percent of patients after the law went into effect in 2005, compared with 16.5 percent before it went into effect.

"These markups were a substantial portion of [doctors'] income," Newhouse said. In response to a loss in profit from those markups, he said, many doctors apparently responded by increasing their prescription rates.

"In sum, far from limiting access," the researchers wrote, "[the law] actually increased the likelihood that lung cancer patients received chemotherapy."

The researchers also found that after reimbursement rates were decreased, doctors became more likely to prescribe more expensive drugs, even when there was no evidence that such drugs were more effective.

"The financial incentive seemed to have an effect where there's not strong evidence or more than one equally good treatment option," Earle said.

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