Doctors Recoup Cuts in Medicare Pay with More Volume, More Expensive Drugs

After Congress tried to reduce Medicare spending on cancer chemotherapy drugs that doctors administer to patients in their offices, many doctors ended up prescribing chemotherapy for more of their patients, to make up for the lower prices…

The study found that doctors frequently switched to more expensive options… [since] doctors using the most expensive chemotherapy drugs still make more money than those who choose a less expensive drug.

Full article on changes in payment rates for certain cancer drugs.

Comments (6)

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  1. Devon Herrick says:

    The Target Income Hypothesis posits that reducing reimbursement per unit can lead to higher volumes as physicians attempt to maintain their desired level of income. Each dollar of physician (net) income is tied to another dollar (or two) in overhead and medical supplies. Of course, physicians use this controversial theory to argue that higher reimbursements will lead to lower spending overall.

    I can see how income could be “sticky” where physician resist wages falling below their peers, or want to maintain an existing level of income to service mortgages, car payments and so on. Yet, I have reservations about the theory mainly because I cannot imagine any reason why physicians would willingly limit their target income to a preconceived level.

  2. Virginia says:

    The last line of the article sums up the lesson that most people don’t seem to understand:

    “When you squeeze the system in a little place, there is a lot of change,” he (Dr. Earle) said, “but not always the way one would expect.”

  3. Ken says:

    Perfect example of why it’s hard to control costs by squeezing the providers.

  4. Tom H. says:

    This does not surprise me at all.

  5. Seamus says:

    We lose money on every Medicare patient…but we make up for it in volume!!

  6. Aulia says:

    Yes it is necessary. If you need an NPI nbemur you can go to the NPI registry. If there is a medical provider that has not registered for one, you will have trouble so you may want to steer clear of using their services. Most offices have you sign a financial responsibility form stating you will be responsible for what is not covered by insurance.