Medicare Cuts Do Not Have to Endanger Care

(MoneyWatch)  With the backing of the AARP, Democrats fended off a Republican effort to strip the Senate reform bill of nearly $500 billion in Medicare cuts over 10 years. The Republicans claimed variously that the reduction in projected Medicare spending would lead to rationed care for seniors or that it would be impossible to get that large an amount of savings in the program.

Meanwhile, a new report from the Medicare Payment Advisory Commission (MedPAC) confirms earlier research showing there is a great deal of waste in Medicare spending. What makes the timing of this report richly ironic is the fact that MedPAC is the very panel that the Senate bill would transform into a new, more powerful commission that would figure out how to achieve Medicare savings.

The federal advisory commission found that regional differences in Medicare spending were substantial but not as large as those that researchers at Dartmouth Medical School and elsewhere have documented. The MedPAC report distinguishes between differences in the amount of services provided to Medicare patients across the country and the amount that the government program pays for those services in various regions. The reason why that's important is that Medicare pays different amounts for the same services, depending on an area's labor and other costs, whether it's a rural or urban area, whether the care is provided in an academic medical center, and other factors.

The variations in spending are higher than the variations in the use of services. So, for example, New York and Boston use slightly less services than the national average even though those cities' health costs are very high. By contrast, Oklahoma City's use of services is 120 percent of the national average; Houston's is 122 percent of that benchmark; and New Orleans' is 125 percent of it. Not surprisingly, providers deliver nearly 40 percent more services in the Miami area than the national average, and 10 percent more than those in any other large metropolitan area.

While legislators from lower-cost states argue they're being shortchanged by Medicare, the real import of this study is that there are large variations in what physicians do or order for patients that are not justified by the patients' health status or the latest medical research.

A solid example of that conclusion is contained in a study presented this week at the Radiological Society of North America meeting in Chicago. A University of Wisconsin-Madison team studied 978 CT scans of the abdomen and pelvis that had been sent to the university for interpretation. Using American College of Radiology guidelines, the researchers determined that 52 percent of the scans were unnecessary. Equally alarming, each one of these unnecessary scans exposed patients to the equivalent of 113 X-rays, raising their cancer risk.

Why do physicians order CT scans that are inappropriate and/or why do radiologists perform them? Dr. Louis Hinshaw, one of the University of Wisconsin researchers, is quoted as saying that some institutions may have done the scans for good measure, or because the CT machines were automatically set to do them. It is also possible, he said, that some imaging centers did more scans for the money.

In any case, it's pretty clear that there's a lot of waste that can be cut out of Medicare. Does it add up to $50 billion a year? Quite likely. Will it harm Medicare patients if this waste is removed from the system? No way.