Chronic Condition: Medicare's Oversight Gaps

John E. Wennberg, M.D.
Dartmouth University
Wednesday, July 27, 2005; 3:00 PM

The Post's series "Chronic Condition: Medicare's Oversight Gaps" highlights flaws in the Medicare system in which hospitals with poor practices are in effect rewarded through greater reimbursement and wasteful spending. Unnecessary medical procedures result in greater financial reward, exacerbated by poor oversight and financial regulation. How has this flaw in the system escaped Medicare regulators and how is it affecting medical care for patients?

John E. Wennberg, a physician at Dartmouth University and expert on geographic variations in Medicare, discussed how bad practices in hospitals lead to greater reimbursement and wasteful spending.

Read more from the series: Bad Practices Net Hospitals More Money.

Accreditors Blamed for Overlooking Problems.

Once Health Regulators, Now Partners.

A transcript follows.


Ames, Iowa: GPCIs are unfair geographic price cost indexes that reduce physicians' fees in rural areas. The huge disparity in Medicare payments (per patient) to L.A. or Miami vs. Iowa City or Minneapolis rewards inefficient and wasteful practices. Should there be an additional (4th) GPCI for excess utilization? That is, where there is waste, should GPCIs reduce the region's fees? If regional adjustments are "good" for work effort where there is NO variation, shouldn't they be even better for wasteful practices? Michael Kitchell, M.D.

John E. Wennberg, M.D.: Medicare's method of payment establishes many adverse incentives and this is certainly an example. I have long advocated that a more equitable policy based on some form of adjustment of payment based on illness would also improve efficiency; the reason that Miami per person spending is more the 2 times greater than Minneapolis is largely because the volume of services provided to chronically ill patients is more than 2 times greater--i.e. the frequency of visits (particularly to medical specialists); hospitalization and stays in intensive care. The policy of paying for utilization without regard to value needs to be addressed; this is increasingly urgent: benchmarks from efficient regions if implemented nationally would go along way in staving off the crisis in Medicare as our population 65 and over increases; moreover, the evidence from Fisher et al that regions with excessive use of such services have worse outcomes underscores the argument that waste must be directly addressed by our policy makers.


Ames, Iowa: The AMA, most specialty societies, and virtually all physicians complain about their own patients not receiving the care they need because of cuts in Medicare or Medicaid services. Do you think physician organizations should take greater responsibility for holding down costs and reducing wasteful practices?; Physicians need to acknowledge that every dollar wasted is one less spent for them or their patients.

John E. Wennberg, M.D.: I certainly agree; we have recently begun to study the performance of individual hospitals and their associated physicians; there is incredible variation within specific regions--even, for example, within Miami and Minneapolis--in the way chronic illness is managed- i.e. up to 2 fold differences in per person spending for those with serious chronic illnesses such as cancer, congestive failure or chronic lung disease; I hope such information will provide the profession with some tools for addressing medical efficiency.


Philadelphia, Pa.: Would an unscrupulous hospital administrator encourage reporting of poor practices to deliberately receive additional money?

John E. Wennberg, M.D.: can't tell from our data; but it sounds like a good definition of unscrupulous behavior


Philadelphia, Pa.: If we could go to a single health insurer, do you think it might become easier to create a sensible reimbursement system to hospitals?

John E. Wennberg, M.D.: it would be easier to deal with incentives and with fairness issues; whether the system would be better depends on how the incentives are designed.


Princeton, N.J.: You've talked about the supply-demand phenomenon in medical activity -- the more doctors there are in a community, the more office visits there are available per person. What about the relationship between the per-capita supply of surgeons and rates of surgery? Are very high rates of surgery the result of too many surgeons practicing in some parts of the country?

John E. Wennberg, M.D.: one of the most interesting facts about the relationship between physician per 1,000 and utilization per 1,000 is that for most surgical procedures, there is virtually no relationship between supply and amount of surgery; what really matters is what the rate for surgery was in the same community ten years ago; Why? Although the evidence is indirect, what happens is that a given surgeon becomes very familiar with a give procedure and "specializes" in that procedure to the exclusion of others.


Alexandria, Va.: Have you heard from anyone from Congress due to this article? That's where I put the blame for making collaborators out of reviewers.

John E. Wennberg, M.D.: not yet


Rockville, Md.: It doesn't seem that articles such as the one in The Post make much distinction between physicians and hospitals when they talk about poor or expensive care. My observation is that hospitals and physicians are intertwined and that neither is doing a particularly good job as it relates to quality or patient safety. Where do you think the process should begin and/or end?

John E. Wennberg, M.D.: they definitely are closely related; one of the least well known facts about practice variation is that the supply of hospital beds relative to the size of the patient population associated with the physicians using that hospital is a key determinant of the risk of hospitalization--and a major determinant of the variation among hospitals and regions.


Truro, Mass.: Who do you think is morally responsible for fixing what's wrong with the system -- the government, the doctors, the hospitals, the medical schools, Medicare? It seems as if, since the failure of the Clinton health plan proposal a decade ago, the problems of the health care system have dropped from most people's radar screens, and there's little sense that there is a crisis, except in paying for the continuously-growing health care economy.

John E. Wennberg, M.D.: in essence, we are all responsible for the mess; the first step out is an accurate diagnosis of the reasons for poor quality; for effective care such as use of beta blocker drugs it is the lack of infrastructure to make sure it gets done to the right patient; for preference sensitive care such as elective surgery, its making sure that patients are well informed and participate actively in choice of treatment; for those with chronic illness, the need is for population-based care management and efficiency in the use of resources.


Washington, D.C.: I've read your articles with fascination and embarrassment. As an "administrator" in the healthcare system, this is exactly why I'm reluctant to work in the industry (I currently serve as an administrative law judge for worker's compensation claims; but my background is rooted in public sector health systems management). It seems to me we need to figure out a way to remove the incentive for the healthcare leadership (including doctors and administrators) to "game" the system - while still encouraging enough initiative to maintain (and increase) quality.

The model in New Hampshire (Dartmouth Hitchcock - and their outcomes based decision making coupled with patient education and directed care) is probably the future of the industry in this country (assuming we can avoid nationalized healthcare) - if we're willing to pay the price (and wrest the money from doctors and administrators who are laughing all the way to the bank right now).

HHS's ineffective management of Medicare argues strongly against nationalizing our system.

Sorry to be so grim.

John E. Wennberg, M.D.: thanks for the plug for Dartmouth; its a wee place but we love it; I think the key is multi-specialty group practice like the mayo et al; how to make it work elsewhere is the big question facing the nation re moving beyond the mess that is


Watertown, Mass.: Come on! The Hospital Quality Alliance -- the way that hospitals report info and CMS posts it publicly -- is a great thing. Customers (patients) can see how hospitals stack up to each other and can choose to go to one over the other. Less customers means less money from Medicare. Plus, rating care is extraordinarily complicated. A high incidence of mortality or bad outcomes in one hospital may be because the sickest patients choose to go there because it has the best reputation in an area. Sicker patients, worse outcomes. No?

John E. Wennberg, M.D.: good idea but a very small start; the problems are systemic; have you seen the papers we publish showing variations among the "world's best hospitals? if not, take a look at the BMJ Web site


Rockville, Md.: Your comment indicates that beta blockers or the lack there of is a systems problem. Why isn't it a physician problem since they are the only ones who can prescribe?

John E. Wennberg, M.D.: not so; standing orders that allow nurses to give these drugs is the common remedy adopted by hospitals with good records on this issue.


Rockville, Md.: Nurses can't prescribe at discharge. Why don't you believe that MDs have responsibility for care. Why aren't they rated instead of hospitals for the process issues that belong to them?

John E. Wennberg, M.D.: they are responsible; but medicine is a team sport and needs to be played that way


Watertown, Mass.: Of course, the Quality Alliance is a "small start," but it's a start nonetheless. It's rating three conditions using 10 measures today with scheduled expansions in coming months. It ain't easy. Plus you ignore all the "systemic" improvements that JCAHO and the National Quality Forum and groups like the one in my state -- the Mass. Coalition for the Prevention of Medical Errors -- are promoting. Sorry things aren't moving fast enough for you, but I think you're too critical of hospital efforts to improve.

John E. Wennberg, M.D.: I'm a critical guy


New York, N.Y. I've read your BMJ article, which points out the really enormous differences in what happens to people depending on what hospital they go to. As a resident of New York, where can I get more information about which hospitals provide the best care, if I can't trust publications like U.S. News & World Report, which rely more on peer recommendations than hard evidence in selecting The "best" hospitals? Do hospitals that are forced to publish mortality statistics, like those in New York and Pennsylvania, have better outcomes or better quality of care than hospitals in states that don't require public reporting?

John E. Wennberg, M.D.: getting information is becoming easier but will always be inadequate to make a fully informed choice unless specific disease registries; patient decision aids and other carefully designed systems become more widely available; mortality rates have dropped in New York State and I think most observers credit this to feedback within the regulatory framework rather than because patients vote with their feet; Northern New England studies provide a counterexample of where mortality following bypass surgery has dropped through use or registry data and constant review of the process of care--without publication of mortality data(beyond the original publication by HCFA


Rockville, Md.: You may be a 'critical guy' but I don't think you are critical enough of MDs. Medicine may be a team sport, but it is hard to get things done when MDs aren't trained or acculturated as team players. I can't believe you don't advocate for MDs to take a bigger role. They do get paid whether the patient does well or the hospital with which they are affiliated do well on the national measures.

John E. Wennberg, M.D.: hey I agree with you one this; not sure how we got to this point.

_______________________ Thank you all for joining us today.


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