Medicare’s Failure to Track Doctors Wastes Billions on Name-Brand Drugs
by Charles Ornstein, Tracy Weber and Jennifer LaFleur ProPublica, Nov. 18, 2013, 3 p.m.ProPublica, Nov. 18ProPublica, Nov. 18ProPublica, Nov. 18
Medicare is wasting hundreds of millions of dollars a year by failing to rein in doctors who routinely give patients pricey name-brand drugs when cheaper generic alternatives are available.
ProPublica analyzed the prescribing habits of 1.6 million practitioners nationwide and found that a tiny fraction of them are having an outsized impact on spending in Medicare’s massive drug program.
Just 913 internists, family medicine and general practice physicians cost taxpayers an extra $300 million in 2011 alone by disproportionately choosing name-brand drugs. These doctors each wrote at least 5,000 prescriptions that year, including refills, and ranked among the program’s most prolific prescribers.
Many of these physicians also have accepted thousands of dollars in promotional or consulting fees from drug companies, records show.
While lawmakers bitterly disagree about the Affordable Care Act, Medicare’s drug program has been held up as a success for government health care. It has come in below cost estimates while providing access to needed medicines for 36 million seniors and the disabled.
But this seeming fiscal success has hidden billions of dollars lost to unnecessarily expensive prescribing over the program’s eight-year history.
The waste is exacerbated by a well-meaning benefit written into the drug program, known as Part D: Low-income patients pay less than $7 per prescription regardless of a medication’s cost. The unintended consequence is that doctors can dole out name brands with little fear of pushback from patients about price.
Taxpayers spent $62 billion last year on Part D 2014 more than a third of it on this low-income subsidy.
Dr. Hew Wah Quon is one of Medicare’s top prescribers. From a worn office in Los Angeles’ bustling Chinatown, he churned out $27 million worth of prescriptions from 2009 to 2011, data show.
All of Quon’s patients in 2011 qualified for the low-income subsidy, sometimes called “Extra Help.” He mostly prescribed name brands, such as AstraZeneca’s Crestor, for high cholesterol. Crestor costs more than $6 a pill; the leading generic costs as little as 20 cents.
If Quon had prescribed the way other internists do in California, choosing drugs so that his average cost was similar to theirs, he alone could have saved Medicare $5 million in 2011, ProPublica’s analysis shows.
“Boy, this doctor is a walking economic disaster,” said Dr. Jerry Avorn, a Harvard medical professor who has written about the risks and benefits of prescription drugs.
When first contacted by ProPublica last year, Quon defended some of his choices but abruptly ended the interview and has since declined to comment. Others who prescribe similarly said they believe name-brand drugs work better.
Health programs run by the U.S. military and the Department of Veterans Affairs control costs by strictly limiting the name-brand drugs doctors can prescribe. Some of the nation’s leading private health insurance plans do as well.
But Medicare, which pays for one in every four prescriptions nationwide, hasn’t asked Congress for the authority to put similar checks in place.
The Centers for Medicare and Medicaid Services (CMS), the federal agency that administers those programs, declined to make an official available for an interview and would not answer specific questions.
“By law, Medicare must cover items and services that are reasonable and necessary,” a CMS spokesperson said in an email. “Within those rules, doctors and their patients are free to make medical treatment decisions that are best for the patient.”
In the past, agency officials have said that while Part D is a government program, private insurers are responsible for running it. They normally decide how to manage their drug plans but cannot increase prices for the poor.
ProPublica’s analysis is part of a broader look at Part D oversight. An article in May found that Medicare has failed to take basic steps to investigate doctors who prescribe large quantities of dangerous, addictive or inappropriate medications.
Some, including the investigative arm of the Department of Health and Human Services, say CMS also needs to do more to stop waste 2014 by investigating doctors who prescribe very differently than their peers. Others say it should establish penalties and bonuses to encourage more cost-effective habits.