Colonoscopy – facts the New York Times omitted

If you happened to come across the June 2nd  New York Times article:  http://www.nytimes.com/2013/06/02/health/colonoscopies-explain-why-us-leads-the-world-in-health-expenditures.html

“The $2.7 Trillion Medical Bill. Colonoscopies Explain Why U.S. Leads The World in Health Expenditures”, you undoubtedly felt outraged by what you read, perhaps even betrayed. Outraged to learn about the exorbitant cost of colonoscopy and the profit-mongering schemes of those who provide the service. Betrayed by the insight that the entire thing may have been a fraud: your colonoscopy may not have even been medically necessary.

                On the other hand, if you were a patient at any one of the 5,300 physician-owned and operated ambulatory surgical centers (ASC) around the country, you may have felt perplexed, even confused. You could not easily dismiss the profusion of tales, quotes, figures and anecdotes carefully compiled by the New York Times. Yet you could not wrap your mind around the story, simply because the story did not reflect your own experience. Indeed, no one at the vast majority of ambulatory centers ever sees the astronomical bills cited by the New York Times and few, if any, of our patients perceive us as profligate money makers.

            So why the discrepancy? Could “All the news that’s fit to print” have omitted a few facts, fundamental to the understanding of healthcare cost and delivery but perhaps cumbersome to their message?

Ms. Rosenthal opts for sensationalism. Price not a reflection of quality

            In the New York Times article, Ms. Rosenthal tells a compelling story of four patients who were dismayed, after undergoing a screening colonoscopy, when they faced the whopping charges they incurred, totaling $6,385, $7,563.56, $9,142.84 and $19,438, respectively. Although they all enjoyed insurance coverage and had no out-of-pocket outlays, and although the actual payment on each of those charges was only in the order of $3,500, that amount is still shocking. We agree.

What Americans pay for colonoscopy varies widely and, as Ms. Rosenthal correctly points out, the price is in no way a reflection of quality. Indeed, variations in price should arouse suspicion in a society which has increasingly regarded medical services as commodities. The very notion of quality has eluded our payers, government funded programs (Medicare and Medicaid) and private insurers alike. A consultation, for example, is valued by its “level of complexity”, a seemingly reasonable estimate of merit but in effect a ludicrous appraisal of worth. Complexity is measured by the amount of data gathering, no matter how irrelevant, and unnecessary time spent at the task. Neither diagnostic accuracy nor appropriateness of therapy even enter the picture. Our system derides efficiency and correctness in favor of verbosity. In fact, the pay-for-performance rules enacted in conjunction with the Affordable Care Act and exalted as a way to promote quality do little to improve it. The so-called “quality measures” are at best marginal to the management of disease and their impact is insidious.  Readily achieved, they create a collectivist standard of valuation, which sidesteps the essence of medical practice and makes a mockery of clinical excellence. 

How are we then to expect that the price of colonoscopy would bear any relationship to the preeminence of care?

Payments to hospitals far higher than ASC’s

Commercial insurance carriers compensate hospital outpatient departments generously for colonoscopy, as for other services, the tendered sum frequently exceeding $2,500.  ASC’s owned by hospitals and considered part of the hospital outpatient department are paid a similar amount. Physician-owned ASC’s, on the other hand, are a different entity altogether but Ms. Rosenthal fails to establish that distinction with clarity. Reimbursement to ASC’s for colonoscopies, as well as other procedures, is but a small fraction of what is paid to hospitals. According to a survey conducted by the OAASC (Ohio Association of Ambulatory Surgical Centers), the average ASC reimbursement for a colonoscopy by commercial insurance carriers in 2012 was only $787.

            Medicare reimbursement is even lower. In our area, screening colonoscopy is reimbursed at $523, which includes the professional fee of $215.42 and the facility fee of $307.53. If anesthesia is used, which is optional, it generates an additional payment averaging $124, bringing the total to $646.95.

With payments so modest, what explains the startling charges exposed by Ms. Rosenthal in the New York Times article? The story remains untold, leaving the reader with indignation over the unconscionable abuses which have riddled our system.  Well, perhaps portions of our system.

The disparity between charges and payments

            Charges which appear on a patient’s bill often seem excessive but payments commonly amount to a thin slice of the charge. Medicare payments are fixed for physician-owned ASC’s, while commercial insurance settles an amount predetermined by contractual agreement. Conversely, hospital compensation follows a different calculation. Medicare pays hospitals a base facility fee equal to 178% of the total fee paid an ASC, and itemized charges follow, making for a bloated total. Commercial insurance payments to hospitals are even higher but the payment formula is typically prearranged.

Why then do hospitals and physicians maintain artificially high charges? Ms. Rosenthal states that they constitute a starting point for negotiations. Negotiations between hospitals and insurance companies are impervious to public scrutiny. When it comes to physicians, however, reimbursement is mostly set by the insurer with minimal bargaining room for the provider. Indeed, the offer to join an insurer’s provider panel entails acceptance of that insurer’s fee schedule. When a provider is excluded from a certain panel, because the insurance plan chooses to funnel patients to other providers, or when proposed payments are unacceptably low, that provider may still bill the insurance plan on behalf of enrollees who seek his services, provided the plan includes out-of-network benefits. Inflated charges then become pertinent because payment is calculated as a percentage of the charge. Depending on the market, that stance may eventually pressure the insurance company to contract with the provider or the enrollee to change insurance plans. While those instances are few and in no way typical of the industry at large, the high charges are sure to raise eyebrows when the underlying dynamics are misconstrued. It is an unfortunate state of affairs which has resulted from the inequity of insurance contracts.

Rosenthal’s attack on physician-owned ASC’s unfounded

            Colonoscopy was largely an office procedure, Ms. Rosenthal states, when it was approved by Congress as a screening test for colon cancer. She suggests that the anticipation of a substantial increase in the number of colonoscopies spurred gastroenterologists’ interest in ASC’s for financial gain. There is only one fee for an office procedure: the professional fee, but in an ASC, gastroenterologists would benefit from a supplemental facility fee. She describes the move from office endoscopy to ASC’s as a “lucrative migration for physicians”, who started cashing in on the abundant new demand for the service, the coronation of their lobbying efforts!

            Not only is that characterization demeaning to physicians, it is unfounded. In the year 1998, when colonoscopy was approved as a screening procedure, the vast majority (75%) of endoscopies was performed in hospitals and ASC’s were already growing in robust numbers. Office-based endoscopy had already given way to ASC’s as physicians, patients and regulators alike understood their many advantages. They provide a safer environment, convenience and easy accessibility, as well as a high level of expertise provided by the availability of trained personnel. Other benefits include responsive, non-bureaucratic environments tailored to patients’ needs, more convenient locations, ease in scheduling and shorter waiting times.  According to a 2009 report from KNG Health Consulting, 70% of ASC volume growth between 2000 and 2007 was due to migration from hospitals to the less costly ASC’s.

            Besides, the economic reality of office-based endoscopy compared to ASC’s is not what Ms. Rosenthal’s article suggests. In our area, for example, office-based screening colonoscopy is reimbursed by Medicare at $388.21, while the professional fee for the same procedure performed at an ASC is only $215. Of course, an ASC entails a facility fee of $307.53, bringing the total payment to $523. The difference in cost between office screening colonoscopy and screening colonoscopy at an ASC is therefore only $135, an amount largely offset by the expense of maintaining, staffing and operating the facility, with the myriad of regulations that govern it. We believe that safety alone, not to mention comfort and the other amenities, is well worth the small price increase. Surely, those who indulge in spending billions on green energy, to “save the environment”, will warmly embrace that trifling surcharge, as they must cherish human life.

ASC’s provide 40% in savings to Medicare, 50% to patients

            The large majority of services performed at ASC’s, including colonoscopy, are offered at a cost far lower than that of hospitals. Not only do ASC’s produce approximately 40% in annual savings to the Medicare program, but the savings translate to an estimated 50% in out-of-pocket costs for patients. As Nancy-Ann DeParle, former CMS (Center for Medicare and Medicaid Services) Administrator observed, physicians have no reason to apologize for their investments in ASC’s but instead should be proud of the contribution they have made in holding down the cost of ambulatory surgery; no other group would have come forward and put up their own money to accomplish this.

No evidence of overutilization according to the OIG

In 2009, Ms. Rosenthal asserts, gastroenterologists who bought into a surgical center performed 27% more procedures. If the insinuation is that unnecessary procedures were being performed, it is without substance. The Ambulatory Surgery Center Advocacy Committee has

examined similar claims and misconceptions. According to Andrew Hayek, Chair of the committee, the increase in the number of surgical procedures performed in ASC’s is due to a variety of positive factors, including the transition of procedures and services from outpatient facilities to the less costly ASC setting as well as patient preference and cost savings. In the case of screening colonoscopy, public awareness of the test continues to grow, driving up the numbers, although screening rates are still considerably lower than recommended. Regarding over-utilization, even the OIG-the Federal Agency charged with prosecuting fraud-recognized the benefits of physician-owned ASC’s. It stated that the risks of improper payment for referrals were relatively low.

            The move away from office endoscopy was primarily motivated by the desire for better service, patient acceptance and safety concerns, particularly during a period which witnessed the largest proliferation of malpractice lawsuits in the history of medicine. It is an aberration to recriminate gastroenterologists because they are hardworking. Working hard when you own a business, as when a physician owns his practice, is typical of any industry. It should be commended and rewarded. Sadly, the inexorable escalation of regulations, coupled with declining reimbursement, is now forcing physicians to trade their practices for hospital employment. It is an unfortunate trend, quickly leading  to higher costs for medical services, notwithstanding the erosion of access, efficiency and quality. With the loss of their practices, physicians also lose enthusiasm and dedication and their productivity dwindles.

Propofol: benefit or superfluous expense?

            Ms. Rosenthal takes issue with the use of propofol as a sedative for colonoscopy, contending that it increases cost but is unnecessary. Propofol may result in respiratory depression and most states mandate that it be administered by anesthesia personnel, to ensure expertise in resuscitation techniques. Nurse anesthetists are usually entreated with that task, rather than anesthesiologists, whose charges may be considerably higher. In either case, however, Medicare reimbursement is fixed for ASC’s, commercial insurance generally paying somewhat more.

            The introduction of propofol as a sedative for colonoscopy was initially met with resistance, due to the added expense, but has gradually gained acceptance and is now in great demand, attesting to the added value it brings. Its detractors continue to argue that it is an extravagance fomented by anesthesiologists, with the complicity of gastroenterologists, conspiring to gouge an unsuspecting public. Ironically, it turns out that propofol was exactly what the public wanted. It provides restful sleep and a refreshed feeling upon awakening. Patients familiar with it invariably prefer it to older sedatives, which left them groggy, unsteady and confused. Endoscopists favor it for its capacity to provide deeper sedation at safe doses, keeping the patient unagitated, thus enhancing the quality of the procedure as it relates to polyp detection and removal, particularly when the procedure is lengthy and technically difficult.

            Ms. Rosenthal argues that economies of scale should have reduced the cost of colonoscopy, which is being performed in greater numbers. Indeed they have, at least with respect to ASC’s. The facility fee has dropped by approximately 25%  since 2008. Hospital reimbursement, on the other hand, has not.

Rosenthal confuses screening and surveillance

Ms. Rosenthal seems to accuse physicians of tacking on unneeded colonoscopies, presumably for the purpose of enriching themselves. She tells the story of a patient who was advised by his physician to have a follow-up colonoscopy nineteen months after the finding of a polyp, then goes on to denounce that physician, as “medical guidelines do not recommend such frequent screening”. Clearly, she does not understand the difference between screening and surveillance.

            She quotes Dr. James Goodwin, a geriatrician at the University of Texas, who estimates that a quarter of Medicare patients undergo the screening test more often than recommended. However, Dr. Goodwin’s analysis assumes screening when that code is not actually used and underestimates poor cleansing as a reason for shorter examination intervals. Yet studies have shown that the rate of inadequate cleansing during the referenced period may have been as high as 26%. Interestingly, Dr. Goodwin’s analysis found that extra colonoscopies were more likely to occur in the office setting than in a hospital or an ASC.

Situations abound in clinical medicine, where conventional guidelines and available resources fall short of individual expectations, but physicians are usually left to bear the burden of that responsibility. We care for patients, not collectives. Although abuse admittedly occurs, as in any other trade, Medicare does not cover screening colonoscopies unless performed at appropriate intervals.

Is colonoscopy in the U.S. overpriced?

            Ms. Rosenthal labels colonoscopy as the most expensive screening test healthy Americans undergo but even that is debatable. A screening colonoscopy is only performed every ten years in average-risk individuals, generally costing less than $1,000 in an ASC, while mammography, with a price tag in excess of $270, is recommended yearly.

             She concludes that colonoscopy, along with other medical procedures, accounts for the astronomical cost of healthcare in the United States and illustrates that point by way of comparison with other countries. Direct cost comparisons between countries are misleading in that different societal considerations apply to different markets. The Sunday Edition of the New York Times  sells  for $5 while the Sunday London Times and the Guardian are priced at 2.5 pounds (approximately $3.80), and the Sunday edition of Spain’s El Pais goes for a mere 2.2 € (approximately $2.86). Is it then fair to say, using Ms. Rosenthal’s own words, that  “that chasm in price helps explain why the U.S. is far and away the world leader in spending”… for news reporting?  Have studies concluded that Americans get better news?

             She refers to Dr. Cesare Hassan, an Italian gastroenterologist who is the Chairman of the Guidelines Committee of the European Society of Gastrointestinal Endoscopy. According to him, studies in Europe estimated that the cost of colonoscopy ranged from $400 to $800. Does it follow that pricing in the United States should be modeled accordingly?

Any discussion of the comparative cost of healthcare without discussion of its  legal context and the bureaucracies that surround it is profoundly naïve or  fundamentally dishonest. In Europe, malpractice lawsuits are few and rarely, if ever, lead to the staggering awards which have become well rooted in U.S. society. Sweden deals with damages under a no-fault patient insurance scheme. Britain, like most of Europe, has a loser-pay all system: a plaintiff who loses carries the burden of defraying all costs, including those of the defense.  By contrast, the perversion of our legal system and its flagrant exploitation causes physicians to fear the prospect of bankruptcy every day of their lives. The fear of lawsuits is indomitable and has created an industry of burdensome tasks and activities, suffused in litanies of senseless verbiage. They are costly, onerous and very time consuming.  Regardless, malpractice insurance premiums have continued to rise.

            Furthermore, our bureaucracy is shackling and snowballing regulations continue to create inefficiencies. If the British, the Swedes and the Greeks had a mere caricature of our regulatory and legal environment, their systems would quickly collapse. It is therefore remarkable that our ASC’s are able to provide screening colonoscopy at a cost comparable to that of our European counterparts.

            Physician owners of ASC’s favor price transparency but, as Ms. Rosenthal points out, hospital charges are often shrouded. Sometimes, they are opaque to the point that even physicians who refer their patients for certain procedures cannot get an accurate quote of their costs.

Rosenthal hints colonoscopy may be unnecessary

            What is most disturbing about the New York Times article, however, is that it seeks to cast doubt on colonoscopy as the preferred screening method for colon cancer. It is a question which has been carefully examined and thoroughly researched. Would Ms. Rosenthal opt for fecal occult blood testing or flexible sigmoidoscopy for herself and members of her family?  Is she perturbed by the fact that colonoscopy, as other procedures, is a source of income for private physicians? Or is her analysis meant to serve as preparation for the rationing of medical services anticipated under the new Health Care Law? 

That colonoscopy is superior to flexible sigmoidoscopy is not just a matter of intuitive sense, as she suggests, it is a matter of common sense. No one would think of doing mammography on a single breast! A town which harbors criminals must be patrolled in its entirety. Keeping watch on the South side allows crime to foster elsewhere. The argument that early lesions may have been hard to detect in some parts of the colon has led to the development of better cleansing solutions, enhanced optics and improved techniques. Colonoscopy has made major strides since its inception. Negating technological advances retrenches it, as it would other inventions, to its early stages of development. Rather than embracing its many advances, the critics of colonoscopy continue to disparage its early limitations. By the same token, the Wright brothers may have seen their efforts thwarted and transatlantic flights would still be a fairy tale.

More people should be encouraged to undergo colonoscopy. It is life-saving. Fifteen years ago, the case for screening colonoscopy prevailed. Today, that victory would be even more resounding.

Farid Naffah, MD, MS, FACG, AGAF

Avamar Gastroenterology and Center for Endoscopy, Inc.

Warren, Ohio

July 2013

Published in "Gastroenterology & Endoscopy News" Volume 65, Number 3 - March 2014.  gastroendonews.com.