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Government Health Programs Skew Incentives; People Respond

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Government Health Programs Skew Incentives; People Respond

Forget QE2; this is QED.

When a health-care providing government pays doctors according to how many procedures they perform, rather than by the effectiveness or their treatments, it makes sense that doctors will perform many more procedures.

Not all of these procedures are necessary. Or proper, for that matter. But since when does Big Government ask what is necessary or proper?

Yesterday's New York Times tells the story of a doctor indicted for implanting more than 500 cardiac stents in patients that did not need this invasive procedure:

The Senate Finance Committee, which oversees Medicare, started investigating Dr. Midei in February after a series of articles in The Baltimore Sun said that Dr. Midei at St. Joseph Medical Center, in Towson, Md., had inserted stents in patients who did not need them, reaping high reimbursements from Medicare and private insurance.

The senators solicited 10,000 documents from Abbott and St. Joseph. Their report, provided in advance to The New York Times, concludes that Dr. Midei “may have implanted 585 stents which were medically unnecessary” from 2007 to 2009. Medicare paid $3.8 million of the $6.6 million charged for those procedures.

The report also describes the close relationship between Dr. Midei and Abbott Labs, which paid consulting fees to the cardiologist after he left the hospital. “The serious allegations lodged against Dr. Midei regarding the medically unnecessary implantation of cardiac stents did not appear to deter Abbott’s interest in assisting him,” the report states.

The case has turned into a legal quagmire for Dr. Midei and St. Joseph, which have been sued by hundreds of patients who claim they received unnecessary implants. Some doctors say the case has revealed a level of inappropriate care that is more common than most patients know.

“What was going on in Baltimore is going on right now in every city in America,” said Dr. Steven Nissen, chief of cardiovascular medicine at the Cleveland Clinic, who said he routinely treats patients who have been given multiple unneeded stents. “We’re spending a fortune as a country on procedures that people don’t need.”

Incentives count, it turns out. People will do what they are paid to do. Doctors paid to implant stents will implant stents.

Doctors paid to think long and hard about whether a stent is necessary may be less eager surgeons.

This story will not be the last in this genre as incentives settle into place under government-run health care.