TUESDAY, Feb. 9 (HealthDay News) -- After Medicare sweetened payments for simple office-based endoscopic procedures, doctors in one New York City practice performed many more in-office bladder biopsies, but the volume of hospital procedures stayed roughly the same, a new study finds.

So, instead of saving money, Medicare expenditures rose 50 percent after the U.S. Centers for Medicare and Medicaid Services (CMS) increased physician reimbursement for those outpatient procedures, researchers report in the March 1 issue of the journal Cancer.

The finding could bolster the argument that some Medicare policies that try to lower costs this way may instead wind up boosting overall expenditures, the study suggests.

"Our study was not intended to be an indictment of physicians or American medicine, but instead to explore how changes in Medicare reimbursement might influence practice patterns," said study co-author Dr. Samir S. Taneja, director of the division of urologic oncology at NYU Langone Medical Center.

"Clearly the intent of CMS in instituting these specific reimbursement changes was to shift bladder cancer care and bladder biopsies from the hospital to the office as these are costly and frequent procedures," he said. "Overall, this should have resulted in a cost reduction."

The authors suspect that it did not reduce costs, in part, because there was a lower threshold for performing those in-office procedures after the reimbursement change.

Lead author Dr. Micah L. Hemani, a physician in the department of urology at NYU Langone Medical Center, explained that patients are often referred to urologists to investigate abnormalities, such as a small amount of blood in the urine. A test called a cystoscopy allows the urologist to look inside the bladder.

"After 2005, when we looked inside, we were more likely to take a piece of the bladder, burn something, or resect the tumor in the office," he said. "The threshold for actually intervening was much lower and it happened to coincide with this dramatic change in Medicare reimbursement."

Dr. Robert A. Berenson, a senior fellow at the Urban Institute in Washington, D.C., and a member of the Medicare Payment Advisory Commission, which advises Congress, said there is great concern that fee-for-service incentives are causing physicians to over-recommend services or over-induce patient demand.

CMS does not experiment with physician payment rates to induce shifts in care from the hospital to the outpatient setting, as the authors suggest, he explained. The 2005 payment change likely responded to urologists' requests for an update of rates that were found to be undervalued, he said.

"The whole statutory basis for how to pay physicians is to determine what the underlying resource costs are for producing the service, whether or not it's a good value," Berenson explained. "And so some of us have actually recommended that CMS should have the authority to do just what those authors suggested, but CMS doesn't have the authority to do that."

Nevertheless, he said the new study adds to growing evidence that physicians are able to induce demand for services, although it remains unclear in this case whether that demand is justified or not. "The premise was wrong, but the findings still raise a very important point," Berenson said.

For the study, Hemani, Taneja and colleagues reviewed 1,341 endoscopic bladder surgeries, including 764 office procedures and 577 hospital procedures, performed from 2002 through 2007.

After 2005, when Medicare increased in-office rates, if patients had a cystoscopy, they were twice as likely to undergo an office-based procedure, such as biopsy or "fulguration" -- the use of an electric current to destroy a tumor or other lesion -- than prior to 2005.

Patients were 2.29 times more likely to have such a procedure in the office than the hospital after 2005 compared with the prior period.

With little decline in the number of hospital-based surgeries, Medicare expenditures, in 2005 dollars, jumped 50 percent from the period prior to the reimbursement change to the latter period.

The authors say other factors, such as a shift in referral patterns and better equipment and training, could have played into the surge in office-based volume, but they admit that the trend is "disturbing" because it may reflect overuse of office-based endoscopic surgery.

But in an accompanying editorial, Dr. David F. Penson, an assistant professor of urologic surgery at Vanderbilt University Medical Center in Nashville, Tenn., said further research is needed to determine whether additional bladder biopsies were clinically indicated and appropriate.

"In the end, access to high-quality cancer care may end up costing more, but it probably will be well worth it from a public health perspective," he wrote.

More information

The U.S. National Cancer Institute has more on bladder cancer.

SOURCES: Samir S. Taneja, M.D., director, division of urologic oncology, New York University (NYU) Langone Medical Center, New York City; Micah L. Hemani, M.D., physician, urology, NYU Langone Medical Center; New York City; Robert A. Berenson, M.D., institute fellow, Urban Institute, and member, Medicare Payment Advisory Commission, Washington, D.C.; Feb. 8, 2010, Cancer, online

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