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Open Medicare data helps uncover potential hidden costs of healthcare

Medical providers receiving higher amounts of industry payments tend to bill higher drug and medical costs.

Jeff Lagasse, Associate Editor

An interdisciplinary team of Indiana University scientists studying Medicare data have found an association between healthcare industry payments to medical providers for non-research expenses and what these providers charge for medical services -- shedding new light on potential hidden costs to the public.

Their findings, published in Nature Communications, demonstrate that medical providers receiving higher amounts of industry payments tend to bill higher drug and medical costs.

Specifically, they found that a 10% increase in industry payments to medical providers is associated with 1.3% higher medical costs and 1.8% higher drug costs.

For example, a $25 increase in annual industry payments to a typical medical provider would be associated with approximately $1,100 higher medical costs and $100 higher drug costs.


The implication is clear: providers may be unduly influenced by payments from the healthcare industry. The association held true regardless of the size or location of the practice, or its predisposition to prescribing drugs.

It's important to note, however, that an association shows that two variables appear to change at the same time, whereas causality implies that one variable causes another variable to change. This study does not prove causality, which the researchers said would be difficult to do with secondary data.

The large Medicare data sets that the researchers used were made openly available as part of the 2010 Affordable Care Act, and while this demonstrates the potential value of open data in highlighting industry insights, the authors said tools are needed to guide patients and consumers to the relevant available data.

To help achieve this goal, the authors hope Medicare will make it easier for researchers and the public to quantify the effect of the payments received by medical providers by adding the national physician identifier to their Open Payments data set. And they hope their findings will start a conversation about how to communicate this information to consumers.

The researchers have several follow-up projects in progress, including one that aims to investigate how industry payments may drive future medical costs, which would bring them one step closer to establishing a causal relationship between payments and costs.


Not all payments to physicians come from drug manufacturers, but many do, and research has shown that doctors who receive direct payments from opioid manufacturers tend to prescribe more opioids than doctors who receive no such payments.

A January report showed Medicare patients were prescribed approximately 4.2 billion daily doses from 2014 to 2016. The most frequently prescribed opioids were hydrocodone (1.6 billion daily doses) and oxycodone (0.9 billion daily doses).

The open payments data, however, shows that fentanyl makers were the largest payers to U.S. physicians in order to promote these synthetic opioids, which possess high potency and the associated risk of fatal overdose.

In all, $50.3 million in opioid‐related payments were made by opioid makers to 77,085 physicians from 2014 to 2016. The aggregate amount of payments increased from $15.1 million in 2014 to $20.5 million in 2015, and declined to $14.8 million in 2016.

Twitter: @JELagasse

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