Medicare reimbursement changes for bladder biopsies

A cautionary tale of unintended consequences


  • David F. Penson MD, MPH

    Corresponding author
    1. Department of Urologic Surgery and the Institute of Medicine and Public Health, Vanderbilt University, Nashville, Tennessee
    • Department of Urologic Surgery, Institute of Medicine and Public Health, Vanderbilt University Medical Center, A-1302 Medical Center North, Nashville, TN 37232-2765
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  • See referenced original article on pages 1264-71, this issue.


Medicare reimbursement policies may have unintended consequences. These are not always negative.

The American healthcare system is currently in the throes of tremendous turmoil. Politicians and policymakers are constantly reminding us that the United States has the highest healthcare costs in the world, whereas it lags far behind other countries in quality. 1 Now, several plans are being proposed that purport to reduce costs while maintaining or improving quality. The report by Hemani and colleagues 2 in this issue of Cancer illustrates that well intentioned changes in health policy often have unintended consequences and ultimately may result in the exact opposite of what policymakers intended.

In 2005, Medicare regulators increased the reimbursement rate for in-office bladder biopsies. The presumed intention of this change was to realize economic efficiencies by incentivizing providers to move this relatively simple procedure from the more expensive inpatient hospital setting to the presumably less expensive outpatient office setting. The study by Hemani et al 2 demonstrates that the new reimbursement policy did result in a considerable increase in the number of outpatient procedures performed. However, the increase was not accompanied by a corresponding drastic decrease in the number of inpatient procedures. In the end, the policy resulted in an increase in the total number of bladder biopsies performed and likely an increase in costs, at least in this single academic practice.

At first blush, this unintended effect might be viewed as another example of the negative effects of the current fee-for-service system. After all, providers, being economic animals, will strive either consciously or unconsciously to maximize reimbursement. One need only read the recent New Yorker article by Atul Gawande, 3 which President Obama reportedly has made required reading for his healthcare team, to appreciate the perverse incentives of the fee-for-service system. I would like to believe that this is not the case here and that, if it is, then it is a smaller and secondary motivator. Hemani and colleagues, as full-time faculty at a large academic medical center, probably are not incentivized purely on a fee-for-service basis and, to their tremendous credit, have presented their own practice patterns in the peer-reviewed literature for all to see. To this end, I do not believe the findings in their report are caused primarily by self-serving financial motives. Rather, as the authors point out, the change in reimbursement policy likely reduced the threshold for office intervention, resulting in an overall increase in the number of bladder biopsies performed.

The real question here is whether or not this unintended consequence is a bad thing. If what is being observed at this single practice is occurring throughout Medicare (and I suspect that it is), then it is likely that the bladder biopsy reimbursement policy change unintentionally resulted in increased costs to the system, because the savings realized by the modest reduction in the number of inpatient procedures performed probably were offset by the added costs of the considerable number of additional outpatient procedures performed. While congress debates healthcare reform, this study tells a cautionary tale of how a change in reimbursement policy can have the exact opposite effect of what was intended and ultimately can result in increased costs.

The current healthcare debate, however, is not (nor should it be) all about cost. Quality and access are important aspects that also must be considered. By incentivizing providers to perform bladder biopsies in the clinic, policymakers inadvertently may have increased costs, but they also may have improved access, which is an important and laudable goal. The increased access may result in earlier detection of bladder tumors, perhaps better outcomes, and even cost savings down the line. To this end, the increase in the total number of bladder biopsies reported in this study may have very positive effects, assuming that all of the biopsies were appropriate. And there is the rub: Is this appropriate care or overuse?

The current study cannot address whether the bladder biopsies were appropriate or not; nor, for that matter, can a review of administrative data from the Medicare claims dataset. Before we truly can assess whether the unintended consequences of this policy change are good or bad, we need further research to determine whether or not the additional bladder biopsies were clinically indicated and appropriate. Only a meticulous chart review will determine this. We, as cancer care providers, need undertake these sorts of studies and must be prepared to answer to the public if significant overuse is observed. It is worth noting that, if we do not do this research, then someone else will who is less familiar with the unique clinical and research aspects of cancer.

In summary, as we proceed further in the healthcare reform debate, studies like this can provide important lessons for policymakers. Although further research on this subject is needed in larger datasets with multiple providers and additional information is required on appropriateness, it is clear that healthcare policy changes like that studied here often have unintended effects that may result in the exact opposite of what the policymakers wanted. However, the debate cannot be centered only on cost. We must remember that improved quality and access are just as important, if not more important, to our patients. 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.


The author made no disclosures.