Show me the data!

Today’s WSJ includes a report by Mark Schoofs and Maurice Tamman about things we can and cannot learn from Medicare administrative data.

[T]he Medicare data come with a severe limitation: While the services and earnings of hospitals and other institutional providers can be publicly identified, such information is kept strictly confidential for doctors and other individual providers. The reason is that the American Medical Association, the doctors’ trade group, successfully sued the government more than three decades ago to keep secret how much money individual physicians receive from Medicare. The AMA has continued to defend this ruling, including in two cases in which federal appeals courts issued decisions last year.

This means the American public is barred from examining in detail how Medicare spends roughly an eighth of its funds, about $62.5 billion in 2009. While that may seem like a small piece, health-care experts point out that physicians have disproportionate power to direct spending in all the other areas of the system because they admit patients into hospitals, prescribe drugs and order procedures and equipment.

This is related to a broader concern about health system data I’ve raised before (and not just once) but tends to get very little attention from the media. There is insufficient access to data for well-meaning researchers. We don’t know enough about what we’re getting for what we spend.

Taxpayer money funds about 40% of the over $2 trillion we spend on health care. Collectively we, the people, spend the rest. This is our system. We bought it. What can we learn about how it is functioning? Not as much as we should.

Not only are elements of of Medicare data out of reach of researchers (physician identifiers, which specific plans individuals are enrolled in, among other information), but entire sectors of our health system are virtually impenetrable in a comprehensive way due to lack of systematic reporting requirements. Data on private-sector plans and related utilization can only be obtained by special arrangements and/or at great cost. Even then, it is far from complete. As I once wrote,

The hidden data imposes a hidden cost on taxpayers. Though it can’t be fully quantified, there is a likely cost in the form of inflated payments. Insurance companies know far more about their costs and enrollee characteristics than regulators or academics. The information asymmetry plays to their advantage and can only drive up taxpayer costs. Unless plans are compelled to provide data, their advantage is likely to continue as the public begins paying a substantial sum to subsidize exchange-based coverage in every state.

I’m aware of the privacy issues that pertain to individuals and firms. They’re legitimate. But so is our need to craft a more efficient health care system. I also once wrote,

[U]se of administrative data does raise privacy concerns (as does survey data use). My threshold for privacy concerns is much higher than most. In general, I’d like to see greater ability for researchers to access, combine, and analyze data so long as they are de-identified whenever possible and there are strong yet reasonable penalties (with enforcement) for misuse and sound, workable remedies for those who might be harmed by such. As a country we have a long way to go in terms of sensible collection and use of data for research and penalties/remedies in the case of misuse.

My main concern about the WSJ article I quoted at the beginning of this post is that its focus on finding doctors that misbehave plays right into our fears about data, that they’ll be used to “get us,” that “big brother” is watching. As important as fraud detection is, that’s not the first (or even the second or third) thing I want to see done with data. We may be wasting some money on fraudulent activities. But I bet we’re wasting even more in other ways. We’ll never know without better access to data. We won’t get that access if we keep scaring everyone into thinking their privacy or will be violated.

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