The New York Times reports on the proliferation of Neurometrix, a popular diagnostic test given by primary care physicians to detect carpal tunnel syndrome and other nerve damage. This is the perfect example of the perverse incentives created by the marriage of technological advances and our wildly illogical system for provider reimbursement. Rather than diagnosing problems by talking to patients, applying some medical knowledge, or referring them to a more qualified neurologist, doctors are instead plugging their patients into a high-priced machine, which spits out diagnosis that don’t always inspire confidence in experts. Why does this happen?
A worksheet prepared by one former Neurometrix salesman, labeled “CONFIDENTIAL OPPORTUNITY,” showed how a doctor could realize an annual profit of $46,588.80 by testing 10 patients a week.
“The doctor’s making margin, the company’s making money,” said the former salesman, who shared the document and spoke only on condition of anonymity.
For physicians, who might be able to bill only $80 or so for a routine 30-minute office visit, Neurometrix’s promise of a profit as high as $250 for 15 minutes, is compelling. So was a customer-referral program in which physicians could receive hundreds of dollars in free products for steering other doctors to Neurometrix.
Medicare and private insurers tend to offer better reimbursement rates for diagnostic procedures than for office visits. This gives providers an incentive to order up a litany of expensive, high-tech tests that may or may not be necessary. There are no scientific guidelines as to when the tests are justifiable, so it’s a race to make as much money as possible. And patients, who are largely insensitive to costs (although this is becoming less true all the time), are loving it, even though the rising costs only contribute to higher premiums in the end. It’s a vicious cycle.
Further more, it turns out that Neurometrix’s marketing practices are under investigation by the federal government. The company aggressively markets to the device to general practitioners, promising higher profits with less work.
Still, some former employees and Neurometrix’s own sales materials portray a company willing to go to great lengths to sell its device.
In May, Neurometrix said the Department of Health and Human Services had issued a subpoena for documents from the company in connection with potential kickbacks and possible fraud against the federal government. The company offered no further details, and federal regulators declined to comment.
Several former employees and Neurometrix documents also describe a program to reward physicians who are already customers, if they find other doctors who will purchase the system. The company gave away boxes of the disposable biosensors that are used with the system — which Neurometrix typically sells to the doctor for around $200 a box.
“Allow us to thank you for your loyalty,” reads a document from this year. If a prospective customer agreed to meet with a sales representative, the referring doctor got one box of sensors — and a second if the prospect became a customer.
Giving doctors something of value for referrals is an industry practice that can potentially violate federal antikickback laws, said Bruce A. Levy, a lawyer in Newark who used to work for the United States attorney there.
Dr. Gozani said the giveaway program had been “extremely small,” involving a tiny fraction of the sensors the company sells. He said Neurometrix had recently stopped it, but declined to comment further.
And it doesn’t stop there.
The debate within the medical community has been muted in part by letters from Neurometrix threatening legal action against some doctors who criticized its technology.
One target was the Arizona Neurological Society, after its Web site posted a sharp critique, according to the society’s president, Dr. Terry D. Fife. The critique claimed that the Neurometrix system produced “results that may be misleading or even wrong” and suggested doctors “are likely to use it excessively for the sole purpose of generating income.”
Dr. Fife said he received a threatening letter in August from the company’s lawyers, saying questions about the test’s accuracy were “unsubstantiated innuendo.” If the Web site continued to post the commentary, the letter said, the society would risk “legal claims both for violations of the antitrust laws and for defamation and for miscellaneous other intentional torts.”
This is a pristine example of the corrupting influence of the medical-industrial complex on the American health care system. It’s painfully clear that stricter regulatory measures are in order to control this kind of abuse. Perhaps if the Democrats win on November 7th we can begin starving the beast, but I’m not getting my hopes up.
- Zach Shoup