I recently read an interesting exchange on X (formerly Twitter) regarding a perverse incentive causing increased health care costs.
Dr. Sanjay Dhall, professor of neurosurgery at UCLA, asked, “Why did lumbar puncture go from being a med student procedure (bc it is extremely low risk) to a procedure that can only be done by an interventional radiologist?”
Dr. Sharisse Stephenson, a practicing neurologist and brain injury specialist, replied, “I stopped doing lumbar punctures in clinic once I realized the reimbursement didn’t even cover the cost of the kit. A relatively simple bedside procedure became financially unsustainable in an outpatient setting—so now it gets done in the hospital under interventional radiology at a much higher cost.”
I can relate to both sides of this issue. A lumbar puncture (also known as a “spinal tap” or “LP”) is an important test that can be helpful in diagnosing certain brain or spine infections, detecting early bleeding in the brain, or evaluating certain neurological diseases such as Alzheimer’s dementia, multiple sclerosis, and Guillain-Barre syndrome.
For most patients, this is a very safe procedure. I learned how to do them as a third year medical student, and did more than I could count during medical school. For most patients, these can be performed safely at the bedside or in a clinic setting just as Dr. Dhall noted.
For a few patients, more advanced imaging guidance is needed. In those cases, the lumbar puncture will be performed by a radiologist using real-time x-ray (fluoroscopic) visualization. Radiology guidance is especially helpful for patients who have had prior spine surgery or patients with scoliosis or other conditions that alter the usual anatomy. In those cases, the x-ray guidance helps the radiologist place the needle as accurately and safely as possible. But of course, this is a more elaborate procedure and thus more expensive than a routine bedside lumbar puncture.
Dr. Stephenson correctly describes a perverse financial incentive for physicians who would ordinarily wish to perform lumbar punctures in the office setting. When the insurance reimbursement for the procedure falls too low, doctors will forced to either perform those procedures at a loss, stop doing them altogether, or refer their patients to a radiologist at higher total expense. As a radiologist, I have also performed countless imaging-guided LPs during my career, not all of whom needed the more expensive service I provided.
Dr. Suzanne Schindler (a neurologist at Washington University) and colleagues published a letter in 2023 in the journal Alzheimer’s & Dementia that puts hard numbers on this problem. Most of their patients who needed a lumbar puncture were covered by Medicare, which paid $134.87 per case. However, the average cost to their clinic per procedure was $193.78.
Dr. Schindler noted, “Rather than lose money by performing LPs in their own clinic, some providers may unnecessarily refer patients for a more expensive fluoroscopic-guided LP. Some providers may attempt to increase reimbursement by adding unnecessary clinical visits at the time of LP. These approaches may increase out-of-pocket costs for patients, may not be consistent with billing best practices, and could lead to higher overall costs for the health care system.”
Although the figures cited by Dr. Schindler were for Medicare patients, the problem also applies to patients with private insurance. Most health insurers peg their reimbursement rates to Medicare rates. So when the federal government attempts to cut health costs by reducing Medicare payments, private insurers routinely follow suit.
Two papers have confirmed this shift over time of lumbar punctures from clinic settings to radiologists. Dr. Wintermark and colleagues noted that in 1991, radiologists performed 11.3% of all LPs. In 2011, radiologists performed 46.6% of LPs. In 2018, Dr. Trunz and colleagues found that 52.3% of all LPs were performed by radiologists.
Furthermore, when radiologists are obliged to perform lumbar punctures that could have been safely done without imaging guidance, it takes away from their time available for other radiology-specific duties, such interpreting MRI scans or performing advanced interventional radiology procedures that can only be done by radiologists.
Of course, it is difficult to know in any particular case whether a patient was sent to radiologists for lumbar puncture for financial (as opposed to medical) reasons. But the paper by Trunz and colleagues make a good argument that “unfavorable economics” contributed heavily to the trend, as opposed to “radiologists’ expertise.”
I do not fault neurologists or other physicians who choose not to perform LPs in their office at a financial loss. They should not be punished for perverse incentives caused by government Medicare policies.
So what can be done about this problem? One short-term answer would be for Medicare to raise the reimbursement rate for LPs performed in the clinic setting without radiology guidance. Just as a decrease in reimbursement has likely led to a paradoxical increase in overall health care costs, an increase in reimbursement could help decrease total health costs. But this does not address the underlying problem—namely, that a government agency is assigning a price to a medical procedure by fiat, without necessarily tying that payment to the actual cost (or the medical value) of the procedure.
A more long-term answer would be to encourage the growth of free-market clinics such as the Surgery Center Of Oklahoma, that offer price transparency and work outside the traditional insurance system to provide quality care at lower cost. In the current heavily regulated US medical system, market-based reforms cannot fully address the problem—but they would be a step in the right direction of rational pricing of medical services and procedures.
Perverse incentives are commonplace in health economics. The first step in fighting them is to shed some light on examples not well-known by the general public. I hope this article is a contribution to this effort.
