Clarifying Sources of Geographic Differences in Medicare Spending

Abstract

Policymakers attempting to control Medicare costs by reducing differences in Medicare spending across geographic areas need better information about the specific source of the differences, as well as better methods for adjusting spending levels to account for underlying differences in beneficiaries' health measures.

Standardizing Medicare Payment Information to Support Examining Geographic Variation in Costs

“…There is a substantial body of research examining geographic variation in medical spending in the United States (Wennberg & Cooper, 1996;O'Connor et al, 1999;Zuckerman, Waidmann, Berenson, & Hadley, 2010;Alhassani, Chandra, & Chernew, 2012). In general, areas with high spending for patients with myocardial infarction (MI) do not have lower 30-day mortality rates (Stukel et al, 2012).…”

“…Zuckerman and colleagues adjusted Medicare claims payments by accounting for geographic variation in the Medicare provider wage index alone (Zuckerman et al, 2010); however, a more complete payment standardization, which also adjusts for the payment differentials for various care settings and service categories, is desirable to account for the full set of factors structured into the Medicare payment system. The Medicare Payment Advisory Commission (MedPAC) was privy to the detailed Medicare fee schedule and payment factors in their role as an independent US Congressional agency.…”

Costs and Clinical Quality Among Medicare Beneficiaries: Associations with Health Center Penetration of Low-Income Residents

“…Such variations include: regional differences in costs of physician practice (Mitchell & Davidson, 1989;Pope, Welch, Zuckerman, & Henderson, 1989), payment variations due to policy decisions and market forces (MedPAC, 2009;Centers for Medicare & Medicaid Services, 2009), provider training and supply as well as supply of other health care resources (Baicker & Chandra, 2004;Cooper, Cooper, McGinley, Fan, & Rosenthal, 2012;Ricketts & Belsky, 2012;Welch, Miller, Welch, Fisher, & Wennberg, 1993;Wennberg & Cooper 1999;Zuckerman, Waidmann, Berenson, & Hadley, 2010), population demographics and socioeconomic status (Cooper et al, 2012;Ricketts & Belsky, 2012;Rosenthal, 2012;Zhang, Steinman, & Kaplan, 2012;Zuckerman et al, 2010), health status and prevalence of particular diseases (Reschovsky, Hadley, Saiontz-Martinez, & Boukus, 2011;Rosenthal, 2012;Sargen, Hoffstad, & Margolis, 2012;Zuckerman et al, 2010), service use arising from patient preferences (Rosenthal, 2012;Wennberg & Cooper, 1999;Zhang et al, 2012), and discretionary decisions by health care providers (Cooper et al, 2012).…”

The Impacts of Lifestyle Behavior on Medicare Costs : A Panel Data Analysis at the State Level

“…Along the demand-side margin for instance, several studies focused on geographical variations in Medicare spending and attempted to link such disparities to observable demographic characteristics, socioeconomic factors, and the general health status of population across different states [6,7,8,9,10,11,12]. Those observable explanatory factors include, but not limited to, age, sex, race, education, income, and selfreported health status.…”

“…On the other hand, some studies took a supply-side approach to explaining state level variations in Medicare spending [6,11,13,14,15]. These studies controlled for the supply of certain medical resources or health care market characteristics in a region such as level of managed care penetration and the number of physicians as a share of older population.…”