Medicare Spending Varies by Region — Mostly Outside the Hospital
Regional variation in Medicare spending is often blamed on inefficiency in the Medicare program. Purportedly, the Medicare program would become much more efficient if only policymakers could force hospitals in high-spending regions to practice medicine in a similar manner as hospitals in low-spending regions.
A new study in JAMA by economists, Joseph Newhouse and Alan Garber, casts doubt on this theory. Newhouse and Garber found nearly three-quarters of the regional variation in Medicare spending is on post-acute care outside the hospital. This includes: nursing home care, home care, skilled nursing, rehab, hospices, etc. Newhouse and Garber go on to explain these are services that are rarely used by non-Medicare populations, which is partially why regional variation is not as common among private insurance expenditure.
An earlier analysis by NCPA senior fellows, Rettenmaier and Saving also called into question whether regional variation could be blamed on inefficient hospitals. Although they didn’t analyze Medicare spending by category, Rettenmaier and Saving found that Medicare spending was high when the uninsured population is large, and spending by private insurance is low. Basically, they found that Medicare spending substitutes for lower private spending:
As expected, a higher uninsured rate is associated with lower state health care spending in the non-Medicare/Medicaid population. In contrast, a higher percent of the population with no insurance resulted in higher Medicare spending per enrollee indicating cost shifting to Medicare.
Glad to see the Dartmouth study is being challenged.
Yes, it is about time. Have you seen anything come out from other sources challenging them?
There is mounting evidence challenging them, the Rettenmaier/Saving study is at the forefront of that.
or “complementary to that” may be more accurate
Thank you, its much appreciated
Health care is very complicated. You can’t just replicate the same system everywhere and expect the same results
Lightning in the same place and such.
Right. People and places are different, we need a flexible system that adapts to us.
Absolutely.
Finally someone challenging Dartmouth
Indeed
So much ignorance. The study tells nothing about physician fees, it tells us about what they get paid. The payment and the “fee” are only the same for cash paying patients. The insurance payment for each particular CPT is contractual – often a unilateral take it or leave it offer from the insurer, and in the case of government contracts, it absolutely is take it or leave it – the “fee” paid is what the government wants to pay, and the doc either accepts or doesn’t accept patients with that insurance. Even patients with high deductibles to meet only have to pay what their insurer contracts, so even though they “pay cash” the amount final bill is usually not known until the bill returns from the insurer with the contractual adjustment applied and permission to collect the contractual allowance from the patient. Calling ahead to ask about fees is stupid for anyone but a cash pay patient. For most everyone else there is no way to quote a “fee” because the particular plan the patient has pays different from a slightly different plan from the SAME insurer. There can be multiple Blue Cross plans for example, each slightly different depending on what was set up with each employer. Often the doctor or clinic has no idea what they will get paid – they have so many contracts they can’t keep them straight. They just send in the bill and hope the “adjustment” is not too severe. The consultants they hire take a look at historical payment data and advise the doctor to raise his fees to make sure there is an adjustment for every insurer – i.e. that the fee for each cpt exceeds what the best payer pays so that you make sure that the best payer is paying the full amount. This of course hurts the cash paying patient because your government has made it illegal to charge anyone less than what you generally charge. The only way to legally discount is to offer an income based sliding scale which is cumbersome to implement. It is a totally whacked system.