Pop health explains Medicare disparities
May 29, 2013 in Medical Technology
Geographic Medicare costs disparities have more to do with health differences across communities than with inefficient care delivery, according to a new study from the Center for Studying Health System Change.
In the report, “Geographic Variation in Fee-for-Service Medicare Beneficiaries’ Medical Costs Is Largely Explained by Disease Burden,” first published in Medical Care Research and Review, researchers from George Mason University and University of California, Davis took a look at ways of adjusting for patient health.
They found that better accounting for health status could explain at least 75 percent to 85 percent of Medicare geographic cost differences between high- and low-cost areas.
While past research has suggested Medicare costs could be reduced by nearly one-third, without harming health, if all providers adopted treatment patterns found in low-cost areas, this new report questions how well those studies accounted for differences in Medicare beneficiaries’ health status, experts say.
“Geographic variation research has been used to argue that there is considerable waste and inefficiency in the delivery of health care,” write James D. Reschovsky, Jack Hadley and Patrick S. Romano, MD, in the report. “We do not question this conclusion, but caution that inefficiencies in American health care may not be nearly as strongly related to geography as the Dartmouth Atlas of Healthcare and others have suggested.”
While certain data limitations “may preclude ever developing the perfect casemix adjustment approach,” they write, “our results suggest that the portion of the geographic variation that can be explained by patient health is much greater than previously estimated, leaving less of the geographic variation potentially attributable to inefficiency.”
Past research into geographic variations often used average spending on beneficiaries in their final months of life to adjust for area differences in health and define high- and low-cost areas, the study points out. That approach, though, assumes people near death have roughly equal health status.
However, Reschovsky et al. found that beneficiaries near death varied considerably in terms of the number and types of conditions they had, and that those differences in health status explained 84 percent of the health care costs during their final year of life, according to the report.
This differed little – two percentage points less – from when the same casemix indicators were applied to the entire elderly Medicare population. Because the end-of-life spending approach fails to effectively account for differences in population health, it misclassifies many areas in terms of how costly they are in treating Medicare patients, the study found.