Medicare Public Policy

Geographic Variation in Health Care Spending and Promotion of High-Value Health Care: Preliminary Committee Observations

Last week I shared a report I wrote at Acumen that described regional variation in spending, utilization and quality for Medicare and Medicaid beneficiaries.  Based on our work, an Institute of Medicine committee (lead by Joseph P. Newhouse, Alan Garber, and Robin P. Graham) reached the following conclusions in their newly released report:

  1. Health care decision making occurs at the individual practitioner or organizational level, such as hospitals or physician groups, not at the geographic region level.
  2. Substantial variation in spending and utilization exists within progressively smaller units of analysis.
  3. Quality across conditions and treatments varies widely within HRRs; utilization across conditions is moderately correlated within HRRs.
  4. Although a non-trivial amount of geographic variation can be explained by specific demographic and, potentially, health status variables, a substantial amount of variation remains unexplained.
  5. HRR-level quality is not consistently related to spending or utilization.
  6. Geographic variation in total Medicare spending is strongly influenced by the utilization of post-acute care. Most remaining variation is attributable to inpatient care.


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