Regional analysis masks substantial local variation in health care spending

October 31, 2012

Reforming Medicare payments based on large geographic regions may be too bluntly targeted to promote the best use of health care resources, a new analysis from the University of Pittsburgh Graduate School of Public Health suggests. The analysis will be published in the Nov. 1 issue of the New England Journal of Medicine.

"Much policy attention has been drawn to the large in across regions, and for good reason – because regional variation points to inefficient use of resources," said lead author Yuting Zhang, Ph.D., associate professor of health economics at Pitt Public Health. "But it is important to effectively target these policies to reduce overutilization while maintaining access to high-quality care."

Policies that are too widely focused, such as at the larger regional level, could leave many high-spending locales untouched while inadvertently penalizing some low-spending locales. However, policies that are too finely focused, such as at the physician-level, could miss system-level factors that account for high utilization in some areas, Dr. Zhang said.

Previous geographic variation analyses primarily focused on regional areas, such as the hospital referral regions (HRRs) described in the Dartmouth Atlas of . The United States can be divided into 306 HRRs, which are areas served by large tertiary hospitals where patients are referred for major cardiovascular surgical procedures and for neurosurgery.

The HRRs can be further divided into 3,436 Dartmouth hospital-service areas (HSAs), where residents receive most of their hospital care from the hospitals in the area.

Dr. Zhang and her colleagues used enrollment, pharmacy claims and medical claims data from 2006 through 2009 from the Centers for Medicare and Medicaid Services for a 5 percent random sample of enrolled in stand-alone Part D plans. The study sample included about 1 million beneficiaries each year.

"We found substantial misalignment of high-spending HSAs and HRRs, after adjusting for population difference across regions," Dr. Zhang said. "Many low-spending HSAs are located within high-spending HRRs, and many high-spending HSAs are located within low-spending HRRs."

Only about half of the HSAs located within the highest-spending fifth of HRRs are themselves in the highest spending fifth of HSAs. Conversely, only about half of the highest-spending fifth of HSAs were located within the highest-spending fifth of HRRs.

For example, Manhattan was one of the HRRs with the highest drug spending in the nation, while Albuquerque was one of the lowest, after adjusting for population difference in the regions. However, the lowest-spending HSA in Manhattan had lower spending than about a quarter of the HSAs within Albuquerque.

"If a reform policy targeted the Manhattan HRR for lower , it would penalize low-spending local hospitals while missing the higher-spending local hospitals within the Manhattan HRR," Dr. Zhang said.

Using their analysis, Dr. Zhang and her colleagues could not determine the "right" level to target policy reforms, but suggest that focusing exclusively on the regional level is too blunt.

Explore further: Medicare spending linked to longer life, better health in elderly

Related Stories

Medicare spending linked to longer life, better health in elderly

May 23, 2011
In 2009, Medicare spending grew about 8 percent to over $502 billion and projections indicate growth at an average rate of nearly 6 percent per year through 2019. Powerful debates are under way in Washington on how to reduce ...

Recommended for you

To reduce postoperative pain, consider sleep—and caffeine

August 18, 2017
Sleep is essential for good mental and physical health, and chronic insufficient sleep increases the risk for several chronic health problems.

Despite benefits, half of parents against later school start times

August 18, 2017
Leading pediatrics and sleep associations agree: Teens shouldn't start school so early.

Doctors exploring how to prescribe income security

August 18, 2017
Physicians at St. Michael's Hospital are studying how full-time income support workers hired by health-care clinics can help vulnerable patients or those living in poverty improve their finances and their health.

Schoolchildren who use e-cigarettes are more likely to try tobacco

August 17, 2017
Vaping - or the use of e-cigarettes - is widely accepted as a safer option for people who are already smoking.

Federal snack program does not yield expected impacts, researchers find

August 17, 2017
A well-intentioned government regulation designed to offer healthier options in school vending machines has failed to instill better snacking habits in a sample of schools in Appalachian Virginia, according to a study by ...

Study shows cigarette makers shifted stance on nicotine patches, gum

August 17, 2017
The use of nicotine patches, gum, lozenges, inhalers or nasal sprays—together called "nicotine replacement therapy," or NRT—came into play in 1984 as prescription medicine, which when combined with counseling, helped ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.