MedPAC Finds Regional Service Use Still Varies Substantially

WASHINGTON—In its most recent report to Congress, the
Medicare Payment Advisory Commission found that the use of services
by similar beneficiaries varies substantially from the highest- to
the lowest-use areas of the country.

Variation is especially high for post-acute sector services,
such as home health, the Jan. 5 report found. “Nonetheless, areas
that are high use in one sector (such as inpatient, ambulatory, and
post-acute) tend to be high use overall, and all three sectors
contribute to overall variation.”

At its extremes, the report highlighted a twofold difference
between the metropolitan statistical areas with the greatest
service use—Miami and McAllen, Texas—and the areas with
the least use—nonmetropolitan Hawaii and LaCrosse, Wis.

While many factors drive service use, such as differences in
physician practice patterns and care decisions and differences in
beneficiaries’ predilection for seeking care, the report
said, “service use among areas could differ for more
idiosyncratic reasons as well.”

Pointing to DME as an example, the report said spending per
capita in Miami-Dade County was $2,043 in 2006—about 10 times
as high as in neighboring Collier County, five times as high as in
Broward County and nearly eight times the national average. While
DME spending had decreased significantly in Miami-Dade by 2008, the
report said, “it was still well above spending in the
surrounding counties and almost three times the national
average.”

Over the same time, per capita spending on home health in the
area doubled, increasing from $2,591 in 2006 to $5,318 by 2008. (It
increased in neighboring counties as well.) “Variation at the
level found in Miami-Dade cannot be explained by simple differences
in practice patterns, prices, or health status. Rather, it is
likely evidence of fraud, as is suggested by many OIG reports on
the topic,” the
report said.

The report noted that it’s also possible the home
health spending increases show the migration of health care
fraud.

The report was intended only to inform policymakers about the
nature of regional variation in service use, its authors pointed
out. However, they concluded, “Extremely high levels of
service use in certain areas may be driven by overuse and,
possibly, fraud and abuse. Additional policy measures may have to
be taken in those areas beyond those used to address variation in
general.”

MedPAC is an independent commission that advises lawmakers on
Medicare policy, including payments to fee-for-service
providers.

Read the full report, titled “Regional Variation in
Medicare Service Use,” at http://medpac.gov/documents/Jan11_RegionalVariation_report.pdf.