Geographic variations in Medicare medical treatment costs can differ among episodes of care for certain conditions and not only across but within regions, according to a new study from the Center for Studying Health System Change (HSC).
Communities can demonstrate high cost for certain conditions but not for others despite being identified as a high- or low-cost area, HSC said in a news release Monday about the report, which was published in the journal Health Services Research.
[See also: Pop health, not healthcare deficiencies responsible for Medicare cost variations]
Previous research has described cost variations by region generally as high- or low-cost areas and also determined that population health accounts for most of the variations in overall Medicare beneficiary costs.
However, patterns of geographic variation “are far more complex than generally thought,” the release said.
The researchers found little connection between an area’s level of costliness of treating specific conditions and overall costliness of the site. “Although the cost of treating specific conditions varies considerably across areas, cost patterns in the treatment of specific conditions within areas were not very consistent and were only weakly related to total costs in an area,” the report said.
The authors explored the associations of service mix by providers and patient health factors with geographic variations in the costs of treatment episodes of care for 10 conditions, including lung infections, heart disease and chronic obstructive pulmonary disease (COPD).
[See also: Hospital costs higher for workers' comp]
Provider service mix delivered to Medicare patients varied considerably in both high- and low-cost areas, the authors said. Episode costs for a condition varied from 34 percent to 68 percent between the most and least expensive site.
Hospitalization and surgery rates and use of specialists were related to the higher episode costs, said the authors – James Reschovsky, PhD, HSC senior fellow; Jack Hadley, PhD, of George Mason University; James O’Malley, PhD, of Harvard Medical School; and Bruce Landon, MD, of Harvard Medical School.
No one site was the most or least costly for all 10 conditions, the report said.
While the results indicate that beneficiaries in geographic areas with higher total cost per beneficiary are generally sicker and so have more episodes of care, the research also suggests that episode cost for specific conditions are related to local practice patterns. And while practice patterns appear to be specific to the type of condition in question, “ … there still may remain considerable practice variations across physicians treating specific conditions within a community,” the authors said in the report.
These variations within an area may have implications with the establishment of new payment and delivery models, such as bundled payments and accountable care organizations (ACOs), to identify specific areas of care where there may be potential savings ..." because even low spending regions were high spending for some types of care, and vice versa," the report said. "Thus, to achieve savings, ACOs will need a nuanced approach to target numerous treatment areas as well as across-the-board efforts to improve upon their care management and data infrastructures."
The study, titled “Geographic Variations in the Cost of Treating Condition-Specific Episodes of Care among Medicare Patients,” was based on an analysis of claims from 1.5 million Medicare beneficiaries in 60 communities and was funded by a National Institute on Aging grant to Harvard University.