Durable Medical Equipment And Home Health Among The Largest Contributors To Area Variations In Use Of Medicare Services
Center for Studying Health System Change, Washington, D.C., USA.Health Affairs (Impact Factor: 4.97). 05/2012; 31(5):956-64. DOI: 10.1377/hlthaff.2011.0243
Most analyses of geographic variation in Medicare spending have focused on total spending. However, focusing on the volume and intensity of specific categories of services delivered to patients could help identify ways to lower costs without having a negative impact on care. We investigated how utilization in thirteen medical service categories in Medicare Parts A and B (for hospital and physician insurance, respectively) varied across sixty communities nationwide. We found considerable geographic variation in the use of some service categories, although not all. We also found that local communities used very different combinations of types of services to produce medical care, that some service categories were substituted for others, and that the mix of service categories differed even among sites with high or low total medical utilization levels. Home health and durable medical equipment were major drivers of total geographic service use variation because of their variation across sites. They may therefore be appropriate targets for policy interventions directed at increasing efficiency.
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ABSTRACT: To measure geographic variations in treatment costs for specific conditions, explore the consistency of these patterns across conditions, and examine how service mix and population health factors are associated with condition-specific and total area costs. Medicare claims for 1.5 million elderly beneficiaries from 60 community tracking study (CTS) sites who received services from 5,500 CTS Physician Survey respondents during 2004-2006. Episodes of care for 10 costly and common conditions were formed using Episode Treatment Group grouper software. Episode and total annual costs were calculated, adjusted for price, patient demographics, and comorbidities. We correlated episode costs across sites and examined whether episode service mix and patient health were associated with condition-specific and total per-beneficiary costs. Adjusted episode costs varied from 34 to 68 percent between the most and least expensive site quintiles. Area mean costs were only weakly correlated across conditions. Hospitalization rates, surgery rates, and specialist involvement were associated with site episode costs, but local population health indicators were most related to site total per-beneficiary costs. Population health appears to drive local per-beneficiary Medicare costs, whereas local practice patterns likely influence condition-specific episode costs. Reforms should be flexible to address local conditions and practice patterns.
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ABSTRACT: For-profit, or proprietary, home health agencies were banned from Medicare until 1980 but now account for a majority of the agencies that provide such services. Medicare home health costs have grown rapidly since the implementation of a risk-based prospective payment system in 2000. We analyzed recent national cost and case-mix-adjusted quality outcomes to assess the performance of for-profit and nonprofit home health agencies. For-profit agencies scored slightly but significantly worse on overall quality indicators compared to nonprofits (77.18 percent and 78.71 percent, respectively). Notably, for-profit agencies scored lower than nonprofits on the clinically important outcome "avoidance of hospitalization" (71.64 percent versus 73.53 percent). Scores on quality measures were lowest in the South, where for-profits predominate. Compared to nonprofits, proprietary agencies also had higher costs per patient ($4,827 versus $4,075), were more profitable, and had higher administrative costs. Our findings raise concerns about whether for-profit agencies should continue to be eligible for Medicare payments and about the efficiency of Medicare's market-oriented, risk-based home care payment system.