Medicare Spending Still Varies Widely by Region
Suzanne DeChillo/The New York Times
Researchers say that doctors in some areas order more frequent tests on elderly patients.
By REED ABELSON
Published: February 25, 2009
In their analysis, to be published Thursday in The New England Journal of Medicine, the researchers say that addressing the wide variations in the cost of care for the elderly will be critical to any overhaul of the nation’s health care system envisioned by the Congress and the Obama administration.
The regional differences in the growth of Medicare spending suggest doctors are helping to drive up costs when they more frequently order tests or admit patients to the hospitals. In areas where there are plenty of hospital beds and sophisticated imaging equipment available, doctors generally spend more on their patients.
“The incentives are there for growth,” said
Dr. Elliott S. Fisher, the director of the
While the specific dynamics of the local markets vary, he said, the current payment method fuels spending by encouraging hospitals and doctors to try to expand their services. He said any attempt to rein in health care costs, as President Obama has repeatedly vowed to do, needs to address how doctors and hospitals are paid, where they are rewarded on the basis of the volume of services they perform.
A former Bush administration health official agreed. “As long as Medicare pays for volume and intensity, that’s what you’re going to get,” said Dr. Mark B. McClellan, a health policy specialist at the Brookings Institution who oversaw the Medicare program during part of the previous administration.
Some areas, like
“This new research only reinforces the importance of enacting comprehensive health reform this year,” said an aide to Senator Max Baucus, the Montana Democrat who is a central figure in the discussions of an overhaul to the current system.
Both Dr. Fisher and Dr. McClellan advocate a
new payment method that would reward doctors for providing
better care and would share with them any savings they generated
by keeping patients out of the hospital or choosing not to order
another test. Medicare has had some success with some
experiments along these lines, said Dr. McClellan, who also
cites a few places like
The Obama administration has already signaled
its interest in attacking the variations in spending as a way of
controlling costs and potentially shifting resources, some
policy specialists say. “It is a virtual certainty within the
next two years,” said Uwe E. Reinhardt, a
The findings, Dr. Fisher said, also suggest the country could potentially absorb the additional costs of insuring the 46 million people who are currently without coverage without necessarily experiencing a significant spike in spending to handle the increased demands of new patients.
“There’s plenty of capacity to support them,” he said.