The MedPAC Blog

Geographic Variation in Medicare Spending and Service Use

by MedPAC Staff | Oct 02, 2017


Today, MedPAC released a report on regional variation
in both spending and service use under Medicare, updating a previous analysis from 2011. Regional variation in unadjusted Medicare spending reflects many factors, such as differences in beneficiaries’ health status, Medicare payment rates, service volume, and service intensity. In contrast, regional variation in use of Medicare services reflects differences only in the volume and intensity of services that beneficiaries with comparable health status receive. There is little evidence that higher service use results in higher quality. Moreover, it is likely that health care service use and spending could be substantially reduced without harming quality if service-use patterns of high-use areas were brought into line with those of lower-use areas.

Some findings we present in this report were similar to those in our previous geographic variation report (2011). Areas with the highest (or lowest) service use are often different from those with the highest (or lowest) unadjusted spending; and post-acute care (PAC) — particularly home health care— is the primary driver of variation in service use.

But there are several important differences between our current findings and those from our previous work. Service variation is slightly lower now than we reported in 2011. Also, Miami, FL, and McAllen, TX—the highest use areas in our 2011 study—had substantial decreases in their use relative to the national average, but were still above average.

How did MedPAC measure regional variation in spending and service use under Medicare?

Our analysis looks at about 38 million beneficiaries who were enrolled in fee-for-service (FFS) Medicare in Part A, Part B, or both for at least one month in the year of analysis (2013 or 2014) and were never enrolled in a Medicare Advantage plan in that year. To examine the relationship between variation in drug use and variation in the use of medical services, we analyzed a subset of beneficiaries who were enrolled in Part D’s stand-alone prescription drug plans (PDPs) and received their medical services under Part A and Part B of Medicare. We aggregated the data into 484 geographic areas (which we call "MedPAC areas") based on where the beneficiaries reside.

To determine medical service use, we adjusted beneficiary-level spending for regional differences in wages and special payments to certain hospitals and physicians (e.g., indirect medical education payments to teaching hospitals). We also adjusted for beneficiaries’ health status and demographic characteristics.

To estimate drug use we used gross drug payments to pharmacies for covered drugs excluding dispensing fees, sales tax, and any retrospective rebates and discounts from manufacturers and pharmacies. We again adjusted for beneficiaries’ health status and demographic characteristics.

What regional variation in medical spending and service use under Medicare Parts A & B did MedPAC find?

Overall, we found greater regional variation in Medicare spending than in the use of Medicare services. One way to examine this variation is by comparing spending and use by beneficiaries in high areas (which we defined at the 90th percentile of areas) with spending and use by beneficiaries in low areas (which we defined at the 10th percentile of areas). Spending in high areas was 47 percent higher than spending in low areas. By comparison, service use was 24 percent higher in high areas than in low areas.

Medicare Part A and Part B service use had less regional variation than Medicare Part A and Part B spending but large differences remained, 2013 and 2014

                       

Measure of variation across areas Spending Service use 
Ratio of 90th to 10th percentile  1.47  1.24
Ratio of maximum to minimum  2.17  1.73
Average distance from the mean
(per beneficiary per month)
(Mean = $863)
 $101  $56


Note:
“Spending” is per capita Medicare Part A and Part B spending among fee-for-service beneficiaries in each area. “Service use” is per capita Part A and Part B service use among fee-for-service beneficiaries in each area. We defined geographic areas as the metropolitan statistical areas (MSAs) of the core-based statistical areas for urban counties and rest-of-state non-MSAs for nonurban counties. If an MSA crosses state borders, we divided the MSA into multiple areas based on state borders. The units of analysis for determining the percentile distribution were the 484 MedPAC geographic units, weighted by beneficiary count.

Source:  MedPAC analysis of 2013 and 2014 beneficiary-level spending from the Medicare Beneficiary Summary Files and Medicare inpatient claims.

 

Our data also enabled us to look at regional variation for different categories of services. We created the following three groups:

  • The acute hospital inpatient sector, which combines the short-term inpatient and inpatient psychiatric sectors;

  • The ambulatory sector, which combines the services from claims processed by carriers (primarily for physician services) and the hospital outpatient (OPD) sector; and

  • The post-acute care (PAC) sector, which combines the home health, skilled nursing facility, long-term care hospital, and inpatient rehabilitation facility sectors.

Overall, PAC had the greatest variation and also had a disproportionate effect on the overall variation in service use. The ratio of service use at the 90th percentile to service use at the 10th percentile was 1.88 for the PAC sector, 1.20 for the ambulatory sector, and 1.16 for the inpatient sector. Looking at the ratio of maximum and minimum values, the PAC sector had the largest ratio at approximately 5.7, while the ambulatory sector was at about 1.6, and inpatient was at about 1.5.

The post-acute sector had the greatest variation in service use, 2013 and 2014

  

Measure of variation across areas  Inpatient  Ambulatory   Post-acute Care
Ratio of 90th to 10th percentile  1.16  1.20  1.88
Ratio of maximum to minimum  1.49  1.65  5.66
Average distance from the mean
(per beneficiary per month)
 $15  $20  $32

                     
Note: “Service use” is per capita Medicare Part A and Part B service use among fee-for-service beneficiaries in each area. We defined areas as metropolitan statistical areas within each state for urban counties and rest-of-state nonmetropolitan areas for nonurban counties. The units of analysis for determining the percentile distribution are the 484 MedPAC geographic units, weighted by beneficiary count

Source:   MedPAC analysis of 2013 and 2014 beneficiary-level spending from the Medicare Beneficiary Summary Files and Medicare inpatient claims.

 

Removing PAC use from total use reduced the average difference from the mean from $56 to $34—that is, by 39 percent, even though PAC services were only 17 percent of the total. The variation in use of PAC services is particularly evident at the top and bottom of the distribution. At the top 10th percentile of areas ranked on total service use, use of PAC services was about $232 per capita compared with $100 per capita at the bottom 10th percentile. We also found a positive correlation between different categories of services, with a correlation of 0.31 between inpatient and ambulatory services, 0.37 between inpatient and PAC services, and 0.23 between ambulatory and PAC services, suggesting that areas with high use tended to have high use for all of these services.


What regional variation in drug spending and service use under Medicare Part D did MedPAC find?

Similar to our findings in the previous study, the use of drugs covered under Medicare Part D varied less than spending. Drug use in higher use areas (90th percentile) was about 21 percent higher than in lower use areas (10th percentile). By comparison, drug spending in high use areas was 38 percent higher than in low-use areas. Overall, variation in drug use was comparable to variation in medical services.


Medicare Part D drug use had less regional variation than
Medicare Part D drug spending, but differences remained, 2013 and 2014

Measure of variation Drug spending   Drug use
Ratio of 90th to 10th percentile  1.38  1.21
Ratio of maximum to minimum  2.51  1.67
Average distance from the mean
(per beneficiary per month)
 $33  $19

 

Note: “Drug use” is the average drug use per beneficiary per month among stand-alone prescription drug plan enrollees in each area. “Geographic areas” are the metropolitan statistical areas (MSAs) of the core-based statistical areas for urban counties and rest-of-state non-MSAs for nonurban counties. If an MSA crosses state borders, the MSA is divided into multiple areas based on state borders. The units of analysis for determining the percentile distribution are the 484 geographic units, with each unit weighted equally (i.e., not weighted by beneficiary count).

Source: MedPAC analysis of the 2013 and 2014 prescription drug event data.

For the subset of FFS beneficiaries with Part D drug coverage, we also evaluated the correlation between the use of inpatient, ambulatory, and post-acute services and use of Part D drugs. We did not find a significant relationship between the use of those services and the use of drugs. That is, areas with very low or very high use of medical services did not consistently have very low or very high use of drugs.

Do spending and service use vary systematically for urban and rural areas?

For the areas we looked at, we found that average service use was similar in metropolitan areas and nonmetropolitan areas. For the metropolitan areas, average service use was 99.9 percent of the national average, and for nonmetropolitan areas, average service use was 100.2 percent of the national average.

176 comments

Leave a comment
  1. alia | Dec 11, 2017

    Deciding to trade Forex? The latest forex trading tips from Forex Friend Loan. Forex Blog about Trading Tips, Forex Trading Strategy, Forex Loan, Motivational Quote and Internet Marketing.

    Forex Loan

  2. digitinc | Dec 11, 2017
    I feel really happy to have seen your webpage and look forward to so many more entertaining times reading here. Thanks once more for all the details. Best Ways to Enjoy the New Year Event
  3. Bangalore Escorts | Dec 11, 2017
  4. arshi | Dec 11, 2017
    I am glad to getting this amazing one check  Escorts Service in Jaipur this is totally fabulous one thank you so much.
  5. Namita | Dec 11, 2017
    Thank you for sharing such a useful information here on the blog.You put truly exceptionally accommodating data. Keep it up. Continue blogging. Hoping to peruse your next post.Very nice blog post. Hifi Escorts In Bangalore
  6. james jack | Dec 09, 2017
    It is somewhat fantastic, and yet check out the advice at this treat. JamTogel Togel Singapura
  7. Nathan | Dec 09, 2017
  8. Nathan | Dec 09, 2017
    <a href="http://hiphopmusics.co/mp3-zip-download/eminem-revival/">eminem Songs</a><br>
    <a href="http://hiphopmusics.co/mp3-download/yellow-claw-both-of-us-feat-stori-cdq/">Mp3 Download</a><br>
    <a href="http://hiphopmusics.co/mp3-download/the-neighbourhood-scary-love-cdq/">Latest Album Download</a><br>
    <a href="http://hiphopmusics.co/zip-download/album-petit-biscuit-presence/">datafilehost Downloads</a><br>
  9. Obi Chigozie | Dec 09, 2017

    <a href="http://hiphopmusics.co/mp3-zip-download/eminem-revival/">eminem Songs</a><br>

    <a href="http://hiphopmusics.co/mp3-download/yellow-claw-both-of-us-feat-stori-cdq/">Mp3 Download</a><br>

    <a href="http://hiphopmusics.co/mp3-download/the-neighbourhood-scary-love-cdq/">Latest Album Download</a><br>

    <a href="http://hiphopmusics.co/zip-download/album-petit-biscuit-presence/">datafilehost Downloads</a><br>

  10. Nathan | Dec 09, 2017
    Excellent post. This article is really very interesting and effective. <a href="http://hiphopmusics.co/zip-download/album-petit-biscuit-presence/">datafilehost Downloads</a><br>
  11. Reena | Dec 09, 2017
    I was reading the provided article with a great interest! This post is useful and informative. Gurgaon Call Girls
  12. Kritika | Dec 09, 2017
    I enjoyed on reading your blog post. Your blog has a lot of useful information for me, I got good ideas from this great blog. I'm always looking for this type of blog post. I hope I will be reading more of your posts further. Delhi Escorts
  13. Jhon Smith | Dec 09, 2017
    I just want to say first of all this one website is the best for medicare advice, I always got helpful information from this website which is really very useful for my futue and my life.Latest USA Dawgs coupon
  14. qq | Dec 08, 2017
  15. ss | Dec 08, 2017

    your site is very good as well as its contents. thank you for sharing

    Domino Online

  16. qq | Dec 08, 2017

    thank you for sharing information, information on your site is very useful for many people. I think will often come back to your site

    Domino Qiu Qiu

  17. qiu qiu | Dec 08, 2017

    It seems that you are doing any distinctive trick. Moreover, The contents are masterwork.

    Bandar Ceme

  18. digitinc | Dec 08, 2017
    Thanks for sharing this information. I really like your blog post very much. You have really shared a informative and interesting blog post. sbi balance enquiry number
  19. Sugar Mama | Dec 08, 2017
    sugar mummy website has a new <a href="https://www.sugarmummywebsite.net/2017/12/sugar-mama-in-south-africa-is-online.html">sugar mama in south africa</a> contact her now. She is ready to spend serious money on you and help you live your dream life.
  20. online statistics assignment help | Dec 08, 2017
    I personally like your post; you have shared online statistics assignment help good insights and experiences. Keep it up.
  21. nelam | Dec 08, 2017
    It is being a long time to get this latest Update here check out  jaipur escorts service It is totally fabulous blog thank you so much.
  22. Calvin | Dec 08, 2017
    Stunning article the article covers each datum which I require it continues sharing all the essential data.  Dedicated Managed Server
  23. nick | Dec 08, 2017
    It is totally interesting thank you so much it was fabulous post I am looking for check  1 dollar web hosting Godaddy Dollar 1 web hosting 1 web hosting Godaddy   One dollar hosting   Great stuff.
  24. james jack | Dec 08, 2017
    Very interesting information, worth recommending. However, I recommend this:  icos
  25. alia | Dec 07, 2017

    New site is solid. A debt of gratitude is in order for the considerable exertion. 

    Aeronautics

  26. alia | Dec 07, 2017

    New site is solid. A debt of gratitude is in order for the considerable exertion. 

    Aeronautics

  27. srishty malhotra | Dec 07, 2017

     <a href="http://allreview4u.com/top-10-philips-air-purifier-reviews-ratings-discounts/">philips air purifier</a>

  28. james jack | Dec 07, 2017
    I came onto your blog while focusing just slightly submits. Nice strategy for next, I will be bookmarking at once seize your complete rises... Ielts Institute In Ludhiana
  29. alex | Dec 07, 2017

    tvstick.co.uk is an online shop that sells amazon fire sticks, amazon 4k sticks, roku express, roku 4k sticks and NOW TV streaming boxes. You can shop and compare to get the best prices with its nice product layout. The cool looking website is simple to use and specialises in adding Kodi, SPMC & PLEX to the streaming sticks so that you can get the most out of them.

    amazon fire stick discount code

  30. james jack | Dec 07, 2017
    Unique Apps to Help You Save and Earn Money hax money  
  31. Sugar Mama | Dec 07, 2017
    Would you like to get some aussie cougars? if your answer is yes, join sugar mummy whatsapp group now. In the group, you can find the latest sugar mummy online
  32. Anakost | Dec 07, 2017
    Kami telah menyediakan Obat Asma Yang Menjadi Perbincangan Hangat Masyarakat Luas agar anda senantiasa dapat mengobati penyakit asma dengan tuntas. Obat asma ini hanya akan anda dapatkan di outlet resmi kami, silahkan cek disini Info AgaricPro
  33. Anakost | Dec 07, 2017
    Kami telah menyediakan Obat Asma Yang Menjadi Perbincangan Hangat Masyarakat Luas agar anda senantiasa dapat mengobati penyakit asma dengan tuntas. Obat asma ini hanya akan anda dapatkan di outlet resmi kami, silahkan cek disini Info AgaricPro
  34. Case Study Helper | Dec 07, 2017
    This is really great work. Case Study Helper Thank you for sharing such a useful information here in the blog.
  35. Sugar Mama | Dec 06, 2017
    Are you looking for older women that can take of you? visit: sugar mummy website
  36. jams | Dec 06, 2017

    https://www.UnlimitedManiac.Com trusted by famous Youtubers, major artist's, record label's and more. We have been successfully in business for over 10 years delivering consistent , high quality social media marketing and branding services. We are the most efficient and cost effective route to success. Shop with confidence at https://www.UnlimitedManiac.com knowing all our services are backed by our 100% satisfaction guarantee. Get Noticed, Get Remembered!

    Buy SoundCloud Plays

  37. alia | Dec 06, 2017

    I utilize this Article to demonstrate my task in college.it is helpful For me Great Work. 

    magie voyance

  38. james | Dec 06, 2017

    As an Online Marketer there are some tools that I need or just really make life easier and what VideoMakerFX does for me (even though the amount of uses are huge) is it makes my promotions way cooler and brings in more sales!

    VideoMakerFX Review by The Wolf

  39. james jack | Dec 06, 2017
    This post is really magnificent. I really like this post. It is one of the best posts that I ve read in a long time. Thanks a lot for this really good post. I really appreciate it! cannabis for sale
  40. dasada | Dec 06, 2017
    Very informative written post. The writer here has done a great job. I personally use them exclusively high-quality elements.  I would love to see more of the same from you Hotel Deals. Thank you for discussing this great post.
  41. Mark | Dec 05, 2017

    Regional variation for different categories of services.

    Translate from Spanish to English language, watch movies TV series at GoMovies free online

  42. happywheelsgame | Dec 05, 2017

    I would like to thank you for the efforts you have made in. The game is best known for its dark sense of humor and its graphic violence . I am hoping the same best work from you in the future as well. I really appreciate your work. Thanks for you agree for me..happy wheels . geometry dash fireboy and watergirl 4 , dumb ways to die

  43. max | Dec 05, 2017

    Your post had given me another perspective on this point. I have taken in a considerable measure from this post. 

    laweta niemcy

  44. connexion republics | Dec 05, 2017
    I can see that you are an expert at your field! I am launching a website soon, and your information will be very useful for me.. Thanks for all your help and wishing you all the success in your business. connexion republics
  45. james jack | Dec 05, 2017
    It is especially decent, though look into the tips during this home address. Toys
  46. james jack | Dec 05, 2017
    These things are very important, good think so - I think so too...  corporate video production
  47. Download Aptoide | Dec 05, 2017
    Download Aptoide for Android free. The best Android apps and games on best alternative to Google Play store.
  48. alisha jonwal | Dec 05, 2017
    All the details are in this post is awesome and very interesting and i am glad to see this post. Hifi Call girls number in Delhi
  49. James Moliver | Dec 05, 2017
    I am a medical student and I am currently attendant at Swansea University Medical School and I have written an assignment on branches of medicine Cheap Essay Help UK providers & I include “Pediatrics” and describe it briefly. If I found your post before submitting so I would definitely include this well-researched post as a reference. 
  50. james jack | Dec 05, 2017
    There is so much in this article that I would never have thought of on my own. Your content gives readers things to think about in an interesting way. Cleaners

    Leave a comment

    Next Public Meeting

    PRESS ROOM

    For the latest news and press releases from MedPAC


    Click Here

    Join Our Mailing List

    Sign up to recieve e-mail notices of Commission meetings and new posts to our website.

    Sign Up Now

    Filter posts by subject