Medicare Compliance & Reimbursement

Data being developed for the Medicare Payment Advisory Commission’s June report clearly suggest that quality of care tends to be lower in many states where beneficiaries use medical services at a high rate.

Commission staff plotted per-beneficiary service use by state — adjusted to remove the influence of cost of services — against ordinal state rankings from a quality-of-care study published in the Jan. 17 Journal of the American Medical Association and found a strong trend line.

“What jumps out at you is that many of the states with low adjusted service use have relatively high quality,” said MedPAC analyst David Glass at the commission’s March 20 meeting. The JAMA study gauged quality based on the percentage of patients who get appropriate care by 22 indicators, such as whether those over age 65 get pneumococcal vaccine.

In the same session, staff revealed that, when corrected for input prices and beneficiary health status, differences in per-beneficiary Medicare expenditures aren’t nearly as wide as many who worry about geographic pay disparities may believe. With states weighted by number of beneficiary to avoid over-representation of sparsely populated states, about 60 percent of states fall in the middle of the expenditure distribution — between $4,500 and $6,000 per year per beneficiary — before adjustment. After adjustment, 90 percent fall in the middle range.

But though the numbers seemed clear, many on the panel fretted about overly simplistic conclusions that might be drawn from them.

For one thing, said Chair Glenn Hackbarth, some might see the narrowed range of spending variation as evidence that Dartmouth Medical School’s John Wennberg, MD, is wrong when he calls regional spending differences troubling because higher spending doesn’t correlate to better care.

But “I don’t see it at odds at all,” said Hackbarth. While MedPAC’s new analysis shows less variation than when the numbers are unadjusted, expenditures still vary significantly by region in the new account. It’s this residual difference that Wennberg attempts to account for and understand, he said.

Former Sen. David Durenberger (R-MN), who in the mid-1990s spearheaded a campaign for geographical payment equity, said he worried that, if the spending variation numbers are published by MedPAC at all, people still may fixate on dollar differences rather than on what he now believes is the important question: “What role is the payment system playing in achieving the results we want or the results we don’t want?”