Variation in Medicare Spending

Researchers who compile the Dartmouth Atlas reports have a long record of documenting significant regional variation in what Medicare spends per beneficiary and in rates of usage of certain services by Medicare beneficiaries.  While the ultimate significance of this variation is debated, the reality of its existence really can’t be.  The researchers’ latest report examines joint replacements.  (Dartmouth Atlas Report)

Consistent with past reports, the authors found that from 2000 to 2006 overall rates of knee, hip and shoulder replacement grew rapidly, but those rates exhibited significant differences in various locales.  Hip replacements grew 15%, knee 48% and shoulder 67%.  In the latter year, there was a fourfold variation in the rate of hip placement from the lowest region to the highest.  A similar level of variation existed in regard to knee procedures and for shoulders, it was 10% from the lowest region to the highest.   Hard to imagine that informed patient preference alone accounts for these differences.

As the researchers point out, joint replacement is relatively expensive and involves significant risk.  Patient expectations tend to be high and are not always met.  Guidelines recommend replacement only as an option after other therapies have been tried.  As with much medical care, it does not appear that patients usually feel fully informed about the risks and likely outcomes of replacement procedures, or about other treatment options.  Other research has demonstrated that when they are so informed, they are less likely to chose joint replacement.

In a related item, Kaiser looked at trends for Medicare spending growth and services per beneficiary by geographic area from 2000 to 2007.  It appears that some of the fastest per beneficiary service and spending growth was occurring in regions that were low cost at the start of the period.   (Kaiser Story) One possible explanation is regression to the mean; that one or another region being high or low cost over a particular period of time is just a statistical anomaly, and over long enough time stretches, spending in regions will become more tightly bunched.  Not clear whether this is good or bad news–are high spending regions also coming back to the pack; or are the low ones just catching up to the higher ones.