Medicare Beneficiary Episode Cost Variation

The journal Health Services Research carries another study on geographic variation, this one looking at specific common episodes of care for Medicare beneficiaries to ascertain the likely causes or at lease correlates of such variation.   (HSR Article)    Geographic variation appears to be more complex than a simplistic high cost or low cost regions, with significant variation within regions for different payers, different conditions and different providers.  This study is survey based on physician responses to treatment questions for the years 2004-06 and claims data from the same time period.   Looking at two acute and ten chronic conditions, the authors used a modified commercial episode grouper to examine costs for these conditions.  The results were divided into quintiles and various factors analyzed for their relation to differences in cost quintiles, including patient health and service mix.  There was from about a one-third to two-thirds variation in costs for the conditions across regions, but within regions there was little consistency in being high cost or low cost across all conditions.  The strongest correlation across the episodes was with patient health status.  Some indicators of practice patterns, particularly hospitalizations and specialist involvement, also showed a correlation with cost variation.  These practice patterns, however, appear to be condition specific and not across the board for all medical care in an area.  The results are in line with the current research trend indicating that patient health status is the predominant factor in cost variation.  They also suggest that identifying and re-educating physicians on potentially inefficient care will involve precise targeting.