Increased Medicare Spending Does Not Equal Quality Care, Study Finds
Greater Medicare spending in certain regions of the country has not led to improved health outcomes, and the federal government could save billions of dollars by reducing regional disparities in spending and encouraging providers to improve Medicare beneficiaries' quality of care, according to a new study appearing online in Health Affairs. "It is a myth that more Medicare spending means better health, or longer life expectancy, and yet our Medicare system has been operating based on this myth for a long time," Dartmouth Medical School researcher John Wennberg, the study's lead author, said (Health Affairs release, 2/13). CongressDaily/AM reports that Wennberg has already shown that huge regional disparities exist in Medicare spending, even when controlling for health differences. For instance, Medicare spent $8,414 per person in Miami in 1996, compared to $3,431 in Minneapolis. The new study goes further by finding that beneficiaries "do not benefit appreciably from the higher spending" (Rovner, CongressDaily/AM, 2/14). The study outlines three reasons for the discrepancy in spending:
- Providers serving fee-for-service beneficiaries "lack the infrastructure to do a quality job," leading to a "systematic underuse of effective care."
- "[U]nwarranted variations in surgery rates among regions" have occurred because patients have not been significantly involved in treatment decisions, which instead "appear to be determined by local doctor opinion about the value of that treatment."
- "The frequency of use of everyday care ... varies significantly among regions," but "more doesn't appear to be better in terms of health care outcomes."
"For all the money being spent on them, are 65-year-olds in Miami getting better treatments or doing better than Minneapolis patients?" Wennberg asked. "The answer is no. This was true 15 years ago, it was true in 1996 and ... unless we change the system, it will continue to be true in the future."
The study authors propose that Congress create a demonstration project in which providers would be given a financial incentive to improve the quality of care for Medicare beneficiaries. Health care organizations that participate in the "Comprehensive Centers of Excellence" program would be expected to provide improved clinical care, reduce the number of medical errors, eliminate the "overuse of medical procedures and treatments and address the underuse of effective care." The study suggests that such an approach could produce significant savings for Medicare if regions receiving higher per capita payments could be "brought down to the benchmark provided" by regions that demonstrate efficiency in their spending (Health Affairs release, 2/13). According to the study, if nationwide Medicare spending had been brought down to the level of the regions that spent the lowest 10%, Medicare would have saved $40 billion in 1996, or 29% (CongressDaily/AM, 2/14). And "in theory," patient care would not be harmed, taking into consideration the study's finding that lower spending does not equal worse care. "If unwanted, unnecessary health care is reduced and quality is improved," Wennberg said, "that $40 billion could help fund a prescription drug program. Given the current economic reality ... as well as rising health costs, learning how to improve efficiency may be the best way to find the resources to fund new programs." Sen. James Jeffords (I-Vt.) has introduced legislation to establish the demonstration program. He called the proposal "an approach to Medicare reform that includes preventing and reducing morbidity, saving lives and saving money -- goals we can all support" (Health Affairs release, 2/13). The full study is available at http://www.healthaffairs.org/WebExclusives/Wennberg_Web_Excl_021302.htm. In addition, five responses to the study are also available from Health Affairs:
- "Geographic Variation In Medicare Spending And The Real Focus Of Medicare Reform" -- by Senate Finance Committee Chair Max Baucus (D-Mont.) and Elizabeth Fowler, the committee's chief health counsel.
- "We Can't Reward What We Can't Perform: The Primacy Of Learning How To Change Systems" -- by Karen Feinstein, chair of the Pittsburgh Regional Healthcare Initiative and president of the Jewish Healthcare Foundation.
- "Saving Lives While Saving Money" -- by Jeffords.
- "Traditional Medicare Versus Medicare+ Choice: A View From Congress" -- by Rep. Nancy Johnson (R-Conn.), chair of the House Ways and Means Subcommittee on Health.
- "The Demographics And Economics Of Chronic Disease" -- by Robert Neese, vice-chair of the Mayo Clinic Rochester Board of Governors.
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