May 29—Wide geographic variation in Medicare costs is largely explained by health differences across communities rather than inefficient care delivery, according to a Center for Studying Health System Change study in Medical Care Research and Review.

The study’s researchers examined multiple ways of adjusting for patient health using claims from 1.6 million Medicare beneficiaries in 60 representative communities and found that a fuller accounting of health status explained at least 75 to 85 percent of Medicare geographic cost differences between high- and low-cost areas.

Although data limitations may preclude developing the perfect case mix adjustment approach, the study’s results suggest the portion of the geographic variation that can be explained by patient health is much greater than previously estimated, leaving less of the geographic variation potentially attributable to inefficiency, according to the researchers.

Publication Date: Wednesday, May 29, 2013