IOM: Geographic-based reimbursements 'impractical'

A new report from the Institute of Medicine (IOM) debunks calls for geographic-based reimbursements and warns that tying Medicare payment rates to the benefits and costs of care in geographic regions would be "impractical."

The IOM concludes quality varies widely within hospital referral regions and that utilization and spending don't always correlate to hospital referral regions. Hospitals within one hospital referral region are rarely uniformly high- or low-cost.

"Because geographic units are not where most healthcare decisions are made, a geographic value index would be a poorly targeted mechanism for encouraging value improvement--it would be neither fair nor likely to improve the value of services offered by individual providers," the IOM said Wednesday in a brief.

Preliminary IOM research also cast doubt on theories that Medicare spending could drop if treatment patterns in low-cost regions were adopted nationwide. President Obama supports such theories, maintaining that if doctors and hospitals worked as efficiently as those in lower-cost states such as Iowa, Minnesota, Washington and Wisconsin, the U.S. healthcare system would reap huge savings, The New York Times reported.

The IOM adds to research showing Medicare cost variations across geographical regions have more to do with health status than wasteful spending or inefficient care practices.

To encourage high-value care, the IOM recommends continuing with payment reforms, such as value-based purchasing, patient-centered medical homes and accountable care organizations, that incentivize providers to share clinical data, coordinate care and take on financial risk.

For more:
- read the IOM report and brief
- here's the NYT article

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