'Wasteful' providers actually spend fewer Medicare dollars, data shows

CMS may have to let go of its long-standing complaint that providers in some areas of the U.S. are padding their Medicare bills. Data requested by the Institutes of Medicine and analyzed by CMS this week show that some health systems' higher-than-average costs are due to patient health factors, such as the prevalence of chronic conditions, overall age of Medicare patients, where they live (nursing home vs. home) and their disability status. 

"If you look at the data, you're going to see that high-cost areas have sicker patients," James Reschovsky, a senior researcher at The Center for Studying Health System Change, a Washington think-tank, told Kaiser Health News. "There’s far more variation among physicians and providers within a geographic area than across areas." 

The most striking difference, according to Kaiser's analysis, was in the Bronx, N.Y., which went from being 55 percent above to 10 percent below the national average after adjusting for higher wages, higher-than-average chronic disease rates and an older patient population. 

In what may be bad news for some providers, though, some regions went from low-spenders to high, once the patient and geographic factors were considered. While 27 of the 306 regions studied changed from above- to below-average in terms of cost, more than 60 went from below- to above-average, Kaiser's analysis shows.

Some analysts aren't quite ready to let go of the fraudulent-billing theory, though, and insist there's too much geographic variation to be accounted for with health factors alone. IOM has opened its data files to the public, inviting private researchers to do their own analysis as well.

For more information:
- read this California Healthline report
- check out this article by Kaiser Health News 
- see what the IOM has to say

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