Post-acute care largely explains geographic differences in Medicare spending, report affirms

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Geographic variances in post-acute care largely account for differences in Medicare spending patterns, supporting healthcare reform measures that encourage better acute and post-acute coordination, according to a report from the Institute of Medicine.

The IOM report is the final version of an interim report released in March. The final version confirms the significant role that post-acute care plays in Medicare spending patterns across different regions.

“If there were no variation in PAC spending, varia­tion in total Medicare spending would fall by 73%,” the IOM's brief on the final report states. “If there was no variation in both acute care and PAC spending, total Medicare spending variation would drop by 89%.”

IOM compiled the report at the request of Congress, to determine if a geographically-based payment index makes sense for Medicare. The theory was that geographic differences in Medicare spending might indicate areas with a high prevalence of waste, fraud and abuse. However, cutting reimbursements based on these geographic trends would unduly punish high-efficiency providers that happen to be located in high-cost areas, IOM found.

Instead of using geography to determine Medicare rates, the Centers for Medicare & Medicaid Services would see better results by continuing to support accountable care organizations, medical homes and bundled payment groups, according to the report.

Click here to access the complete report.