Pressure on senior care providers to improve efficiency may be misguided, say Medicare cost researchers

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Providers in areas with low average Medicare costs are not delivering care more efficiently than providers in high-cost areas, according to a new study in Medical Care Research and Review.

Prior studies said Medicare spending could be reduced by nearly a third if all providers adopted the practices of those in low-cost areas. This is contradicted by new findings, said researchers Jack Hadley, Ph.D., of George Mason University; Patrick Romano, M.D., Ph.D., of the University of California-Davis; and James D. Reschovsky, Ph.D., of policy research organization the Center for Health System Change.

The research team analyzed claims of 1.6 million Medicare beneficiaries from 60 communities, including low-cost sites such as Northeast Indiana and high-cost sites such as New York City and Miami.

The researchers focused on end-of-life claims, because earlier studies assumed people near death always have roughly the same health status. These earlier researchers argued that providers delivering low-cost care to these beneficiaries are more efficient than those providing high-cost care for people in approximately the same state of health.

However, the new analysis found those at the end of life “varied considerably in terms of the number and types of conditions they had,” and these differences accounted for 84% of healthcare costs in the last year of life, the researchers stated. This finding implies geographic differences in population health, and not provider efficiency, are the main reason for variations in Medicare reimbursements around the country.

Another newly released study provides a more detailed look at geographic health disparities of seniors. To prepare the “Senior Report 2013,” researchers at the United Health Foundation looked at how the 50 states stack up on 34 measures of seniors' health. Minnesota was ranked the healthiest state for seniors, with low levels of obesity and diabetes and high levels of physical activity. Minnesota also ranked the best on the 2011 State Long-Term Services and Supports Scorecard. Mississippi was No. 50, due in part to a severe lack of geriatric care specialists, as well as high rates of obesity, diabetes, physical inactivity and smoking.

Like other studies, the UHF report warned that the aging of the baby boomer generation threatens to “overwhelm” long-term care providers, which may not have the resources to care for an exploding population with a long life expectancy and a high rate of chronic health conditions.

Click here to access the Senior Report 2013