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Study Finds Medicare Spending Variations Due to Health Differences NOT “Overtreatment”

For many years, healthcare policy researchers have put forward the notion that Medicare spending variations across the U.S. are solely due to wasteful practices and overtreatment — an idea that neurosurgery has repeatedly challenged. A recent study, published in the journal Medical Care — Research and Review, agrees with us that this simply is not the case. In fact, (as this points out) the paper concludes that health differences — NOT wasteful practices — around the country explains between 75 percent and 85 percent of the cost variations. We aren’t math majors here at Neurosurgery Blog, but it doesn’t take a mathematician to figure out that “between 75 percent and 85 percent” is a huge piece of the Medicare healthcare spending variation pie, and this finding really drives a stake through the heart of the idea that there might be a lot of savings within the healthcare system simply by limiting certain medical services.

Pursuant to a Congressional directive, the Institute of Medicine (IOM) panel is currently whether Medicare should pay less to hospitals and physicians in areas with heavy use of medical services and more in areas of the country where spending is lower. We agree with Congress — finding optimum efficiency is a good thing — but banking on the buckets full of savings it could yield might not be the best bet. There simply is no evidence that these ideas are effective in encouraging higher quality and lower costs, so perhaps it is time for policymakers to abandon this line of thinking. As Buz Cooper, MD, has repeatedly pointed out, most spending variations can be attributed to the fact that disease prevalence is greatest among individuals who are poor, poorly educated, often minorities, and usually residing in densely poor neighborhoods. Healthcare utilization and spending is higher among this population, and because poverty is geographic, increased utilization naturally follows these geographic patterns.

Right now physicians in every region of the country face cumulative financial penalties if they do not successfully participate in multiple Medicare programs, including the e-prescribing program, the electronic health record (EHR) meaningful use program and the Physician Quality Reporting System (PQRS). These cuts are on top of the sustainable growth rate (SGR) and other budget deficit-related cuts, and, as we have , the cumulative pay cut to physicians adds up to at least a whopping 85 percent over the next nine years.  This figure doesn’t even begin to factor in the potential of lower payments to providers based on unproven and flawed explanations for Medicare spending variations.

In on the Reschovsky paper, Dr. Cooper summed up this entire debate well by posing a number of questions:

Isn’t it time to stop this foolishness about geographic variation being a manifestation of variation in practice? Wouldn’t it have been wonderful if that could have occurred before all of the foolish incentives and penalties were written into Obama-care? Shouldn’t someone be held accountable for deceiving congress, distorting the practice of medicine and bilking the profession?  Isn’t it time that the high health care costs of poverty became a focus of national attention? Don’t we owe our children a health care system that they can sustain?

Neurosurgeons have been at the forefront of discussions on the best way to implement payment reform measures and it is high time that move beyond the Dartmouth narrative to find creative solutions that will improve the value of our healthcare system.

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