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McAllen, Texas, for example, has been pegged by Dartmouth as one of the top-spending areas in the country. When MedPAC, a commission that advises lawmakers on Medicare, conducted its own analysis of actual use of medical services — adjusting the raw spending figures for the health status of different groups and Medicare payment rates, among other things — McAllen also appeared at the top of the list. That was in part because of its high use of rehabilitation and home-health care services.
The new report, however, puts McAllen in the lowest ten spending markets in the nation, with overall spending at just 71.9% of the national average. Spending on adults was 70.2% of average and on kids 83.4% of average. But in a nod to the same forces — whatever they may be — that keeps Medicare spending high in the area, spending on seniors with commercial coverage was 129.7% of average.
Seniors tracked in this study had supplementary coverage from former employers on top of Medicare benefits. The report notes that, like McAllen, areas with high medical spending for seniors weren’t necessarily big spenders for younger people.
Other areas in the lowest-spending category were Ogden-Clearfield, Utah; Dubuque, Iowa; the Fayetteville-Springdale-Rogers area in Arkansas and Missouri; the greater Fort Smith, Ark. area, which includes parts of Oklahoma; Laredo, Texas and Amarillo, Texas.
The biggest-spending area was Anderson, Ind., with overall medical spending of 176.2% of the national average. Punta Gorda, Fla., Racine, Wis.; Naples-Marco Island, Fla. and Ocean City, N.J. rounded out the top five.
Geographical variations in drug spending was larger than variation in spending on other medical costs for adults and kids, but not for seniors.
The obvious question with these spending-variation studies is always why the disparities exist. Are the big spenders using care unnecessarily? Could the lower-spending ones improve care by spending more? And why might the spending patterns vary between public and private beneficiaries?
William Marder, an author of the report and senior vice president for analytic consulting and research services in the health-care business of Thomson Reuters, tells us it’s not clear why these spending trends differ from what’s seen in Medicare data. But he notes that the public- and private-insurance dynamics are very different, with pricing on the private side influenced by competition. Also, there may well be different practice styles among physicians in a given region that influence how much care is delivered, but those may differ between providers serving different age groups — gerontologists and pediatricians, for example.
Thomson Reuters plans further research to adjust for variations in illness burden across different places and investigate how much of the variations are due to pricing and how much to greater demand for health care.
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