Hanover, N.H.

In studying Medicare's 1996 expenses, Dartmouth researchers found that the Centers for Medicare and Medicaid Services paid more than twice as much per beneficiary for health care in some U.S. regions than in others.

To explain these discrepancies, the researchers examined hospital records from regions across the country and found that higher costs did not correspond to better medical outcomes. In fact, even after adjusting for illness rates from region to region, researchers found no evidence that beneficiaries in Miami — where Medicare paid an average of $8,414 per beneficiary in 1996 — receive better health care than beneficiaries in Minneapolis — where Medicare paid only $3,431 per beneficiary in 1996.

Furthermore, the researchers concluded, if Medicare used efficient regions as a benchmark for health care spending nationwide, the federal government could save as much as 40 billion annually, while bolstering health care quality.

“It is a myth that more Medicare spending means better health or longer life expectancy, and yet our Medicare system has been operating based on this myth for a long time,” said the report's lead author John Wennberg.

After drawing this conclusion, Wennberg and his associates reexamined the hospital records, looking for clues to why some regions cost Medicare so much more than others. The researchers determined that:

• Health care organizations in these expensive regions did not provide enough “effective care,” which the researchers defined as scientifically undisputed treatments and services such as colon cancer screening and post-heart-attack drugs;

• Patients in these expensive regions were not involved enough in making treatment decisions, and the patients' lack of involvement led to unwarranted variations in surgery rates among regions; and

• Patients in these expensive regions used “supply-sensitive care” — which the researchers defined as everyday care such as physician visits, diagnostic testing and hospitalizations — more frequently than did patients in other regions, without gaining better health outcomes.

To read this study go to www.healthaffairs.org/WebExclusives/Wennberg_Web_Excl_021302.htm.

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