Geographic Variation in Medicare Services

An IOM committee report on geographic variation in Medicare spending and the advisability of value-adjusted payments shows that most of the variation is due to the use of post–acute-care and inpatient services and that provider behavior varies substantially within areas. At the request of members of Congress, the Institute of Medicine (IOM) convened a committee to examine geographic variation in Medicare expenditures for the services of hospitals, physicians, and other health care providers. In particular, the committee was asked whether Medicare should modify payments to adjust for the value of services delivered in a region by using a value index. Such an index would account for both the health benefit obtained from delivered services and their cost. Payment rates would then be raised in areas where benefits were high relative to Medicare spending and lowered where benefits were low. The . . .