Clarifying Sources of Geographic Differences in Medicare Spending

The large variation in Medicare spending across geographic areas has raised concern about inappropriate spending in some areas. In this study, the authors assessed how differences in patients' characteristics contribute to variation in spending. In unadjusted analyses, spending was 52% higher in areas in the highest quintile of per-beneficiary spending than in the lowest quintile. After adjustment for demographic and health-status variables, the difference was reduced to 33%. The authors assessed how differences in patients' characteristics contribute to variation in spending. In unadjusted analyses, spending was 52% higher in areas in the highest quintile of per-beneficiary spending than in the lowest quintile. The issue of geographic differences in Medicare spending per beneficiary has been fueled by more than two decades of research behind the Dartmouth Atlas of Health Care . 1 Most notably, after adjustment for baseline differences in health status and other variables, Medicare spending per beneficiary for physician and hospital services was 52% higher in regions in the top quintile of spending than in those in the lowest quintile, with no apparent differences in quality. 2 , 3 The Dartmouth research suggests that the primary source of the spending differences is variation in the supply of medical resources and that this variation leads . . .