Medicare could save up to 30% of its expenditures annually if it reduced spending in areas where more care is delivered with no corresponding increase in quality, according to a study published last week in the Annals of Internal Medicine.
The study found that Medicare beneficiaries in regions with the highest per-capita spending at the end of life received 60% more care than beneficiaries in the lowest-spending regions. The extra care, however, did not translate into lower mortality rates, greater degrees of functional status or better patient satisfaction, the study found.
Correcting for regional differences in spending could fortify the Medicare trust fund "into the indefinite future," the study said, adding that "remarkably little is known about whether the increased spending in high-cost regions results in better care or improved health."
In an editorial comment on the Annals of Internal Medicine study, former HCFA Administrator Gail Wilensky said, "To the extent that expenditures in high-spending areas are in part unnecessary or inappropriate, reducing spending in these areas could represent a source of new savings for Medicare."
Wilensky, now a senior fellow at Project HOPE in Millwood, Va., said the study can be a springboard for discussions of how to optimize Medicare payment, given disparities in the amount of care provided.
"Medicare now pays for the correction of medical errors but does not pay for the costs of putting systems in place that might prevent these errors," Wilensky said. "We need more thought about how to reward physicians who practice high-quality conservative medicine. Today is none too soon to begin."
Before further research is conducted, it would be a mistake to adjust payment rates or set other policies based on the study's findings, one healthcare lobbyist said last week.
Healthcare spending is expected to increase 49% by 2011, when per-capita spending on medical services will reach $9,216, or 17% of the gross domestic product, the study said. The result, researchers said, could include "further increases in the numbers of uninsured persons and reduced public and private spending in other sectors of the economy."
The study focused on care for colorectal cancer, hip fractures and heart attacks from 1993 to 1995, concluding that "efforts to reduce spending should proceed with caution, but policies to better manage further spending growth are warranted."
In areas where spending was highest, patients stayed in the hospital at least twice as often as their counterparts in lower-spending areas, according to the study. The bigger spenders also saw more specialists and received more tests.