Prices don't drive regional Medicare spending variations

Health Aff (Millwood). 2010 Mar-Apr;29(3):537-43. doi: 10.1377/hlthaff.2009.0609. Epub 2010 Jan 28.


Per capita Medicare spending is more than twice as high in New York City and Miami than in places like Salem, Oregon. How much of these differences can be explained by Medicare's paying more to compensate for the higher cost of goods and services in such areas? To answer this question, we analyzed Medicare spending after adjusting for local price differences in 306 Hospital Referral Regions. The price-adjustment analysis resulted in less variation in what Medicare pays regionally, but not much. The findings suggest that utilization-not local price differences-drives Medicare regional payment variations, along with special payments for medical education and care for the poor.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Adult
  • Diagnosis-Related Groups / statistics & numerical data
  • Geography / statistics & numerical data
  • Health Expenditures / statistics & numerical data
  • Health Expenditures / trends*
  • Health Services Accessibility / economics*
  • Hospitals / statistics & numerical data*
  • Humans
  • Inpatients
  • Insurance, Health, Reimbursement
  • Medicare / economics*
  • Medicare Part B / economics
  • Outpatients
  • Referral and Consultation / economics*
  • Referral and Consultation / statistics & numerical data
  • Regional Medical Programs / economics*
  • United States
  • Utilization Review