Study: Illness, Not Waste, Raises Medicare Costs

Flying in the face of earlier reports that Medicare price variation is caused by wasteful spending, a study published in the journal Medical Care Research and Review found patients' health was to blame for 75 to 85 percent of Medicare price differences.

The Dartmouth Institute for Health Policy & Clinical Practice has led the academic campaign for lowering Medicare costs by cutting out inefficiencies from the program and incentivizing physicians to keep care as inexpensive as possible, leaning on decades of research. The dissenting study, authored by researchers from think tank Center for Studying Health System Change, claims Dartmouth's method of comparing spending per beneficiary is inadequate because it doesn't compare the magnitude of patients' illness.

Analyzing claims from 1.6 million Medicare beneficiaries in 60 communities, CSHSC researchers "failed to find evidence of bias" when they controlled for patient conditions determined from physician diagnosis records, according to the study's abstract. Researchers also criticized Dartmouth's contention that end-of-life care across regions should cost similarly.

Dartmouth claims Medicare diagnosis records are unreliable to determine patients' level of illness because, according to its findings, physicians in some regions are financially incentivized to diagnose and treat certain more serious illnesses than patients may actually experience.

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