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Health Insurance Spending Varies For Medicare Beneficiaries With Chronic Conditions

Armen Hareyan's picture

There is wide variationamong the U.S.'s top academic medical centers in spending on care for Medicarebeneficiaries with chronic conditions during the last two years of their lives,according to the 2008 edition of The Dartmouth Atlas of Health Care,the New York Times reports (Pear, New York Times,4/7).

For the study, researchers from the DartmouthInstitute for Health Policy and Clinical Practice analyzed data on 192,242 beneficiaries whoreceived care at any of 93 teaching hospitals and died between 2001 and 2005. Allof the beneficiaries had at least one chronic health condition. The studycompared the length of hospitalization, the number of physicians treating abeneficiary and the amount of time beneficiaries spent in intensive care unitsduring the last two years of their lives (Appleby, USA Today, 4/7). The study focused on the top five teaching hospitals, as ranked by U.S. News & World Report (New York Times, 4/7). Care for beneficiaries with chronic illnesses during the last two years of their lives accounts for about one-third of all Medicare spending (Francis, Wall Street Journal, 4/7).


The study found thatspending at teaching hospitals for the last two years of beneficiaries' livescost an average of $67,369 per beneficiary (USA Today, 4/7). University of California-Los Angeles Medical Center spent the most per beneficiary at $93,842, and the Mayo Clinic spent the least at $53,432. UCLA was followed by Johns Hopkins Hospital at $85,729 per beneficiary; Massachusetts General Hospital at $78,666; and Cleveland Clinic Foundation at $55,333 (New York Times graphic, 4/7).

The study also found that New Jersey spent the most on end-of-life care for Medicare beneficiaries at $59,379, compared with the national average of $46,412 per chronically ill beneficiary. Three dozen states spent below the national average, with North Dakota spending the least at $32,523 per beneficiary.

Study co-author Elliott Fisher, a Dartmouth medical professor and director of its Center for Healthcare Research and Reform, said that costs tended to be higher at facilities where more treatment options were available. In addition, an effort to reduce costs by shifting care to rehabilitation centers, nursing homes and home health care does not appear to be effective, according to the study.

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Researchers projected that Medicare could have saved $50 billion from 2001 to 2005 if care at all hospitals across the U.S. were on par with per-beneficiary spending of Rochester, Minn., where the Mayo Clinic is based. Study co-author David Goodman, a Dartmouth pediatrics professor, said that Mayo Clinic and Minnesota served as benchmarks for high-quality, efficient care (Wall Street Journal, 4/7).

The researchers said the findings show that policymakers need to focus on volume as a cost-containment measure, not just the price of a particular treatment or expanding health insurance to all U.S. residents (Freking, AP/San Francisco Chronicle, 4/7).


Lead study author JohnWennberg of Dartmouth Medical School said, "Some chronically illand dying Americans are receiving too much care -- more than they and theirfamilies actually want or benefit from" (Dow Jones/Chicago Tribune, 4/7). Wennberg added,"Contrary to popular assumptions, it's the volume of services, not theprice per service, that accounts for most of the variation in Medicarespending" (New York Times, 4/7).

Nancy Foster, the American Hospital Association's vice president of quality andpatient safety, said the study triggers the question of how much overuse isdriven by hospitals and physicians and how much is because "patients wantand require more care, and when that's available, take advantage of it" (WallStreet Journal, 4/7).

J. Thomas Rosenthal, chief medical officer at UCLA Medical Center, said, "Someof the aggressive care saves lives," adding, "The Dartmouth studydoes not ferret that out in a systematic way."

Denis Cortese, president of Mayo Clinic, said, "Our physicians are allsalaried. They have no financial incentive to do more than is necessary for thepatient. In each case, multiple doctors and nurses make decisionscollaboratively with the patient and family members. We really try tounderstand the patient's wishes for end-of-life care."

Congressional Budget Office Director Peter Orszag commented on the wide difference in costs attop-ranked hospitals, saying, "How can the best medical care in the worldcost twice as much as the best medical care in the world?"(New YorkTimes, 4/7).

Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation.