Medicare Lacks Cost Consistency

The cost of treating medical conditions for Medicare patients varies significantly, according to a study by a Center for Studying Health System Change (HSC). Most communities are relatively expensive in the treatment of some conditions and inexpensive in the treatment of others.

Industry observers have suggested that Medicare could reduce spending by as much as 30% if all providers adopted the same treatment patterns that are found in low-cost areas But the study indicates that patterns of geographic variation are far more complex. Researchers found that treatment costs for 10 medical conditions, including heart disease and bacterial lung infections, varied a great deal across communities. However, patterns of geographic cost variation were not consistent across conditions.

The health of the general population appears to be a much more important cost driver. In areas with high costs, the population tends to be sicker. Payment reform initiatives, such as patient-centered medical homes and accountable care organizations, may need to adopt flexible approaches to address local conditions and treatment patterns. For more information, visit

Last Updated 05/25/2022

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