Geographic Variation In Medicare Per Capita Spending Narrowed From 2007 To 2017

Abstract

We examined the trends in geographic variation in Medicare per capita spending and growth from 2007 to 2017 and found that the variation narrowed during this period. The difference in Medicare price- and risk-adjusted per capita spending between hospital referral regions (HRRs) in the top decile and those in the bottom decile decreased from $3,388 in 2007 to $2,916 in 2017-a reduction of $472, or 14 percent. The spending convergence occurred almost entirely between 2009 and 2014, during the early years of the Affordable Care Act (ACA). The highest-spending HRRs in 2007 had the lowest annual growth rates from 2007 to 2017, and the lowest-spending HRRs in 2007 had the highest annual growth rates. We also found that a greater supply of postacute care providers, especially hospice providers, significantly predicted lower spending growth across HRRs after the implementation of the ACA.

Exhibit 1. Trends in geographic variation in Medicare per capita spending, by hospital referral region (HRR), 2007–17

SOURCE Authors’ analysis of data for 2007–17 from the Medicare Geographic Variation Public Use File (Centers for Medicare and Medicaid Services). NOTES High-spending HRRs were in the top 10 percent of price- and risk-adjusted total Medicare per capita spending each year, and low-spending HRRs were in the bottom 10 percent.

Exhibit 2. Relationship between 2007 and 2017 price- and risk-adjusted Medicare per capita spending, by hospital referral region (HRR)

SOURCE Authors’ analysis of data for 2007–17 from the Medicare Geographic Variation Public Use File (Centers for Medicare and Medicaid Services). NOTE Each point in the scatterplot represents an HRR.