In the report, the researchers said “an overall explanation for geographic variation remains elusive,” but there have been key drivers in the fluctuation of Medicare spending — most notably post-acute care areas like skilled nursing homes. In addition, the report says variation in spending within the commercial insurance market is “due mainly to differences in price markups by providers rather than to differences in the utilization of healthcare services.”
IOM researchers did not endorse a geographic-based value index for Medicare reimbursements because “geographic units are not where most healthcare decisions are made,” according to the report. “A geographic value index would be a poorly targeted mechanism for encouraging value improvement — it would be neither fair nor likely to improve the value of services offered by individual providers.”
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