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Cost Gaps Are Real, But Why?

Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.
Kaiser Health News
The Florida Channel
Leon County Judge John Cooper on June 30, 2022, in a screen grab from The Florida Channel.

After three years and $8.5 million, a team of economists has come to the conclusion that geographic differences in health-care spending are real, both for Medicare and commercial insurers. 

In other words, the gap can't be explained by variations in income, the level of illness, or some other rational factor, the report says. For example, Medicare patients aren't sicker in super-expensive South Florida than anywhere else.  There are just more bills being sent to Medicare from South Florida than most places.

Their report, Variation in Health Care Spending: Target Decision Making, Not Geography, urges that the federal government continue to encourage a change in Medicare payments to encourage efficiency.

Earlier, some in Congress had called for cutting Medicare payments in regions with high spending, but the economists said no; that would hurt the honest, efficient providers as well as the profligate and the crooks.

Differences in the way Medicare patients are treated after hospitalization explains more than 70 percent of the geographic difference in spending for that program, the economists said. That includes rehabilitation in skilled nursing facilities,  home-health agencies, and hospice care.

Investigators have reported rampant fraud in home health care in South Florida for years. As the South Florida Sun-Sentinelreported this week, a major federal whistleblower case has been filed alleging an agency gave indirect kickbacks to doctors by hiring their wives.

More from the report and responses to it can be found at Kaiser Health News.

Originally founded in December 2006 as an independent grassroots publication dedicated to coverage of health issues in Florida, Health News Florida was acquired by WUSF Public Media in September 2012.