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Research Letter
June 2015

Hospital and Regional Variation in Medicare Payment for Inpatient Episodes of Care

Author Affiliations
  • 1RAND Corporation, Boston, Massachusetts
  • 2Division of Health Policy and Management, University of Minnesota School of Public Health, Minneapolis
  • 3Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
JAMA Intern Med. 2015;175(6):1056-1057. doi:10.1001/jamainternmed.2015.0674

Health care spending varies widely between geographic regions, but there is disagreement regarding the appropriate policy response.1 Regional policies include reducing Medicare payment rates in high-spending regions,2 limiting the supply of health care facilities using certificate-of-need criteria, and implementing care-improvement collaboratives. The Institute of Medicine opposed regional policies in favor of hospital- and health care professional–focused policies, such as bundled payments, accountable-care organizations, and value-based payments.3 Their concern was that substantial variation in Medicare spending occurs within geographic regions3-5 and high-performing hospitals and health care professionals in low-performing regions would be unfairly penalized by regional policies. To further inform this debate, we compared the amount of spending variation that occurs between regions vs between hospitals.