Analysis Of Medicare Costs Knocks McAllen, Texas, Off Its Expensive Perch

Move over McAllen, Texas. When it comes to Medicare spending, you’ve been ousted by Lubbock.

McAllen, a Texas border town, was thrust into the national spotlight after a New Yorker article by surgeon Atul Gawande showed in June that it had the highest Medicare spending per beneficiary next to fraud-plagued Miami, based on data compiled by Dartmouth researchers.

But a highly anticipated report now out from an independent agency that oversees Medicare measured the program’s spending differently, and it knocks McAllen to number 14 out of 403 locales, behind three other Texas cities and parts of Louisiana and Oklahoma.

How come? The new analysis, from the Medicare Payment Advisory Commission, or MedPAC, factors in higher costs of living and different payment rates for rural or urban areas.

Research on health spending at Dartmouth – the Dartmouth Atlas of Health Care – has been highly influential for its conclusion that some areas of the country spend much more than others to treat Medicare patients –indicating that there may be large quantities of unnecessary procedures or waste.

Both MedPAC and Dartmouth took into account how sick patients were. The MedPAC analysis finds less variation but echoes the conclusion that significant differences exist.

The Miami-Dade area is starkly different than any other in many ways. For example, 2006 spending on durable medical equipment (such as wheelchairs or oxygen tanks) averaged $2,200 per Medicare beneficiary in the Miami area, while the national average was $250. Neighboring Broward county averaged $430 per beneficiary.

Three states appear at the top of both lists — Louisiana, Texas and Florida. But elsewhere, the reports differ. For instance, Dartmouth ranks Los Angeles and New York City as among the highest-spending areas. But MedPAC rated L.A. at 56, using just 7 percent more services than the national average, and NYC clocks in at 174th place, almost halfway through the pack and spending 2 percent less than the average.

Among states, Dartmouth ranked New York and Massachusetts as high spenders, while MedPAC listed a solid block of the South, including Alabama and Oklahoma at the top.

Head researcher Elliott Fisher told CQ HealthBeat that the Dartmouth Atlas data are consistent with the MedPAC findings. “The implications for health care reform remain unchanged: if all regions could avoid unnecessary hospital stays and treatments as effectively as the lower spending regions, Medicare spending could be reduced by 20 percent or more,” he said.

The Senate began debating its health overhaul bill this week, and it includes an estimated $380 billion in savings from the nation’s health insurance program for seniors. But MedPAC’s new rankings demonstrate how tricky it is to find savings in health care — even when data is plentiful.

Here is the list, by rank, (with the most expensive first) of variations in the use of health care services. These data, released Monday by MedPAC, show the range of spending per beneficiary for health care services in different areas of the country. A score of 100 is equal to the national average, so Miami-Dade County, with a score of 139, spends 39 percent more than the national average. The analysis adjusted spending to take into account higher cost of living and different payment rates for rural or urban areas.

KateS@kff.org