Interim Report
of the Committee on
Geographic Variation
in Health Care Spending
and Promotion of
High-Value Care
PRELIMINARY COMMITTEE OBSERVATIONS
Committee on Geographic Variation in Health Care Spending and Promotion of High-Value Care
Board on Health Care Services
Joseph P. Newhouse, Alan M. Garber, Robin P. Graham,
Margaret A. McCoy, Michelle Mancher, and Ashna Kibria, Editors
INSTITUTE OF MEDICINE
OF THE NATIONAL ACADEMIES
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract No. HHSP23320042509XI between the National Academy of Sciences and the Department of Health & Human Services. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.
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Suggested citation: IOM (Institute of Medicine). 2013. Interim report of the Committee on Geographic Variation in Health Care Spending and Promotion of High-Value Care: Preliminary committee observations. Washington, DC: The National Academies Press.
Advisers to the Nation on Science, Engineering and Medicine
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council.
COMMITTEE ON GEOGRAPHIC VARIATION IN HEALTH CARE SPENDING AND PROMOTION OF HIGH-VALUE CARE
JOSEPH P. NEWHOUSE (Chair), John D. MacArthur Professor of Health Policy and Management, Department of Health Policy and Management, Harvard School of Public Health and Harvard Kennedy School, Boston, MA
ALAN M. GARBER (Vice-Chair), Provost, Harvard University; Mallinckrodt Professor of Health Care Policy, Harvard Medical School, Boston, MA
PETER BACH, Director of the Center for Health Policy and Outcomes, Department of Epidemiology & Biostatistics, Memorial Sloan-Kettering Cancer Center, New York, NY
JOSEPH BAKER, President, Medicare Rights Center, New York, NY
AMBER E. BARNATO, Associate Professor of Medicine, Clinical and Translational Science, and Health Policy and Management and Director of the Clinical Scientist Training Program and the Doris Duke Clinical Research Fellowship, University of Pittsburgh, PA
ROBERT BELL, Statistics Research Department, AT&T Labs-Research, Florham Park, NJ
KAREN DAVIS, Eugene and Mildred Lipitz Professor and Director, Roger C. Lipitz Center for Integrated Health Care, Department of Health Policy and Management, Johns Hopkins Bloomberg School of Public Health, Washington, DC
A. MARK FENDRICK, Professor, Departments of Internal Medicine and Health Management & Policy, University of Michigan; Director, University of Michigan Center for Value-Based Insurance Design, Ann Arbor
PAUL B. GINSBURG, President, Center for Studying Health System Change, Washington, DC
DOUGLAS HASTINGS, Chair of the Board of Directors, Epstein Becker & Green, P.C., Washington, DC
BRENT C. JAMES, Chief Quality Officer and Executive Director, Institute for Health Care Delivery Research, Intermountain Health Care, Salt Lake City, UT
KIMBERLY S. JOHNSON, Assistant Professor, Department of Medicine, Division of Geriatrics, Duke University, Durham, NC
EMMETT B. KEELER, Senior Mathematician, RAND Corporation, Santa Monica, CA
THOMAS H. LEE, Professor of Medicine, Harvard Medical School and Harvard School of Public Health; CEO, Partners Community HealthCare, Inc., Boston, MA
MARK B. MCCLELLAN, Director, Engelberg Center for Health Care Reform; Leonard D. Schaeffer Chair in Health Policy Studies, Brookings Institution, Washington, DC
SALLY C. MORTON, Professor and Chair, Department of Biostatistics, Graduate School of Public Health, University of Pittsburgh, PA
ROBERT D. REISCHAUER, Distinguished Institute Fellow and President Emeritus, The Urban Institute, Washington, DC
ALAN WEIL, Executive Director, National Academy for State Health Policy, Washington, DC
GAIL R. WILENSKY, Senior Fellow, Project HOPE, Bethesda, MD
Study Staff
ROBIN P. GRAHAM, Study Director
DIANNE WOLMAN, Senior Program Officer (through December 2010)
MARGARET A. MCCOY, Program Officer
MEG F. BARRY, Associate Program Officer (through December 2012)
MICHELLE MANCHER, Associate Program Officer
ASHNA KIBRIA, Research Associate (from July 2012)
CASSANDRA CACACE, Research Associate (October 2011 through April 2012)
REBECCA MARKSAMER, Research Associate (from February 2013)
NINA SURESH, Research Assistant (through August 2012)
JILLIAN LAFFREY, Assistant, Board on Health Care Services
KATERINA HORSKA, Presidential Management Fellow (December 2011 through May 2012)
MARGARET L. SCHWARZE, IOM Anniversary Fellow
SETH GLICKMAN, IOM Anniversary Fellow
ROGER HERDMAN, Director, Board on Health Care Services
Consultants
GARY ALLEN, Truven Health Analytics
ABBY ALPERT, RAND Corporation
DAVID AUERBACH, RAND Corporation
ANITA AU-YEUNG, Acumen LLC
SARAH AXEEN, Precision Health Economics
KATHERINE BAICKER, Harvard University
SEO HYON BAIK, University of Pittsburgh
JOHN BAILAR, University of Chicago (Emeritus)
ERIC BARRETTE, The Lewin Group
HANI BASHOUR, Acumen LLC
JAY BHATTACHARYA, Acumen LLC
AMITABH CHANDRA, Harvard Kennedy School of Government
MICHAEL CHERNEW, Department of Health Care Policy, Harvard Medical School
CAMILLE CHICKLIS, Acumen LLC
KENNAN CRONEN, Acumen LLC
BRYAN DOWD, University of Minnesota
EMILY EHRLICH, Truven Health Analytics
AMANDA FARR, Truven Health Analytics
ELLIOTT S. FISHER, Dartmouth Institute for Health Policy and Clinical Practice
CAROL FORHAN, Truven Health Analytics
JESSELYN FRILEY, Acumen LLC
PROJESH GHOSH, The Lewin Group
TERESA GIBSON, Department of Health Care Policy, Harvard Medical School; Truven Health Analytics
IAN GLENN, The Lewin Group
DANA GOLDMAN, Precision Health Economics
CLIFFORD GOODMAN, The Lewin Group
DANIEL GOTTLIEB, Dartmouth Institute for Health Policy and Clinical Practice
THOMAS HOERGER, RTI International
PAUL HOGAN, The Lewin Group
PETER HUCKFELDT, RAND Corporation
MARCO D. HUESCH, University of Southern California
PETER HUSSEY, RAND Corporation
JOSIE IDOKO, The Lewin Group
MELINA IMSHAUG, Truven Health Analytics
CAMERON KAPLAN, University of Pittsburgh
DARIUS LAKDAWALLA, Precision Health Economics
BRUCE LANDON, Department of Health Care Policy, Harvard Medical School; Division of Primary Care and General Internal Medicine, Department of Medicine, Beth Israel Deaconess Medical Center
MARY BETH LANDRUM, Department of Health Care Policy, Harvard Medical School
CHRISTOPHER LAU, RAND Corporation
BRANDY LIPTON, Acumen LLC
HANGSHENG LIU, RAND Corporation
THOMAS MACURDY, Acumen LLC
WILLARD G. MANNING, University of Chicago
JACLYN MARSHALL, The Lewin Group
MICHAEL MCKELLAR, Department of Health Care Policy, Harvard Medical School
ELLEN MEARA, Dartmouth Institute for Health Policy and Clinical Practice
ATEEV MEHROTRA, RAND Corporation
COURT MELIN, The Lewin Group
KAY MILLER, Truven Health Analytics
BRIAN MOORE, Truven Health Analytics
CAITLIN MORRIS, The Lewin Group
SIVIA NAIMER, Department of Health Care Policy, Harvard Medical School
SEBASTIAN NEGRUSA, The Lewin Group
SIMON NEUWAHL, RTI International
EDWARD C. NORTON, University of Michigan
MICHAEL K. ONG, University of California, Los Angeles
DANIELLA PERLROTH, Acumen LLC
TOMAS PHILIPSON, Precision Health Economics
BRADY POST, The Lewin Group
DANIEL ROGERS, Acumen LLC
JOHN ROMLEY, Precision Health Economics
SHAHIN SANEINEJAD, Acumen LLC
JASON SHAFRIN, Acumen LLC
VICTORIA SHIER, RAND Corporation
ELEN SHRESTHA, Acumen LLC
JONATHAN SKINNER, Dartmouth Institute for Health Policy and Clinical Practice
MARK TOTTEN, RAND Corporation
JASON WAHLMAN, The Lewin Group
NANCY WALCZAK, The Lewin Group
JOHN WARNER, The Lewin Group
ADAM S. WILK, University of Michigan
BENJAMIN YARNOFF, RTI International
SAJID ZAIDI, Acumen LLC
YUTING ZHANG, University of Pittsburgh
WEIPING ZHOU, Dartmouth Institute for Health Policy and Clinical Practice
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report:
HENRY AARON, Brookings Institution
STUART ALTMAN, Brandeis University
GERARD F. ANDERSON, Johns Hopkins University
DAVID A. ASCH, Professor of Medicine and Health Care Management; Executive Director, Penn Medicine Center for Innovation, University of Pennsylvania
DAVID BLUMENTHAL, The Commonwealth Fund
ELLIOT FISHER, Dartmouth Institute of Health Policy and Clinical Practice
ELIZABETH A. MCGLYNN, Kaiser Permanente
MARILYN MOON, American Institutes for Research
ROBERT PHILLIPS, American Academy of Family Physicians
JOHN ROTHER, National Coalition on Health Care
ALAN M. ZASLAVSKY, Harvard Medical School
STEVE ZUCKERMAN, The Urban Institute
Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the observations nor did they see the final draft of the report before its release. The review of this report was overseen by DONALD M. STEINWACHS, Johns Hopkins Institute for Policy Studies, and CHARLES E. PHELPS, University of Rochester (Emeritus). Appointed by the National Research Council and Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.
Geographic Variation and the Pursuit of Value in U.S. Health Care
RESEARCH FRAMEWORK AND STATISTICAL MODELING APPROACH
EVALUATION OF A GEOGRAPHIC VALUE INDEX
Conceptual Assessment of a Geographic Value Index
Empirical Assessment of a Geographic Value Index
CONTRIBUTORS TO GEOGRAPHIC VARIATION IN MEDICARE SPENDING
Variation in Utilization of Specific Health Care Services
Boxes
2 Definitions of Geographic Units Frequently Used in Health Services Research
Figures
1 Map of the United States with hospital referral region boundaries
2 Top 20 percent of hospital referral regions and hospital service areas in drug spending
3 Bottom 20 percent of hospital referral regions and hospital service areas in drug spending
4 Variation in price- and risk-adjusted Medicare spending for stroke in a hospital referral region
7 Use of upper GI endoscopy among gastroenterologists treating gastroesophageal reflux disease
9 Growth rates of spending among quintiles of HRRs based on expenditure levels in 1992
10a-h Medicare service category utilization (monthly cost residual) by HRR
Tables
3 Pearson Correlations of Condition-Specific Medicare Quality and Condition-Specific Utilization