Background The national volume-performance standard recentlyimplemented by Medicare does not account for geographic variationin expenditures for physicians' services. To study this variation,we examined expenditures for physicians' services in all metropolitanareas in the United States.
Methods We used Medicare claims data for 1989 to measure ratesof service use for beneficiaries living in the 317 U.S. metropolitanstatistical areas (MSAs). The variables investigated were ratesof admission to the hospital, payments to physicians for inpatientcare per admission and per beneficiary, payments to physiciansfor outpatient care per beneficiary, and overall payments tophysicians per beneficiary. Expenditures were measured in termsof allowed charges as adjusted to reflect prevailing chargesin each MSA. Rates of use were adjusted for age and sex, withthe exception of the variable for payments to physicians forinpatient care per admission, which was adjusted for case mix.
Results Expenditures for the delivery of physicians' servicesto Medicare beneficiaries varied markedly among MSAs, with thosefor the areas with the lowest and the highest rates differingat least twofold on each measure. The measures for specificareas varied in parallel: areas with high rates of admissiontended to have high levels of payment to physicians for inpatientcare per admission, and areas with high payments for inpatientservices tended to have high payments for outpatient services.Expenditures were not related to the number of physicians percapita but were lower in MSAs with a high proportion of primarycare practitioners. The variation persisted when the 25 largestMSAs were examined; for total payments to physicians per beneficiary,there was a twofold difference between the area with the lowestrate and that with the highest, San Francisco ($872) and Miami($1,874). The states with the highest overall payments to physiciansper beneficiary were Florida, Louisiana, and Michigan.
Conclusions The marked variation among metropolitan areas inpayments to physicians underscores the lack of consensus amongphysicians about which services are required. Moreover, thepractice style in a given community appears to be influencednot by the aggregate supply of physicians but rather by themixture of primary care physicians and specialists.
Source Information
From the Urban Institute, Washington, D.(W.P.W., M.E.M.); the Department of Veterans Affairs Medical Center, White River Junction, Vt. (H.G.W., E.S.F.); and the Center for the Evaluative Clinical Sciences, Dartmouth Medical School, Hanover, N.H. (H.G.W., E.S.F., J.E.W.).
Address reprint requests to Dr. W.P. Welch at the Urban Institute, 2100 M St., NW, Washington, DC 20037.
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(W.P.W., M.E.M.); the Department of Veterans Affairs Medical Center, White River Junction, Vt. (H.G.W., E.S.F.); and the Center for the Evaluative Clinical Sciences, Dartmouth Medical School, Hanover, N.H. (H.G.W., E.S.F., J.E.W.).
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