By Christine Grimaldi, CQ Staff
April , 2008 -- Medicare is overpaying for chronically ill patients but getting lesser quality care than other health care institutions, according to a new report.
One-third of Medicare's funding is spent annually on chronically ill patients in their last two years of life, the study noted.
Driving up costs is the amount of services provided, rather than how much each service costs, the Dartmouth Institute for Health Policy and Clinical Practice found.
Patients in different hospitals, regions, or states received different numbers of services and encountered hospitals stays that varied three or four times in length. This has led to discrepancies in Medicare spending, the study said.
Medicare spent $289 billion over five years on the patients studied here, but the program would have saved $50.1 billion, or 17.3 percent, if spending modeled the "gold-standard" Mayo Clinic's region of Rochester, Minn.
"We need to benchmark the best systems and use policy to drive providers toward the benchmark by holding them accountable for the volume of services they deliver," said study co-author Elliott S. Fisher, the institute's director of the Center for Health Policy Research.
Medicare on average pays $46,412 for chronically ill patients at the end of life, but that spending reached a high of $59,379 in New Jersey and a low of $32,523 in North Dakota.
The Mayo Clinic's St. Mary's Hospital spent an average $53,432 caring for patients in the last two years of life, while UCLA Medical Center spent more than $93,000.
The study examined Medicare enrollees who died from 2001 to 2005 that "had at least one of nine severe chronic illnesses." Two-thirds had cancer, congestive heart failure, and/or chronic lung disease.
The Robert Wood Johnson Foundation funded the study with a funding consortium that included the WellPoint Foundation, the Aetna Foundation, the United Health Foundation, and the California HealthCare Foundation.