Vegas docs, hospitals bill Medicare big

By Marshall Allen

Friday, Feb. 27, 2009 | 2 a.m.

Las Vegas area hospitals cost the federal government more per Medicare patient than hospitals in about 90 percent of the regions in the country — a level of spending that is hard to justify, says a researcher who conducted an analysis of Medicare spending in the United States.

Such high spending threatens to bankrupt Medicare.

At first blush, the level of spending — $9,527 per Medicare enrollee in 2006, 15 percent more than the national average — might seem like good news for the patients, suggesting they are getting more care than the average Medicare enrollee. But receiving more services is not necessarily to patients’ benefit, according to the study, Health Care Spending, Quality, and Outcomes. On the contrary, the researchers said care is often better in lower-cost regions. The study was published this week by The Dartmouth Institute for Health Policy & Clinical Practice.

The differences in the amount of care for similar patients reflect clinical decisions based on the local “ecology” of health care — hospital capacity, imaging centers and social norms combined with a payment system that rewards greater use of medical resources, the report said.

But in fact, every hospital admission puts patients at risk of infection — at least 24,000 people die every year of hospital-acquired infections, according to the Centers for Disease Control and Prevention; and medical errors kill an estimated 98,000 people a year.

“The stark reality is that we are about to spend ourselves to death in health care,” said Dr. David Goodman, the co-principal investigator of the Dartmouth Atlas of Health Care. “If some of the locales that are experiencing high and excessive growth would moderate their growth in spending just by a bit, the whole system would be preserved.”

Generally speaking, it’s impossible to justify the high spending in places such as Las Vegas, he said.

“I would guess the entrepreneurial spirit is high in Las Vegas and they are digging themselves into a cost hole,” Goodman said.

There have been several high-profile cases of greedy Las Vegas doctors billing for services beyond what they provided. Goodman said such “profiteering” can be a factor in the high spending.

Larry Matheis, executive director of the Nevada State Medical Association, said he does not know how much greed affects the high spending. He attributes the higher costs to the transience of the Las Vegas community and the shortage of primary care doctors. People who are transient — even patients with Medicare, the federal government’s insurance for people older than 65 and with disabilities — are not connected to local doctors, so their conditions become more acute, requiring more hospital stays and intensive treatment, he said. And the shortage of primary care doctors makes it less likely that Medicare patients will manage their health, he said.

For more than 20 years, the Dartmouth Atlas Project has studied regional variations in the practice of health care, mostly based on Medicare data. The report on regional spending provides a broad overview of spending patterns but the data cannot explain specifics that drive the spending, Goodman said.

There are dramatic variations in spending nationally. Medicare spent an average of $8,304 per patient in 2006. New York spent the most per enrollee, at $9,564, and Hawaii spent the least, at $5,311.

Among hospital regions, Miami spent the most per enrollee, at $16,351, compared with Honolulu, which spent $5,311. Las Vegas ranked 36th for spending per Medicare patient in 2006 among the 306 hospital referral regions in the study.

From 1992 to 2006, the annual growth rate of per-patient Medicare spending was lowest in Honolulu, at 1.62 percent, and highest in McAllen, Texas, at 8.31 percent, the study said. In the same period, Medicare spending per enrollee grew at an annual rate of 3.61 percent in Las Vegas, slightly higher than the national average.

Medicare will be $660 billion in the red by 2023 if the excessive spending is not stopped, the report said. But there is hope. If the annual rate of growth in spending per Medicare patient could be reduced from a national average of 3.5 percent to the rate in San Francisco, 2.4 percent, Medicare could save $1.42 trillion and turn the deficit into a surplus, the report said.

It’s harder to get data on the money spent by commercial insurance providers, but Goodman said studies have shown a similar pattern of spending, where the intensity of care varies by health care region.

The federal government’s scrutiny of hospitals and doctors in high-spending regions such as Las Vegas is going to increase every year, Goodman said, and any discussions about health care reform must base reimbursements on performance and efficiency.