GAO issues report on variation in private-sector spending for three procedures

Private-sector spending for coronary stent placement, laparoscopic appendectomy and total hip replacement varied widely by geographic area in 2009 and 2010, even after adjusting for geographic differences in the cost of doing business and differences in enrollee demographics and health status, according to a report released yesterday by the Government Accountability Office. Average spending for an episode of care, which included all services from the day of admission to 30 days after discharge and certain services in the three days prior to admission, was 74%-94% higher (depending on the procedure) when comparing metropolitan statistical areas in the highest and lowest spending quintiles, GAO said. The price of the initial admission was the largest contributor to the difference, in part because it represented the largest percentage of adjusted episode spending. Areas in the highest-spending quintile had higher average prices and intensity (a measure of the resources needed to provide a service) but fewer services (volume) than areas in the lowest-spending quintile for all three procedures. The findings do not reflect the impact of more recent policy changes, such as the Affordable Care Act, the report notes. In addition, the database used for the analysis did not include all private payers and may not be generalizable to the broader private health insurance market, GAO said.