Maine Below National Average in Medicare Expenditures

Jun 4, 2014

According to newly released federal data, Maine ranks 17 percent below the national average in Medicare expenditures. While some hold up the report by the Centers for Medicare and Medicaid Services as evidence of low hospital costs in Maine, health policy advocates say the numbers may not be as promising as they seem.

When Jeff Austin of the Maine Hospital Association looks at the numbers in the federal report, he sees Maine as one of the lower cost Medicare providers in the country. It lists the state as 17 percent below the national average of all Medicare-related spending per recipient.

Even better, says Austin, the cost of inpatient hospital care for Medicare recipients is 20 percent below the national average.

"In some ways, that's great news. I think it reflects healthy utilization trends, not doing wasteful spending, lower readmission rates - all the kinds of things that you want to squeeze out of the health care system," Austin says.

Chalk up this success, says Austin, to the fact that Maine hospitals have been collecting data on quality longer than a lot of other states, and adjusting policies and procedures accordingly. But he also sees some bad news in the numbers. He explains that there are two components to Medicare costs: First is how much health care is used.

"That's the 'utilization rate' - how much health care are people are consuming," he says. "And price - the second factor is price." Meaning how much the federal government reimburses for Medicare services, which varies from state to state based on a variety of factors.

"The Maine rate, every time it's been looked at, is lower than national averages," Austin says.

Austin says reimbursement rates should be determined primarily by value and quality. Though that's the current trend, Austin says he'd like to see the effort ramp up.

While the Maine Hospital Association's position is that the report reflects, in part, the state's high-quality, low-cost hospital system, independent health care policy consultant Mitchell Stein says the data should be taken with a grain of salt.

"You want to be cautious about drawing too many conclusions just from some top line numbers," Stein says, "which aren't telling the whole story."

Stein says it's tempting to think from the report that all Medicare recipients in Maine are generally paying 17 percent below the national average for their health care. But the reality is different.

"We do know that we have some very high-priced areas here in Maine," Stein says, "and we have some unique challenges with respect to what people pay because of the rural nature of our state, and because of the aging demographics of our state."

Nancy Morris of the Maine Health Management Coalition is also restraining a jump-for-joy about the numbers because she wants to know how Medicare costs compare to Medicaid and commercial insurance.

"Are they low and the others high?" she questions.

Morris and Stein both say these data need more scrutiny. And Morris suggests that some other analysis might be useful when evaluating health care in Maine, and the U.S.

"We have to recognize that we don't have the highest quality health care or the lowest costs in the world, and the rest of the industrialized world has better outcomes and lower costs than we do," she says, "so maybe we should be benchmarking ourselves against the best in the world."

And that kind of data might take a long time to compile.