IOM: Post-hospital care, provider prices drive spending differences

Big health spending variations nationwide are largely driven by differences in the use of postacute services such as skilled nursing homes and home health care by Medicare beneficiaries, and by higher prices that some hospitals and physicians charge commercial insurers, according to an Institute of Medicine (IOM) report released last week.

The report recommended that Medicare continue using its financial muscle to make hospitals, physicians, and other providers work more closely and reap rewards—or lose money—based on how well and efficiently they care for their patients. The IOM report rejected an idea that has been promoted by some members of Congress to pay more to medical providers in areas of the country where Medicare spending is lower.