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Practice pattern variation in Medicaid

The folks at SignalHealth have published an interesting paper on practice pattern variation in Medicaid within New York State. I’ve been interested in variation, small area analysis and the results thereof ever since reading John Wennberg’s seminal study of hospital discharge variations in New England, and Signalhealth’s contribution is quite useful.
For those not quite as geeky about these matters, practice pattern variation is simply the geographical differences in medical practice for similar demographic groups. Or, why do people in New Haven have significantly fewer hospital admissions than those in Boston (to quote Wennberg).
One of the problems with this somewhat-arcane topic is what do you do with the information? Yes, there are significant public policy implications involved here, but what could an employer, insurer, or managed care firm do about practice pattern variation?
My recommendation to clients is to figure out where differences in practice patterns exist, then either sell health insurance in the “good” places(underwriting approach) or target case/utilization management at the “bad” places (managed care approach).
There actually might be a positive public policy impact from these private initatives – increased attention focused on providers treating outside the norm may impact their practice patterns, and higher prices and reduced availability of insurance in certain areas may encourage employers to seek change.
In the meantime, smart companies can take advantage of the inherent inefficiencies in the market revealed by practice pattern variation analysis.
What does this mean for you?
See above.

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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