Regional Variations: The Use of Hospitals, Home Health, and Skilled Nursing in Traditional Medicare and Medicare Advantage

In the traditional Medicare program, the use of health care services—particularly postacute care—varies substantially across geographic regions. Less is known about such variations in Medicare Advantage (MA), which is growing rapidly. Insurers that are paid on a risk basis, as in MA, may have incentives and tools to restrain the use of services, which could attenuate geographic variations. In this study of fifty-four million Medicare beneficiaries in the period 2007–13, we found that geographic variations in the use of skilled nursing facility and hospital care in the MA population exceeded those in traditional Medicare, though variations in the use of home health care were greater in traditional Medicare. Within hospital referral regions, the correlations between the use of services in MA and traditional Medicare were moderate to strong. The findings suggest that regional variations in hospital and postacute care reflect local factors that influence beneficiaries’ use of services irrespective of the way they obtain coverage.