Convergence in health care spending across counties in New York from 2007 through 2016

One approach considered for reducing health care spending is to narrow the gap in spending between high- and low-spending areas. The goal would be to reduce spending in the high areas to similar levels achieved in areas that use health care more efficiently. This paper examined the degree to which high-spending areas remain high-spending and which types of service lead to convergence or divergence in spending in New York State.

This analysis utilized publicly available data on county-level spending trends for the Medicare fee-for-service population from 2007 to 2016. The study applied methods previously used to evaluate changes in the regional variation of health care spending nationally to county-level data within New York.

The spread of health care spending converged slightly over the ten-year period analyzed. There was also evidence for regression to the mean-effects and changes in the relative rankings of spending across counties during this time. While there was strong evidence for convergence, many high-spending counties in 2007 remained high-spending in 2016. There were also differences in which services drove spending variation at the national level compared to within New York.

These findings point to counties with consistently high spending as a potential focus for health care cost-control efforts. Moreover, efforts to reduce unwarranted variation in spending may need to be tailored to the circumstances of particular regions as there are geographic differences in which services drive spending variation. Regression to the mean effects also have important implications for the specifications of alternative provider payment models, such as accountable care organizations, which promote convergence in spending by utilizing spending targets.