It’s no surprise that money is routinely wasted on unneeded medical care, but for the first time, officials have estimated just how many health care dollars may be squandered in Massachusetts. It could be as much as $27 billion a year.
Between 21 and 39 percent of medical expenditures in the state may be wasteful, according to the state’s newly formed Health Policy Commission. That added up to $14.7 billion to $26.9 billion in 2012. One large chunk of that went toward readmitting hospital patients who could have stayed home if their discharge planning had been better, such as having proper instructions for taking medication.
The commission, which released the report on health care cost trends Wednesday, said hospital readmissions may account for $700 million in unnecessary spending annually. It also blamed emergency room visits that could have been prevented with better primary care and treatment for hospital-acquired infections. Other factors included inappropriate imaging tests for low back pain, and unnecessarily inducing labor early in women, which can increase health problems for infants.
The group arrived at the findings a variety of ways, including using information from previous reports and analyzing new data from the state’s All-Payer Claims Database. That database contains information on all medical claims paid by private insurers and Medicare. The group was able to identify patients with low back pain who got CT scans or MRIs to diagnose the condition, rather than wait a few weeks for the pain to go away, which is usually what happens.
Economists and policy specialists also employed a formula typically used to estimate waste in health care spending nationally, said David Cutler, a Harvard University health economist and commission member. He said it is the first time wasteful spending has been estimated for a smaller geographic region.
The commission, established by the state’s health care cost control law passed in 2012, is an independent state agency responsible for slowing growth in medical spending, improving access to care, and creating better ways to pay for care.
In its report, the group pointed out that per-person spending on health care in Massachusetts is the highest in the nation and grew far faster than the national average until 2009. After that, increases in both national and state spending slowed.
Lynn Nicholas, president of the Massachusetts Hospital Association, said some of the report’s assertions are misleading. Since 2009, medical-cost growth has slowed more in Massachusetts than nationally, she said.
And the commission based its analysis of hospital readmissions, for example, on 2009 data, and hospitals and other providers have worked hard to become more efficient since then, Nicholas said. “It’s beginning to pay off,’’ she said, and those efforts are not reflected in the data.
The commission also analyzed high-cost patients, providing the first statewide attempt at “hot-spotting’’ — the identification of chronically ill patients who repeatedly visit emergency rooms and are often hospitalized.
It found that 5 percent of patients accounted for nearly half of all medical spending among those covered by Medicare and commercial insurance. Many of these patients also had mental health problems, or were poor. The commission said it hopes the findings will help focus resources as providers and insurers develop programs to improve primary care.
Dr. Ronald Dunlap, president of the Massachusetts Medical Society, said the problem is “we have two different cultures clashing.’’
On the one hand, he said, doctors who work in hospitals push hard to get patients diagnosed and discharged as quickly as possible to keep down costs. But the systems are not yet in place to make sure those patients have appropriate home visits and other follow-up care to keep them on the road to recovery. Doctors and nurses are trying to spend more time talking to and visiting patients to keep them healthy at home, he said, but insurers do not yet routinely pay for this extra work.
“We have already started to change our behavior, but the payment system has not caught up yet,’’ he said.
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