Luke Wylie

Data Scientist

Understanding Geographic Variability in Healthcare

Understanding patterns in reimbursement is critical to any healthcare provider who accepts Medicare patients. Fortunately, a wealth of data is released by CMS that helps shed light on the Medicare system. One of the most interesting files released is the Hospital Service Area File (HSAF), which breaks down Medicare inpatient claims and charges across a calendar year by ZIP code. The geographic nature of this dataset makes maps an obvious choice to help understand how these charges vary across the country. The first way of looking at this data is to visualize total Medicare Inpatient Charges by ZIP Code.

Total Medicare Charges by ZIP Code

This map follows a pattern one would expect when looking at a trend across the continental United States. Areas of higher population, like New York, Chicago, and Los Angeles have more patients and thus a higher total amount of Medicare charges.  Florida has an extremely high amount of total Medicare charges throughout the entire state (not just the state’s population centers), most likely attributed to the state’s high number of 65+ Medicare recipients.

The second and most meaningful way to visualize this data is to normalize it by dividing the total charges by inpatient cases per zip code. This removes the focus on major population centers and instead paints a more interesting picture about where charges per case are the highest.

Average Charge per Patient by ZIP Code

Here we see a shift in the story. Instead of hotbeds in New York, Los Angeles, and western Arizona, we see several regions of the county that have much higher averages charges per case than others. States like California, Colorado, and New Jersey show much higher charges per case than states like Michigan, the Dakotas, or Minnesota. This brings to light interesting questions for physicians and healthcare managers in these states. For instance, are there more expensive procedures being performed in these states, do individual states see higher acuity patients, or do hospitals and physicians bill more for the same procedures?

Additionally, from a retiree point of view, should you plan to retire in an area with a low average charge per case?

With CMS predicting our National Health Expenditure to reach $5,000,000,000,000  by 2022, these are questions healthcare professionals and policy-makers should not take lightly.