Geographic Variations in Physician Service Utilization

Abstract

This article investigates the geographic variation in Medicare physician services by type of service. Using 1990 Medicare beneficiary samples, age-sex-race adjusted population based physician service rates are computed. Physician services are measured using relative value units (RVUs)from the Medicare feeschedule. There is substantial variation across the states in utilization levels (Florida 38 percent above the U.S. mean; Vermont and Montana 29 percent below the mean) and a much greater range at the metropolitan area level. With the exception of major surgery, urban area benefciaries generally receive higher amounts of most evaluation and management services (particularly consultations), imaging services, and diagnostic testing. If volume performance standards (or an entitlement cap) were established at a state or area level, policymakers would have to address issues of geographic variation.