But that proposal has problems. The report said those disagreeing with it say that it would "conflate" two issues:
1. That some beneficiaries have a true and acceptable need for more care because of demographic characteristics and poorer health status, and
2. That some providers and beneficiaries tend to overuse low-value services, duplicate many others, and not follow Medicare standards in designing treatment regimens.
"It is not clear that any existing methodology can adequately disentangle acceptable and unacceptable variation," the committee wrote.
One issue that seems to both define and confuse the controversy over variation in cost and quality is that of fraud, the report says.
"Differences in practice patterns explain some variation in home health, the literature suggests that large deviations from the national average in spending and utilization among nearby areas may be an indication of fraud," the report says.
"In fact, the U.S. Office of the Inspector General (OIG) identified certain geographic areas in Florida, Texas, Louisiana, Illinois, New York, and Michigan as high risk for Medicare fraud."
For durable medical equipment, for example, "Miami-Dade County is a clear outlier, with per-capital spending substantially greater than that of other nearby areas," and also accounted for more home health outlier payments in 2008 than the rest of the nation combined. Some 67% of home health areas that received outlier payments greater than $1 million were located in Miami-Dade, the report said.