Midwestern Town the Anti-McAllen, TX, for Medicare Costs

Allen believes the region's coordinated care approach is a significant driver in lowering costs. He credits the Mayo Clinic, just 50 miles down the road from Winona, as a major cultural influence on providers in the state and across the Midwest. Many providers in the state and area are integrated, he says, pointing to Gundersen Lutheran Health System in LaCrosse, MN, and the Marshfield (WI) Clinic.

"Costs are lowered through care coordination and integrated healthcare systems where physicians work in the same organizations," he adds, noting that nearly all of Winona Health's physicians are employed by the system. "We also have less duplication of tests in this area." As a side note, Allen points out that the Midwestern culture may also affects costs. "Culturally, Minnesotans are pragmatic, which plays out in individual choices and how providers use the medical resources to treat people."

Still, for all the outrage over McAllen and all the talk about bending the Medicare cost curve, Allen is skeptical that anything meaningful will come out of a healthcare reform bill that rewards low cost, high quality providers, mainly because of politics.

"The McAllen story is known, but I am concerned that nothing will change because places like Texas that are high spending don't want to give any money back." At the same time, he adds, "low cost states in the low-cost areas don't have enough population, so they don't have the representation or political clout to push through healthcare reform that stops paying places like McAllen, TX, and rewards areas such as Minnesota, which spend less per beneficiary."

Politically, says Allen, it's easier and faster to just cut payment levels for all providers instead of segmenting out the high-quality, low-cost producers. "Of course, that's not a very well thought out strategy. Anybody can do that."