Dartmouth scholars have revisited their analysis of regional variation in health  care spending and found contrary to the assertions of some critics that cost-of-living differentials do not account for much of the difference. However, they confirmed that some big cities with high poverty concentrations that also serve as training grounds for future physicians may have been unfairly lumped in with areas that overuse health care services.

The new study in Health Affairs showed after adjusting for price differences that Miami, Florida and McAllen, Texas still led the pack in terms of how much Medicare spent on each beneficiary. Both areas still spent nearly three times more than the lowest spending regions of the country, which remained Honolulu, Hawaii and LaCrosse, Wisconsin. 

There were a few areas of the country where the adjustments made a big difference, and they were mostly big cities. The Bronx and Manhattan in New York City fell 39 and 33 percent, respectively, from the adjustments. But price was only a minor factor, according to the researchers, who were led by Daniel Gottlieb of the Dartmouth Institute for Health Policy and Clinical Practice.

Much of the reason why the New York metropolitan area is so costly is not because of the wage index per se (what we usually think of as "cost-of-living" adjustments), but because the CMS pays hospitals in the New York area so much to reimburse them for graduate medical education and caring for disproportionate shares of low-income patients.

Other high-spending areas frequently targeted by critics did not do so well under the adjustments. Los Angeles, for instance, dropped just 14 percent after adjusting for cost-of-living, graduate education and disproportionate share payments for low-income residents.

The Medicare Payment Advisory Commission issued a report late last year that suggested regional variation in use patterns were less than the Dartmouth Atlas of Health scholars had previously estimated. This latest study says regional variation still matter -- a lot. The debate clearly isn't over.

Here's the list of the ten highest and ten lowest spending areas in the country both before and after adjustments for price, graduate medical education and disproportionate share payments:

10 high-spending hospital regions:

                            BEFORE        AFTER    % CHG.

FL-Miami               $15,909     $14,966      6%
TX-McAllen              13,633       13,881      -2
NY-Bronx                12,004         8,653      39
NY-Manhattan          11,744         8,861      33
TX-Harlingen            11,489       11,324      1
CA-Los Angeles        10,674         9,325      14
NY-Long Island        10,608         8,740      21
MI-Dearborn            10,460         9,791        7
LA-Monroe               10,226       11,385     -10
MI-Detroit                 9,954         9,541       4

10 low-spending hospital regions:
ND-Minot                   6,033         6,711     -10
VA-Lynchburg             6,022         6,524      -8
CO-Grand Junction      5,983         6,075      -2
OR-Eugene                5,968         5,798       3
IA-Iowa City               5,902         6,254      -6
SD-Rapid City             5,854         6,176      -5
OR-Salem                  5,810         5,642       3
IA-Dubuque               5,799         6,219      -7
WI-La Crosse             5,715         5,757      -1
HI-Honolulu               5,293         5,212       2

5 hospital regions with biggest drop due to price and other factors:

NY-Bronx                   12,004         8,653     39
NY-Manhattan            11,744         8,861     33
CA-Alameda County     9,251         7,094     30
CA-San Francisco         8,140          6,278    30
CA-San Mateo County  7,878          6,104     29