Variation in spending associated with primary care practices.

Objectives: To measure variation in spending and inpatient prices associated with the primary care physician (PCP) practice to which patients are attributed.

Study Design: Cross-sectional analysis of claims data.

Methods: We used random effect models to estimate case mix-adjusted spending across large PCP practices within 3-digit zip codes. We compare inpatient prices for patients in high-spending practices with those in low-spending practices.

Results: The physician practice to which a patient was attributed is associated with significant differences in spending after controlling for patient comorbidities and geography. Patients attributed to practices in the top quartile of total medical expenses have about 30% higher spending than patients attributed to practices in the bottom quartile of adjusted spending in their 3-digit zip code. If patients attributed to practices in the top 2 quartiles had spending equivalent to those in the median practice, total spending would drop by 8%. Price variation accounts for a meaningful amount of the variation, with inpatient prices 17% higher in top-quartile vs bottom-quartile practices. We cannot disaggregate the large variation in utilization into practice patterns and unmeasured case mix (including unmeasured differences in patients' socioeconomic status) vs random health shocks, but correlation in spending patterns across years suggests that some persistent differences in spending patterns exist.

Conclusions: There are meaningful opportunities to reduce spending by changing patient PCP selection, encouraging patients to use lower-priced specialists and hospitals, and eliminating wasteful care. Attention must be paid to the best ways to reap these savings.