JULY 2022

Health Care 

Spending

and the 

Medicare 

Program

A Data Book

ME AC Medicare Pay

Advisory Com
A DATA BOOK

Health Care Spending 

and the 

Medicare Program

J U L Y 2 0 2 2

iii

Introduction

The MedPAC Data Book provides information on national health care and Medicare 

spending as well as Medicare beneficiary demographics, dual-eligible beneficiaries, quality 

of care in the Medicare program, and Medicare beneficiary and other payer liability. It also 

examines provider settings—such as hospitals and post-acute care—and presents data on 

Medicare spending, beneficiaries’ access to care in the setting (measured by the number of 

beneficiaries using the service, number of providers, volume of services, length of stay, or 

through direct surveys), and the sector’s Medicare profit margins, if applicable. In addition, 

it covers the Medicare Advantage program and prescription drug coverage for Medicare 

beneficiaries, including Part D.

MedPAC began producing its annual Data Book at the suggestion of congressional staff. 

Some of the information it contains is derived from MedPAC’s March and June reports to 

the Congress; other information is unique to the Data Book. The information is presented 

in tables and figures with brief discussions. 

We produce a limited number of printed copies of this report. It is, however, available 

through the MedPAC website: www.medpac.gov. 

Notes on data

Changes in aggregate spending for the fee-for-service sectors presented in this Data Book 

partly reflect the shift in Medicare enrollment from the traditional fee-for-service program

to Medicare Advantage. Fee-for-service spending per capita may present a more complete

picture of spending changes.

v

Table of contents 

Introduction....................................................................................................................................................................iii

Sections

1 National health care and Medicare spending..........................................................................................1

1-1 Medicare was the largest single purchaser of personal health care, 2020...................................................3

1-2 Medicare’s share of spending on personal health care varied by type of service, 2020.......................... 4

1-3 Health care spending has consumed an increasing share of the country’s GDP........................................5

1-4 The Medicare Trustees and CBO both project Medicare spending to exceed $1 trillion by 2023 ........ 6

1-5 Factors contributing to Medicare’s projected spending growth, 2021–2030 (not including 

general economy-wide inflation)...............................................................................................................................7

1-6 Health care spending per enrollee grew faster for those who were privately insured than for 

beneficiaries in traditional FFS Medicare, 2014–2019......................................................................................... 8

1-7 The declining ratio of workers to Medicare beneficiaries threatens the Medicare 

program’s financial stability ....................................................................................................................................... 9

1-8 Medicare is mainly financed by general tax revenues, Medicare payroll taxes, and 

beneficiary premiums .................................................................................................................................................10

1-9 The Medicare payroll tax will need to increase and/or Part A spending will need to decrease 

to maintain the solvency of Medicare’s Hospital Insurance Trust Fund ......................................................11

1-10 Medicare Part A and Part B benefits and cost sharing per FFS beneficiary, 2020....................................12

1-11 The share of Medicare beneficiaries enrolled in Medicare Advantage has grown rapidly.....................13

1-12 FFS program spending was highly concentrated in a small group of beneficiaries, 2019 ..................... 14

2 Medicare beneficiary demographics............................................................................................................15

2-1 Aged beneficiaries accounted for the greatest share of the Medicare population and 

program spending, 2019 .............................................................................................................................................17

2-2 Beneficiaries younger than 65 accounted for a disproportionate share of 

Medicare spending, 2019............................................................................................................................................18

2-3 Beneficiaries who reported being in poor health accounted for a disproportionate share of 

Medicare spending, 2019............................................................................................................................................19

2-4 Enrollment in the Medicare program is projected to grow rapidly through 2030..................................20

2-5 Characteristics of the Medicare population, 2019..............................................................................................21

3 Medicare beneficiary and other payer financial liability............................................................23

3-1 Sources of supplemental coverage among noninstitutionalized Medicare beneficiaries, 2019 ..........25

3-2 Sources of supplemental coverage among noninstitutionalized Medicare beneficiaries, 

by beneficiaries’ characteristics, 2019...................................................................................................................26

3-3 Covered benefits and enrollment in standardized Medigap plans, 2020...................................................27

3-4 Total spending on health care services for noninstitutionalized FFS Medicare beneficiaries, 

by source of payment, 2019......................................................................................................................................28

3-5 Distribution of per capita total spending on health care services among noninstitutionalized 

FFS beneficiaries, by source of payment, 2019 ...................................................................................................29

3-6 Geographic variation in use of services decreased among FFS Medicare 

beneficiaries, 2008–2018...........................................................................................................................................30
vi

4 Dual-eligible beneficiaries ....................................................................................................................................31

4-1 Dual-eligible beneficiaries accounted for a disproportionate share of Medicare spending, 2019......33

4-2 Dual-eligible beneficiaries were more likely than non-dual-eligible beneficiaries to be 

under age 65 and have a disability, 2019...............................................................................................................34

4-3 Dual-eligible beneficiaries were more likely than non-dual-eligible beneficiaries to report 

being in poor health, 2019.........................................................................................................................................35

4-4 Demographic differences between dual-eligible beneficiaries and non-dual-eligible 

beneficiaries, 2019.......................................................................................................................................................36

4-5 Differences in Medicare spending and service use between dual-eligible beneficiaries 

and non-dual-eligible beneficiaries, 2019 ............................................................................................................37

4-6 Both Medicare and total spending were concentrated among dual-eligible beneficiaries, 2019 .......38

5 Alternative payment models .............................................................................................................................39

5-1 Most Medicare beneficiaries are in managed care plans or are assigned to accountable 

care organizations, 2022 ........................................................................................................................................... 41

5-2 The number of beneficiaries assigned to MSSP ACOs grew rapidly through 2018 and 

then leveled off.............................................................................................................................................................42

5-3 Distribution of ACOs and types of providers participating in MSSP, by number of 

attributed beneficiaries, 2020..................................................................................................................................43

5-4 Participation by select specialists in MSSP ACOs, by number of attributed beneficiaries, 2018........44

5-5 BPCI Advanced is Medicare’s largest episode-based payment model, 2022.............................................45

5-6 Share of BPCI Advanced episode initiators accepting responsibility for each 

clinical episode group, 2022.................................................................................................................................... 46

5-7 Almost 3,000 practices are testing the Primary Care First model, 2022................................................... 47

5-8 About 75 percent of the clinicians who qualified for a 5 percent A–APM bonus in 2022 

were in the Medicare Shared Savings Program ................................................................................................ 48

6 Acute inpatient services....................................................................................................................................... 49

General short-term hospitals

6-1 Number of short-term acute care hospitals and inpatient stays, 2020.......................................................51

6-2 Fewer general short-term acute care hospitals closed in 2021.....................................................................52

6-3 Short-term acute care hospitals’ occupancy rate declined slightly in 2020.............................................53

6-4 All-payer inpatient stays per capita and outpatient visits per capita declined in 2020.........................54

6-5 IPPS hospitals’ all-payer margin remained strong in 2020 with the support of 

federal relief funds ......................................................................................................................................................55

6-6 IPPS hospitals’ all-payer total margin continued to vary across hospital groups in 2020, 

including differences in targeted federal relief funds ......................................................................................56

6-7 IPPS hospitals’ all-payer total margin continued to be higher for those under low fiscal 

pressure, 2016–2020...................................................................................................................................................57

6-8 IPPS hospitals’ Medicare margin remained negative in 2020, but increased slightly 

when including Medicare’s share of federal relief funds.................................................................................58

6-9 IPPS hospitals’ Medicare margin continued to vary across hospital groups in 2020, 

including differences in targeted federal relief funds ......................................................................................59

6-10 IPPS hospitals’ Medicare margin continued to be higher for those under high fiscal 

pressure, 2016–2020.................................................................................................................................................. 60

6-11 Financial pressure led to lower hospital costs per discharge in 2020..........................................................61

6-12 Medicare FFS payments for inpatient services continued to be the largest 

component of payments to IPPS hospitals but not to CAHs, 2016–2020...................................................62
vii

6-13 About 15 percent of IPPS payments in 2020 were from adjustments and additional payments .........63

6-14 Medicare’s uncompensated care payments to IPPS hospitals increased nearly 

2 percent in 2020........................................................................................................................................................ 64

6-15 Medicare FFS inpatient stays per capita declined more than 11 percent in 2020....................................65

6-16 Four major diagnostic categories accounted for over half of all Medicare FFS inpatient 

stays at short-term acute care hospitals, 2016–2020.......................................................................................66

6-17 Share of one-day stays among Medicare FFS beneficiaries at short-term acute care hospitals 

continued to increase in 2020.................................................................................................................................67

6-18 Number of Medicare FFS outpatient observation visits per capita declined 30 percent in 2020.......68

Inpatient psychiatric facilities

6-19 Inpatient psychiatric facility PPS payments and stays continued to decline, with largest 

decline in FY 2020.......................................................................................................................................................69

6-20 The share of freestanding and for-profit Medicare-certified inpatient psychiatric facilities 

continued to increase, 2016–2020 .........................................................................................................................70

6-21 Growing share of Medicare FFS beneficiaries’ stays at IPFs were for schizophrenia, 

schizotypal, and other psychotic disorders, 2016–2020...................................................................................71

6-22 Medicare FFS beneficiaries using IPFs tended to be disabled, under age 65, low income, 

and non-White, FY 2020 ...........................................................................................................................................72

7 Ambulatory care...........................................................................................................................................................73

Physicians and other health professionals

7-1 Medicare spending per fee-for-service beneficiary on services in the physician fee 

schedule, 2010–2020..................................................................................................................................................75

7-2 Physician fee schedule–allowed charges by type of service, 2020...............................................................76

7-3 Total encounters per FFS beneficiary fell in 2020 due to the coronavirus pandemic............................77

7-4 The number of clinicians billing Medicare’s physician fee schedule increased and the mix of 

clinicians changed, 2015–2020................................................................................................................................78

7-5 Medicare beneficiaries’ ability to get timely appointments with physicians was comparable 

with that of privately insured individuals, 2018–2021.......................................................................................79

7-6 Medicare beneficiaries had more problems finding a new primary care provider than a 

new specialist, 2021.................................................................................................................................................... 80

7-7 More Black beneficiaries waited longer than they wanted for appointments compared 

with White beneficiaries, 2021..................................................................................................................................81

7-8 There were few statistically significant differences in the shares of White, Black, and Hispanic 

beneficiaries who reported problems finding a new primary care provider or specialist, 2021..........82

Hospital outpatient services

7-9 Spending on hospital outpatient services covered under the outpatient PPS, 2011–2021 ...................84

7-10 Most hospitals provide outpatient services.........................................................................................................85

7-11 Payments and volume of services under the Medicare hospital outpatient PPS, by type 

of service, 2020............................................................................................................................................................86

7-12 Hospital outpatient services with the highest Medicare expenditures, 2020 ..........................................87

7-13 Separately payable drugs have increased as a share of total spending in the 

outpatient prospective payment system, 2014–2020...................................................................................... 88

Ambulatory surgical centers

7-14 Number of Medicare-certified ASCs increased by 11 percent, 2014–2020.................................................89
viii

Low-value care

7-15 Between 35 and 74 low-value services were provided per 100 FFS beneficiaries in 2019; 

Medicare spent between $2.5 billion and $7.3 billion on these services.................................................... 90

7-16 Imaging, cancer screening, and diagnostic and preventive testing accounted for most 

of the volume of low-value care in 2019...............................................................................................................92

7-17 Cardiovascular testing and procedures, other surgical procedures, and imaging accounted 

for most spending on low-value care in 2019 .....................................................................................................93

8 Post-acute care..............................................................................................................................................................95

8-1 The number of post-acute care providers decreased slightly in 2021 ........................................................97

8-2 Medicare fee-for-service spending for post-acute care was relatively stable from 2010 to 2020.....98

Skilled nursing facilities

8-3 Use of skilled nursing facilities and home health agencies after an inpatient hospital 

stay shifted in 2020.....................................................................................................................................................99

8-4 Freestanding SNFs and for-profit SNFs accounted for the majority of facilities, 

Medicare stays, and Medicare spending in 2020.............................................................................................100

8-5 SNF admissions continued to decline in 2020 ..................................................................................................101

8-6 Freestanding SNF Medicare margins remained high in 2020......................................................................102

8-7 SNF quality measures were stable or improving between 2015 and 2019; 2020 rates reflect 

conditions unique to the coronavirus PHE........................................................................................................103

Home health services

8-8 Trends in home health care use and spending................................................................................................ 104

8-9 Most home health periods are not preceded by hospitalization or PAC stay.........................................105

8-10 Medicare margins for freestanding home health agencies, 2019 and 2020.............................................106

8-11 Changes in home health care quality in 2020 likely reflect disruption of COVID-19 

public health emergency.........................................................................................................................................107

Inpatient rehabilitation facilities

8-12 Number of IRF cases decreased in 2020 ............................................................................................................108

8-13 Most common types of IRF cases, 2020 .............................................................................................................109

8-14 IRF Medicare margins by type of facility, 2015–2020 ......................................................................................110

8-15 Risk-adjusted quality indicators for IRFs, 2016–2020....................................................................................... 111

Long-term care hospitals

8-16 Ten MS–LTC–DRGs accounted for over half of LTCH discharges in 2020 .............................................. 112

8-17 LTCH volume fell during the dual payment-rate system transition period (2016–2019), 

largely due to declining volume of nonqualifying cases ................................................................................. 113

8-18 LTCHs’ Medicare aggregate margin had been negative during the phase-in of site-neutral 

rates for nonqualifying cases but increased in 2020 due to higher Medicare payments.....................114

9 Medicare Advantage................................................................................................................................................115

9-1 Enrollment in MA plans, 2010–2022...................................................................................................................... 117

9-2 MA plans available to almost all Medicare beneficiaries, 2015–2022 ..........................................................118

9-3 Changes in enrollment vary among major plan types .....................................................................................119

9-4 MA and cost plan enrollment by state and type of plan, 2022.....................................................................120

9-5 MA plan benchmarks, bids, and Medicare program payments relative to FFS spending, 2022.......... 121

9-6 Average monthly rebate dollars, by plan type, 2017–2022 ............................................................................ 122
ix

9-7 Enrollment in employer group MA plans, 2009–2022.................................................................................... 123

9-8 Number of special needs plan enrollees, 2013–2022 ......................................................................................124

9-9 Number of SNPs and SNP enrollment rose from 2021 to 2022.................................................................... 125

9-10 The share of Medicare beneficiaries in MA plans is lower in rural areas, 2022...................................... 126

9-11 MA enrollment patterns vary based on urban influence designation, 2022............................................ 127

9-12 MA plans are available to nearly all beneficiaries in rural areas, 2022.......................................................128

9-13 Most Medicare beneficiaries have access to a considerable number of MA plans, but rural 

beneficiaries typically have fewer plans from which to choose, 2022....................................................... 129

9-14 MA enrollment patterns, by age, dual-eligible status, and ESRD status, June 2021 ..............................130

10 Prescription drugs .....................................................................................................................................................131

10-1 Medicare spending for Part B drugs furnished by physicians, hospital outpatient 

departments, and suppliers, 2009–2020............................................................................................................ 133

10-2 Change in Medicare payments and utilization for separately payable Part B drugs, 2009–2020..... 135

10-3 Top 20 Part B drugs, 2020 ...................................................................................................................................... 137

10-4 Growth in ASP for the 20 highest-expenditure Part B drugs, 2015–2022................................................ 139

10-5 Trends in Medicare Part B payment rates for originator biologics and their 

biosimilar products....................................................................................................................................................141

10-6 Price indexes for Medicare Part B drugs, 2010–2020.....................................................................................143

10-7 Part D enrollment by plan type, 2007–2021.......................................................................................................145

10-8 Characteristics of Part D enrollees, 2021............................................................................................................147

10-9 Changes in parameters of the Part D defined standard benefit over time, 2006–2022.......................148

10-10 Characteristics of stand-alone Medicare PDPs, 2021–2022 .........................................................................150

10-11 Characteristics of general MA–PDs, 2021–2022................................................................................................ 151

10-12 Characteristics of SNPs, 2021–2022..................................................................................................................... 152

10-13 Change in average Part D premiums, 2018–2022............................................................................................. 153

10-14 Part D benchmarks for LIS premiums and number of qualifying PDPs, by region................................ 155

10-15 In 2022, about one in two listed drugs is subject to some utilization management ............................. 157

10-16 Components of Part D spending growth, 2009–2020.................................................................................... 159

10-17 Distribution of annual gross Part D drug spending for EGWP and other plan enrollees 

by percentile, 2020 ....................................................................................................................................................161

10-18 Part D spending and use per enrollee, 2020 ..................................................................................................... 162

10-19 Trends in Part D spending and use per enrollee per month, 2007–2020.................................................164

10-20 Top 15 therapeutic classes of drugs covered under Part D, by spending, 2020..................................... 165

10-21 Despite high generic use, brand-name drugs accounted for the majority of spending in 

the top 15 therapeutic classes by spending, 2020 ...........................................................................................166

10-22 Price growth for Part D–covered drugs, 2010–2020 ......................................................................................167

10-23 Price growth for therapeutic classes with protected status under Part D, 2010–2020.......................168

10-24 Price growth for biologics covered under Part D, 2010–2020.....................................................................170

10-25 Potential impact of biosimilars and certain follow-on biologics on Part B and Part D spending....... 171

11 Other services...............................................................................................................................................................173

Dialysis

11-1 Growth in the number of dialysis facilities slowed in 2020; most facilities are for profit and 

freestanding ................................................................................................................................................................ 175

11-2 Medicare spending for outpatient dialysis services furnished by freestanding 

and hospital-based dialysis facilities, 2019 and 2020......................................................................................176

11-3 The ESRD population is growing, and most patients with ESRD undergo dialysis ...............................177
x

11-4 Asian Americans and Hispanics are among the fastest-growing segments of the 

ESRD population........................................................................................................................................................178

11-5 Characteristics of Medicare fee-for-service dialysis patients, 2020.........................................................179

11-6 Aggregate margins varied by type of freestanding dialysis facility, 2020.................................................180

11-7 Dialysis quality of care: Some measures show progress, others need improvement, 2014–2019 ......181

Hospice

11-8 Hospice spending and use increased in 2020...................................................................................................182

11-9 Number of Medicare decedents and number of decedents who used hospice 

grew substantially in 2020......................................................................................................................................183

11-10 Share of decedents using hospice increased from 2010 to 2019 but declined in 2020 as 

growth in deaths outpaced growth in hospice use.........................................................................................184

11-11 Number of Medicare-participating hospices has increased due to growth in 

for-profit hospices ....................................................................................................................................................186

11-12 Hospice cases by primary diagnosis, 2020 ........................................................................................................187

11-13 Hospice average length of stay among decedents increased in 2020.......................................................188

11-14 Hospice length of stay among decedents, by beneficiary and hospice characteristics, 2020...........189

11-15 Nearly 60 percent of Medicare hospice spending in 2020 was for patients with 

stays exceeding 180 days.........................................................................................................................................190

11-16 Hospice Medicare aggregate margins, 2015–2019............................................................................................191

11-17 Medicare aggregate margins were higher among hospices with more long stays, 2019..................... 192

11-18 Hospices that exceeded Medicare’s annual payment cap, 2015–2019....................................................... 193

11-19 Hospice live-discharge rates, 2018–2020...........................................................................................................194

Clinical laboratory

11-20 Medicare spending for clinical laboratory tests, 2005–2020....................................................................... 195
1S E C T I O N

National health care and

Medicare spending

A Data Book: Health care spending and the Medicare program, July 2022 3

Chart 1-1. Medicare was the largest single purchaser of personal 

health care, 2020

Note: CHIP (Children’s Health Insurance Program), DoD (Department of Defense), VA (Department of Veterans 

Affairs). “Personal health care” is a subset of national health expenditures that comprises spending for all 

medical goods and services that are provided for the treatment of an individual. “Out-of-pocket” spending 

includes cost sharing for both privately and publicly insured individuals. Premiums are included in the 

shares of each program (e.g., Medicare, private health insurance) rather than in the share of the “out-ofpocket” category. “Other third-party payers” includes worksite health care, other private revenues, Indian 

Health Service, workers’ compensation, general assistance, maternal and child health, vocational 

rehabilitation, other federal programs (including COVID-19 Paycheck Protection Program loans and the 

Provider Relief Fund), the Substance Abuse and Mental Health Services Administration, other state and 

local programs, and school health. 

Source: CMS Office of the Actuary, Table 6: Personal Health Care Expenditures; Levels, Percent Change, and Percent 

Distribution, by Source of Funds: Selected Calendar Years 1970–2020, released December 2021, 

https://www.cms.gov/files/zip/nhe-tables.zip.

• Medicare is the largest single purchaser of health care in the U.S. (Although the share of 

spending accounted for by private health insurance is greater than Medicare’s share,

private health insurance is not a single purchaser of health care; rather, it includes many 

private plans, including managed care, self-insured health plans, and indemnity plans.) Of 

the $3.4 trillion spent on personal health care in 2020, Medicare accounted for 22 percent, 

or $754.5 billion. This amount comprises spending on direct patient care and excludes 

administrative and business costs.

• Private health insurance plans financed 30 percent of total personal health care spending,

and consumer out-of-pocket spending (not including premiums) amounted to 12 percent.

• In this chart, enrollees’ premium contributions are included in the spending category of 

their insurance type.

Medicare

22%

Medicaid

17%

Private health 

insurance

30%

Out of pocket

12%

CHIP, DoD, and VA

4%

Total = $3.4 trillion

Other third-party payers

14%
4 National health care and Medicare spending

Chart 1-2. Medicare’s share of spending on personal health care 

varied by type of service, 2020

Note: CHIP (Children’s Health Insurance Program). “Personal health care” is a subset of national health 

expenditures that comprises spending for all medical goods and services that are provided for the 

treatment of an individual. “Other” includes private health insurance, out-of-pocket spending, and other 

private and public spending. Other service categories included in personal health care that are not shown 

here are other professional services; dental services; other health, residential, and personal care; and other 

nondurable medical equipment. 

Source: CMS Office of the Actuary, National Health Expenditures by Type of Service and Source of Funds: Calendar 

Years 1960 to 2020, released December 2021, https://www.cms.gov/files/zip/national-health-expenditurestype-service-and-source-funds-cy-1960-2020.zip.

• While Medicare’s share of total personal health care spending was 22 percent in 2020 (see 

Chart 1-1), its share of spending by type of service varied, from 20 percent of spending on 

durable medical equipment to 34 percent of spending on home health care.

• Medicare’s share of spending on nursing care facilities and continuing care retirement 

communities was smaller than Medicaid’s share. Medicare pays for nursing home services

only for Medicare beneficiaries who require skilled nursing or rehabilitation services, 

whereas Medicaid pays for custodial care (assistance with activities of daily living) 

provided in nursing homes for people with limited income and assets.

25 24

34

20 20

32

17

11

30

27

16

10

58

65

36

53

64 59

0

10

20

30

40

50

60

70

80

90

100

Hospital Clinician Home health Nursing care

facilities and

continuing

care

retirement

communities

Durable

medical

equipment

Retail

prescription

drugs

Share of spending (in percent)

Medicare Medicaid and CHIP Other
A Data Book: Health care spending and the Medicare program, July 2022 5

Chart 1-3. Health care spending has consumed an increasing share 

of the country’s GDP

Note: GDP (gross domestic product). 

Source: CMS Office of the Actuary, National Health Expenditure Data, historical data released December 2021 and 

projections released April 2022, https://www.cms.gov/research-statistics-data-and-systems/statistics-trendsand-reports/nationalhealthexpenddata.

• In 2020, total health care spending made up 19.7 percent of the country’s GDP—driven 

upward by one-time spending prompted by the COVID-19 pandemic. 

• Private health insurance spending constituted 5.5 percent of GDP spending in 2020, 

Medicare constituted 4.0 percent, and Medicaid constituted 3.2 percent. 

• Over time, Medicare spending has accounted for an increasing share of GDP. From 1 

percent in 1975, it is projected to reach nearly 5 percent of GDP by 2030.

• One of the drivers of Medicare spending growth between now and 2030 is the continued 

aging of the baby-boom generation into the Medicare program, which began in 2011. By 

2030, all baby boomers will have reached Medicare-eligibility age.

1.0

1.7

2.4 2.6

3.6 4.3

0

5

10

15

20

25

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Share of GDP (in percent)

Calendar year

Total health care spending

Private health insurance spending

Medicare spending

Medicaid spending

Historical Projected
6 National health care and Medicare spending

Chart 1-4. The Medicare Trustees and CBO both project Medicare 

spending to exceed $1 trillion by 2023

Note: CBO (Congressional Budget Office). All data are nominal, mandatory outlays (benefit payments plus 

mandatory administrative expenses) by fiscal year.

Source: Congressional Budget Office’s July 2021 baseline spending projections for Medicare,

https://www.cbo.gov/system/files/2021-07/51302-2021-07-medicare.xlsx; the 2021 annual report of the Boards 

of Trustees of the Medicare trust funds.

• Medicare spending has more than doubled since 2005, increasing from $337 billion to

over $800 billion by 2021. (Medicare spending reached $919 billion in 2020 due to onetime spending prompted by the COVID-19 pandemic.)

• The Medicare Trustees and CBO both project that Medicare spending between 2020 and 

2030 will grow at an average annual rate of 6.2 percent. Medicare spending will reach $1 

trillion by 2023 under both sets of projections.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 2010 2015 2020 2025 2030

Dollars (in billions)

Fiscal year

Trustees

CBO

Actual Projected
A Data Book: Health care spending and the Medicare program, July 2022 7

Chart 1-5. Factors contributing to Medicare’s projected spending 

growth, 2021–2030 (not including general economy-wide 

inflation)

Average annual percent change in:

Medicare 

part

Medicare 

prices

Number of 

beneficiaries

Beneficiary 

demographic 

mix

Volume and 

intensity of 

services used

Medicare’s 

projected 

spending

Part A –0.2% 2.1% –0.6% 2.4% 3.8%

Part B –1.2 2.2 –0.2 5.1 6.0

Part D –0.4 2.4 –0.2 1.8 3.5

Total* –0.7 N/A** –0.4 3.6 4.7

Note: N/A (not available). Includes Medicare Advantage enrollees. “Medicare prices” reflects Medicare’s annual 

updates to payment rates (not including inflation, as measured by the consumer price index), multifactor 

productivity reductions, and any other reductions required by law or regulation. Part A prices are expected 

to decrease to a smaller degree than Part B and Part D in part due to statutorily required increases. 

Specifically, in each of fiscal years 2020 through 2023, there is a statutory 0.5 percent increase in inpatient 

operating payments due to unwinding a temporary reduction in payments that was put in place to recoup 

past overpayments resulting from changes in providers’ documentation and coding. “Volume and 

intensity” is the residual after the other three factors shown in the table (growth in “Medicare prices,”

“number of beneficiaries,” and “beneficiary demographic mix”) are removed. Much of the 2.4 percent 

projected increase in Part A “volume and intensity” may be due to increased coding of hospital severity of 

illness, which could reflect real changes in patients’ needs, changes in coding practices, or both; the 2.4

percent projected increase is not likely to reflect growth in volume per capita, given that the number of 

discharges per beneficiary has been declining for several decades. Figures in the “Medicare’s projected 

spending” column are the product of the other columns in the table. 

* The “total” row is the sum of the other rows of the table, each weighted by their part’s share of total 

Medicare spending in 2020 (as measured by shares of gross domestic product). 

** We are unable to calculate the total contribution to projected spending growth made by the growth in 

“Number of beneficiaries” because there is beneficiary overlap in enrollment in Part A, Part B, and Part D. 

Source: MedPAC analysis of data from the 2021 annual report of the Boards of Trustees of the Medicare trust funds.

• Medicare’s spending is projected to grow 4.7 percent per year, on average, between 2021

and 2030 (not including growth due to general economy-wide inflation).

• Medicare’s projected spending growth is driven by growth in the number of beneficiaries 

(expected to increase by a little more than 2 percent per year over this period) and 

growth in the volume and intensity of services delivered per beneficiary (expected to rise

by 3.6 percent per year).

• Unlike in the private health care sector, price growth is not expected to drive Medicare’s 

increased spending because Medicare is able to administratively set prices for many 

health care providers.
8 National health care and Medicare spending

Chart 1-6. Health care spending per enrollee grew faster for those 

who were privately insured than for beneficiaries in 

traditional FFS Medicare, 2014–2019

Note: FFS (fee-for-service). The figure shows cumulative growth since 2014. It reflects payments to providers from 

health insurers and patients (i.e., cost sharing) but not payments from other sources (e.g., workers’

compensation or auto insurance). Data for spending on retail prescription drugs is not available for the 

privately insured, so it is excluded from both lines in this graph. Spending on out-of-network services for the 

privately insured is not available for that group and thus is not included in this graph. “Private insurance” 

reflects spending contributed by national and regional plans and third-party administrators nationwide for 

adults ages 18 to 64 in self-insured plans (i.e., employer self-funded plans) and fully insured plans, including

individual and group plans, marketplace plans, and Medicare Advantage plans for non-elderly disabled 

individuals. The figure reflects spending for individuals with full-year insurance coverage (including 

individuals with $0 of health care spending).

Source: MedPAC analysis of Medicare's Master Beneficiary Summary File; FAIR Health analysis of its National Private 

Insurance Claims database (which reflects 150 million covered lives) for the subset of enrollees ages 18 to 64.

• Between 2014 and 2019, total health care spending per enrollee (including cost sharing) 

grew 27 percent for people with private insurance, compared with 14 percent for 

beneficiaries with traditional FFS Medicare coverage.

• Increased prices were largely responsible for spending growth in the private sector. One 

key driver of the private sector’s higher prices has been provider market power. Hospitals 

and physician groups have increasingly consolidated, in part to gain leverage over 

insurers in negotiating higher payment rates. By 2017, 57 percent of hospital markets 

were so concentrated that one health system in the market produced a majority of the 

market’s hospital discharges (data not shown). Studies have found that prices paid by 

private payers tend to increase as provider consolidation increases.

27%

14%

0

5

10

15

20

25

30

2014 2015 2016 2017 2018 2019

Private insurance, in network, excluding prescription drugs

FFS Medicare, excluding prescription drugs

Cumulative spending growth

since 2014 (in percent)
A Data Book: Health care spending and the Medicare program, July 2022 9

Chart 1-7. The declining ratio of workers to Medicare beneficiaries 

threatens the Medicare program’s financial stability 

 Medicare beneficiaries with 

 Part A hospital coverage

 Workers per Medicare beneficiary

 with Part A hospital coverage

Note: Part A Hospital Insurance is largely financed by Medicare payroll taxes paid by workers. More beneficiaries 

have Part A Hospital Insurance than Part B Supplemental Medical Insurance. Part A Hospital Insurance is 

usually available to fee-for-service (FFS) Medicare beneficiaries at no cost, while FFS beneficiaries usually 

pay a premium for Part B Supplemental Medical Insurance. Medicare Advantage enrollees are considered 

to have both Part A and Part B coverage and are included in the above graphs.

Source: The 2021 annual report of the Boards of Trustees of the Medicare trust funds.

• As the baby-boom generation ages, enrollment in the Medicare program is surging. By 

2030, all baby boomers will have reached the age of eligibility for the Medicare program, 

and 77 million beneficiaries are expected to have Medicare Part A Hospital Insurance—up 

from 62 million beneficiaries in 2020.

• While Medicare enrollment is rising, the number of workers per beneficiary is rapidly 

declining. Part A Hospital Insurance is primarily financed by workers’ Medicare payroll 

taxes. However, the number of workers per Medicare beneficiary with Part A Hospital 

Insurance has declined from 4.6 in the early years of the program to 2.9 in 2020 and is 

projected to fall to 2.5 by 2030.

0

20

40

60

80

100

1970 1990 2010 2030

Medicare enrollment (in millions)

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1970 1990 2010 2030

Workers per beneficiary
10 National health care and Medicare spending

0%

1%

2%

3%

4%

5%

6%

7%

1966 1976 1986 1996 2006 2016 2026 2036 2046 2056 2066 2076

Share of GDP

Calendar year

Historical Projected Total Medicare spending

General revenue transfers

State transfers and drug fees

Premiums

Payroll taxes

Tax on benefits

Part A deficit

Chart 1-8. Medicare is mainly financed by general tax revenues,

Medicare payroll taxes, and beneficiary premiums 

Note: GDP (gross domestic product). These projections are based on the Trustees’ intermediate set of 

assumptions. “Tax on benefits” refers to the portion of income taxes that higher-income individuals pay on 

Social Security benefits, which is designated for Medicare. “State transfers” (often called the Part D 

“clawback”) refers to payments from the states to Medicare, required by the Medicare Prescription Drug, 

Improvement, and Modernization Act of 2003, for assuming primary responsibility for prescription drug 

spending. “Drug fees” refers to the fee imposed by the Affordable Care Act of 2010 on manufacturers and 

importers of brand-name prescription drugs; these fees are deposited in the Part B account of the 

Supplementary Medical Insurance Trust Fund. Graph does not include the interest earned on trust fund 

investments (which makes up 1 percent of the Hospital Insurance Trust Fund’s income and is expected to 

decline in coming years as trust fund assets decline).

Source: The 2021 annual report of the Boards of Trustees of the Medicare trust funds.

• Medicare spending accounted for 4.0 percent of GDP in 2020. By 2030, the Medicare 

Trustees project that Medicare’s share of GDP will rise to 4.8 percent.

• In the early years of the Medicare program, Medicare payroll taxes deposited into the 

Hospital Insurance Trust Fund (which finances Part A) were the main source of funding 

for the Medicare program, but beginning in 2009, general revenue transfers (which help 

finance Part B and Part D) became the largest single source of Medicare funding. General 

revenue transfers are expected to grow to 51 percent of Medicare financing by 2031. 

• As more general revenues are devoted to Medicare, fewer general tax revenues will be 

available to invest in growing the economic output of the country or supporting other 

national priorities.

2086
A Data Book: Health care spending and the Medicare program, July 2022 11

Chart 1-9. The Medicare payroll tax will need to increase and/or 

Part A spending will need to decrease to maintain the 

solvency of Medicare’s Hospital Insurance Trust Fund 

To maintain Hospital Insurance

Trust Fund solvency for:

Increase 2.9% 

payroll tax to:

Or decrease Part A 

spending by:

25 years (2020–2044) 3.71% 17.8%

50 years (2020–2069) 3.73 17.7

75 years (2020–2094) 3.67 16.2

Source: MedPAC analysis of Table III.B8 in the 2021 annual report of the Boards of Trustees of the Medicare trust 

funds. 

• Medicare’s Hospital Insurance Trust Fund helps pay for Part A services such as inpatient 

hospital stays, post-acute care provided by skilled nursing facilities, and hospice services. 

The trust fund is mainly financed through a dedicated payroll tax (i.e., a tax on wage 

earnings). 

• Payroll tax revenues are not growing as fast as Part A spending, and Medicare often 

spends more on Part A services than it collects through trust fund revenues—creating 

annual deficits. Leftover surpluses from prior years have been used in recent years to pay 

for this deficit spending. As a result, the trust fund’s reserves have been dwindling. 

Medicare’s Trustees estimate that by 2026, the Hospital Insurance Trust Fund’s prior 

surpluses will be depleted—meaning it will be unable to fully cover its obligations. The 

Congressional Budget Office also tracks the trust fund’s financial status and projects that 

it will become insolvent within a similar time frame, by 2027.

• To keep the trust fund solvent over the next 25 years, the Medicare Trustees estimate that 

either the Medicare payroll tax would need to be increased immediately from its current 

rate of 2.9 percent to about 3.7 percent or Part A spending would need to be permanently 

reduced by about 18 percent (about $70 billion in 2022). Alternatively, some combination 

of smaller tax increases and smaller spending reductions could be used to achieve 

solvency.
12 National health care and Medicare spending

Chart 1-10. Medicare Part A and Part B benefits and cost sharing per 

FFS beneficiary, 2020

Average benefit in 2020

(in dollars)

Average cost sharing in 2020

(in dollars)

Part A $5,003 $383

Part B 5,959 1,469

Note: FFS (fee-for-service). Dollar amounts are nominal for FFS Medicare only and do not include Part D. “Average 

benefit” represents amounts paid for covered services per FFS beneficiary and excludes administrative 

expenses. “Average cost sharing” represents the sum of deductibles, coinsurance, and balance billing paid 

for covered services per FFS beneficiary and excludes all monthly premiums. The “Part A” row reflects 

spending for 37 million beneficiaries with Part A, and the “Part B” row reflects spending for 32 million 

beneficiaries with Part B.

Source: CMS, Medicare Part A and Part B Summary, 2020, https://data.cms.gov/summary-statistics-on-use-andpayments/medicare-service-type-reports/medicare-part-a-part-b-all-types-of-service.

• In calendar year 2020, the Medicare program made $5,003 in Part A benefit payments 

and $5,959 in Part B benefit payments, on average, per FFS beneficiary. 

• Beneficiaries owed an average of $383 in cost sharing for Part A and $1,469 in cost sharing 

for Part B that year. (Cost sharing excludes monthly premiums.)

• These amounts are all down slightly from 2019, which could reflect reduced health care 

usage in the early months of the COVID-19 pandemic in 2020.

• To cover some cost-sharing requirements, 90 percent of beneficiaries had coverage that 

supplemented or replaced the Medicare benefit package in 2019, such as Medicare 

Advantage, Medigap coverage, supplemental coverage through former employers, or 

Medicaid (see Chart 3-1).
A Data Book: Health care spending and the Medicare program, July 2022 13

Chart 1-11. The share of Medicare beneficiaries enrolled in Medicare 

Advantage has grown rapidly

Note: Figure shows share of Medicare beneficiaries enrolled in Medicare Advantage plans, from among those 

beneficiaries with both Part A and Part B coverage. For detailed information on Medicare Advantage 

enrollment, see Section 9 of this report.

Source: MedPAC analysis of CMS enrollment files, July 2011–2021.

• The share of Medicare beneficiaries with both Part A and Part B coverage who chose to 

enroll in Medicare Advantage (MA) plans grew rapidly from 2011 to 2021—rising from 26 

percent to 46 percent.

• Since 2016, spending per beneficiary (not risk standardized) in MA and other private plans 

has grown faster than in traditional fee-for-service (FFS) Medicare. From 2018 to 2019 

alone, Medicare private plan spending per beneficiary rose 7.7 percent, compared with 3.5 

percent in FFS Medicare (data not shown). (Medicare private plan spending includes 

spending on extra benefits that nearly all private plans provide.)

• The relatively faster growth in private plan spending per beneficiary in recent years at 

least partially reflects MA demographic changes, the growing number of MA plans 

receiving higher payments due to their quality bonus status, growth in the risk scores MA 

plans report for their enrollees, and Medicare enrollment growth in areas of the country 

where MA payment benchmarks are set at 115 percent of FFS Medicare’s spending per 

beneficiary.

26%

28% 30% 31% 32% 33% 35%

37%

40%

43%

46%

0%

10%

20%

30%

40%

50%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Share of beneficiaries in 

Medicare Advantage
14 National health care and Medicare spending

Chart 1-12. FFS program spending was highly concentrated in a small 

group of beneficiaries, 2019

Note: FFS (fee-for-service). Analysis excludes beneficiaries with any enrollment in a Medicare Advantage plan or 

other health plan that covers Part A and Part B services (e.g., Medicare cost plans, Medicare–Medicaid Plans, 

and Medicare and Medicaid’s Program of All-Inclusive Care for the Elderly [PACE]). Percentages in second 

bar do not sum due to 100 percent due to rounding. The Medicare Current Beneficiary Survey is collected 

from a sample of Medicare beneficiaries; year-to-year variation in some reported data is expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, 2019.

• Medicare FFS spending is concentrated among a small number of beneficiaries. In 2019, 

the costliest 5 percent of beneficiaries (i.e., adding the costliest 1 percent and the nextcostliest 4 percent at the top of the bar at left) accounted for 41 percent of annual 

Medicare FFS spending. The costliest 25 percent of beneficiaries accounted for 83 percent

of Medicare spending. The least costly 50 percent of beneficiaries accounted for only 4

percent of FFS spending. 

• Costly beneficiaries tend to be those who have multiple chronic conditions, are using 

inpatient hospital services, are dually eligible for Medicare and Medicaid, and are in the 

last year of life. 

Least costly 50%

4%

Next 25%

14%

Next 15%

24%

Next 5%

18%

Next 4%

26%

Costliest 

1%

15%

0

10

20

30

40

50

60

70

80

90

100

Percent of FFS beneficiaries Percent of FFS program spending

Percent

83%
2 S E C T I O N

Medicare beneficiary 

demographics

A Data Book: Health care spending and the Medicare program, July 2022 17

Chart 2-1. Aged beneficiaries accounted for the greatest 

share of the Medicare population and program 

spending, 2019

Note: ESRD (end-stage renal disease). The “aged” category includes beneficiaries ages 65 and older without ESRD. 

The “disabled" category includes beneficiaries under age 65 without ESRD. The “ESRD” category includes

beneficiaries with ESRD, regardless of age. Results include fee-for-service, Medicare Advantage, 

community-dwelling, and institutionalized beneficiaries. The Medicare Current Beneficiary Survey is 

collected from a sample of Medicare beneficiaries; year-to-year variation in some reported data is expected.

Totals may not sum to 100 percent due to rounding.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, Cost Supplement file 2019.

• In 2019, beneficiaries ages 65 and older without ESRD composed 85.8 percent of the 

beneficiary population and accounted for 79.7 percent of Medicare spending. 

Beneficiaries under 65 with a disability and beneficiaries with ESRD accounted for the 

remaining population and spending.

• A disproportionate share of Medicare expenditures is on behalf of Medicare beneficiaries 

with ESRD. On average, these beneficiaries incur spending that is more than six times 

greater than spending for aged beneficiaries (ages 65 years and older without ESRD) and 

more than five times greater than spending for beneficiaries under age 65 with a 

disability (non-ESRD).

Total beneficiaries: 60.9 million

79.7%

85.8%

15.9%

13.5%

4.4%

0.7%

Share of

spending

Share of

beneficiaries

Aged Disabled ESRD

Total spending: $807 billion

Total beneficiaries: 62.5

million
18 Medicare beneficiary demographics

Chart 2-2. Beneficiaries younger than 65 accounted for a 

disproportionate share of Medicare spending, 2019

Note: Results include fee-for-service, Medicare Advantage, community-dwelling, and institutionalized 

beneficiaries. The Medicare Current Beneficiary Survey is collected from a sample of Medicare beneficiaries;

year-to-year variation in some reported data is expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, Cost Supplement file 2019.

• Beneficiaries younger than 65 made up 13.7 percent of the beneficiary population in 2019

but accounted for 17.3 percent of Medicare spending. 

• In 2019, average Medicare spending per beneficiary was $12,910. 

• For the aged population (65 and older), per capita expenditures increase with age. In 2019, 

per capita expenditures were $9,971 for beneficiaries 65 to 74 years old, $14,713 for those 

75 to 84 years old, and $17,742 for those 85 or older (data not shown).

• In 2019, per capita expenditures for Medicare beneficiaries under age 65 who were 

enrolled because of end-stage renal disease or disability were $16,289 (data not shown). 

Average per capita spending = $12,594

17.3%

13.7%

38.3%

49.6%

29.2%

25.6%

15.1%

11.0%

Share of

spending

Share of

beneficiaries

Under 65 65-74 75-84 85+

Average per capita spending = $12,910
A Data Book: Health care spending and the Medicare program, July 2022 19

Chart 2-3. Beneficiaries who reported being in poor health 

accounted for a disproportionate share of Medicare 

spending, 2019

Note: Results include fee-for-service, Medicare Advantage, community-dwelling, and institutionalized 

beneficiaries. The Medicare Current Beneficiary Survey is collected from a sample of Medicare beneficiaries;

year-to-year variation in some reported data is expected. Totals may not sum to 100 percent due to 

rounding.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, Cost Supplement file 2019.

• In 2019, most beneficiaries reported fair to excellent health. Only about 5 percent reported

poor health. 

• Medicare spending is strongly associated with self-reported health status. In 2019, per 

capita expenditures were $7,688 for those who reported excellent or very good health, 

$15,663 for those who reported good or fair health, and $26,330 for those who reported

poor health (data not shown).

28.8%

46.8%

60.3%

48.0%

10.9%

5.2%

Share of

spending

Share of

beneficiaries

Excellent or very good health Good or fair health Poor health
20 Medicare beneficiary demographics

Chart 2-4. Enrollment in the Medicare program is projected to grow 

rapidly through 2030

Note: Enrollment numbers are based on Part A enrollment only. Beneficiaries enrolled only in Part B are not 

included. The potential effects of the coronavirus pandemic are not reflected in these projections.

Source: The annual report of the Boards of Trustees of the Medicare trust funds 2021.

• The total number of people enrolled in the Medicare program is projected to increase 

from about 62 million in 2020 to about 77 million in 2030.

• The rate of increase in Medicare enrollment has begun to accelerate as more members of

the baby-boom generation become eligible for the program. Beginning in 2030, when

the entire baby-boom generation will have become eligible, Medicare enrollment will 

continue to increase, but more slowly.

20.1

28.0

33.7

39.3

47.4

62.3

76.9

83.3

86.4

92.3

98.7

104.4 106.7

0

20

40

60

80

100

120

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090

Beneficiaries (in millions)

Historical Projected
A Data Book: Health care spending and the Medicare program, July 2022 21

Chart 2-5. Characteristics of the Medicare population, 2019

Share of the Share of the

Medicare Medicare

Characteristic population Characteristic population

Total (57.2 million) 100% Living arrangement

Institution 3

Sex Alone 29

Male 45 With spouse 47

Female 55 Other 22

Race/ethnicity Education

White, non-Hispanic 75 No high school diploma 14

Black, High school diploma only 25

non-Hispanic 10 Some college or more 59

Hispanic 8

Other 7 Income status

Below poverty 14

Age 100–125% of poverty 7

<65 14 125–200% of poverty 17

65–74 48 200–400% of poverty 26

75–84 27 Over 400% of poverty 36

85+ 11

Supplemental insurance status

Health status Medicare only 13

Excellent or very good 46 Managed care 37

Good or fair 47 Employer-sponsored insurance 19

Poor 6 Medigap 18

Medigap with employerResidence sponsored insurance 2

Urban 81 Medicaid 9

Rural 19 Other 1

Note: Total number of beneficiaries, age, and health status values may slightly differ from previous reports’ figures 

because only beneficiaries with complete characteristic data were included in this analysis. Components may not 

sum to 100 percent due to rounding and exclusion of an “other” category. “Urban” indicates beneficiaries living in 

metropolitan statistical areas (MSAs). “Rural” indicates beneficiaries living outside MSAs. In 2019, “poverty” was 

defined as income of $12,261 for single individuals ages 65 and older and $15,468 for married couples ages 65 and 

older. Poverty thresholds are calculated by the U.S. Census Bureau (https://www.census.gov/data/tables/timeseries/demo/income-poverty/historical-poverty-thresholds.html). Some beneficiaries may have more than one 

type of supplemental insurance. The Medicare Current Beneficiary Survey is collected from a sample of Medicare 

beneficiaries; year-to-year variation in some reported data is expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, Cost Supplement file 2019.

• A majority of Medicare beneficiaries are female (rather than male) and White (rather than 

other races/ethnicities). 

• About one-fifth of beneficiaries live in rural areas. 

• Twenty-nine percent of the Medicare population lives alone.

• Most Medicare beneficiaries have some source of supplemental insurance. Managed care

plans are the most common source of supplemental coverage.

3 S E C T I O N

Medicare beneficiary and 

other payer financial liability

A Data Book: Health care spending and the Medicare program, July 2022 25

Chart 3-1. Sources of supplemental coverage among 

noninstitutionalized Medicare beneficiaries, 2019

Note: We assigned beneficiaries to the supplemental coverage category in which they spent the most time in 

2019. They could have had coverage in other categories during 2019. “Other public sector” includes federal 

and state programs not included in other categories. This analysis includes only beneficiaries not living in 

institutions such as nursing homes. It excludes beneficiaries who were not in both Part A and Part B 

throughout their Medicare enrollment in 2019 or who had Medicare as a secondary payer. The Medicare 

Current Beneficiary Survey is collected from a sample of Medicare beneficiaries; year-to-year variation in 

some reported data is expected.

Source: MedPAC analysis of Medicare Current Beneficiary Survey, Survey file 2019.

• Most beneficiaries living in the community (the noninstitutionalized) have coverage that 

supplements or replaces the Medicare benefit package. In 2019, 90 percent of 

beneficiaries had supplemental coverage or participated in Medicare managed care.

• About 40 percent of beneficiaries had private sector supplemental coverage such as 

Medigap (about 22 percent) or employer-sponsored retiree coverage (almost 18 percent).

• About 9 percent of beneficiaries had public sector supplemental coverage, primarily 

Medicaid.

• Forty-one percent of beneficiaries participated in Medicare managed care, which includes 

Medicare Advantage, health care prepayment, and cost plans. These types of arrangements 

generally replace Medicare’s fee-for-service coverage and often provide more coverage.

• The numbers in this chart differ from those in Chart 2-5, Chart 4-1, and Chart 4-4 because 

of differences in the populations represented in the charts. This chart excludes 

beneficiaries in long-term care institutions, while Chart 2-5 and Chart 4-4 include all 

Medicare beneficiaries, and Chart 4-1 excludes beneficiaries in Medicare Advantage.

Medigap

22.1%

Employersponsored 

insurance

17.6%

Medicaid

Other public 8.8%

sector

0.3%

Medicare 

managed care

41.1%

No supplemental 

coverage

10.1%
26 Medicare beneficiary and other payer financial liability

Chart 3-2. Sources of supplemental coverage among 

noninstitutionalized Medicare beneficiaries, by 

beneficiaries’ characteristics, 2019

Number of Employer- Medicare Other

beneficiaries sponsored Medigap managed public Medicare

(thousands) insurance insurance Medicaid care sector only

All beneficiaries 50,097 18% 22% 9% 41% 0% 10%

Age

<65 6,799 9 3 34 38 0 16

65–69 11,082 16 26 5 41 0 12

70–74 12,493 19 26 5 41 0 9

75–79 9,004 20 24 4 43 0 8

80–84 5,515 22 23 5 43 0 7

85+ 5,203 21 25 5 40 0 8

Income-to-poverty ratio

≤1.00 7,751 3 6 38 44 0 9

1.00 to 1.20 3,156 3 9 23 52 0 13

1.20 to 1.35 1,973 6 17 12 43 1 21

1.35 to 2.00 8,095 11 21 5 48 1 14

>2.00 29,121 26 28 0 37 0 8

Eligibility status

Aged 43,076 19 25 5 41 0 9

Disabled 6,712 9 3 33 39 0 16

ESRD 309 20 19 23 29 1 8

Residence

Urban 40,469 17 21 8 44 0 9

Rural 9,628 18 27 12 28 0 14

Sex

Male 22,465 18 21 8 40 0 12

Female 27,632 17 23 9 42 0 9

Health status

Excellent/very good 23,630 20 27 4 40 0 9

Good/fair 23,415 16 19 12 42 0 11

Poor 2,846 12 12 24 39 0 13

Note: ESRD (end-stage renal disease). We assigned beneficiaries to the supplemental coverage category in which 

they spent the most time in 2019. They could have had coverage in other categories during 2019. “Medicare 

managed care” includes Medicare Advantage, cost, and health care prepayment plans. “Other public 

sector” includes federal and state programs not included in other categories. “Urban” indicates beneficiaries 

living in metropolitan statistical areas (MSAs) as indicated by core-based statistical areas. “Rural” indicates 

beneficiaries living outside MSAs, which includes both micropolitan statistical areas and rural areas as 

indicated by core-based statistical areas. Analysis excludes beneficiaries living in institutions such as 

nursing homes. Analysis also excludes beneficiaries who were not in both Part A and Part B throughout 

their Medicare enrollment in 2019 or who had Medicare as a secondary payer. The number of beneficiaries 

differs among boldface categories because we excluded beneficiaries with missing values. Numbers in 

some rows do not sum to 100 percent because of rounding. The Medicare Current Beneficiary Survey is 

collected from a sample of Medicare beneficiaries; year-to-year variation in some reported data is expected.

Source: MedPAC analysis of Medicare Current Beneficiary Survey (MCBS), Survey file 2019.

• Beneficiaries most likely to have employer-sponsored supplemental coverage are those who are age 

65 or older, have income above twice the poverty level, and report excellent or very good health.

• Medigap is most common among those who are age 65 or older, have income higher than 1.35 times 

the poverty level, are eligible because of age, are rural dwelling, and report excellent or very good health. 

• Medicaid coverage is most common among those who are under age 65, have income lower than 1.2

times the poverty level, are eligible because of disability, are rural dwelling, and report poor health. 

• Lack of supplemental coverage (Medicare coverage only) is most common among beneficiaries who 

are under age 70, have income between 1.00 and 2.00 times the poverty level, are eligible because of

disability, are rural dwelling, are male, and report poor health.
A Data Book: Health care spending and the Medicare program, July 2022 27

Chart 3-3. Covered benefits and enrollment in standardized Medigap 

plans, 2020

 Medigap standardized plan type

Highdeductible

Benefit A B C* D F* F G K L M N 

Part A hospital costs ü ü ü ü ü ü ü ü ü ü ü

Part B cost sharing ü ü ü ü ü ü ü 50% 75% ü $20/$50

Blood (first 3 pints) ü ü ü ü ü ü ü 50% 75% ü ü

Hospice cost sharing ü ü ü ü ü ü ü 50% 75% ü ü

SNF coinsurance ü ü ü ü ü 50% 75% ü ü

Part A deductible ü ü ü ü ü ü 50% 75% 50% ü

Part B deductible ü ü ü 

Part B excess charges ü ü ü 

Foreign travel emergency ü ü ü ü ü ü ü

Lives covered

(in thousands) 100 182 542 126 6,243 360 3,743 76 39 4 1,363

Note: SNF (skilled nursing facility). Three states (Massachusetts, Minnesota, and Wisconsin) have different plan 

types and are not included in this chart. The ü indicates that the plan covers all cost sharing for that 

benefit. Percentages indicate that the plan covers that share of the total cost sharing. The "$20/$50"

indicates that the plan covers all but $20 for physician office visits and all but $50 for emergency room visits. 

* Beginning in 2020, new policies for Plans C or F are not allowed to be sold. However, beneficiaries who 

purchased C plans or F plans before 2020 will be able to continue to purchase those plans.

Source: MedPAC analysis of National Association of Insurance Commissioners data, 2021.

• Medicare beneficiaries often purchase Medigap plans, also known as Medicare 

supplementary insurance plans, to cover fee-for-service Medicare cost sharing. Statute 

specifies 11 standardized plans. States enforce the standards based on model regulations 

developed by the National Association of Insurance Commissioners. Three states 

(Massachusetts, Minnesota, and Wisconsin) have waivers from these standards and have 

different standard plan types not included in this chart.

• Plan F, which covers all Medicare cost sharing, is the most popular plan, with 6.2 million 

enrollees. However, because the Congress was concerned about the overuse of Medicare 

services, legislation prohibits the sale of new Plan F policies as of 2020. As a result, 

insurers have begun to direct beneficiaries into other plan types, namely plans G, K, and 

N, which do not cover the Part B deductible.

• During 2020, 14 million beneficiaries enrolled in Medigap plans (including those in

Massachusetts, Minnesota, and Wisconsin). Of all Medicare beneficiaries, about one-fifth 

were enrolled in Medigap plans. 
28 Medicare beneficiary and other payer financial liability

Chart 3-4. Total spending on health care services for 

noninstitutionalized FFS Medicare beneficiaries, by source 

of payment, 2019

Note: FFS (fee-for-service). “Private supplements” includes employer-sponsored plans and individually purchased 

coverage. “Public supplements” includes Medicaid, Department of Veterans Affairs, and other public 

coverage. “Beneficiaries’ direct spending” includes Medicare cost sharing and spending on noncovered 

services, but not supplemental premiums. Analysis includes only FFS beneficiaries not living in institutions 

such as nursing homes. The Medicare Current Beneficiary Survey is collected from a sample of Medicare 

beneficiaries; year-to-year variation in some reported data is expected.

Source: MedPAC analysis of Medicare Current Beneficiary Survey, Cost Supplement file, 2019.

• Among FFS beneficiaries living in the community (rather than in an institution), the total 

cost of health care services (beneficiaries’ direct spending as well as expenditures by 

Medicare, other public sector sources, and all private sector sources on all health care 

goods and services) averaged about $16,000 in 2019. Medicare was the largest source of 

payment: It paid about 66 percent of the health care costs for FFS beneficiaries living in the 

community, an average of $10,468 per beneficiary.

• Private sources of supplemental coverage—primarily employer-sponsored retiree 

coverage and Medigap—paid about 14 percent of beneficiaries’ costs, an average of $2,225

per beneficiary.

• Beneficiaries paid about 14 percent of their health care costs out of pocket, an average of 

$2,279 per beneficiary.

• Public sources of supplemental coverage—primarily Medicaid—paid about 6 percent of 

beneficiaries’ health care costs, an average of $1,001 per beneficiary.

Medicare

66%

Beneficiaries' 

direct 

spending

14%

Private 

supplements

14%

Public 

supplements

6%

Per capita total spending = $15,973
A Data Book: Health care spending and the Medicare program, July 2022 29

Chart 3-5. Distribution of per capita total spending on health care 

services among noninstitutionalized FFS beneficiaries, by

source of payment, 2019

Note: FFS (fee-for-service). Analysis excludes those who are not in FFS Medicare and those living in institutions 

such as nursing homes. “Out-of-pocket" spending includes Medicare cost sharing and noncovered services, 

but not supplemental premiums. The Medicare Current Beneficiary Survey is collected from a sample of 

Medicare beneficiaries; year-to-year variation in some reported data is expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, Cost Supplement file, 2019.

• Total spending on health care services varied dramatically among FFS beneficiaries living 

in the community in 2019. Per capita spending for the 10 percent of beneficiaries with the 

highest total spending averaged nearly $81,000. Per capita spending for the 10 percent of 

beneficiaries with the lowest total spending averaged $305.

• Among FFS beneficiaries living in the community, Medicare paid a larger share and 

beneficiaries’ out-of-pocket spending was a smaller share as total spending increased. For 

example, Medicare paid 66 percent of total spending for all beneficiaries, but paid 74

percent of total spending for the 10 percent of beneficiaries with the highest total 

spending (data not shown). Among all FFS beneficiaries living in the community, out-ofpocket spending amounted to 14 percent of total spending, but only 8 percent of total 

spending for the 10 percent of beneficiaries with the highest total spending (data not 

shown).

$305 $1,576 $4,382

$10,958

$23,734

$80,787

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

<10 10–25 25–50 50–75 75–90 >90

Dollars

Groups of beneficiaries ranked by total spending (percentile ranges)

Medicare

Supplemental payers

Out of pocket
30 Medicare beneficiary and other payer financial liability

Chart 3-6. Geographic variation in use of services decreased among 

FFS Medicare beneficiaries, 2008–2018

Note: FFS (fee-for-service). “Service use” is per capita monthly Part A and Part B service use among FFS

beneficiaries in each geographic area. We defined geographic areas as metropolitan statistical areas within 

each state for urban counties and rest-of-state nonmetropolitan areas for nonurban counties.

Source: MedPAC analysis of 2008, 2013, and 2018 beneficiary-level spending from the Medicare Beneficiary 

Summary Files and Medicare inpatient claims.

• FFS beneficiaries’ use of Medicare-covered services varies by geographic area, 

but that variation decreased from 2008 to 2018. The share of FFS beneficiaries 

living in geographic areas that had service use within 5 percent of the national 

average (95 percent to 105 percent) increased from 43 percent in 2008 to 59 

percent in 2018. Also, the share of FFS beneficiaries living in geographic areas 

that had service use that was more than 25 percent higher than the national 

average (>125 percent) decreased from 2 percent in 2008 to almost 0 percent 

in 2018.

• The service sector that had the largest decrease in variation from 2008 to 2018 

was post-acute care, especially home health care (data not shown). From 2008 

to 2018, the variation in use of home health services across geographic areas 

declined by 24 percent.

0%

10%

20%

30%

40%

50%

60%

70%

< 75% 75%-85% 85%-95% 95%-105% 105%-115% 115%-125% >125%

Share of FFS beneficiaries living in geographic

area with specified level of service use 

Area service use as a share of national average service use

2008

2013

2018
4S E C T I O N

Dual-eligible 

beneficiaries

A Data Book: Health care spending and the Medicare program, July 2022 33

Chart 4-1. Dual-eligible beneficiaries accounted for a 

disproportionate share of Medicare spending, 2019

Share of FFS beneficiaries Share of FFS spending

Note: FFS (fee-for-service). “Dual-eligible beneficiaries” are defined as beneficiaries who were eligible for both 

Medicare and Medicaid for at least one month during the year. The Medicare Current Beneficiary Survey is a 

point-in-time survey from a sample of Medicare beneficiaries. Year-to-year variation in reported data is 

expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, 2019.

• Dual-eligible beneficiaries are those who qualify for both Medicare and Medicaid. 

Medicaid is a joint federal and state program designed to help people with low incomes

obtain needed health care. 

• Dual-eligible beneficiaries account for a disproportionate share of Medicare FFS 

expenditures. Although they were 15 percent of the Medicare FFS population in 2019, they 

represented 27 percent of aggregate Medicare FFS spending. 

• On average, Medicare FFS per capita spending is more than twice as high for dualeligible beneficiaries compared with non-dual-eligible beneficiaries: In 2019, $20,577 was 

spent per dual-eligible beneficiary, and $9,698 was spent per non-dual-eligible 

beneficiary (data not shown).

• In 2019, average total spending3⁄4which includes Medicare, Medicaid, supplemental 

insurance, and out-of-pocket spending across all payers3⁄4for dual-eligible beneficiaries

was $33,220 per beneficiary, about twice the amount for other Medicare beneficiaries

(data not shown).

Dual 

eligible

15%

Nondual 

eligible

85%

Dual 

eligible

27%

Nondual 

eligible

73%
34 Dual-eligible beneficiaries

Chart 4-2. Dual-eligible beneficiaries were more likely than 

non-dual-eligible beneficiaries to be under age 65 and 

have a disability, 2019

Dual-eligible beneficiaries Non-dual-eligible beneficiaries

Note: Beneficiaries who are under age 65 generally qualify for Medicare because of disability. Once beneficiaries 

with disabilities reach age 65, they are counted as aged beneficiaries. “Dual-eligible beneficiaries” are 

defined as beneficiaries who were eligible for both Medicare and Medicaid for at least one month during 

the year. The Medicare Current Beneficiary Survey is a point-in-time survey from a sample of Medicare 

beneficiaries. Year-to-year variation in reported data is expected.

Source: MedPAC analysis of Medicare Current Beneficiary Survey, 2019.

• Disability is a pathway for individuals to become eligible for both Medicare and Medicaid 

benefits. 

• Dual-eligible beneficiaries are more likely than non-dual-eligible beneficiaries to be under

age 65 and have a disability. In 2019, 40 percent of dual-eligible beneficiaries were under

age 65 with a disability compared with 8 percent of the non-dual-eligible population. 

Under 65 

(disabled)

40%

65-74

31%

75-84

19%

85+

10%

Under 65 

(disabled)

8%

65-74

52%

75-84

29%

85+

11%
A Data Book: Health care spending and the Medicare program, July 2022 35

Chart 4-3. Dual-eligible beneficiaries were more likely than non-dualeligible beneficiaries to report being in poor health, 2019

Dual-eligible beneficiaries Non-dual-eligible beneficiaries

Note: “Dual-eligible beneficiaries” are defined as beneficiaries who were eligible for both Medicare and Medicaid 

for at least one month during the year. The Medicare Current Beneficiary Survey is a point-in-time survey 

from a sample of Medicare beneficiaries. Year-to-year variation in reported data is expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, 2019.

• Dual-eligible beneficiaries are more likely than non-dual-eligible beneficiaries to report 

being in poor health. In 2019, 14 percent of dual-eligible beneficiaries reported being in 

poor health compared with 4 percent of non-dual-eligible beneficiaries. 

• Just over half of non-dual-eligible beneficiaries (52 percent) reported being in excellent or 

very good health in 2019. In comparison, about one-fifth (22 percent) of dual-eligible 

beneficiaries reported being in excellent or very good health.

Poor health

14%

Good or 

fair health

64%

Excellent 

or very 

good 

health

22%

Poor health

4%

Good or 

fair 

health

44%

Excellent 

or very 

good 

health

52%
36 Dual-eligible beneficiaries

Chart 4-4. Demographic differences between dual-eligible

beneficiaries and non-dual-eligible beneficiaries, 2019

Share of dual- Share of non-dualCharacteristic eligible beneficiaries eligible beneficiaries

Sex

Male 38% 47%

Female 62 53

Race/ethnicity

White, non-Hispanic 50 81

African American, non-Hispanic 22 8

Hispanic 19 6

Other 9 6

Limitations in ADLs

No limitations in ADLs 49 75

Limitations in 1–2 ADLs 24 17

Limitations in 3–6 ADLs 27 9

Residence

Urban 79 81

Rural 21 19

Living arrangement

Institution 10 1

Alone 35 27

With spouse 14 54

With children, nonrelatives, others 41 17

Education

No high school diploma 38 9

High school diploma only 32 24

Some college or more 30 66

Income status

Below poverty 57 5

100–125% of poverty 21 4

125–200% of poverty 16 17

200–400% of poverty 5 31

Over 400% of poverty 1 44

Supplemental insurance status

Medicare or Medicare/Medicaid only 48 18

Medicare managed care 46 36

Employer-sponsored insurance 1 22

Medigap 3 23

Medigap/employer <1 1

Other* 3 1

Note: ADL (activity of daily living). “Dual-eligible beneficiaries” were eligible for both Medicare and Medicaid for at least 

one month during the year. “Urban” indicates beneficiaries living in metropolitan statistical areas (MSAs). “Rural”

indicates beneficiaries living outside of MSAs. In 2019, poverty was defined as annual income of $12,261 for people 

living alone and $15,468 for married couples. Poverty thresholds are calculated by the U.S. Census Bureau 

(https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-poverty-thresholds.html). 

Totals may not sum to 100 percent due to rounding and exclusion of an “other” category. The Medicare Current 

Beneficiary Survey is a point-in-time survey of a sample of beneficiaries. Year-to-year data variation is expected.

*Includes public programs such as the Department of Veterans Affairs and state-sponsored drug plans.

Source: MedPAC analysis of Medicare Current Beneficiary Survey, 2019.

• Dual-eligible beneficiaries qualify for Medicaid due in part to low incomes. In 2019, 57 percent of dualeligible beneficiaries lived below the poverty threshold, and 94 percent lived below 200 percent of the 

poverty threshold. Compared with non-dual-eligible beneficiaries, dual-eligible beneficiaries are more 

likely to be female, be African American or Hispanic, lack a high school diploma, have greater 

limitations in activities of daily living, and live in an institution. They are less likely to have 

supplemental employer-sponsored or Medigap coverage.
A Data Book: Health care spending and the Medicare program, July 2022 37

Chart 4-5. Differences in Medicare spending and service use 

between dual-eligible beneficiaries and non-dual-eligible

beneficiaries, 2019

Dual-eligible Non-dual-eligible

Service beneficiaries beneficiaries

Average FFS Medicare payment for all beneficiaries

Total Medicare FFS payments $20,577 $9,698

Inpatient hospital 4,834 2,378

Physiciana 3,494 2,593

Outpatient hospital 3,252 1,798

Home health 871 326

Skilled nursing facilityb 1,353 307

Hospice 447 220

Prescribed medicationc 6,268 1,922

Share of FFS beneficiaries using service

Share using any type of service 96.0% 84.5%

Inpatient hospital 22.2 12.6

Physiciana 91.0 80.8

Outpatient hospital 77.2 62.1

Home health 13.0 6.9

Skilled nursing facilityb 6.1 2.7

Hospice 3.4 1.9

Prescribed medicationc 93.1 58.3

Note: FFS (fee-for-service). Data in this analysis are restricted to beneficiaries in FFS Medicare. “Dual-eligible 

beneficiaries” are defined as beneficiaries who were eligible for both Medicare and Medicaid for at least one 

month during the year. Spending totals derived from the Medicare Current Beneficiary Survey (MCBS) do 

not necessarily match estimates from CMS Office of the Actuary. Total payments may not equal the sum of 

line items due to omitted “other” category. The MCBS is a point-in-time survey from a sample of Medicare 

beneficiaries. Year-to-year variation in reported data is expected. a Includes a variety of medical services, equipment, and supplies.

b Individual short-term facility (usually skilled nursing facility) stays for the MCBS population. cData from stand-alone prescription drug plans.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, 2019.

• In 2019, average per capita Medicare FFS spending for dual-eligible beneficiaries was 

more than twice that for non-dual-eligible beneficiaries3⁄4$20,577 compared with $9,698. 

• For each type of service, average Medicare FFS per capita spending was higher for dualeligible beneficiaries than for non-dual-eligible beneficiaries. Higher average per capita 

FFS spending for dual-eligible beneficiaries is a function of higher use of these services by 

dual-eligible beneficiaries compared with their non-dual-eligible counterparts. Dualeligible beneficiaries are more likely than non-dual-eligible beneficiaries to use each type 

of Medicare-covered service.
38 Dual-eligible beneficiaries

Chart 4-6. Both Medicare and total spending were concentrated 

among dual-eligible beneficiaries, 2019

Note: “Total spending” includes Medicare, Medicaid, supplemental insurance, and out-of-pocket spending. Data 

in this analysis are restricted to beneficiaries in fee-for-service (FFS) Medicare. “Dual-eligible beneficiaries”

are defined as beneficiaries who were eligible for both Medicare and Medicaid for at least one month 

during the year. The Medicare Current Beneficiary Survey is a point-in-time survey from a sample of 

Medicare beneficiaries. Year-to-year variation in reported data is expected.

Source: MedPAC analysis of the Medicare Current Beneficiary Survey, 2019.

• Annual Medicare FFS and total spending on dual-eligible beneficiaries are concentrated 

among a small number of people. The costliest 5 percent of dual-eligible beneficiaries 

accounted for 28 percent of Medicare spending and 23 percent of total spending on dualeligible beneficiaries in 2019. In contrast, the least costly 50 percent of dual-eligible 

beneficiaries accounted for only 8 percent of Medicare FFS spending and 15 percent of 

total spending on dual-eligible beneficiaries. 

• On average, total spending (including Medicaid, Medigap, etc.) for dual-eligible 

beneficiaries in 2019 was almost twice that for non-dual-eligible beneficiaries—$33,220

compared with $16,721, respectively (data not shown).

8

50

15

25

30

28

39

15

35

28

5

23

0

10

20

30

40

50

60

70

80

90

100

Medicare spending for dualeligible beneficiariesShare of dual-eligible

beneficiaries

Total spending for dualeligible beneficiaries

Percent
5 S E C T I O N

Alternative 

payment models

A Data Book: Health care spending and the Medicare program, July 2022 41

Chart 5-1. Most Medicare beneficiaries are in managed care plans or 

are assigned to accountable care organizations, 2022

Note: ACO (accountable care organization), FFS (fee-for-service), MSSP (Medicare Shared Savings Program). This 

chart includes only beneficiaries enrolled in both Part A and Part B in January 2022. Both Part A and Part B 

coverage is necessary for either Medicare Advantage enrollment or ACO assignment. In general, Medicare 

managed care plans include Medicare Advantage plans as well as cost-reimbursed plans and MedicareMedicaid demonstration plans. Other ACOs and ACO-like models include the Global and Professional Direct 

Contracting (GPDC) Model, the Maryland Total Cost of Care (TCOC) Model, and the Vermont All-Payer ACO. In 

the Maryland TCOC Model, all FFS beneficiaries are assigned to a hospital, and each hospital is responsible for 

all Part A and Part B spending for all Medicare beneficiaries in its market. This system creates ACO-like 

incentives for the hospital and qualifies physicians affiliated with those hospitals for the Medicare Access and 

CHIP Reauthorization Act (MACRA) bonus payments for participation in eligible alternative payment models.

Source: CMS January 2022 enrollment data, CMS Shared Savings Program January 2022 Fast Facts, CMS GPDC 2021 

summary performance and 2022 GPDC participant list, CMS ACO Next Generation 2020 performance data 

for Next Generation ACOs entering GPDC in 2022, and State of Vermont Green Mountain Care Board 2021 

alignment report. 

• Among the 58.6 million Medicare beneficiaries with both Part A and Part B coverage 

in 2022, approximately three-fourths (72 percent) are in Medicare managed care 

(Medicare Advantage or other private plans) or ACO models.

• The Medicare Shared Savings Program—a permanent ACO model established 

through the Affordable Care Act of 2010—accounts for most of the beneficiaries 

assigned to ACO or ACO-like payment models.

• Only 28 percent of Medicare beneficiaries with both Part A and Part B coverage are 

now in traditional FFS Medicare—a share that has declined in recent years.

• Even among the share of beneficiaries in traditional FFS, some beneficiaries may be 

assigned to other alternative payments models such as the Bundled Payments for 

Care Improvement Advanced Model or the Primary Care First Model.

Traditional FFS 

28%

MSSP ACO 19%

Medicare 

managed care 

50%

Other ACOs and ACO-like 

models 3%
42 Alternative payment models

Chart 5-2. The number of beneficiaries assigned to MSSP ACOs grew 

rapidly through 2018 and then leveled off

Note: MSSP (Medicare Shared Savings Program), ACO (accountable care organization). Numbers are as of January 

in each year. In 2019, MSSP ACOs were allowed to join the program in July. Those ACOs and the 

beneficiaries assigned to them were therefore not in the program as of January 2019 and so are not 

included in the 2019 counts on this chart. As of July 2019, there were 518 MSSP ACOs and 10.9 million 

beneficiaries assigned to them (data not shown). In 2021, new MSSP ACOs were not allowed to join the 

program due to the coronavirus pandemic, though ACOs were still allowed to exit the program.

Source: CMS Shared Savings Program January 2022 Fast Facts.

• The number of beneficiaries assigned to MSSP ACOs grew rapidly through 2018 but has 

leveled off in recent years. In 2022, 19 percent of beneficiaries enrolled in both Part A and 

Part B were assigned to an MSSP ACO (see Chart 5-1).

• The number of ACOs peaked at 561 in 2018 and then declined to 487 in 2019. Growth in 

the number of ACOs was relatively flat between 2019 and 2022.

• CMS finalized changes to MSSP at the end of 2018 that included (1) requiring ACOs to 

transition toward greater levels of financial risk and (2) using regional spending as a 

component of all ACO benchmarks (the spending levels used to measure an ACO’s 

financial performance). These changes coincided with some ACOs dropping out of the 

program and fewer new ACOs joining.

• While the number of ACOs and assigned beneficiaries has leveled off in recent years, the 

number of beneficiaries per ACO continues to increase (data not shown).

220

338

404 433

480

561

487 517

477 483

3.2

4.9

7.3 7.7

9.0

10.5 10.4

11.2

10.7 11.0

0

100

200

300

400

500

600

0

2

4

6

8

10

12

14

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Number of MSSP ACOs

MSSP-assigned beneficiaries (millions)
A Data Book: Health care spending and the Medicare program, July 2022 43

Chart 5-3. Distribution of ACOs and types of providers participating 

in MSSP, by number of attributed beneficiaries, 2020

Note: ACO (accountable care organization), MSSP (Medicare Shared Savings Program). As of January 2020, there 

were 517 MSSP ACOs, but the chart includes only the 513 ACOs that did not drop out of the program prior to 

July 2020. “Nonphysician” clinicians include nurse practitioners, physician assistants, and clinical nurse 

specialists. 

Source: Shared Savings Program Accountable Care Organizations public use files.

• Of 513 MSSP ACOs, more than half (58 percent) have 15,000 or fewer attributed 

beneficiaries. Less than 19 percent of MSSP ACOs have 30,000 or more attributed 

beneficiaries. 

• MSSP ACOs usually have a combination of primary care physicians, specialists, and 

nonphysician practitioners; the mix of these practitioners is relatively similar across size 

categories. On average, 24 percent of clinicians participating in an MSSP ACO are primary 

care physicians, while 46 percent are specialists and 30 percent are nonphysician 

practitioners (data not shown).

• Primary care physicians comprise at least half of all participating clinicians in 60 (12 

percent) MSSP ACOs, while specialists comprise more than half of all clinicians in 103 (20 

percent) of MSSP ACOs (data not shown). 

21

176

100

66

37

18

95

0

50

100

150

200

< 5,000

5,001 - 10,000

10,001 - 15,000

15,001 - 20,000

20,001 - 25,00025,001 - 30,000

> 30,000

Number of MSSP ACOs

Attributed beneficiaries 

40%

26% 25% 24% 25% 25% 23%

18% 43% 44% 43% 44% 44% 48%

42%

30% 31% 33% 31% 31% 29%

< 5,000

5,001 - 10,000

10,001 - 15,000

15,001 - 20,000

20,001 - 25,00025,001 - 30,000

> 30,000

Percent of participating clinicians

Attributed beneficiaries

Primary care physicians Specialists Nonphysicians
44 Alternative payment models

Chart 5-4. Participation by select specialists in MSSP ACOs, by 

number of attributed beneficiaries, 2018

Note: MSSP (Medicare Shared Savings Program), ACO (accountable care organization), FFS (fee-for-service). “Total 

clinicians” includes all physicians, nurse practitioners, physician assistants, and clinical nurse specialists. This 

chart focuses on non–primary care physician specialties.

Source: Shared Savings Program Accountable Care Organizations public use files and research identifiable files; 

Carrier Standard Analytic File for 100 percent of Medicare beneficiaries.

• ACOs by design are oriented around primary care, but specialists can and do participate in 

these models. Most MSSP ACOs have a mix of physicians among various clinical specialties.

• Specialists’ participation in ACOs relative to their share of all clinicians varies by 

specialty. For example, cardiologists comprise about 2 percent of all clinicians 

participating in FFS Medicare, but a larger share of clinicians participating in ACOs. By 

contrast, specialties such as anesthesiology and ophthalmology are underrepresented in 

ACOs relative to their share of all FFS clinicians.

• The portion of participating specialist physicians varies greatly across ACOs. For example, 

cardiologists account for a little more than 3 percent of all MSSP ACO physicians, but they 

comprise anywhere from 0 percent to 20 percent of clinicians in any individual ACO (data 

not shown).

• The portion of specialists as a share of all clinicians who participate in MSSP tends to be 

somewhat higher among larger ACOs (as measured by the number of attributed 

beneficiaries in each ACO). For example, the share of clinicians who specialize in 

emergency medicine is 2.9 percent in smaller ACOs, 3.7 percent in midsize ACOs, and 4.5

percent in the largest ACOs.

• Many specialties account for a larger share of clinicians in larger ACOs. This finding may 

reflect smaller ACOs being more often composed of independent physician practices 

with relatively fewer specialists, while larger ACOs are often affiliated with hospitals or 

health systems that have a broader range of specialists.

0%

1%

2%

3%

4%

5%

Emergency medicine

Anesthesiology

Obstetrics/gynecology

Diagnostic radiology

Psychiatry

Orthopedic surgery

General surgery

Cardiology

Ophthalmology

Neurology

Gastroenterology

Pathology

Dermatology

Pulmonary disease

Otolaryngology

Percent of total clinicians

FFS Medicare <10,000 10,000-30,000 >30,000
A Data Book: Health care spending and the Medicare program, July 2022 45

Chart 5-5. BPCI Advanced is Medicare’s largest episode-based 

payment model, 2022

Note: BPCI (Bundled Payments for Care Improvement).

Source: CMS’s Oncology Care Model website (https://innovation.cms.gov/innovation-models/oncology-care); 

Comprehensive Care for Joint Replacement website (https://innovation.cms.gov/innovation-models/cjr); 

information on BPCI Advanced participants: CMS's Where Innovation Is Happening website 

(https://innovation.cms.gov/innovation-models/bpci-advanced); 2020 CMMI Report to the Congress 

(https://innovation.cms.gov/data-and-reports/2021/rtc-2020).

• Medicare fee-for-service (FFS) providers can participate in episode-based payment 

models, and roughly one million Medicare beneficiaries have been attributed to at least 

one of these models.

• Episode-based payment models give health care providers a spending target for most 

types of care provided during a clinical episode (e.g., six months of chemotherapy or an 

inpatient admission or outpatient procedure plus most other care provided in the 

subsequent 90 days). If total spending is less than the target, Medicare pays providers a 

bonus; if total spending is more than the target, Medicare recoups money from providers.

• Within FFS Medicare, the episode-based payment model with broadest participation is 

the BPCI Advanced Model, with 831 participating hospitals and practices (435 acute care 

hospitals and 396 physician group practices participate as episode initiators). 

Oncology Care Model

Comprehensive Care for Joint Replacement

BPCI Advanced 831 hospitals 

and practices

Number of participating health care organizations

126 practices

324 hospitals
46 Alternative payment models

Chart 5-6. Share of BPCI Advanced episode initiators accepting 

responsibility for each clinical episode group, 2022

Note: BPCI (Bundled Payments for Care Improvement). BPCI Advanced participants can accept episode-based 

payments for multiple clinical-episode service-line groups. The denominators for each group are 435 acute 

care hospital and 396 physician group practice episode initiators in 2022. 

Source: List of clinical-episode service-line groups each BPCI Advanced participating episode initiator agreed to 

take financial responsibility for in Model Year 5 (2022) downloaded from CMS’s BPCI Advanced webpage 

(https://innovation.cms.gov/innovation-models/bpci-advanced).

• BPCI Advanced covers dozens of types of inpatient and outpatient clinical episodes,

which are aggregated into eight clinical-episode service-line groups (e.g., the cardiac care 

group includes acute myocardial infarction, cardiac arrhythmia, and congestive heart 

failure). Participating hospitals and physician practices select the service-line groups for 

which they will be financially responsible under the model.

• About three-quarters of hospital and physician practices initiate episodes within the 

medical and critical care service-line group, while only 13% of hospitals and 36% of 

physician practices opt to initiate episodes under the gastrointestinal surgery service-line 

group.

• More than 70 percent of BPCI Advanced episode initiators accept episode-based 

payments for fewer than five clinical-episode service-line groups. Twenty-two percent 

accept episode-based payments for only one clinical-episode service-line group (data not 

shown).

36%

39%

43%

55%

54%

60%

66%

73%

13%

16%

23%

29%

43%

53%

61%

77%

Gastrointestinal surgery

Cardiac procedures

Spinal procedures

Orthopedics

Gastrointestinal care

Neurological care

Cardiac care

Medical and critical care

Acute care hospitals Physician group practices
A Data Book: Health care spending and the Medicare program, July 2022 47

Chart 5-7. Almost 3,000 practices are testing the Primary Care First 

model, 2022

Note: Primary Care First is an advanced alternative payment model that CMS began testing with the first cohort 

in 2021 and the second cohort in 2022. Primary Care First is a multipayer model, with some Medicaid and 

private insurers voluntarily paying similar fees for their enrollees. 

Source: CMS's list of Primary Care First practices (https://innovation.cms.gov/innovation-models/primary-care-firstmodel-options).

• CMS’s Primary Care First is an advanced alternative payment model that has about 3,000 

participating practices in 26 states and the District of Columbia. The model aims to 

strengthen primary care by testing alternative ways of paying participating providers of 

primary care services. These payments are intended to support enhanced, coordinated 

care management and assist with care delivery transformation.

• Participating practices receive a risk-adjusted per beneficiary per month care 

management fee, plus a flat primary care visit fee instead of fee-for-service payments for 

certain primary care services. These payments are subject to adjustments determined by 

each practice’s performance on specified quality and utilization measures.

Number of practices

© GeoNames, Microsoft, TomTom

Powered by Bing

506

318 316

197 183 175 166

124 118 117 106 101

63 57 53 53 51 48 34 33 32 28 20 16 14 13 1

OH

MI

NJ

PACA

FL

CO

NYAR

OK

OR

MA

ME

TN

VA

MO

KS

HI

RI

MT

NE

KY

ND

DE

LA

NH

DC
48 Alternative payment models

Chart 5-8. About 75 percent of the clinicians who qualified for a 

5 percent A–APM bonus in 2022 were in the Medicare 

Shared Savings Program

Note: A–APM (advanced alternative payment model), ACO (accountable care organization). Clinicians’ 2020

A–APM participation determines their 2022 bonuses. Shares do not sum to 100 percent because clinicians 

can participate in more than one A–APM simultaneously. To qualify for the A–APM bonus in 2022, clinicians 

had to receive 50 percent of their professional services payments or provide 35 percent of their patients 

with professional services through an A–APM in 2020. The A–APM bonus is equal to 5 percent of a clinician’s 

professional services payments from Medicare (not including cost sharing paid by beneficiaries). “Other 

models” includes the Maryland Total Cost of Care Model, Comprehensive Care for Joint Replacement Model, 

Comprehensive ESRD (End-Stage Renal Disease) Care Model, and Vermont ACO model. For the payment 

models shown, only those model tracks that require clinicians to take on some financial risk qualify as 

A–APMs (e.g., physicians participating in Track 1 of the Medicare Shared Savings Program did not qualify for 

A–APM bonuses because Track 1 involved no financial risk for participants). 

Source: CMS data on clinicians who qualified for the 5 percent bonus in 2022 based on clinicians’ 2020 model 

participation.

• The payment models that CMS has designated as A–APMs place health care providers at 

some financial risk for Medicare spending while expecting them to meet quality goals for 

a defined patient population. Clinicians who participate in A–APMs qualify for bonuses 

equal to 5 percent of their professional services payments from Medicare. These bonus 

payments are available from 2019 to 2024.

• In 2022, nearly 237,000 clinicians nationwide qualified for the A–APM bonus (based on 

2020 A–APM participation) out of about 1.3 million who billed the Medicare physician fee 

schedule. About 93 percent of these clinicians participated in ACOs, which give clinicians 

an opportunity to earn shared savings payments from Medicare if they lower health care 

spending while meeting care quality standards (data not shown). 

• Among clinicians who qualified for an A–APM bonus in 2022, 38 percent were specialists,

23 percent were primary care physicians, and 38 percent were nonphysician practitioners

(data not shown).

76.1%

17.4%

12.4%

3.3%

1.5%

3.4%

Medicare Shared Savings Program

Next Generation ACO

Bundled Payment for Care Improvement Advanced

Comprehensive Primary Care Plus

Oncology Care Model

Other models
6 S E C T I O N

Acute inpatient services

General short-term hospitals

Inpatient psychiatric facilities

A Data Book: Health care spending and the Medicare program, July 2022 51

Chart 6-1. Number of short-term acute care hospitals and inpatient 

stays, 2020

Hospitals Inpatient stays

 All payer Medicare FFS

Number Share of Number Share of Number Share of

Hospital group (in thousands) total (in millions) total (in millions) total

All short-term acute 4.3 100 28.0 100 7.6 100

IPPS 2.9 67 26.4 94 7.2 94

Metropolitan (urban) 2.2 51 24.5 88 6.5 85

Rural micropolitan 0.5 11 1.6 6 0.6 8

Other rural 0.2 5 0.3 1 0.1 1

For profit 0.7 16 4.4 16 1.2 15

Nonprofit 1.8 41 18.5 66 5.1 67

Government 0.4 10 3.6 13 0.9 12

DSH and teaching 1.0 24 16.9 60 4.3 56

DSH only 1.4 33 7.7 28 2.3 30

Teaching only 0.1 2 0.8 3 0.2 3

Neither 0.3 8 1.0 3 0.4 5

Sole community 0.3 8 1.0 4 0.4 5

Medicare dependent 0.1 3 0.2 1 0.1 1

Neither 2.4 56 25.2 90 6.7 88

Critical access 1.3 30 0.5 2 0.2 3

Maryland <0.1 1 0.5 2 0.2 2

Note: FFS (fee-for-service), IPPS (inpatient prospective payment systems), DSH (disproportionate share hospital). 

Data are for short-term acute care hospitals in the U.S. (excluding territories) that had a cost report with a 

midpoint in fiscal year 2020 and were complete as of our analysis. “Number of hospitals” is the number of 

Medicare provider numbers; a single provider number can represent multiple hospital locations.

Metropolitan (urban) counties contain an urban cluster of 50,000 or more people, and rural micropolitan 

counties contain a cluster of 10,000 to 50,000 people. Components may not sum to totals due to rounding

and because children's and cancer hospitals are not listed separately. 

Source: MedPAC analysis of hospital cost report data from CMS.

• Due to cost report filing extensions during the coronavirus public health emergency, the 

number of hospitals in this chart is lower than in prior years. We include it here because it 

reflects the cost reports used to calculate margins and other metrics in subsequent 

charts in this chapter.
52 Acute inpatient services

Chart 6-2. Fewer general short-term acute care hospitals closed

in 2021 

Note: “Closure” refers to a hospital location that ceased inpatient services, while “opening” refers to a new location 

for inpatient services. The chart does not include the relocation of inpatient services from one hospital to 

another under common ownership within 10 miles, nor does it include hospitals that both opened and 

closed within a 5-year period. Data are for general short-term acute care hospitals in the U.S. paid under the 

inpatient prospective payment systems, designated as critical access hospitals, or covered under the 

Maryland state waiver. Metropolitan (urban) counties contain an urban cluster of 50,000 or more people,

and rural micropolitan counties contain a cluster of 10,000 to 50,000 people. The counts in this chart differ 

from those previously published for several reasons, such as removing hospitals previously counted as 

closures but that have since reopened. The figures pertain to fiscal years.

Source: MedPAC analysis of the CMS Provider of Services file, census data on metropolitan and micropolitan areas,

internet searches, and personal communication with the Department of Health and Human Services Office 

of Rural Health Policy.

• In fiscal year 2021, 10 general short-term acute care hospitals participating in the Medicare 

program closed, and 11 hospitals opened. The number of closures decreased from the 

peak in 2019, while the number of openings stayed relatively consistent with historical 

trends. The decline in closures was likely a result of the substantial financial support 

provided by the federal government to hospitals during the coronavirus public health 

emergency.

• Among the 10 hospital closures in 2021, 6 were in metropolitan counties, 1 was in a rural 

micropolitan county, and 3 were in other rural counties. 

• Nearly all of the hospital openings from 2017 to 2021 were in metropolitan counties.

8 12

27

13

6

3

8

6

3

4

11

6

3

12

19

46

25

10

0

10

20

30

40

50

60

2017 2018 2019 2020 2021

Number of hospitals

Closures

9 8 12 15

10

2

9 8

12

18

11

0

10

20

30

2017 2018 2019 2020 2021

Number of hospitals

Metropolitan Rural micropolitan Other rural

Openings
A Data Book: Health care spending and the Medicare program, July 2022 53

Chart 6-3. Short-term acute care hospitals’ occupancy rate declined 

slightly in 2020

Note: “Aggregate occupancy rate” is calculated as total used bed days (including inpatient, swing, and 

observation bed days but excluding nursery bed days) divided by total bed days available. “Average daily 

census” is calculated as total used bed days divided by 365; “beds” refers to total bed days available divided 

by 365. Data are for short-term acute care hospitals in the U.S. (excluding territories) that had a cost report 

with a midpoint in fiscal year 2020 and were complete as of our analysis. Occupancy rates may vary slightly 

from calculations of components due to rounding.

Source: MedPAC analysis of hospital cost report data from CMS.

• Due to cost report filing extensions during the public health emergency, the number of 

hospitals in this chart is lower than in prior years. 

• With that caveat, the short-term acute care hospitals’ occupancy rate declined slightly in 

2020, reversing the prior trend of slight increases in the aggregate occupancy rate from 

2016 through 2019. 

• While the second chart indicates a decline in both inpatient beds and average daily 

census in 2020, the decline is driven by the decline in the number of included hospitals.

• Hospital occupancy rates varied by month and state, with more states having higher 

occupancy rates as the coronavirus pandemic continued into 2021 (data not shown).

62.5% 62.9% 63.6% 64.5% 61.9%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2016 2017 2018 2019 2020

Aggregate occupancy rate

426 426 427 433 398

681 678 672 672 643

0

200

400

600

800

1000

2016 2017 2018 2019 2020

(Thousands)

Beds

Average 

daily census
54 Acute inpatient services

Chart 6-4. All-payer inpatient stays per capita and outpatient visits

per capita declined in 2020

Note: “Outpatient visits” includes all clinic visits, referred visits, observation services, outpatient surgeries, and 

emergency department visits, regardless of the number of diagnostic and/or therapeutic treatments the 

patient received during the visit. Data are for community hospitals (nonfederal short-term general and 

specialty hospitals), estimated from those who responded to the American Hospital Association survey and 

reflect each hospital's own fiscal year. Given that not all hospitals are reporting the same 12-month period, 

the 2020 data reflect varying numbers of months of COVID-19 impacts.

Source: MedPAC analysis of Hospital Statistics data from the American Hospital Association and U.S. population 

estimates from National Health Expenditure data.

• In 2020, all-payer inpatient stays and hospital outpatient visits per capita declined, 

reflecting delayed and forgone care during the COVID-19 public health emergency. The 

exact numbers in 2020 should be interpreted with caution because hospitals reported 

data based on their own fiscal year, reflecting varying numbers of months of pandemic

impacts. 

• In contrast, from 2016 to 2019, there were divergent trends in all-payer inpatient stays and 

hospital outpatient visits per capita, with a cumulative 1.5 percent decline in inpatient 

stays but a 2.1 percent growth in outpatient visits.

105 106 105 104

95

-0.1% 0.2% -0.7% -1.0%

-8.2%

-10.0%

-5.0%

0.0%

5.0%

10.0%

0

50

100

150

2016 2017 2018 2019 2020

Annual percentage change 

Inpatient stays per 1,000 people

2,344 2,359 2,347 2,394 

2,179 

2.8%

0.6%

-0.5%

2.0%

-9.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

0

500

1,000

1,500

2,000

2,500

3,000

2016 2017 2018 2019 2020

Annual percentage change 

Outpatient visits per 1,000 people
A Data Book: Health care spending and the Medicare program, July 2022 55

Chart 6-5. IPPS hospitals’ all-payer margin remained strong in 2020

with the support of federal relief funds

Note: IPPS (inpatient prospective payment systems), EBITDA (earnings before interest, taxes, depreciation, and 

amortization). Hospitals’ margin is calculated as aggregate payments minus aggregate allowable costs, 

divided by aggregate payments. “All-payer” margin includes payments from all payers and, in 2020, 

reported federal relief funds. “Total margin” includes investments; “operating” margin is limited to patient 

care revenue; and EBITDA margin is a measure of cash flow. Data are for IPPS hospitals in the U.S. 

(excluding territories) that had a cost report with a midpoint in fiscal year 2020 and were complete as of our 

analysis.

Source: MedPAC analysis of hospital cost report data from CMS.

• Hospitals’ aggregate all-payer margin reflects the relationship between hospitals’ 

payments and costs across all payers (Medicare, Medicaid, other government payers, and 

private payers). The all-payer total margin includes investment income, while the 

operating margin is limited to patient care revenue, and the EBITDA margin measures 

cash flow. In 2020, these measures include reported federal relief funds to support 

hospitals during the COVID-19 public health emergency. 

• IPPS hospitals’ all-payer total, operating, and EBITDA margins remained strong in 2020 

with the support of over $32 billion in reported federal relief funds. 

• The exact 2020 all-payer margins presented in this chart should be interpreted with 

caution. In particular, hospitals reported data based on their own fiscal year, reflecting

varying numbers of months of pandemic impacts and differences in the extent to which

they include federal relief funds. In addition, the final amount of federal relief funds that 

hospitals will end up retaining is still not known.

Total

6.5

7.1

6.6

7.6

6.3

Operating

5.9

5.9 5.9

6.5

5.2

EBITDA

10.2 10.3

9.8

10.5

9.7

0

5

10

15

2016 2017 2018 2019 2020

Aggregate all-payer margin (percent)
56 Acute inpatient services

Chart 6-6. IPPS hospitals’ all-payer total margin continued to vary

across hospital groups in 2020, including differences in 

targeted federal relief funds

All-payer total margin

Hospital group 2016 2017 2018 2019 2020 2020

without with

relief funds relief funds

All IPPS 6.5% 7.1% 6.6% 7.6% 3.0% 6.3%

Metropolitan (urban) 6.6 7.2 6.8 7.8 3.1 6.2

Micropolitan 5.3 6.3 5.1 6.6 3.1 7.0

Other rural 1.9 2.7 0.7 1.4 –0.8 3.9

For profit 10.8 10.5 11.3 12.4 10.3 12.3

Nonprofit 6.2 7.3 6.3 7.3 2.5 5.9

DSH and teaching 6.3 7.0 6.4 7.4 2.3 5.6

DSH only 6.5 6.9 6.7 7.6 4.3 7.6

Teaching only 7.8 9.9 9.7 8.8 4.7 6.6

Neither 8.8 9.6 9.1 10.6 6.7 9.1

CAHs 3.7 3.6 2.8 3.6 2.1 6.4

Note: IPPS (inpatient prospective payment systems), DSH (disproportionate share hospital), CAH (critical access 

hospital). “Relief funds” refers to Provider Relief Fund payments and Paycheck Protection Program forgiven 

loans recorded on hospitals’ cost reports. Hospitals’ margin is calculated as aggregate payments minus 

aggregate allowable costs, divided by aggregate payments. “All-payer total margin” includes payments 

from all payers and from investments and, for 2020, is reported with and without reported federal relief 

funds. Metropolitan (urban) counties contain an urban cluster of 50,000 or more people; rural micropolitan 

counties contain a cluster of 10,000 to 50,000 people; all other counties are classified as “other rural.” Data 

are for IPPS hospitals in the U.S. (excluding territories) that had a cost report with a midpoint in fiscal year 

2020 and were complete as of our analysis.

Source: MedPAC analysis of hospital cost report data from CMS.

• In 2020, there continued to be substantial variation in the all-payer total margin across 

hospital groups, and the variation increased relative to 2019. The exact 2020 all-payer 

margins presented in this chart should be interpreted with caution. In particular, 

hospitals reported data based on their own fiscal year, reflecting varying numbers of 

months of pandemic impacts and differences in the extent to which they include federal 

relief funds.

• Given those caveats, rural hospitals’ all-payer total margin reached a near record high in 

2020 (3.9 percent) due to the targeted relief funds these hospitals received. 

• Disproportionate share hospitals’ all-payer total margin declined in 2020 among those 

that were also teaching hospitals and held steady among those that were not also 

teaching hospitals. However, this difference in part reflects that teaching hospitals are 

more likely to have cost reporting years ending in June, before the 90-day period that 

DSH hospitals had to attest to the targeted relief funds.
A Data Book: Health care spending and the Medicare program, July 2022 57

Chart 6-7. IPPS hospitals’ all-payer total margin continued to be 

higher for those under low fiscal pressure, 2016–2020

Note: IPPS (inpatient prospective payment systems). “Relief funds” refers to Provider Relief Fund payments and 

Paycheck Protection Program forgiven loans recorded on hospitals’ cost reports. Hospitals’ margin is 

calculated as aggregate payments minus aggregate allowable costs, divided by aggregate payments. “Allpayer total margin” includes payments from all payers, from investments, and, in 2020, with and without 

reported federal relief funds. “Low-pressure” hospitals are defined as those with a median non-Medicare 

profit margin greater than 5 percent over five years and a net worth that would have grown by more than 1 

percent per year over that period if the hospital’s Medicare profits had been zero. “High-pressure” hospitals 

are defined as those with a median non-Medicare profit margin of 1 percent or less over five years and a net 

worth (assets minus liabilities) that would have grown by less than 1 percent per year over that period if the 

hospital’s Medicare profits had been zero. “Medium-pressure” hospitals are those that fit into neither the 

high- nor the low-pressure categories. Data are for IPPS hospitals in the U.S. (excluding territories) that had 

a cost report with a midpoint in fiscal year 2020 and were complete as of our analysis.

Source: MedPAC analysis of hospital cost report data from CMS.

• The all-payer total margin continued to vary depending on IPPS hospitals’ level of fiscal 

pressure. IPPS hospitals under low fiscal pressure—defined as those with a median nonMedicare profit margin of greater than 5 percent and growth in net worth—continued to 

have a higher aggregate all-payer total margin than hospitals under more fiscal pressure. 

(In contrast, the aggregate Medicare margin is lower among IPPS hospitals under low 

fiscal pressure; see Chart 6-10.)

• While this variation held in 2020, IPPS hospitals under high fiscal pressure 

disproportionately benefited from federal relief funds, such that their 2020 all-payer total 

margin including relief funds became positive. The exact 2020 all-payer margins 

presented in this chart should be interpreted with caution. In particular, hospitals 

reported data based on their own fiscal year, reflecting varying numbers of months of 

pandemic impacts and differences in the extent to which they include federal relief 

funds.

Low pressure

Medium pressure

High pressure

-10

-5

0

5

10

15

2016 2017 2018 2019 2020

Aggregate all-payer total margin (percent)

(Unfilled markers 

exclude relief funds)
58 Acute inpatient services

Chart 6-8. IPPS hospitals’ Medicare margin remained negative in 

2020, but increased slightly when including Medicare’s 

share of federal relief funds

Note: IPPS (inpatient prospective payment systems). “Relief funds” refers to Provider Relief Fund payments and 

Paycheck Protection Program forgiven loans recorded on hospitals’ cost reports, with the Medicare share 

calculated using fee-for-service Medicare’s share of 2019 all-payer operating revenue. Hospitals’ “Medicare 

margin” is calculated as aggregate Medicare payments minus aggregate allowable Medicare costs, divided by 

aggregate payments. Payments and costs include multiple hospital service lines (including inpatient, 

outpatient, swing bed, skilled nursing, rehabilitation, psychiatric, and home health services) as well as direct 

graduate medical education and uncompensated care payments. Data are for IPPS hospitals in the U.S. 

(excluding territories) that had a cost report with a midpoint in fiscal year 2020 and were complete as of our 

analysis.

Source: MedPAC analysis of hospital cost report data from CMS.

• Hospitals’ Medicare margin reflects the relationship between hospitals’ Medicare fee-forservice (FFS) payments and Medicare-allowable costs across inpatient, outpatient, and 

other services, as well as supplemental Medicare payments not tied to the provision of 

services (such as uncompensated care and direct graduate medical education 

payments).

• From 2019 to 2020, IPPS hospitals’ Medicare margin fell when excluding federal relief 

funds. However, because federal relief funds were intended to help cover lost revenue 

and payroll costs—including lost revenue from Medicare patients and the cost of staff 

who help treat these patients—we include a portion of these relief funds (based on FFS 

Medicare’s share of 2019 all-payer operating revenue) in our Medicare margins. Using this 

method, we allocated $6.4 billion of the over $32 billion in federal funds that hospitals 

reported on their cost reports toward hospitals’ care of FFS Medicare beneficiaries. With 

these relief funds, IPPS hospitals’ 2020 Medicare margin increased slightly from 2019.

• The exact 2020 Medicare margins presented in this chart should be interpreted with

caution. In particular, hospitals reported data based on their own fiscal year, reflecting

varying numbers of months of pandemic impacts and differences in the extent to which 

they include federal relief funds.

-9.5 -9.9 -9.4 -8.7

-12.6

Excluding

relief funds

Including 

relief funds

-8.5

-20

-15

-10

-5

0

5

2016 2017 2018 2019 2020

Aggregate Medicare margin 

(percent)
A Data Book: Health care spending and the Medicare program, July 2022 59

Chart 6-9. IPPS hospitals’ Medicare margin continued to vary across 

hospital groups in 2020, including differences in targeted 

federal relief funds

Medicare total margin

Hospital group 2016 2017 2018 2019 2020 2020

without with

relief funds relief funds

All IPPS –9.5% –9.9% –9.4% –8.7% –12.6% –8.5%

Metropolitan (urban) –9.7 –10.1 –9.6 –9.0 –13.0 –9.1

Micropolitan –8.0 –8.3 –6.9 –6.1 –8.4 –3.8

Other rural –4.1 –5.6 –5.3 –2.6 –4.2 1.3

For profit –2.3 –2.8 –1.0 0.5 0.5 3.1

Nonprofit –10.8 –11.0 –10.6 –10.1 –14.8 –10.5

DSH and teaching –8.3 –8.6 –8.3 –7.8 –12.1 –8.0

DSH only –10.6 –11.1 –10.4 –9.1 –12.2 –8.1

Teaching only –14.1 –15.0 –13.2 –12.7 –17.3 –14.8

Neither –16.7 –17.9 –15.7 –15.2 –18.4 –15.2

CAHs –1.7 –1.8 –1.9 –1.8 –1.2 3.6

Note: IPPS (inpatient prospective payment systems), DSH (disproportionate share hospital), CAH (critical access 

hospital). “Relief funds” refers to Provider Relief Fund payments and Paycheck Protection Program forgiven 

loans recorded on hospitals’ cost reports, with the Medicare share calculated using fee-for-service 

Medicare’s share of 2019 all-payer operating revenue. Hospitals’ “Medicare margin” is calculated as 

aggregate Medicare payments minus aggregate allowable Medicare costs, divided by aggregate payments. 

Payments and costs include multiple hospital service lines (including inpatient, outpatient, swing bed, 

skilled nursing, rehabilitation, psychiatric, and home health services) as well as direct graduate medical 

education and uncompensated care payments. Metropolitan (urban) counties contain an urban cluster of 

50,000 or more people; rural micropolitan counties contain a cluster of 10,000 to 50,000 people; all other 

counties are classified as “other rural.” Data are for IPPS hospitals in the U.S. (excluding territories) or CAHs 

that had a cost report with a midpoint in fiscal year 2020 and were complete as of our analysis.

Source: MedPAC analysis of hospital cost report data from CMS.

• In 2020, there continued to be substantial variation in hospitals’ Medicare margins, and 

the variation increased relative to 2019. The exact 2020 all-payer margins presented in this 

chart should be interpreted with caution. In particular, hospitals reported data based on 

their own fiscal year, reflecting varying numbers of months of pandemic impacts and the 

extent to which they include federal relief funds.

• Given those caveats, rural hospitals continued to have a higher Medicare margin than 

urban hospitals and had a larger increase when including federal relief funds. 

• Disproportionate share hospitals continued to have a higher Medicare margin than other 

hospitals and had a larger increase after allocating federal relief funds.

• For-profit hospitals continued to have a higher Medicare margin than nonprofits and 

maintained a positive Medicare margin even prior to federal relief fund allocation. 
60 Acute inpatient services

Chart 6-10. IPPS hospitals’ Medicare margin continued to be higher 

for those under high fiscal pressure, 2016–2020

Note: IPPS (inpatient prospective payment systems). “Relief funds” refers to Provider Relief Fund payments and 

Paycheck Protection Program forgiven loans recorded on hospitals’ cost reports. Hospitals’ “Medicare 

margin” is calculated as aggregate Medicare payments minus aggregate allowable Medicare costs, divided 

by aggregate payments. Payments and costs include multiple hospital service lines (including inpatient, 

outpatient, swing bed, skilled nursing, rehabilitation, psychiatric, and home health services) as well as direct 

graduate medical education and uncompensated care payments. “High-pressure” hospitals are defined as 

those with a median non-Medicare profit margin of 1 percent or less over five years and a net worth (assets 

minus liabilities) that would have grown by less than 1 percent per year over that period if the hospital’s 

Medicare profits had been zero. “Low-pressure” hospitals are defined as those with a median non-Medicare 

profit margin greater than 5 percent over five years and a net worth that would have grown by more than 1 

percent per year over that period if the hospital’s Medicare profits had been zero. “Medium-pressure” 

hospitals are those that fit into neither the high- nor the low-pressure categories. Data are for IPPS hospitals 

in the U.S. (excluding territories) that had a cost report with a midpoint in fiscal year 2020 and were 

complete as of our analysis.

Source: MedPAC analysis of hospital cost report data from CMS.

• IPPS hospitals’ Medicare margin continued to vary depending on their level of fiscal 

pressure. IPPS hospitals under the highest fiscal pressure—defined as those with a 

median non-Medicare profit margin of 1 percent or less and a lack of material growth in 

worth—continued to have a higher aggregate Medicare margin than hospitals under less 

fiscal pressure. (In contrast, IPPS hospitals under fiscal pressure have a lower all-payer

total margin; see Chart 6-7.)

• While this variation held in 2020, IPPS hospitals under high fiscal pressure 

disproportionately benefited from federal relief funds, causing their 2020 Medicare 

margin including relief funds to become positive. The exact 2020 Medicare margins 

presented in this chart should be interpreted with caution. In particular, hospitals 

reported data based on their own fiscal year, reflecting varying numbers of months of 

pandemic impacts and differences in whether they include federal relief funds.

Low pressure

Medium pressure

High pressure

-20

-15

-10

-5

0

5

2016 2017 2018 2019 2020

Aggregate Medicare margin (percent)

(Unfilled markers 

exclude relief funds)
A Data Book: Health care spending and the Medicare program, July 2022 61

Chart 6-11. Financial pressure led to lower hospital costs per 

discharge in 2020

Level of financial pressure, 2015–2019

High pressure Low pressure

(non-Medicare Medium (non-Medicare

margin ≤ 1%) pressure margin > 5%)

Number of hospitals 590 314 1,618

Financial characteristics, 2020 (medians)

Non-Medicare margin

(private, Medicaid, uninsured) –3% 5% 13% 

Standardized cost per Medicare discharge 

(as a share of the national median)

For-profit and nonprofit hospitals 0.93 0.97 1.03

Nonprofit hospitals 0.97 1.00 1.05

For-profit hospitals 0.85 0.87 0.93

Annual growth in cost per

discharge, 2017–2020 5% 5% 5%

Medicare margin 

(Before federal relief funds) –2% –6% –12%

Patient characteristics (medians)

Total hospital discharges in 2020 3,345 5,651 7,823 

Medicare share of inpatient days* 58% 59% 59%

Medicaid share of inpatient days* 24% 24% 21%

Medicare case-mix index 1.46 1.56 1.69

Note: Standardized costs are adjusted for hospital case mix, wage index, outliers, transfer cases, interest expense, 

and the effects of teaching and low-income Medicare patients on hospital costs. The sample includes shortterm acute care hospitals paid under the inpatient prospective payment systems with over 500 discharges 

that had complete cost reports as of the time of our analysis. “High-pressure” hospitals are defined as those 

with a median non-Medicare profit margin of 1 percent or less over five years and a net worth (assets minus 

liabilities) that would have grown by less than 1 percent per year over that period if the hospital’s Medicare 

profits had been zero. “Low-pressure” hospitals are defined as those with a median non-Medicare profit 

margin greater than 5 percent over five years and a net worth that would have grown by more than 1 

percent per year over that period if the hospital’s Medicare profits had been zero. “Medium-pressure” 

hospitals are those that fit into neither the high- nor the low-pressure categories. 

* Unlike data books in prior years that focused on Medicare fee-for-service (FFS) days, the number of 

Medicare and Medicaid inpatient days in this chart includes FFS days and managed care days. Most 

inpatient days are now either Medicaid or Medicare.

Source: MedPAC analysis of hospital cost report data and claims files from CMS.

• Hospitals under high financial pressure had 7 percent lower standardized costs per 

discharge than the national median. For-profit hospitals tended to constrain their costs 

more than nonprofit hospitals. The median for-profit hospital had costs that were 7

percent below the median even when they were not under financial pressure. 

• Hospitals with lower volume and lower case mix are more likely to be under financial 

pressure. 

• Cost per case grew rapidly in 2020 due to the pandemic’s effect on costs, volume, and 

case mix. One limitation of this analysis is that it measures only hospital inpatient costs. 
62 Acute inpatient services

Chart 6-12. Medicare FFS payments for inpatient services continued 

to be the largest component of payments to IPPS 

hospitals but not to CAHs, 2016–2020

Note: FFS (fee-for-service), IPPS (inpatient prospective payment systems), CAH (critical access hospital), UC 

(uncompensated care), DGME (direct graduate medical education). Medicare-designated CAHs are limited 

to 25 beds and primarily operate in rural areas; Medicare pays these hospitals based on their reported costs. 

Data are for IPPS hospitals in the U.S. (excluding territories) or CAHs with complete cost report data as of 

the time of our analysis. Components may not sum to totals due to rounding and components with values 

not shown. The 2020 payment amounts do not include Medicare’s share of Provider Relief Fund payments 

or Paycheck Protection Program forgiven loans provided as part of the public health emergency.

Source: MedPAC analysis of hospital cost report data from CMS.

• In 2020, Medicare FFS payments for general inpatient services continued to be the 

largest component of payments to IPPS hospitals, while payments for outpatient services 

continued to be the largest component of payments to CAHs. 

• For both IPPS hospitals and CAHs, the share of total Medicare FFS payments for inpatient 

services has been slowly declining while the share for outpatient services has been 

increasing.

• The exact 2020 payments should be interpreted with caution. The decrease in Medicare 

FFS payments reflects both the decrease in services during the COVID-19 public health 

emergency and a lower number of hospitals due to cost report filing extensions during 

the public health emergency.

108.2 110.5 110.8 111.4 101.0

52.8 55.9 59.3 62.1 55.4

179.9 184.1 188.1 192.6

174.3

0

50

100

150

200

250

2016 2017 2018 2019 2020

Billions of dollars

IPPS hospitals

2.7 2.8 2.8 2.7 2.5

5.4 5.8 6.2 6.3 6.2

2.1 2.1 2.2 2.3 2.2

10.3 10.7 11.2 11.3 10.9

0

5

10

15

2016 2017 2018 2019 2020

Billions of dollars

General inpatient services Outpatient services

Post-acute care and psychiatric services Supplemental payments (UC, DGME)

CAHs
A Data Book: Health care spending and the Medicare program, July 2022 63

Chart 6-13. About 15 percent of IPPS payments in 2020 were from 

adjustments and additional payments

Share of IPPS payments

Hospital group Base PPS Low income Teaching Outliers Rural and/or Quality

(DSH) (IME) isolated

All IPPS 84.5% 3.2% 6.9% 4.7% 1.3% –0.8%

Metropolitan (urban) 84.6 3.3 7.2 4.9 0.6 –0.8

Micropolitan 84.2 2.4 2.4 2.3 9.1 –0.5

Other rural 79.9 2.4 0.6 1.3 16.4 –0.6

For profit 89.7 3.4 4.1 2.9 0.9 –1.2

Nonprofit 84.8 3.0 6.8 4.6 1.2 –0.7

Government 77.4 4.1 10.1 7.0 2.1 –0.9

DSH and teaching 81.1 3.6 10.0 5.4 0.6 –0.9

DSH only 91.2 3.1 0.0 3.2 3.1 –0.8

Teaching only 89.1 0.1* 6.0 4.3 0.6 –0.3

Neither 94.1 0.1* 0.0 2.9 3.2 –0.5

Sole community 79.6 2.3 2.6 2.4 13.4 –0.4

Medicare dependent 82.8 2.0 0.5 1.2 14.2 –0.5

Low volume 78.8 2.1 0.7 1.5 17.1 –0.2

Note: IPPS (inpatient prospective payment systems), DSH (disproportionate share hospital), IME (indirect medical 

education). Payments are shares of total inpatient operating and capital PPS payments and exclude 

uncompensated care, direct graduate medical education, Medicare Advantage IME, and other pass-through 

payments outside of the IPPS. "Rural and/or isolated" includes additional payments to sole community

hospitals, Medicare-dependent hospitals, and low-volume hospitals. While sole community and Medicaredependent hospitals that are paid on their hospital-specific rate do not technically receive any base PPS 

payments or adjustments, the “Rural and/or isolated” column includes only the amount by which their rate 

exceeds the otherwise applicable IPPS payments. "Quality" includes payments and penalties from the ValueBased Purchasing Program, Hospital Readmissions Reduction Program, and Hospital-Acquired Conditions 

Reduction Program. Metropolitan (urban) counties contain an urban cluster of 50,000 or more people; rural 

micropolitan counties contain a cluster of 10,000 to 50,000 people; all other counties are classified as “other 

rural.” Components may not sum to totals due to rounding and because other types of payments, such as new 

technology payments, are not included in the table. Data are for IPPS hospitals in the U.S. (excluding 

territories) with complete cost report data as of the time of our analysis. * DSH group is defined by receiving inpatient operating DSH payments, while the DSH payments column 

includes both inpatient operating and capital DSH payments. All urban hospitals with more than 100 beds 

are eligible for inpatient capital DSH payments.

Source: MedPAC analysis of hospital cost report data from CMS.

• In 2020, base payments accounted for about 85 percent of IPPS payments to hospitals for 

inpatient services provided to Medicare fee-for-service beneficiaries, while low-income and 

teaching adjustments, outlier payments, rural and/or isolated payments, and quality 

payments and penalties accounted for the remaining 15 percent.

• While the exact 2020 payments should be interpreted with caution due to the public 

health emergency, the share of IPPS payments for different adjustments was similar to 

those in 2019, which had more complete data.
64 Acute inpatient services

Chart 6-14. Medicare’s uncompensated care payments to IPPS 

hospitals increased nearly 2 percent in 2020

Note: IPPS (inpatient prospective payment systems), DSH (disproportionate share hospital). “Estimated prior-law 

DSH payments" refers to operating DSH payments only. “Uncompensated care payments” are 

postsequestration; the 2 percent sequestration of Medicare payments was suspended in May 2020. CMS 

estimated that from 2019 to 2020, the uninsured rate declined from 9.5 percent to 9.4 percent, equivalent to a 

change from 67.7 percent to 67.1 percent of the 2013 uninsured rate of 14 percent. There was also a 0.2 

percentage point mandatory reduction in 2019, bringing the projected uninsured rate in 2019 down to 67.5 

percent.

Source: MedPAC analysis of IPPS final rules. 

• In addition to IPPS payments for fee-for-service Medicare beneficiaries’ inpatient stays, 

the Medicare program makes uncompensated care payments to IPPS hospitals to help 

cover their costs of treating uninsured patients. When the rate of uninsured individuals 

increases and hospitals have greater losses on uncompensated care, the Medicare 

program makes higher uncompensated care payments to hospitals.

• In 2020, uncompensated care payments grew 1.8 percent to $8.3 billion. Under current 

law, the uncompensated care pool is the product of two factors: 75 percent of the 

estimated DSH payment under prior law and the uninsured rate as a percentage of the 

rate in 2013. This amount is subject to sequestration (when the sequester is in effect). 

Thus, the 1.8 percent growth in the 2020 uncompensated care pool was the result of (1) an 

estimated 1.5 percent increase in what DSH payments would have been under prior law; 

(2) a projected 0.5 percent decline in the national uninsured rate relative to 2013 (after 

taking into account the mandatory reduction through 2019); and (3) a 0.8 percent 

increase from the suspension of Medicare sequestration.

Estimated prior-law 

DSH payments

$16.3 $16.6

Uncompensated 

care payments

$8.1 $8.3

$0

$5

$10

$15

$20

2016 2017 2018 2019 2020

Dollars (in billions)

1.5%

1.8%

Projected 

uninsured rate as 

percentage of 

2013 rate

67.5% 67.1%

0%

50%

100%

2016 2017 2018 2019 2020

Percentage

–0.5%
A Data Book: Health care spending and the Medicare program, July 2022 65

Chart 6-15. Medicare FFS inpatient stays per capita declined more 

than 11 percent in 2020

Note: FFS (fee-for-service). Data are for short-term acute care hospitals in the U.S. (exclusive of territories). The 

number of inpatient stays per 1,00 FFS Part A beneficiaries can change from what was previously published 

when CMS updates its estimates of FFS enrollment. 

Source: MedPAC analysis of Medicare Provider Analysis and Review data and enrollment data from CMS.

• The number of inpatient stays per 1,000 Medicare FFS beneficiaries decreased from 241 in 

2019 to 214 in 2020, an 11.5 percent decline. This decline is slightly larger than the 8.2

percent decline in all-payer inpatient stays per capita, though that difference could reflect 

differences in reporting hospitals (see Chart 6-4).

• The decrease in Medicare FFS inpatient stays per capita in 2020 was driven by a large 

drop in spring 2020, followed by a partial rebound as beneficiaries and providers 

continued to postpone care because of the coronavirus pandemic. For the first five 

months of fiscal year 2020 (from October 2019 through February 2020), Medicare FFS 

inpatient stays per capita were slightly below 2019 levels, while average case mix was 

slightly higher—both consistent with historical trends. However, in March 2020, inpatient 

volume began to decline, and by April, inpatient stays per capita were 40 percent below 

the level in 2019. Inpatient volume partially rebounded by summer 2020 but remained 

about 15 percent below 2019 levels through the end of fiscal years 2020 and 2021, and case 

mix remained about 6 percent higher than 2019 levels (data not shown).

• The magnitude of the decrease in Medicare FFS inpatient stays per capita varied across 

types of hospitals. For example, from 2019 to 2020, the number of Medicare FFS inpatient 

stays per capita fell 11.2 percent at hospitals located in metropolitan (urban) areas, 13.1

percent at those in rural micropolitan areas, and 14.1 percent at those located in other 

rural areas (data not shown).

253 252 249 241

214

-2.9%

-0.2%

-1.3%

-3.1%

-11.5%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

0

50

100

150

200

250

300

2016 2017 2018 2019 2020

Annual percentage change 

Inpatient stays per 1,000 

FFS Part A beneficiaries
66 Acute inpatient services

Chart 6-16. Four major diagnostic categories accounted for over half 

of all Medicare FFS inpatient stays at short-term acute 

care hospitals, 2016–2020

Note: FFS (fee-for-service). Data are for short-term acute care hospitals in the U.S. (exclusive of territories). 

Source: MedPAC analysis of Medicare Provider Analysis and Review data from CMS.

• Over half of all Medicare FFS inpatient stays at short-term acute care hospitals were for 

beneficiaries with a primary diagnosis in one of four major diagnostic categories: 

circulatory, musculoskeletal, respiratory, or infectious diseases.

• The most common major diagnostic category of Medicare FFS inpatient stays is diseases 

of the circulatory system, such as heart failure and cardiac arrhythmia. In each of 2016 

through 2020, about 20 percent of Medicare FFS inpatient stays were for circulatory 

system diseases. 

• Of the four most common major diagnostic categories, the one with the largest increase 

from 2016 to 2020, was infectious and parasitic diseases, such as septicemia. This rise 

continued a longer-term trend, with the share of Medicare FFS beneficiaries’ inpatient 

stays for infectious diseases doubling since 2010 (data not shown).

• In 2020, the share of Medicare FFS inpatient stays for respiratory conditions increased 

while the share for musculoskeletal conditions declined, reflecting the increase in COVID19 stays and delays in nonemergency stays, such as those for hip and knee replacements, 

during the public health emergency.

Circulatory 

19.8% 20.2% 20.3% 20.7% 20.1%

Respiratory 

13.5%

13.6% 13.6% 12.7%

13.5%

Musculoskeletal

14.1% 13.9% 13.6% 13.7%

12.6%

Infectious

9.5%

10.0% 10.6% 10.7%

11.7%

0%

5%

10%

15%

20%

25%

30%

2016 2017 2018 2019 2020

Share of inpatient stays
A Data Book: Health care spending and the Medicare program, July 2022 67

Chart 6-17. Share of one-day stays among Medicare FFS beneficiaries 

at short-term acute care hospitals continued to increase in 

2020

Note: FFS (fee-for-service). Data are for short-term acute care hospitals in the U.S. (exclusive of territories). 

Components may not sum to 100 percent due to rounding. 

Source: MedPAC analysis of Medicare Provider Analysis and Review data from CMS.

• The share of Medicare FFS beneficiaries’ inpatient stays at short-term acute care hospitals 

that were only one day long steadily increased from 2016 to 2020, up to 14.4 percent,

reversing the prior trend of declining one-day stays from 2010 to 2014 (data not shown). 

As the Commission has previously noted, growth in the number of one-day stays starting 

in 2015 could be due to the reduced likelihood that CMS’s recovery audit contractors 

would deny payment for one-day stays. 

• The share of Medicare FFS beneficiaries’ inpatient stays that were three days or longer 

also slightly increased in 2020, reversing the declining trend from 2016 to 2019. The 

growth in 2020 was driven by an increase in the share of inpatient stays seven days or 

longer, which increased from 21.1 percent in 2019 to 22.7 percent in 2020 (data not shown).

In contrast, the share of stays of exactly three days declined from 18.5 percent in 2019 to 

17.2 percent in 2020, which likely in part reflects the waiver during the public health 

emergency of the three-day stay requirement for skilled nursing facilities.

• Driven by the increase in longer stays, in 2020 the average length of inpatient stay 

increased 3.9 percent, to 5.14 days per stay (data not shown).

12.3% 12.9% 13.4% 14.1% 14.4%

2 days

18.1% 18.4% 18.4% 18.1% 17.8%

69.7% 68.7% 68.2% 67.8% 67.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2016 2017 2018 2019 2020

Share of inpatient stays

3+ days

1 day
68 Acute inpatient services

Chart 6-18. Number of Medicare FFS outpatient observation visits per 

capita declined 30 percent in 2020

Note: FFS (fee-for-service). Observation visits are separately payable visits with a length of stay of at least eight 

hours. Data for outpatient observation visits include short-term acute care hospitals in the U.S. (exclusive of 

territories) paid under the inpatient prospective payment system or under the Maryland state waiver. 

“Outpatient observation visits per capita” refers to outpatient observation visits—that is, observation visits 

that did not result in an inpatient admission—per Medicare FFS Part B beneficiary. Years are calendar years.

Components may not sum to 100 percent due to rounding and component values not shown. 

Source: MedPAC analysis of outpatient standard analytical file data from CMS. 

• Hospitals sometimes use observation care to determine whether a patient should be 

hospitalized for inpatient care, transferred to an alternative treatment setting, or sent 

home. 

• The number of Medicare FFS outpatient observation visits per capita remained relatively 

steady from 2016 to 2019, at about 45 visits per 1,000 beneficiaries. The distribution of 

observation visits by length of stay also remained steady, with about half longer than 24 

hours, including 10 percent that spanned more than 2 days.

• In 2020, the number of Medicare FFS outpatient observation visits per capita declined 30 

percent to about 32 visits per 1,000 beneficiaries, though the distribution by length of stay 

remained similar to prior years. The decline in observation visits in 2020 reflects the 

COVID-19 public health emergency and is similar to the decline in non-COVID emergency 

room visits (data not shown). 

50% 51% 51% 51%

50%

39% 39% 38% 39%

38%

9% 9% 9% 9%

9%

45.4 45.0 44.7 45.2

32.1

0

10

20

30

40

50

60

2016 2017 2018 2019 2020

Outpatient observation visits per 1,000 

FFS beneficiaries

<24 hours 1 to 2 days 2 to 3 days 3+ days
A Data Book: Health care spending and the Medicare program, July 2022 69

Chart 6-19. Inpatient psychiatric facility PPS payments and stays 

continued to decline, with largest decline in FY 2020

Note: PPS (prospective payment system), FY (fiscal year), FFS (fee-for-service). The 2020 payment amounts do not 

include Medicare’s share of Provider Relief Fund payments or Paycheck Protection Program forgiven loans 

provided as part of the public health emergency.

Source: MedPAC analysis of Medicare Provider of Analysis and Review and enrollment data from CMS.

• The Medicare FFS program pays for inpatient psychiatric facility (IPF) services under the 

IPF PPS.

• From 2016 to 2019, total (Medicare FFS plus beneficiary) payments for IPF PPS services 

decreased from $4.3 billion to $3.9 billion—equivalent to a 3 percent annual decrease—

and inpatient psychiatric stays decreased from 1,076 stays to 903 per 100,000 Medicare 

FFS beneficiaries—equivalent to a 6 percent annual decrease. 

• From 2019 to 2020, the decrease in payments was 13 percent (from $3.9 billion to $3.4 

billion) and the decline in stays was 17 percent (from 903 to 754 per 100,000 Medicare FFS 

beneficiaries). This substantial decrease is likely related to avoidance or deferral of stays 

due to the COVID-19 public health emergency.

$4.3 $4.3 $4.2 $3.9

$3.4

1,076 1,027 966

903

754

000

200

400

600

800

1,000

1,200

1,400

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2016 2017 2018 2019 2020

Stays (per 100,000 beneficiaries)

Dollars (in billions)

Payments Stays per 100,000 FFS beneficiaries
70 Acute inpatient services

Chart 6-20. The share of freestanding and for-profit Medicare-certified 

inpatient psychiatric facilities continued to increase, 

2016–2020

Average annual change

2016– 2019–

Type of IPF 2016 2017 2018 2019 2020 2019 2020

All 1,600 1,610 1,590 1,540 1,530 –1.3% –0.6%

Share of all 

Urban 78% 78% 78% 79% 79% 0.5 0.0

Rural 21 21 20 19 19 –2.4 –0.5

Freestanding 31 33 33 35 36 3.3 2.7

Hospital-based units 69 67 67 65 64 –1.6 –1.5

Nonprofit 46 46 46 45 44 –1.0 –1.8

For profit 32 33 33 34 34 1.8 1.0

Government 22 22 21 21 22 –0.5 2.1

Note: IPF (inpatient psychiatric facility). Data are from facilities that submitted valid Medicare cost reports and 

had at least one Medicare IPF prospective payment system stay in the given fiscal year. The number of 

cases presented differs from past reports due to a change in methodology. IPF counts are rounded to the 

10s’ place. Components and annual changes may not match totals due to rounding. 

Source: MedPAC analysis of Medicare Provider of Analysis and Review, Medicare hospital cost reports, and the 

Provider of Services data from CMS.

• From 2016 to 2020, the number of IPFs nationwide decreased about 1 percent each year,

from about 1,600 to 1,530. 

• Most IPFs are located in urban areas (nearly 80 percent). The share of IPFs in urban and 

rural areas remained mostly steady, with a slight shift in the share of IPFs toward urban 

areas since 2016. 

• Most IPFs (64 percent in 2020) are hospital-based units; however, since 2016, the share of 

freestanding IPFs grew by approximately 3 percent annually while the share of hospitalbased IPFs decreased. 

• About a third of IPFs are for profit, and the share of for-profit IPFs has been increasing 

over time by more than 1 percent annually. The shares of freestanding and for-profit IPFs 

have steadily increased by nearly 5 percent annually in the past five years (data not 

shown). 
A Data Book: Health care spending and the Medicare program, July 2022 71

Chart 6-21. Growing share of Medicare FFS beneficiaries’ stays at IPFs 

were for schizophrenia, schizotypal, and other psychotic 

disorders, 2016–2020

MS–DRG/ Average annual change

ICD–10 2016– 2019–

block Diagnosis 2016 2019 2020 2019 2020

885 Psychosis 70.9% 73.4% 74.4% 1% 1%

F30–F39 Mood [affective] disorders 38.7 38.6 37.5 0 –3

F20–F29 Schizophrenia, schizotypal, delusion, 

and other non-mood psychotic disorders 32.3 34.8 36.9 3 6

884 Organic disturbances 

and mental retardation 6.6 7.0 6.9 2 –2

057 Degenerative nervous system disorders

without MCC 6.5 5.5 4.9 –6 –10

897 Alcohol/drug abuse or dependency, no 

rehabilitation, without MCC 4.6 4.4 4.2 –2 –3

881 Depressive neurosis 4.4 3.2 2.9 –10 –9

895 Alcohol/drug abuse or dependency with 

rehabilitation, without MCC 1.6 1.6 1.6 0 –2

882 Neurosis except depressive 1.3 1.3 1.3 1 –4

Other psychiatric MS–DRGs* 3.1 2.8 3.0 –3 7

Nonpsychiatric MS–DRGs 0.9 0.8 0.8 –5 4

Total 100.0 100.0 100.0

Note: FFS (fee-for-service), IPF (inpatient psychiatric facility), MS–DRG (Medicare severity diagnosis related group), 

ICD–10 (International Classification of Diseases, 10th Revision), MCC (major comorbidity or complication). 

Totals may not sum to 100 percent due to rounding.

*Other psychiatric MS–DRGs include 056 (degenerative nervous system disorders with MCC), 080 

(nontraumatic stupor and coma with MCC), 081 (nontraumatic stupor and coma without MCC), 876 

(operating room procedure with principal diagnosis of mental illness), 880 (acute adjustment reaction and 

psychosocial dysfunction), 883 (disorders of personality and impulse control), 886 (behavioral and 

developmental disorders), 887 (other mental disorders), 894 (alcohol/drug use—left against medical advice), 

896 (alcohol/drug abuse or dependency without rehabilitation, with MCC)

Source: MedPAC analysis of Medicare Provider Analysis and Review data from CMS.

• Medicare FFS patients in IPFs are generally assigned 1 of 17 psychiatric MS–DRGs. 

However, the MS–DRG system does not differentiate well among Medicare beneficiaries 

in IPFs; in 2020, 96 percent of cases were assigned to seven MS–DRGs and nearly 75 

percent of cases were assigned to the psychosis MS–DRG.

• The psychosis MS–DRG is a broad category including patients with principal diagnoses of

mood disorders (such as bipolar disorder and major depression) and non-mood psychotic 

disorders (such as schizophrenia). From 2016 to 2019, the share of patients with non-mood 

psychotic disorders increased by 3 percent annually. More recently, from 2019 to 2020, 

corresponding with the start of the COVID-19 public health emergency, this share 

increased by 6 percent. In contrast, the share of patients with mood disorders did not 

change prior to 2019 but decreased by 3 percent between 2019 and 2020. Given that the 

number of overall IPF stays decreased substantially (see Chart 6-19) during this time, it 

may be that patients with certain diagnoses (such as schizophrenia and psychotic 

disorders) were less able to avoid or defer IPF use. 
72 Acute inpatient services

Chart 6-22. Medicare FFS beneficiaries using IPFs tended to be 

disabled, under age 65, low income, and non-White, 

FY 2020

Share of Share of IPF Share of all

all IPF users with more than FFS

Characteristic users one IPF stay in 2020 beneficiaries

All 100% 27% —

Current eligibility status and demographics

Aged 45 31 87

Disabled 55 69 13

ESRD 0.1 0.0 0.2

Female 50 45 53

Male 50 55 47

<45 24 33 3

45–64 31 36 10

65–79 31 24 66

80+ 14 7 21

Non-Hispanic White 73 68 78

Black 16 19 9

Asian/Pacific Islander 1 2 3

Hispanic 6 7 6

American Indian/Alaska native 1 1 1

Other or unknown 3 3 3

Urban 80 83 80

Rural 20 17 20

Dual eligible or LIS during year

No 33 23 82

Yes 67 77 18

Note: FFS (fee-for-service), IPF (inpatient psychiatric facility), FY (fiscal year), ESRD (end-stage renal disease), LIS 

(low-income subsidy). Components may not sum to totals due to rounding.

Source: MedPAC analysis of Medicare Provider Analysis and Review and enrollment data from CMS.

• Of Medicare FFS beneficiaries who had at least one IPF stay in 2020, 55 percent qualified 

for Medicare because of a disability, compared with 13 percent across all FFS beneficiaries. 

Beneficiaries who used IPF care also tended to be younger and poorer.

• Twenty-seven percent of Medicare FFS beneficiaries who used an IPF in 2020 had more 

than one IPF stay during the year. These beneficiaries were even more likely than all IPF 

users to be disabled (often because of a psychiatric diagnosis), under age 65, low income, 

and non-White. 

• The shares and patterns were similar for beneficiaries using IPFs in 2019.
7S E C T I O N

Ambulatory care

Physicians and other 

health professionals

Hospital outpatient services

Ambulatory surgical centers

A Data Book: Health care spending and the Medicare program, July 2022 75

Chart 7-1. Medicare spending per fee-for-service beneficiary on 

services in the physician fee schedule, 2010–2020

Note: Dollar amounts are Medicare spending only and do not include beneficiary cost sharing. The category 

“disabled” excludes beneficiaries who qualify for Medicare because they have end-stage renal disease. All 

beneficiaries ages 65 and over are included in the “aged” category.

Source: The annual report of the Boards of Trustees of the Medicare trust funds 2021.

• The physician fee schedule includes a broad range of services such as office visits, surgical 

procedures, and diagnostic and therapeutic services. Total fee schedule spending 

(excluding beneficiary cost sharing) was $64.8 billion in 2020 (data not shown).

• Spending per fee-for-service beneficiary for fee schedule services increased between 2010

and 2012, remained stable between 2012 and 2018, and declined between 2018 and 2020 

due to the effects of the coronavirus pandemic, which began in early 2020. From 2010 to 

2020, spending per beneficiary (across aged beneficiaries and those with disabilities) 

declined by a cumulative rate of 1 percent.

• Per capita spending for beneficiaries with disabilities (under age 65) is lower than per 

capita spending for aged beneficiaries (ages 65 and over). In 2020, for example, per capita 

spending for beneficiaries with disabilities was $1,714 compared with $2,013 for aged 

beneficiaries. However, spending per capita grew faster for beneficiaries with disabilities 

than aged beneficiaries between 2010 and 2020 (3 percent vs. –2 percent, respectively).

2,064

2,155 2,146 2,091 2,138

2,013

1,668

1,770 1,822 1,775 1,779 1,714

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2010 2012 2014 2016 2018 2020

Spending per beneficiary (dollars)

Aged

Disabled
76 Ambulatory care

Chart 7-2. Physician fee schedule–allowed charges by type of 

service, 2020

 Total allowed charges in 2020 = $84.7 billion

Note: Components may not sum to 100 percent due to rounding.

Source: MedPAC analysis of the Carrier Standard Analytic File for 100 percent of beneficiaries.

• In 2020, allowed charges for physician fee schedule services totaled $84.7 billion. “Allowed 

charges” includes both program spending and beneficiary cost sharing. 

• In 2020, more than half of all allowed charges were for evaluation and management 

(E&M) services. 

• Within the E&M category, about half of allowed charges were for office/outpatient visits. 

The remaining allowed charges within the E&M category were for various types of 

services provided across a broad range of settings, including hospital inpatient 

departments, emergency departments, and nursing facilities (data not shown).

Evaluation and 

management

50.7%

Other procedures

22.6%

Imaging

10.9%

Major procedures

7.7%

Tests

4.9%

Anesthesia

2.8%

Other

0.5%
A Data Book: Health care spending and the Medicare program, July 2022 77

Chart 7-3. Total encounters per FFS beneficiary fell in 2020 due to the 

coronavirus pandemic

Specialty category

Encounters per beneficiary

Percent change in 

encounters per beneficiary

2015 2019 2020

Average annual 

2015–2019 Total

2019–

2020

Total (all clinicians) 21.1 22.3 19.8 1.3% –11.1% –6.4%

Primary care physicians 3.8 3.5 3.1 –2.5 –10.9 –19.4

Specialists 12.7 19.9 11.4 0.4 –11.7 –10.1

APRNs/PAs 1.6 2.5 2.4 11.2 –2.7 48.8

Other practitioners 3.0 3.4 2.9 3.3 –15.1 –3.2

Note: FFS (fee-for-service), APRN (advanced practice registered nurse), PA (physician assistant). We define 

“encounters” as unique combinations of beneficiary identification numbers, claim identification numbers 

(for paid claims), and national provider identifiers of the clinicians who billed for the service. Components

may not sum to totals due to rounding. Figures do not account for “incident to” billing, meaning, for 

example, that encounters with APRNs/PAs that are billed under Medicare’s “incident to” rules are included 

in the physician totals. We use the number of FFS beneficiaries enrolled in Part B to define encounters per 

beneficiary. 

Source: MedPAC analysis of the Carrier Standard Analytic File for 100 percent of beneficiaries and 2021 annual report 

of the Boards of Trustees of the Medicare trust funds.

• “Encounters” are a measure of beneficiary interactions with clinicians. For example, if a 

physician billed for an office visit and an X-ray on the same claim, we count that as one 

encounter.

• After rising over the 2015 to 2019 period, the overall number of encounters per beneficiary 

fell 11.1 percent from 2019 to 2020 due to the coronavirus pandemic.

• Encounters with specialist physicians accounted for the majority of all encounters. These 

encounters increased by an average of 0.4 percent per year between 2015 and 2019, but

fell by 11.7 percent from 2019 to 2020. 

• Encounters with APRNs and PAs grew rapidly from 2015 to 2020 (48.8 percent), and 

encounters with primary care physicians declined substantially (–19.4 percent). These 

changes continue a longer-term trend of declines in services billed by primary care 

physicians and rapid increases in services billed by APRNs and PAs.

• The decline in encounters with primary care physicians occurred across a broad range of 

services, including evaluation and management services, tests, procedures, and imaging 

services (data not shown). 
78 Ambulatory care

Chart 7-4. The number of clinicians billing Medicare’s physician fee 

schedule increased and the mix of clinicians changed, 

2015–2020

Number (in thousands) Number per 1,000 beneficiaries

Physicians Physicians

Year

Primary 

care 

specialties

Other 

specialties

APRNs 

and 

PAs

Other 

practitioners Total

Primary 

care 

specialties

Other 

specialties

APRNs 

and 

PAs

Other 

practitioners Total

2015 141 439 178 161 919 2.8 8.7 3.5 3.2 18.1

2016 141 447 198 166 952 2.7 8.6 3.8 3.2 18.3

2017 140 455 218 172 985 2.6 8.5 4.1 3.2 18.4

2018 139 462 237 178 1,015 2.5 8.4 4.3 3.2 18.6

2019 139 468 258 184 1,048 2.5 8.4 4.6 3.3 18.7

2020 135 468 268 175 1,047 2.4 8.2 4.7 3.1 18.3

Note: APRN (advanced practice registered nurse), PA (physician assistant). “Primary care specialties” includes

family medicine, internal medicine, pediatric medicine, and geriatric medicine, with an adjustment to 

exclude hospitalists. Hospitalists are counted in “other specialties.” “Other practitioners” includes clinicians 

such as physical therapists, psychologists, social workers, and podiatrists. The number of clinicians shown in 

this table includes only those with a caseload of more than 15 beneficiaries in the year. Beneficiary counts 

used to calculate clinicians per 1,000 beneficiaries include beneficiaries enrolled in traditional Medicare Part 

B and those in Medicare Advantage, based on the assumption that clinicians generally furnish services to 

beneficiaries in both programs. Numbers exclude nonperson providers, such as clinical laboratories and 

independent diagnostic testing facilities.

Source: MedPAC analysis of Medicare claims data for 100 percent of beneficiaries and 2021 annual report of the 

Boards of Trustees of the Medicare trust funds.

• From 2015 to 2019, the total number of clinicians billing the fee schedule grew in absolute 

terms and relative to the size of the overall Medicare population. In 2020, the overall 

number of clinicians shrank slightly, likely due to the effects of the coronavirus pandemic.

• The total number of clinicians per 1,000 beneficiaries increased from 18.1 to 18.7 before 

falling to 18.3 in 2020. Although the ratio of clinicians to Medicare beneficiaries decreased 

in 2020, probably due to the pandemic, the effect on the overall supply of clinicians was 

relatively small and may be temporary.

• Over the 2015 to 2020 period, the number of primary care physicians billing the fee 

schedule slowly declined—yielding a net loss of about 6,000 primary care physicians by 

2020. Over the same five-year period, the number of APRNs and PAs billing the fee 

schedule grew rapidly from about 178,000 to 268,000. The number of specialist physicians 

and other practitioners, such as physical therapists and podiatrists, who billed the fee 

schedule increased at a steady pace.
A Data Book: Health care spending and the Medicare program, July 2022 79

Chart 7-5. Medicare beneficiaries’ ability to get timely appointments 

with physicians was comparable with that of privately 

insured individuals, 2018–2021

Medicare (ages 65 and older) Private insurance (ages 50–64)

Survey question 2018 2019 2020 2021 2018 2019 2020 2021

Unwanted delay in getting an appointment: Among those who needed an appointment in the 

past 12 months, “How often did you have to wait longer than you wanted to get a doctor’s 

appointment?”

For routine care

Never 70%a 72%b 69%a 67%a 64%ab 74%b 73%ab 78%a

Sometimes 20ab 20b 22a 23a 26ab 19 20ab 17a

Usually 5 3b 3b 5a 5b 4b 4b 3a

Always 3a 3 3 3a 4ab 3b 3b 2a

For illness or injury

Never 79a 80 79 78a 74ab 81 80b 83a

Sometimes 15a 14 15 16a 19ab 15 15 13a

Usually 2 2 2 2 3b 2 3 2

Always 2 2 2 2 2 1 2 1

Note: Components may not sum to 100 percent because of rounding and because the table excludes the 

following responses: “Don’t Know” and “Refused.” Sample sizes for each group (Medicare and private 

insurance) were approximately 4,000 each year. Sample sizes for individual questions varied. Survey 

includes beneficiaries enrolled in fee-for-service Medicare or Medicare Advantage and excludes 

beneficiaries under the age of 65.

a Statistically significant difference between the Medicare and private insurance groups in the given year (at 

a 95 percent confidence level).

b Statistically significant difference from 2021 within the same insurance category (at a 95 percent 

confidence level).

Source: MedPAC-sponsored annual telephone surveys conducted 2018–2021.

• Most Medicare beneficiaries have one or more doctor appointments in a given year. Their 

ability to schedule timely appointments is one indicator of access that we examine in our 

annual survey.

• Before the COVID-19 pandemic, comparable shares of Medicare beneficiaries ages 65 and 

over and privately insured individuals ages 50 to 64 reported that they never had to wait 

longer than they wanted to get a doctor’s appointment for routine care or for an illness or

injury. During the pandemic, Medicare beneficiaries were less likely to report never 

having to wait for an appointment compared to younger privately insured people, which 

may reflect decisions by beneficiaries and/or their clinicians to put off nonurgent care 

during the pandemic given elderly individuals’ elevated risk of death from COVID-19.

• Appointment scheduling for illness or injury is consistently better than for routine care 

appointments, for both Medicare beneficiaries and privately insured individuals, 

suggesting clinicians prioritize making these more urgent types of appointments 

available on a timely basis.
80 Ambulatory care

Chart 7-6. Medicare beneficiaries had more problems finding a new 

primary care provider than a new specialist, 2021

Note: Components may not sum to 100 percent because the figure does not show the share of respondents who 

said they didn’t know or refused to answer. Overall sample size for Medicare beneficiaries was

approximately 4,000. Survey includes beneficiaries enrolled in traditional fee-for-service Medicare or 

Medicare Advantage.

Source: MedPAC’s annual access-to-care telephone survey conducted In 2021.

• In 2021, only 8 percent of Medicare beneficiaries reported looking for a new primary care 

provider. This finding suggests that most beneficiaries were satisfied with their current 

provider and did not need to look for a new one.

• In 2021, among Medicare beneficiaries looking for a new clinician, beneficiaries were more 

likely to report problems finding a new primary care provider than a new specialist.

• Of the 8 percent of Medicare beneficiaries who looked for a new primary care provider in 2021, 

23 percent reported a “big problem” finding a new one, and another 18 percent reported a 

“small problem” finding a new one. Although this finding means that only 3 percent of the 

total Medicare population reported problems finding a new primary care provider, the 

Commission is concerned about the continuing pattern of greater problems accessing 

primary care than specialty care. We have observed this trend in our annual survey for many 

years, among both Medicare beneficiaries and privately insured people (data not shown).

8%

Yes

14%

Yes

92%

No

85%

No

Tried to get a new

primary care provider

in past year?

Tried to get a new

specialist

in past year?

How much of a 

problem 

was it finding a 

primary care provider?

How much of a 

problem was it 

finding a specialist?

57%

Not a 

problem

23%

A small problem

18%

A big problem

73%

Not a 

problem

A small problem (16%)

A big problem (11%)
A Data Book: Health care spending and the Medicare program, July 2022 81

Chart 7-7. More Black beneficiaries waited longer than they wanted 

for appointments compared with White beneficiaries, 2021

Medicare (ages 65 and older) Private insurance (ages 50–64)

Survey question White Black Hispanic White Black Hispanic

Unwanted delay in getting an appointment: Among those who needed an appointment in the 

past 12 months, “How often did you have to wait longer than you wanted to get a doctor’s 

appointment?”

For routine care

Never 69%ab 57%b 60%ab 82%ab 66%b 72%ab

Sometimes 23a 27 24 14ab 27b 22b

Usually 4a 6 5 2a 3 4

Always 2b 6ab 7ab 1 2a 1

a

For illness or injury

Never 80ab 68ab 77 85ab 78ab 80

Sometimes 16ab 23b 16 12ab 18b 14

Usually 2 3b 0ab 1

b 3 3ab

Always 2b 4ab 4b 1 1

a 1

Note: Components may not sum to 100 percent because of rounding and because the table excludes the 

following responses: “Don’t Know” and “Refused.” “White” refers to non-Hispanic White respondents. 

“Black” refers to non-Hispanic Black respondents. “Hispanic” refers to Hispanic respondents of any race. The 

small size of our survey prevents us from breaking out results for other races. Sample sizes for each 

insurance group (Medicare and private insurance) were approximately 4,000 in 2021. Sample sizes for 

individual questions varied. Survey includes beneficiaries enrolled in fee-for-service Medicare or Medicare 

Advantage and excludes beneficiaries under the age of 65.

a Statistically significant difference between the Medicare and private insurance groups (at a 95 percent 

confidence level).

b Statistically significant difference by race/ethnicity within the same insurance category (at a 95 percent 

confidence level). 

Source: MedPAC-sponsored telephone survey conducted in 2021.

• In 2021, White respondents were more likely than Black respondents to report that they 

never had to wait longer than they wanted to get an appointment for an illness or injury. 

• White respondents were more likely than Black or Hispanic respondents to report that 

they never had to wait longer than they wanted to get an appointment for routine care. 

• These trends were observed both for Medicare beneficiaries and for privately insured 

individuals.
82 Ambulatory care

Chart 7-8. There were few statistically significant differences in the 

shares of White, Black, and Hispanic beneficiaries who 

reported problems finding a new primary care provider or 

specialist, 2021

Medicare (ages 65 and older) Private insurance (ages 50–64)

Survey question White Black Hispanic White Black Hispanic

Looking for a new provider: “In the past 12 months, have you tried to get a new ...?”

Primary care provider 7% 9% 11% 6% 6% 6%

Specialist 14a 12 16 10a 9 11

Getting a new provider: Among those who tried to get an appointment with a new provider, 

“How much of a problem was it finding a primary care provider/specialist who would treat you? 

Was it ... ?”

Primary care provider

No problem 56 71 56 58 73b 37b

(Share overall) 4 6 6a 4 4 2a

Small problem 25 12 24 26 22 32

(Share overall) 2 1 2 2 1 2

Big problem 17 17 20 16 5 30

(Share overall) 1 2 2 1 0 2

Specialist

No problem 73 70 79 74 87 76

(Share overall) 10a 9 13 8a 8 8

Small problem 15 4 18 17 7 20

(Share overall) 2 0b 3b 2 1 2

Big problem 11b 26ab 3b 9 6a 4

(Share overall) 1

b 3ab 0b 1 1a 0

Note: Totals may not sum to 100 percent because of rounding and because the table excludes the following 

responses: “Don’t Know” and “Refused.” “White” refers to non-Hispanic White respondents. “Black” refers to 

non-Hispanic Black respondents. “Hispanic” refers to Hispanic respondents of any race. The small size of our 

survey prevents us from breaking out results for other races. Sample sizes for each insurance group (Medicare 

and private insurance) were approximately 4,000 in 2021. Sample sizes for individual questions varied. Survey 

includes beneficiaries enrolled in fee-for-service Medicare or Medicare Advantage and excludes beneficiaries 

under the age of 65. “Share overall” refers to the share of total insurance group, by race.

a Statistically significant difference between the Medicare and private insurance groups (at a 95 percent 

confidence level).

b Statistically significant difference by race/ethnicity within the same insurance category (at a 95 percent 

confidence level). 

Source: MedPAC-sponsored telephone survey conducted in 2021.

(Continued next page)
A Data Book: Health care spending and the Medicare program, July 2022 83

Chart 7-8. There were few statistically significant differences in the 

shares of White, Black, and Hispanic beneficiaries who 

reported problems finding a new primary care provider or 

specialist, 2021 (continued)

• In 2021, our survey found no statistically significant differences in the shares of 

Medicare beneficiaries of different races and ethnicities who tried to find a new 

primary care provider or a new specialist in the past year.

• Our survey also found no statistically significant differences in shares of Medicare 

beneficiaries of different races and ethnicities who reported problems finding a 

new primary care provider.

• There were no statistically significant differences in the shares of Medicare 

beneficiaries of different races and ethnicities who reported a problem finding a 

new specialist. However, among those who did report a problem, Black 

beneficiaries were more likely than other groups to report having a “big problem” 

(as opposed to a “small problem”).
84 Ambulatory care

Chart 7-9. Spending on hospital outpatient services covered under 

the outpatient PPS, 2011–2021

Note: PPS (prospective payment system). Spending amounts are for services covered by the Medicare outpatient 

PPS. They do not include services paid on separate fee schedules (e.g., ambulance services and durable 

medical equipment) or those paid on a cost basis (e.g., corneal tissue acquisition and flu vaccines) or

payments for clinical laboratory services, except those packaged into payment bundles. 

* Estimated figures.

Source: CMS, Office of the Actuary.

• The Office of the Actuary estimates that spending under the outpatient PPS was $76.2 billion 

in 2021 ($63.4 billion in program spending, $12.8 billion in beneficiary copayments). We 

estimate that the outpatient PPS accounted for about 7 percent of total Medicare program 

spending in 2021 (data not shown).

• From calendar year 2011 to 2021, overall spending by Medicare and beneficiaries on 

hospital outpatient services covered under the outpatient PPS increased by 91 percent, 

an average of 6.7 percent per year. The Office of the Actuary projects continued growth in 

total spending, averaging 8.0 percent per year from 2021 to 2023 (data not shown).

• Beneficiary cost sharing under the outpatient PPS includes the Part B deductible and 

coinsurance for each service. Under the outpatient PPS, beneficiary cost sharing was 

about 17 percent in 2021 (data not shown).

30.9 33.7 36.0 41.1 44.7 47.6 51.1 54.8 57.5 52.5

63.4

8.9

9.4 10.4

11.3

11.6

12.2

12.7

12.0

12.5

13.7

12.8

0

10

20

30

40

50

60

70

80

90

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*

Dollars (in billions)

Beneficiary cost sharing

Program payments
A Data Book: Health care spending and the Medicare program, July 2022 85

Chart 7-10. Most hospitals provide outpatient services

Share offering

Acute care Outpatient Outpatient Emergency

Year hospitals services surgery services

2008 3,607 94% 87% N/A

2010 3,518 95 90 N/A

2012 3,483 95 91 93%

2014 3,429 96 92 93

2016 3,370 96 93 93

2018 3,301 96 93 90

2020 3,194 96 93 91

2021 3,189 96 93 91

Note: N/A (not applicable). We list emergency services for 2008 and 2010 as “N/A” because the data source we 

used in this chart changed the variable for identifying hospitals’ provision of emergency services. This 

change in variable definition makes it appear that the share of hospitals providing emergency services 

increased sharply from 2010 to 2012, but we question whether such a large increase actually occurred. This 

chart includes services provided or arranged by acute care short-term hospitals and excludes long-term, 

Christian Science, psychiatric, rehabilitation, children’s, critical access, and alcohol/drug hospitals.

Source: Medicare Provider of Services files from CMS.

• The number of hospitals that furnish services under Medicare’s outpatient prospective 

payment system declined slowly from 3,607 in 2008 to 3,189 in 2021.

• The share of hospitals providing outpatient services remained stable, and the share 

offering outpatient surgery steadily increased from 2008 through 2014 and has remained 

stable since then. The share offering emergency services declined slightly from 2016 to 

2018.
86 Ambulatory care

Chart 7-11. Payments and volume of services under the Medicare 

hospital outpatient PPS, by type of service, 2020

Payments Volume

Note: PPS (prospective payment system), E&M (evaluation and management). “Payments” includes both 

program spending and beneficiary cost sharing. We grouped services into the following categories, 

according to the Berenson-Eggers Type of Service codes developed by CMS: evaluation and management, 

procedures, imaging, and tests. “Pass-through drugs” and “separately paid drugs/blood products” are 

classified by their payment status indicator. The components in neither figure sum to 100 percent due to 

rounding. The share for each type of service changed substantially from the shares reported in the 2021 

data book because we changed how we calculate the volume for the drug categories. For the 2021 data 

book, we calculated the volume in the drug categories as the sum of the number of units for each drug. In 

this chart, we calculated the volume in the drug categories as the sum of the number of times each drug 

was administered.

Source: MedPAC analysis of standard analytic file of outpatient claims for 2020.

• Hospitals provide many types of services in their outpatient departments, including 

emergency and clinic visits, imaging and other diagnostic services, laboratory tests, and 

ambulatory surgery.

• The payments for services are distributed differently from volume. For example, in 2020, 

procedures accounted for 48 percent of payments but only 33 percent of volume.

• Procedures (e.g., endoscopies, surgeries, and skin and musculoskeletal procedures) 

accounted for the greatest share of payments for services (48 percent) in 2020, followed 

by separately paid drugs and blood products (23 percent), E&M services (14 percent), and 

imaging services (11 percent). The share attributable to E&M services dropped from the 

2019 level (19 percent, data not shown) because clinic and emergency department visits 

decreased sharply as patients responded to the coronavirus pandemic.

Tests

1%

Passthrough 

drugs

3%

Procedures

48%

Imaging

11%

E&M

14%

Separately 

paid drugs/

blood 

products

23%

Tests

5% Pass-through 

drugs

1%

Procedures

33%

Imaging

21%

E&M 34%

Separately 

paid 

drugs/blood 

products

6%
A Data Book: Health care spending and the Medicare program, July 2022 87

Chart 7-12. Hospital outpatient services with the highest Medicare 

expenditures, 2020

Share of

Medicare Volume Payment

APC title expenditures (thousands) rate

Total 49%

All emergency visits 5 9,442 $343

Level 5 musculoskeletal procedures 5 255 11,901

Clinic visits 4 24,385 116

Comprehensive observation services 4 1,012 2,204

Level 3 electrophysiologic procedures 2 68 20,435

Level 3 endovascular procedures 2 134 9,908

Level 4 musculoskeletal procedures 2 185 5,982

Level 2 ICD and similar procedures 2 33 32,283

Level 3 drug administration 2 5,341 184

Level 3 radiation therapy 2 1,786 539

Level 2 imaging with contrast 1 2,085 382

Level 1 endovascular procedures 1 276 2,850

Level 1 laparoscopy and related procedures 1 164 4,834

Level 4 drug administration 1 2,476 310

Level 4 endovascular procedures 1 50 15,940

Level 4 imaging without contrast 1 1,552 482

Level 2 imaging without contrast 1 6,604 112

Level 3 nuclear medicine and related services 1 564 1,272

Level 3 pacemaker and similar procedures 1 65 10,252

Level 2 lower GI procedures 1 740 1,004

Level 3 imaging without contrast 1 2,760 233

Level 1 intraocular procedures 1 305 2,022

Level 4 intraocular procedures 1 404 1,443

Level 5 urology and related services 1 136 4,232

Level 2 laparoscopy and related procedures 1 69 8,413

Level 3 vascular procedures 1 201 2,771

Level 1 imaging without contrast 1 6,842 80

Level 1 upper GI procedures 1 768 786

Average APC 626 $410

Note: APC (ambulatory payment classification), ICD (implantable cardioverter-defibrillator), GI (gastrointestinal). 

The payment rate for “all emergency visits” is a weighted average of payment rates for 10 emergency visit 

APCs (not listed on this chart). The shares of payments for the 28 APC categories do not add to the total 

share of payments (49 percent) because of rounding. The average APC figures in the last line represent 

averages for all APCs.

Source: MedPAC analysis of 100 percent analytic files of outpatient claims for calendar year 2020.

• Although the outpatient prospective payment system covers thousands of services, 

expenditures are concentrated in a few categories that have high volume, high payment 

rates, or both.
88 Ambulatory care

Chart 7-13. Separately payable drugs have increased as a share of 

total spending in the outpatient prospective payment 

system, 2014–2020

Note: OPPS (outpatient prospective payment system).

Source: MedPAC analysis of hospital outpatient standard analytic claims files from 2014 through 2020.

• The OPPS packages the cost of most drugs into the payment for the related services. 

However, the OPPS has two programs that provide separate payment for higher cost 

drugs: the pass-through program, which is focused on drugs that are new to the market, 

and the program for separately payable non-pass-through (SPNPT) drugs, which is 

focused on drugs that have been established in the drug market. Pass-through drugs can 

hold that status for two to three years, after which they can become SPNPT drugs. Most 

SPNPT drugs were previously pass-through drugs.

• Separately payable drugs have become an increasingly large share of OPPS spending,

increasing from 14.7 percent in 2014 to 25.7 percent in 2020.

• The share of OPPS spending attributable to separately payable drugs increased each year 

from 2014 to 2020, but the increase was relatively small from 2017 to 2018. The small 

increase during that period was the result of a policy implemented by CMS that 

substantially decreased the payment rates for SPNPT drugs that hospitals obtained 

through the 340B Drug Pricing Program. Without that policy, we estimate that 

separately payable drugs would have been 22.7 percent of OPPS spending in 2018 and 

24.8 percent in 2019.

14.7

16.3

18.4

20.4 20.5

22.4

25.7

0

5

10

15

20

25

30

2014 2015 2016 2017 2018 2019 2020

Separately payable drugs as a 

share of OPPS spending
A Data Book: Health care spending and the Medicare program, July 2022 89

Chart 7-14. Number of Medicare-certified ASCs increased by 11

percent, 2014–2020

2014 2015 2016 2017 2018 2019 2020

Medicare payments (billions of dollars) $3.8 $4.1 $4.3 $4.6 $4.9 $5.2 $4.9

New centers (during year) 189 170 171 217 236 240 174

Closed or merged centers (during year) 123 110 101 102 111 91 55

Net total number of centers (end of year) 5,292 5,352 5,422 5,537 5,662 5,811 5,930

Net percent growth in number

of centers 1.3% 1.1% 1.3% 2.1% 2.3% 2.6% 2.0%

Share of all centers that are:

For profit 95 95 95 95 95 95 95

Nonprofit 4 4 4 4 4 4 4

Government 2 2 1 1 1 1 1

Urban 93 93 93 93 93 93 93

Rural 7 7 7 7 7 7 7

Note: ASC (ambulatory surgical center). Medicare payments include program spending and beneficiary cost 

sharing for ASC facility services. Some figures differ from Chart 7-14 in our 2021 data book because CMS 

updated the Provider of Services file. Some components may not sum to 100 percent due to rounding.

Source: MedPAC analysis of Provider of Services file from CMS 2021. Payment data are from CMS, Office of the 

Actuary. 

• ASCs are distinct entities that furnish ambulatory surgical services not requiring an 

overnight stay in a hospital. The most common ASC procedures are cataract removal with 

lens insertion, upper gastrointestinal endoscopy, colonoscopy, and nerve procedures.

• Total Medicare payments per fee-for-service (FFS) Medicare beneficiary for ASC services 

increased by approximately 5 percent per year, on average, from 2014 through 2020 (data 

not shown). Payments per FFS beneficiary served in an ASC grew by 6.5 percent per year 

during this period. From 2019 to 2020, total payments per FFS beneficiary dropped by 3.9

percent, and payments per beneficiary grew by 10.2 percent (per beneficiary data not 

shown).

• The number of Medicare-certified ASCs grew at an average annual rate of 1.9 percent 

from 2014 through 2020. In this same period, an annual average of 200 new facilities 

entered the market, while an average of 99 closed or merged with other facilities.
90 Ambulatory care

Chart 7-15. Between 35 and 74 low-value services were provided per 

100 FFS beneficiaries in 2019; Medicare spent between $2.5 

billion and $7.3 billion on these services 

Measure

Broader version of measure Narrower version of measure

Count 

per 100 

beneficiaries

Share of 

beneficiaries 

affected

Spending 

(millions)

Count 

per 100 

beneficiaries

Share of 

beneficiaries 

affected

Spending 

(millions)

Imaging for nonspecific

low back pain 13.2 9.6% $280 3.7 3.3% $78

PSA screening at age > 75 years 9.0 6.1 87 5.1 4.2 49

Spinal injection for low back pain 7.2 3.8 1,509 3.2 1.9 674

Colon cancer screening 

for older adults 6.9 6.6 437 0.2 0.2 3

PTH testing in early CKD 6.0 3.6 122 5.0 3.1 102

Carotid artery disease screening 

in asymptomatic adults 4.9 4.5 284 3.9 3.6 226

T3 level testing for patients 

with hypothyroidism 4.7 2.7 31 4.7 2.7 31

Preoperative chest radiography 3.9 3.6 63 0.9 0.9 15

Head imaging for 

uncomplicated headache 3.9 3.5 284 2.4 2.2 176

Stress testing for stable 

coronary disease 3.9 3.7 1,183 0.4 0.4 139

Cervical cancer screening at 

age > 65 years 1.6 1.6 37 1.5 1.5 33

Head imaging for syncope 1.2 1.2 89 0.7 0.7 55

Homocysteine testing in 

cardiovascular disease 1.2 1.0 11 0.2 0.2 2

Preoperative echocardiography 1.0 0.9 85 0.3 0.3 26

Preoperative stress testing 0.7 0.6 201 0.2 0.2 62

CT for uncomplicated rhinosinusitis 0.6 0.6 48 0.3 0.3 20

Imaging for plantar fasciitis 0.5 0.5 11 0.3 0.3 4

Screening for carotid artery disease 

for syncope 0.5 0.5 30 0.4 0.4 22

BMD testing at frequent intervals 0.5 0.5 12 0.3 0.3 8

Vitamin D testing in absence of 

hypercalcemia or decreased kidney 

function 0.4 0.4 7 0.4 0.4 7

Cancer screening for patients 

with CKD on dialysis 0.4 0.3 11 0.1 0.1 2

PCI/stenting for stable 

coronary disease 0.3 0.3 1,545 0.1 0.1 271

Arthroscopic surgery for knee 

osteoarthritis 0.2 0.2 183 0.03 0.03 32

Preoperative PFT 0.2 0.2 2 0.1 0.1 1

Vertebroplasty/kyphoplasty for 

osteoporotic vertebral fractures 0.2 0.2 359 0.2 0.2 351

Hypercoagulability testing after DVT 0.2 0.1 6 0.1 0.1 2

IVC filter to prevent pulmonary 

embolism 0.1 0.1 20 0.1 0.1 20

Renal artery angioplasty/stenting 0.1 0.1 182 0.02 0.02 43

EEG for headache 0.1 0.1 4 0.03 0.03 2

Carotid endarterectomy for 

asymptomatic patients 0.1 0.1 147 0.02 0.02 60

Pulmonary artery catheterization in 

ICU 0.01 0.01 0.2 0.01 0.01 0.2

Total 73.7 37.4 7,371 34.9 22.6 2,549

(Chart continued next page)
A Data Book: Health care spending and the Medicare program, July 2022 91

Chart 7-15. Between 35 and 74 low-value services were provided per 

100 FFS beneficiaries in 2019; Medicare spent between $2.5 

billion and $7.3 billion on these services (continued)

Note: FFS (fee-for-service), PSA (prostate-specific antigen), PTH (parathyroid hormone), CKD (chronic kidney 

disease), CT (computed tomography), BMD (bone mineral density), PCI (percutaneous coronary 

intervention), PFT (pulmonary function test), DVT (deep vein thrombosis), IVC (inferior vena cava), EEG 

(electroencephalography), ICU (intensive care unit). “Count” refers to the number of unique services. 

Components may not sum to totals due to rounding. The total for “share of beneficiaries affected” does not 

equal the column sum because some beneficiaries received services covered by multiple measures. 

“Spending” includes Medicare Part A and Part B program spending and beneficiary cost sharing for services 

detected by measures of low-value care. Spending is based on a standardized price for each service from 

2009 that was updated to 2019. The broad and narrow versions of the measures for T3 level testing for 

patients with hypothyroidism and IVC filter to prevent pulmonary embolism are the same. 

Source: MedPAC analysis of 100 percent of Medicare claims using measures developed by Schwartz and colleagues 

(Schwartz, A. L., M. E. Chernew, B. E. Landon, et al. 2015. Changes in low-value services in year 1 of the 

Medicare Pioneer Accountable Care Organization Program. JAMA Internal Medicine 175: 1815–1825; 

Schwartz, A. L., B. E. Landon, A. G. Elshaug, et al. 2014. Measuring low-value care in Medicare. JAMA Internal 

Medicine 174: 1067–1076).

• Low-value care is the provision of a service that has little or no clinical benefit or care in 

which the risk of harm from the service outweighs its potential benefit.

• The 31 measures of low-value care in this chart were developed by a team of researchers. 

The measures are drawn from evidence-based lists—such as Choosing Wisely—and the 

medical literature. We applied these measures to 100 percent of Medicare claims data 

from 2019. These 31 measures do not represent all instances of low-value care; the actual 

number (and corresponding spending) may be much higher. 

• The researchers developed two versions of each measure: a broader version (more

sensitive, less specific) and a narrower version (less sensitive, more specific). Increasing 

the sensitivity of a measure captures more potentially inappropriate use but is also more 

likely to misclassify some appropriate use as inappropriate. Increasing a measure’s 

specificity leads to less misclassification of appropriate use as inappropriate at the 

expense of potentially missing some instances of inappropriate use. 

• Based on the broader versions of the measures, our analysis found about 74 instances of 

low-value care per 100 beneficiaries in 2019, with about 37 percent of beneficiaries 

receiving at least 1 low-value service that year. Medicare spending for these services was 

$7.3 billion. Based on the narrower versions of the measures, our analysis showed about 

35 instances of low-value care per 100 beneficiaries, with almost 23 percent of 

beneficiaries receiving at least 1 low-value service. Medicare spending for these services 

totaled about $2.5 billion.
92 Ambulatory care

Chart 7-16. Imaging, cancer screening, and diagnostic and preventive 

testing accounted for most of the volume of low-value 

care in 2019 

Note: “Count” refers to the number of unique services provided to fee-for-service Medicare beneficiaries. 

Source: MedPAC analysis of 100 percent of Medicare claims using measures developed by Schwartz and colleagues 

(Schwartz, A. L., M. E. Chernew, B. E. Landon, et al. 2015. Changes in low-value services in year 1 of the 

Medicare Pioneer Accountable Care Organization Program. JAMA Internal Medicine 175: 1815–1825; 

Schwartz, A. L., B. E. Landon, A. G. Elshaug, et al. 2014. Measuring low-value care in Medicare. JAMA Internal 

Medicine 174: 1067–1076).

• We assigned each of the 31 measures of low-value care from Chart 7-15 to 1 of 6 clinical 

categories. 

• Imaging and cancer screening accounted for 58 percent of the volume of low-value care 

per 100 beneficiaries using the broader versions of the measures. The “imaging” category 

includes back imaging for patients with nonspecific low back pain and screening for 

carotid artery disease in asymptomatic adults. The “cancer screening” category includes 

prostate-specific antigen testing for men ages 75 or older and colorectal cancer 

screening for older adults.

• Using the narrower versions of the measures, imaging and diagnostic and preventive 

testing accounted for 64 percent of the volume of low-value care per 100 beneficiaries.

0

10

20

30

40

50

60

70

80

Broader measures Narrower measures

Count per 100 beneficiaries

Cardiovascular testing and procedures

Preoperative testing

Other surgical procedures

Diagnostic and preventive testing

Cancer screening

Imaging

Total: 74

Total: 35
A Data Book: Health care spending and the Medicare program, July 2022 93

Chart 7-17. Cardiovascular testing and procedures, other surgical 

procedures, and imaging accounted for most spending on 

low-value care in 2019 

Note: “Spending” includes Medicare Part A and Part B program spending and beneficiary cost sharing for services 

detected by measures of low-value care. To estimate spending, we used standardized prices to adjust for 

regional differences in payment rates. The standardized price is the median payment amount per service in 

2009, adjusted for the increase in payment rates between 2009 and 2019. This method was developed by 

Schwartz et al. (2014). 

Source: MedPAC analysis of 100 percent of Medicare claims using measures developed by Schwartz and colleagues 

(Schwartz, A. L., M. E. Chernew, B. E. Landon, et al. 2015. Changes in low-value services in year 1 of the 

Medicare Pioneer Accountable Care Organization Program. JAMA Internal Medicine 175: 1815–1825; 

Schwartz, A. L., B. E. Landon, A. G. Elshaug, et al. 2014. Measuring low-value care in Medicare. JAMA Internal 

Medicine 174: 1067–1076).

• Cardiovascular testing and procedures and other surgical procedures accounted for 71 

percent of total spending on low-value care using the broader measures. Other surgical 

procedures and imaging made up nearly two-thirds of spending on low-value care using 

the narrower measures.

• The “cardiovascular testing and procedures” category includes stress testing for stable 

coronary disease and percutaneous coronary intervention with balloon angioplasty or 

stent placement for stable coronary disease. The “other surgical procedures” category 

includes spinal injection for low back pain and arthroscopic surgery for knee 

osteoarthritis. The “imaging” category includes back imaging for patients with 

nonspecific low back pain and screening for carotid artery disease in asymptomatic 

adults.

• The spending estimates probably understate actual spending on low-value care because 

they do not include the cost of downstream services (e.g., follow-up tests and procedures) 

that may result from the initial low-value service. Also, we are not capturing all low-value 

care through these 31 measures.

0

1

2

3

4

5

6

7

8

Broader measures Narrower measures

Medicare spending (in billions of dollars)

Cardiovascular testing and procedures

Preoperative testing

Other surgical procedures

Diagnostic and preventive testing

Cancer screening

Imaging

Total: $7.3

Total: $2.5

8 S E C T I O N

Post-acute care

Skilled nursing facilities

Home health services

Inpatient rehabilitation facilities

Long-term care hospitals

A Data Book: Health care spending and the Medicare program, July 2022 97

Chart 8-1. The number of post-acute care providers decreased 

slightly in 2021

Average

annual

percent Percent

change change

2017 2018 2019 2020 2021 2017-2021 2020-2021

Home health

agencies 11,963 11,699 11,569 11,565 11,474 –1.0 –0.8

Inpatient

rehabilitation

facilities 1,178 1,170 1,152 1,159 1,181 0.1 1.9

Long-term

care hospitals 411 386 371 351 345 –4.3 –1.7

Skilled nursing

facilities 15,377 15,350 15,297 15,159 15,086 –0.5 –0.5

Source: MedPAC analysis of active provider counts from CMS Survey and Certification’s Quality, Certification, and 

Oversight reports (skilled nursing facilities and home health agencies) and CMS Provider of Services files 

(inpatient rehabilitation facilities and long-term care hospitals).

• The number of home health agencies has been declining since 2013 after several years of 

substantial growth (data not shown). The decline in agencies was concentrated in Texas 

and Florida, two states that saw considerable growth after the implementation of the

home health prospective payment system in October 2000.

• After declining for several years, the total number of inpatient rehabilitation facilities 

(IRFs) increased from 1,152 IRFs in 2019 to 1,159 IRFs in 2020. In 2021, the number of IRFs 

increased again to 1,181 IRFs. Most IRFs are distinct units in acute care hospitals; about

one-quarter are freestanding facilities. However, because freestanding IRFs tend to have 

more beds, they account for about half of Medicare discharges from IRFs.

• After peaking in 2012 (data not shown), the number of long-term care hospitals (LTCHs)

has decreased. The decline became more rapid after the implementation of a dual 

payment-rate system that reduced payments for certain Medicare discharges from 

LTCHs beginning in fiscal year 2016.

• The total number of skilled nursing facilities rose between 2016 and 2017, then decreased 

less than 1 percent per year between 2017 and 2021. 
98 Post-acute care

Chart 8-2. Medicare fee-for-service spending for post-acute care was 

relatively stable from 2010 to 2020

Note: These calendar year‒incurred data represent program spending only; they do not include beneficiary cost 

sharing.

Source: CMS Office of the Actuary 2022.

• Aggregate fee-for-service (FFS) spending on post-acute care (PAC) has remained stable 

since 2010, in part because of expanded enrollment in managed care under Medicare 

Advantage (Medicare Advantage spending is not included in this chart). However, 

spending growth has varied by PAC sector. In 2020, the COVID-19 public health 

emergency had varying effects on each sector. Spending for skilled nursing facility (SNF)

care increased, declined for home health care and long-term care hospitals, and was 

steady for inpatient rehabilitation facility (IRF) care. 

• FFS spending on SNFs increased in 2020 due to the implementation of the new case-mix 

system, the pandemic-related policy that waived the prior hospital stay requirement 

(thus enabling SNFs to “skill in place” nursing home residents who required higher-skilled 

services), higher case-mix indexes, longer stays, and the temporary suspension of the 

sequester that otherwise would have lowered payment rates. 

• FFS spending on IRFs has increased steadily over the past decade. In all, spending on IRFs 

increased 38 percent between 2010 and 2019.

• FFS spending on long-term care hospitals (LTCHs) decreased by about 32 percent from 

2015 and 2019, largely due to the implementation of the dual payment-rate system that 

reduced payments for certain LTCH cases.

58.6

61.3

58.3 58.8 59.2 60.4 59.7 58.8 58.4 57.5 57.9

27.8

31.1

28.2 28.6 29.0 29.6 28.9 28.5 28.1 27.6 29.0

19.6 18.6 18.2 18.1 18.0 18.4 18.4 18.1 18.2 18.0 17.2

6.1 6.4 6.7 6.9 7.2 7.5 7.7 8.0 8.3 8.5 8.5

5.0 5.2 5.3 5.2 5.0 5.0 4.7 4.1 3.8 3.4 3.2 0

10

20

30

40

50

60

70

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Dollars (in billions)

Calendar year

All post-acute care Skilled nursing facilities

Home health agencies Inpatient rehabilitation facilities

Long-term care hospitals
A Data Book: Health care spending and the Medicare program, July 2022 99

Chart 8-3. Use of skilled nursing facilities and home health agencies 

after an inpatient hospital stay shifted in 2020 

Note: This chart shows where beneficiaries received post-acute care (PAC) after a hospitalization. PAC use for 

beneficiaries admitted from the community is not included. 

Source: MedPAC analysis of Medicare Provider Analysis and Review files and the home health standard analytic file.

• About 39 percent of inpatient hospital discharges in both 2019 and 2020 were followed by 

services at a skilled nursing facility (SNF), home health agency, inpatient rehabilitation 

facility, or long-term acute care hospital (data not shown). Use of PAC after hospital 

discharge varied depending on the condition or treatment a patient received while 

hospitalized. For example, in 2019 the share of hospital discharges using PAC was 47 

percent for postsurgical patients compared with 36 percent for patients who received 

mostly medical services during their inpatient stay (data not shown).

• In 2019, SNF care was the most common type of PAC, used after 18.7 percent of inpatient 

discharges. Home health care was the second most frequent type of PAC, used after 15.8

percent of inpatient discharges.

• In March 2020, at the onset of the COVID-19 public health emergency, the share of 

inpatient hospital discharges referred to SNFs declined to 16.6 percent and by October

2020 had reached 14.9 percent. By contrast, the share receiving home health care services 

increased to 20.9 percent. The shift to home health care reflected the pandemic-related 

effects experienced by nursing homes and the reluctance of beneficiaries to use them. 

The share of inpatient hospital discharges referred to inpatient rehabilitation facilities also 

increased slightly in April 2020.

0%

5%

10%

15%

20%

25%

Jan March May July Sept Nov Jan March May July Sept

Share of inpatient hospital discharges

2019 2020

Inpatient rehabilitation facilities

Long-term acute care hospitals

Skilled nursing facilities

Home health agencies
100 Post-acute care

Chart 8-4. Freestanding SNFs and for-profit SNFs accounted for the 

majority of facilities, Medicare stays, and Medicare 

spending in 2020

Medicare-covered Medicare FFS payments

Type of SNF Facilities stays (billions)

Totals 13,884 1,722,219 $24.7

Freestanding 96% 97% 97%

Hospital based 4 3 3

Urban 73 83 84

Rural 27 17 16

For profit 71 74 78

Nonprofit 24 23 20

Government 5 3 3

Note: SNF (skilled nursing facility), FFS (fee-for-service). The spending amount included here is lower than that 

reported by the Office of the Actuary, and the count of SNFs is slightly lower than what is reported in CMS 

Survey and Certification’s Quality, Certification, and Oversight reports. Components may not sum to 100 

percent due to rounding.

Source: MedPAC analysis of the Provider of Services and Medicare Provider Analysis and Review files from CMS.

• In 2020, freestanding facilities accounted for 97 percent of Medicare-covered SNF stays 

and 97 percent of Medicare’s payments to SNFs.

• Urban facilities accounted for 73 percent of facilities, 83 percent of stays, and 84 percent 

of Medicare payments in 2020. 

• In 2020, for-profit facilities accounted for 71 percent of facilities but higher shares of stays

(74 percent) and Medicare payments (78 percent). The shares of stays and payments 

increased from 2019, when for-profit facilities accounted for 71 percent of all stays and 75 

percent of Medicare FFS payments (data not shown). 
A Data Book: Health care spending and the Medicare program, July 2022 101

Chart 8-5. SNF admissions continued to decline in 2020 

 Percent 

 change

Volume measure 2014 2016 2018 2019 2020 2019‒2020

Covered admissions per 

 1,000 FFS beneficiaries 68.3 65.9 62.5 59.5 54.8 –7.9%

Covered days per 1,000 1,843 1,693 1,559 1,475 1,453 –1.5

 FFS beneficiaries

Covered days per admission 27.0 25.7 25.0 24.8 26.5 6.9

Note: SNF (skilled nursing facility), FFS (fee-for-service). Data include 50 states and the District of Columbia. 

Source: Calendar year data from CMS, Office of Information Products and Data Analytics, 2021.

• SNF use for all beneficiaries has been declining for years, reflecting expanded enrollment 

in Medicare Advantage (MA) and more entities participating in alternative payment 

models (APMs) such as accountable care organizations and bundled payment 

demonstrations. MA plans and participants in APMs have financial incentives to shift 

post-acute care to home health services when possible and to shorten lengths of stays in 

SNFs. 

• Reflecting the continued expansion of beneficiaries enrolling in MA, in 2020, 3.3 percent 

of beneficiaries enrolled in FFS Medicare used SNF services, down from 4 percent in 2019

(data not shown). 

• Between 2019 and 2020, covered SNF admissions per 1,000 FFS beneficiaries decreased 

7.9 percent. The decline is consistent with a decline in FFS per capita inpatient hospital 

stays that were three days or longer and therefore qualified for Medicare coverage of SNF 

care (data not shown). It also reflects a decline in SNF use during the coronavirus public 

health emergency.

• During the same period, covered days per admission declined at a slower 1.5 percent

because stays were longer. 
102 Post-acute care

Chart 8-6. Freestanding SNF Medicare margins remained high in 2020

2012 2014 2016 2018 2019 2020

All 14.1% 12.8% 11.6% 10.9% 11.9% 16.5%

Rural 13.3 10.8 9.7 8.6 10.2 18.4

Urban 14.2 13.1 11.9 11.2 12.2 16.1

Nonprofit 5.7 4.3 2.6 0.8 1.4 0.6

For profit 16.3 15.1 14.1 13.7 15.0 20.0

Note: SNF (skilled nursing facility). 

Source: MedPAC analysis of freestanding SNF cost reports 2012–2020.

• The aggregate Medicare margin for freestanding SNFs in 2020 exceeded 10 percent for

the 21st consecutive year (not all years are shown). The aggregate Medicare margin was 

16.5 percent in 2020, a sizable increase from 2019. Had we considered an allocated share 

of the additional federal relief funds providers received due to the coronavirus pandemic, 

we estimate the aggregate margin would be even higher, at 19.2 percent. 

• The aggregate Medicare margin increased in 2020 because SNFs kept their cost growth 

below the payment rate increase and, on the payment side, providers received 

augmented payments from the new case-mix system and the suspension of the 

sequester that otherwise would have lowered payment rates. 

• Aggregate Medicare margins (excluding the federal relief funds) varied widely across 

freestanding SNFs. One-quarter of SNFs had Medicare margins that were 28.7 percent or 

higher; one-quarter had margins that were 4 percent or lower (data not shown). On 

average, rural facilities had higher Medicare margins than urban facilities, and for-profit 

SNFs had considerably higher Medicare margins than nonprofit SNFs, reflecting their 

larger size and lower cost growth.

• High-margin SNFs had lower costs per day (43 percent lower costs than low-margin 

SNFs), after adjusting for wage and case-mix differences, and higher payments per day 

(10 percent) (data not shown). 

• In 2020, the average total margin (the margin across all payers and all lines of business) 

for freestanding facilities was 3.0 percent, up from 0.6 percent in 2019 (data not shown). 
A Data Book: Health care spending and the Medicare program, July 2022 103

Chart 8-7. SNF quality measures were stable or improving between 

2015 and 2019; 2020 rates reflect conditions unique to the 

coronavirus PHE

Average 

annual 

change 

Average 

annual 

change

Measure 2015 2017 2019 2015–2019 2020 2019–2020

Successful discharge to the community

All SNFs 43.9% 44.4% 44.8% 0.5% 38.6% –13.8%

For profit 43.0 43.6 43.7 0.4 42.5 –2.7

Nonprofit 47.2 47.6 48.0 0.4 37.6 –21.7

Freestanding 43.4 44.0 44.4 0.6 38.2 –14.0

Hospital based 52.9 53.8 53.6 0.3 48.2 –10.1

Hospitalizations 

All SNFs 15.1 14.4 13.7 –2.4 14.2 3.6

For profit 15.7 14.9 14.2 –2.5 14.7 3.5 

Nonprofit 13.3 12.9 12.3 –1.9 12.6 2.4 

Freestanding 15.3 14.6 13.8 –2.5 14.3 3.6

Hospital based 10.6 10.2 10.0 –1.4 10.4 4.0

Note: SNF (skilled nursing facility), PHE (public health emergency). “Successful discharge to the community” 

includes beneficiaries discharged to the community (including those discharged to the same nursing home 

they were in before) who did not have an unplanned hospitalization or die in the 30 days after discharge. The 

hospitalization measure captures all unplanned hospital admissions, readmissions, and outpatient observation 

stays that occurred during the SNF stay. Both measures are uniformly defined and risk adjusted across SNFs, 

home health agencies, inpatient rehabilitation facilities, and long-term care hospitals. Providers with at least 

60 stays in the year were included in calculating the average facility rate. The “All SNFs” category includes the 

performance of government-owned SNFs, which are not displayed separately in the table. The average annual 

changes were calculated using unrounded annual rates.

Source: MedPAC analysis of SNF claims and linked inpatient hospital stays, 2015 through 2020, for fee-for-service 

beneficiaries. 

• While we report 2020 results for quality measures we track, these data reflect conditions 

unique to the PHE that confound our measurement and assessment of trends in 2020. 

For example, increased mortality due to COVID-19 infection and capacity constraints of 

acute care hospitals likely affected outcomes. In addition, the Commission’s quality 

metrics rely on risk-adjustment models that use performance from previous years to 

predict beneficiary risk; COVID-19, a new diagnosis, is not included in the current models. 

As a result, our models may not adequately represent the acuity and mix of patients 

receiving care in 2020. Therefore, we report the changes we have observed in the quality 

measures but do not draw conclusions about whether quality improved, worsened, or 

stayed the same in 2020.
104 Post-acute care

Chart 8-8. Trends in home health care use and spending

Note: FFS (fee-for-service). Yearly figures presented in the table are rounded, but the percent change 

columns were calculated using unrounded data. 

Source:MedPAC analysis of the home health standard analytic file from CMS.

• On an average annual basis between 2011 and 2019, total spending declined by 0.3 

percent and the number of users dropped by 0.6 percent.

• In 2020, the use of home health care was disrupted by the COVID-19 public health 

emergency, and the decline in volume was greater than previous years. Total spending 

declined by 4.7 percent, and the number of beneficiaries using home health care 

decreased 7.3 percent. However, the decline in volume in 2020 was concentrated in 

March and April of that year (data not shown). 

• As the number of beneficiaries receiving home health care declined by more than the 

drop in total spending, the average payment per home health user increased by about 

2.8 percent a year in 2020, reaching $5,591. Through most of the 2011 to 2020 period,

Medicare implemented a number of policies to reduce or slow the growth of home 

health payments. However, despite these reductions, the margins of freestanding home 

health agencies averaged in excess of 15 percent in this period, indicating that payments 

remain well in excess of costs despite these policies (data not shown; see Chart 8-10 for 

home health care Medicare margins in 2019 and 2020).

Average 

annual 

change

Average 

annual 

change

2011– 2019–

2011 2017 2018 2019 2019 2020 2020

Home health users 

(millions) 3.4 3.4 3.4 3.3 –0.6% 3.1 –7.3%

Share of beneficiaries 

using home health 9.4% 8.8% 8.7% 8.5% –1.2% 8.1% –4.7%

Total payments 

(in billions) $18.4 $17.9 $18.0 $17.9 –0.3% $17.1 –4.7%

Average payment per 

home health user $5,348 $5,255 $5,333 $5,437 0.2% $5,591 2.8%

Average payment per 

FFS beneficiary $505 $461 $466 $465 –1.0% $455 –2.0%
A Data Book: Health care spending and the Medicare program, July 2022 105

Chart 8-9. Most home health periods are not preceded by 

hospitalization or PAC stay

Note: PAC (post-acute care). Periods "preceded by hospitalization or institutional PAC” refers to periods that 

occurred less than 15 days after a stay in a hospital (including a long-term care hospital), skilled nursing 

facility, or inpatient rehabilitation facility. “Community admitted” refers to periods for which there was no 

hospitalization or PAC stay in the previous 15 days. “Early” periods are periods for beneficiaries who have not 

received any home health care in the prior 60 days; “late” periods are the second or later in a series of 

consecutive periods. In 2020, CMS implemented a new unit of payment, replacing the 60-day episode in 

effect in 2019 and prior years with a 30-day period. In this table, 60-day episodes from 2019 have been 

converted to 30-day periods to facilitate comparison of volume with 2020.

Source: MedPAC analysis of 2020 home health standard analytic file, 2019 home health limited data set.

• Most home health periods are not preceded by a hospitalization or institutional PAC stay, 

and these periods accounted for about three-quarters of PAC stays in 2019 and 2020. 

• Home health periods for beneficiaries who have not received any home health care in the 

prior 60 days are classified as “early” under the home health payment system. Periods

that are the second or later in a series of consecutive periods are classified as “late.” The 

share of late periods increased slightly from 65.0 percent in 2019 to 68.9 percent in 2020. 

• The share of periods by timing or source of referral did not change substantially in 2020 

compared to the prior year. The mix of cases by clinical payment group (data not shown) 

also did not change significantly. These relatively unchanged indicators for patient acuity 

suggest that the types of patients served by home health agencies did not change 

significantly in 2020, despite Medicare’s implementation of significant payment policy 

changes and the disruptions of the COVID-19 public health emergency that year.

2019 2020

Periods by source of referral

 Preceded by hospital or institutional PAC 25.3% 25.7%

 Community admitted 74.7% 74.3%

Periods by timing of 30-day period

Early 35.0% 31.1%

Late 65.0% 68.9%
106 Post-acute care

Chart 8-10. Medicare margins for freestanding home health agencies, 

2019 and 2020

Share of

agencies

2019 2020 2020

All 15.4% 20.2% 100%

Geography

Mostly urban 16.1 20.0 87

Mostly rural 14.2 21.6 13

Type of control

For profit 17.4 22.7 87

Nonprofit 11.4 12.4 13

Volume quintile (lowest to highest)

First 9.7 11.6 20

Second 11.4 14.0 20

Third 13.3 17.0 20

Fourth 14.1 18.8 20

Fifth 17.5 22.4 20

Note: Agencies are characterized as urban or rural based on the residence of the majority of their patients. 

Source: MedPAC analysis of Medicare Cost Report files from CMS.

• In 2020, freestanding home health agencies (HHAs) (87 percent of all HHAs) had an 

aggregate margin of 20.2 percent. The 2020 margin is consistent with the historically 

high margins the home health industry has experienced since the prospective payment 

system (PPS) was implemented in 2000. The margins from 2001 to 2019 averaged 16.2

percent (data not shown), indicating that most agencies have been paid well in excess of 

their costs under the PPS.

• HHAs that served mostly urban patients in 2020 had an aggregate margin of 20.0

percent; HHAs that served mostly rural patients had an aggregate margin of 21.6 percent. 

For-profit agencies in 2020 had an average margin of 22.7 percent, while nonprofit 

agencies had an average margin of 12.4 percent.

• Agencies with higher episode volumes had higher margins. The agencies in the lowestvolume quintile in 2019 had an aggregate margin of 11.6 percent, while those in the 

highest quintile had an aggregate margin of 22.4 percent.
A Data Book: Health care spending and the Medicare program, July 2022 107

Chart 8-11. Changes in home health care quality in 2020 likely reflect 

disruption of COVID-19 public health emergency

Measure 2015 2016 2017 2018 2019 2020

Successful discharge to community 68.3% 69.2% 69.6% 70.4% 72.2% 60.9%

Hospitalization during home health stay 20.6% 20.8% 21.4% 21.5% 21.4% 18.3%

Note: “Successful discharge to the community” includes beneficiaries discharged to the community (including 

those discharged to the same nursing home) who did not have an unplanned hospitalization or die in the 

30 days after discharge. The hospitalization measure captures all unplanned hospital admissions and 

readmissions and outpatient observation stays that occur during the stay. Both measures are uniformly 

defined and risk adjusted across the four post-acute care settings. Providers with at least 60 stays in the 

year (the minimum count to meet a reliability threshold of 0.7) were included in calculating the average 

facility rate.

Source: MedPAC analysis of Medicare Provider Analysis and Review and home health standard analytic files from 

CMS.

• Over the five years from 2015 to 2019, the share of patients successfully discharged from 

home health care to the community rose from 68.3 percent to 72.2 percent (higher rates 

indicate better performance). Over this period, the share of patients hospitalized while 

receiving home health care increased slightly from 20.6 percent to 21.4 percent (higher 

rates indicate worse performance). 

• In 2020, the rate of hospitalizations declined slightly, but the share of beneficiaries 

successfully discharged to the community also declined. While we report 2020 results for 

these measures, these data reflect conditions unique to the public health emergency 

that confound our measurement and assessment of trends in 2020. For example, 

increased mortality due to COVID-19 infection and other changes to the health care 

delivery system could affect these measures. In addition, the Commission’s quality 

metrics rely on risk-adjustment models that use performance from previous years to 

predict beneficiary risk; COVID-19, a new diagnosis, is not included in the current models. 

As a result, our models may not adequately represent the acuity and mix of patients 

receiving care in 2020. Therefore, we report the changes we have observed in the quality 

measures but do not draw conclusions about whether quality improved, worsened, or 

stayed the same in 2020.
108 Post-acute care

Chart 8-12. Number of IRF cases decreased in 2020

Average

annual

percent Percent

change change

2015 2017 2019 2015–2019 2020 2019–2020

Number of IRF cases 393,475 396,294 409,059 0.8% 378,756 –7.4%

Cases per 10,000 103.3 102.0 106.0 0.5 100.9 –5.0

FFS beneficiaries

Payment per case $18,527 $19,481 $20,417 2.0 $21,765 6.6

Average length of stay

(in days) 12.7 12.7 12.6 –0.2 12.9 2.0

Note: IRF (inpatient rehabilitation facility), FFS (fee-for-service). Numbers of cases reflect Medicare FFS utilization 

only. Yearly figures presented in the table are rounded, but the percent-change columns were calculated 

using unrounded data.

Source: MedPAC analysis of Medicare Provider Analysis and Review data from CMS. 

• From 2015 to 2017, the number of FFS IRF cases steadily rose, then jumped to about 

409,000 cases in 2019. In 2020, however, the total number of cases fell by 7.4 percent to 

about 379,000 cases. Controlling for the number of FFS beneficiaries, FFS cases declined 

by 5 percent in 2020.

• Consistent with the impact of the public health emergency (PHE), the number of IRF 

cases fell around April 2020 but then began to rise, reaching over 95 percent of 

prepandemic levels by the end of the fiscal year (data not shown). A large portion of IRF 

volume comes from patients who are transferred from the acute-care hospital (ACH)

setting after surgery. Although the share of ACH cases discharged to IRFs was unaffected 

in 2020, the drop in volume in April 2020 is consistent with a temporary suspension of 

elective surgeries in ACHs from March through May 2020. The rebound in volume in 

summer 2020 may have been the result of the pent-up demand for surgical services after 

many FFS beneficiaries’ surgeries had been canceled or delayed.

• Due to a combination of PHE-related factors, IRFs’ overall case-mix index (CMI) increased 

11 percent between 2019 and 2020, compared with a 3 percent average decrease in CMI 

between 2018 and 2019 (data not shown). The increase in the acuity level of IRF patients is 

one of several factors that contributed to the rise in payments per case and average 

length of stay. In 2020, payments per case rose by 6.6 percent to almost $22,000 per case,

and the average length of stay grew by 2 percent to 12.9 days.
A Data Book: Health care spending and the Medicare program, July 2022 109

Chart 8-13. Most common types of IRF cases, 2020

Type of case Share of cases

Stroke 19.1%

Other neurological conditions 14.0

Debility 13.5

Fracture of the lower extremity 11.3

Brain injury 11.2

Other orthopedic conditions 7.4

Cardiac conditions 5.8

Spinal cord injury 4.7

Major joint replacement of lower extremity 2.9

All other 10.2

Note: IRF (inpatient rehabilitation facility). “Other neurological conditions” includes multiple sclerosis, Parkinson’s 

disease, polyneuropathy, and neuromuscular disorders. Patients with debility have generalized 

deconditioning not attributable to other conditions. “Fracture of the lower extremity” includes hip, pelvis, 

and femur fractures. “Other orthopedic conditions” excludes fractures of the hip, pelvis, and femur and hip 

and knee replacements. “All other” includes conditions such as amputations, arthritis, and pain syndrome. 

All Medicare fee-for-service IRF cases with valid patient assessment information were included in this 

analysis. 

Source: MedPAC analysis of Inpatient Rehabilitation Facility–Patient Assessment Instrument data from CMS.

• In 2020, the most frequently occurring case type among fee-for-service (FFS)

beneficiaries admitted to IRFs was stroke, which accounted for 19.1 percent of Medicare 

FFS cases. 

• Due to the public health emergency, in addition to waiving the 3-hour rule in 2020, CMS 

waived the “60 percent rule,” which requires that at least 60 percent of patients admitted 

to an IRF have as a primary diagnosis or comorbidity at least 1 of 13 qualifying conditions. 

The waiver of these rules allowed IRFs to treat a broader mix of patients, including those 

without a qualifying condition or who were unable to tolerate intensive therapy. 

Nevertheless, the mix of case types in IRFs remained relatively stable. Between 2019 and 

2020, the share of IRF cases with a diagnosis of debility increased from 12.3 percent to 13.5 

percent of IRF discharges. The share of cases with lower extremity fracture increased 

from 10.0 percent to 11.3 percent, while the share of patients with stroke declined from 

19.8 percent to 19.1 percent (2019 data not shown).

• The distribution of case types differs by type of IRF (data not shown). For example, in 

2020, only 16 percent of cases in freestanding for-profit IRFs were admitted for 

rehabilitation following a stroke, compared with 24 percent of cases in hospital-based 

nonprofit IRFs. Likewise, 19 percent of cases in freestanding for-profit IRFs were admitted 

with other neurological conditions, more than twice the share admitted to hospital-based 

nonprofit IRFs. Cases with other orthopedic conditions also made up a higher share of 

cases in freestanding for-profit facilities than in all other IRFs.
110 Post-acute care

Chart 8-14. IRF Medicare margins by type of facility, 2015–2020

2015 2016 2017 2018 2019 2020

All IRFs 13.9% 13.3% 13.9% 14.7% 14.3% 13.5%

Hospital based 2.1 0.9 1.4 2.5 2.1 1.6

Freestanding 26.6 25.9 25.6 25.4 24.7 23.5

Urban 14.3 13.7 14.2 15.0 14.7 13.8

Rural 8.4 9.1 8.3 9.9 8.6 8.9

Nonprofit 3.5 1.8 2.0 2.5 1.5 –0.7

For profit 25.0 24.5 24.3 24.6 24.2 23.7

Number of beds

1–10 –7.7 –10.1 –10.5 –5.7 –4.2 –6.5

11–24 –0.4 –0.3 0.6 2.1 2.0 2.5

25–64 16.0 15.0 15.7 16.9 16.0 15.0

65+ 22.9 22.5 22.0 21.2 20.9 19.3

Note: IRF (inpatient rehabilitation facility).

Source: MedPAC analysis of cost report data from CMS. 

• In 2020, the aggregate margin fell slightly from 2019 levels but remained high at 13.5 

percent. Had we considered an allocated share of the additional federal relief funds 

providers received due to the coronavirus pandemic, the aggregate margin would have 

been 14.9 percent.

• Margins varied by ownership, with for-profit IRFs having substantially higher margins. 

Medicare margins in freestanding IRFs far exceeded those of hospital-based facilities.

• There was a wide range in Medicare margins for hospital-based IRFs. One-quarter of 

hospital-based IRFs had Medicare margins greater than 14 percent (data not shown), 

indicating that many hospitals can manage their IRF units profitably. Further, despite 

comparatively low average margins in hospital-based IRFs, evidence suggests that these 

units make a positive financial contribution to their parent hospitals. For example, in 

2020, hospitals’ aggregate total margins across all lines of service were slightly higher in 

hospitals with IRF units compared with those without such units (6.5 percent vs. 6.2 

percent; data not shown).

• There are also large differences in Medicare margins when comparing the size of IRFs. In 

2020, the aggregate Medicare margin for IRFs with 10 or fewer beds was –6.5 percent. In 

comparison, the Medicare margin for IRFs with 65 or more beds was 19.3 percent. These 

differences are in large measure due to economies of scale: That is, smaller facilities have 

higher unit costs.
A Data Book: Health care spending and the Medicare program, July 2022 111

Chart 8-15. Risk-adjusted quality indicators for IRFs, 2016–2020

Measure 2016 2017 2018 2019 2020

All-condition hospitalizations within 

an IRF stay 

7.7% 7.9% 7.7% 7.8% 7.8%

Successful discharge to community 64.6 64.8 65.1 65.5 67.3

Note: IRF (inpatient rehabilitation facility). The “all-condition hospitalization” measure captures all unplanned 

hospital admissions and readmissions and outpatient observation stays that occur during the stay. 

“Successful discharge to the community” includes beneficiaries discharged to the community (including 

those discharged to the same nursing home) who did not have an unplanned hospitalization or die in the 

30 days after discharge. Both measures are uniformly defined and risk adjusted across the four post-acute 

care settings. Providers with at least 60 stays in the year (the minimum count to meet a reliability of 0.7) 

were included in calculating the average facility rate. High rates of hospitalizations within a stay indicate 

worse quality. High rates of successful discharge to the community indicate better quality. 

Source: Analysis of Medicare claims data and Inpatient Rehabilitation Facility‒Patient Assessment Instrument data 

from CMS.

• While we report 2020 results for quality measures we track, these data reflect conditions 

unique to the public health emergency that confound our measurement and assessment 

of trends in 2020. For example, increased mortality due to COVID-19 infection and 

capacity constraints of acute care hospitals likely affected outcomes. In addition, the 

Commission’s quality metrics rely on risk-adjustment models that use performance from 

previous years to predict beneficiary risk; COVID-19, a new diagnosis, is not included in the 

current models. As a result, our models may not adequately represent the acuity and mix 

of patients receiving care in 2020. Therefore, we report the changes we have observed in 

the quality measures but do not draw conclusions about whether quality improved, 

worsened, or stayed the same in 2020.

• Between 2016 and 2019, the two quality measures we examined held steady or improved. 

• In 2020, the national average rate of risk-adjusted all-condition hospitalizations within an 

IRF stay was 7.8 percent. The national average rate of risk-adjusted successful discharge 

to community was 67.3 percent in 2020. 
112 Post-acute care

Chart 8-16. Ten MS–LTC–DRGs accounted for over half of LTCH 

discharges in 2020

MS–LTC

–DRG Description Discharges

Share

of cases

189 Pulmonary edema and respiratory failure 15,076 19.4%

207 Respiratory system diagnosis with ventilator support 96+ hours 11,254 14.5

871 Septicemia without ventilator support 96+ hours with MCC 3,965 5.1

177 Respiratory infections and inflammations with MCC 2,869 3.7

208 Respiratory system diagnosis with ventilator support <96 hours 2,393 3.1

166 Other respiratory system OR procedures with MCC 1,903 2.5

949 Aftercare with CC/MCC 1,572 2.0

981 Extensive OR procedure unrelated to principal diagnosis with MCC 1,535 2.0

682 Renal failure with MCC 1,349 1.7

4 Tracheostomy with ventilator support 96+ hours or primary 

diagnosis except face, mouth, and neck without major OR 1,281 1.7

Top 10 MS–LTC–DRGs 43,197 55.7

Total 77,603 100.0

Note: MS–LTC–DRG (Medicare severity long-term care diagnosis related group), LTCH (long-term care hospital), 

MCC (major complication or comorbidity), OR (operating room), CC (complication or comorbidity). MS–LTC–

DRGs are the case-mix system for LTCHs. Shares for each MS–LTC–DRG presented in the table are rounded, 

but the sum of the top 10 was calculated using unrounded values.

Source: MedPAC analysis of Medicare Provider Analysis and Review data from CMS.

• Cases in LTCHs are concentrated in a relatively small number of MS–LTC–DRGs. In 

2020, the top 10 MS–LTC–DRGs accounted for over 55 percent of LTCH Medicare 

cases.
A Data Book: Health care spending and the Medicare program, July 2022 113

Chart 8-17. LTCH volume fell during the dual payment-rate system 

transition period (2016–2019), largely due to declining 

volume of nonqualifying cases

2019

Average 

annual 

percent 

change

2016–2019 2020

Percent 

change 

2019–

2020

Cases

All 91,147 –10.1% 77,603 –14.9%

Nonqualifying cases 23,160 –24.2 18,702 –19.2

Qualifying cases 67,987 –2.0 58,901 –13.4

Share of qualifying cases 75% 8.6 76% 1.8

Cases per 

10,000 FFS 

beneficiaries

All 23.8 –10.1 20.9 –12.4

Nonqualifying cases 6.1 –24.2 5.0 –16.9

Qualifying cases 17.8 –2.0 15.8 –10.9

Payment per 

case

All $41,448 0.6 $45,634 10.1

Nonqualifying cases $25,738 –8.0 $32,401 25.9

Qualifying cases $46,800 0.4 $49,835 6.5

Length of stay 

(in days)

All 26.8 –0.1 27.6 3.0

Nonqualifying cases 23.3 –2.9 23.8 2.4

Qualifying cases 28.0 0.1 28.8 2.8

Note: LTCH (long-term care hospital), FFS (fee-for-service). “Qualifying cases” refers to Medicare cases that meet 

the criteria specified in the Pathway for SGR Reform Act of 2013 for payment under the LTCH prospective 

payment system. All counts are for stays covered by FFS Medicare and do not include those in private plans. 

Source: MedPAC analysis of Medicare Provider Analysis and Review data from CMS and the annual report of the 

Boards of Trustees of the Medicare trust funds. 

• Beginning in fiscal year 2016, only certain LTCH cases qualify for the higher standard LTCH 

prospective payment system (PPS) rate. Cases that do not meet LTCH-qualifying criteria 

are paid a lower site-neutral rate—the lower of (1) an amount based on Medicare’s 

inpatient hospital PPS rate or (2) 100 percent of the cost of the case.

• The number of LTCH cases per 10,000 FFS beneficiaries declined, on average, by about 10

percent per year between 2016 and 2019. In contrast, the number of cases meeting the 

LTCH-qualifying criteria decreased by just 2 percent per year during the same period.

• In 2020, the volume of all LTCH cases fell nearly 15 percent, while the volume of qualifying 

cases fell 13.4 percent, due, in part, to the overall reduction in upstream acute care 

volume during the pandemic.

• During the public health emergency (PHE), all cases were paid the higher standard LTCH 

PPS. As a result of this temporary PHE-related payment change, the average payment 

per nonqualifying case between 2019 and 2020 increased 26 percent. 
114 Post-acute care

Chart 8-18. LTCHs’ Medicare aggregate margin had been negative 

during the phase-in of site-neutral rates for nonqualifying 

cases but increased in 2020 due to higher Medicare 

payments

Type of 

LTCH

Share of 

discharges

in 2020

Medicare margin

2016 2017 2018 2019 2020

All 100% 3.9% -2.2% -0.5% -1.6% 3.6

Nonprofit 16 -5.7 -13.0 -11.7 –12.2 –12.7

For profit 76 5.5 -0.3 1.3 0.4 6.3

Note: LTCH (long-term care hospital). Nonprofit and for-profit shares sum to 92 percent of discharges because 

margins for government-owned facilities are not shown. 

Source: MedPAC analysis of cost report data from CMS.

• In fiscal year 2016, CMS began implementing a dual payment-rate system under which

LTCH cases not meeting criteria specified in law are paid a lower site-neutral rate—the

lower of an amount based on (1) Medicare’s inpatient hospital prospective payment 

system rate or (2) 100 percent of the cost of the case. As a result, the aggregate Medicare 

margin fell to -2.2 percent in 2017 and remained negative through 2019.

• In 2020, when all cases were paid the higher standard LTCH prospective payment system 

rates due to the public health emergency, Medicare aggregate margins (excluding relief 

funds) for all LTCHs increased to 3.6 percent. With reported Provider Relief Fund revenue 

allocated to Medicare payments, margins were 5 percent (data not shown).

• LTCHs with a high share (greater than 85 percent) of qualifying cases have had 

consistently higher aggregate margins than those that do not, each year since CMS

began implementing a dual payment-rate system. In 2020, LTCHs with a high share of 

qualifying cases had Medicare aggregate margins, excluding relief funds, of 6.9 percent

(data not shown).
9 S E C T I O N

Medicare Advantage

A Data Book: Health care spending and the Medicare program, July 2022 117

Chart 9-1. Enrollment in MA plans, 2010–2022

Note: MA (Medicare Advantage).

Source: CMS Medicare managed care contract reports and monthly summary reports, February 2010–2022. 

• In February 2022, enrollment in MA plans, which are paid on an at-risk capitated basis,

reached 28.7 million, or 49 percent of all eligible Medicare beneficiaries (only beneficiaries 

enrolled in both Part A and Part B are eligible to enroll in an MA plan). An additional 1 

percent of all Medicare beneficiaries with both Part A and Part B coverage are enrolled in 

other private plans such as cost plans, plans under the Program of All-Inclusive Care for 

the Elderly (PACE), and Medicare–Medicaid plans participating in CMS’s financial 

alignment demonstration (data not shown).

• MA enrollment has grown steadily since 2010 (increasing nearly threefold) and has grown 

particularly rapidly in recent years: In each of the last four years, MA enrollment has 

grown by at least 9 percent. The Medicare program paid MA plans about $350 billion in 

2021 to cover Part A and Part B services for MA enrollees (data not shown).

11.0 11.7

12.8

14.1

15.4 16.4 17.2

18.5

20.0

21.9

24.0

26.4

28.7

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Beneficiaries (in millions) 
118 Medicare Advantage

Chart 9-2. MA plans available to almost all Medicare beneficiaries, 

2015–2022

 Share of Medicare beneficiaries living in counties with plans available

 CCPs

HMO or Any Average plan

local PPO Regional Any MA offerings per

(local CCP) PPO CCP PFFS plan beneficiary

2015 95 70 98 47 99 17

2016 96 73 99 47 99 18

2017 95 74 98 45 99 18

2018 96 74 98 41 99 20

2019 97 74 98 38 99 23

2020 98 73 99 36 99 27

2021 98 72 99 34 99 32

2022 99 74 99 35 99 36

Note: MA (Medicare Advantage), CCP (coordinated care plan), HMO (health maintenance organization), PPO 

(preferred provider organization), PFFS (private fee-for-service). These data do not include plans that have 

restricted enrollment (special needs plans, employer plans) or are not paid based on MA rates (cost plans 

and certain demonstration plans). For 2015 through 2021, “share of Medicare beneficiaries” includes 

beneficiaries who do not have both Part A and Part B coverage (i.e., includes all Medicare beneficiaries). For 

2022, the share of Medicare beneficiaries includes only beneficiaries with both Part A and Part B coverage 

(i.e., MA-eligible beneficiaries).

Source: MedPAC analysis of plan bid data from CMS, 2015–2022.

• There are four types of MA plans, three of which are coordinated care plans (CCPs). Local 

CCPs include HMOs and local PPOs, which have comprehensive provider networks and 

limit or discourage use of out-of-network providers. Local CCPs may choose which 

individual counties to serve. Regional PPOs cover one or more entire states and have 

networks that may be looser than those of local PPOs. CCPs accounted for 98 percent of 

Medicare private plan enrollees as of February 2022 (data not shown). Since 2011, PFFS plans 

are required to have networks in areas with two or more CCPs. In other areas, PFFS plans 

are not required to have networks, and enrollees are free to use any Medicare provider.

• Local CCPs are available to 99 percent of eligible Medicare beneficiaries in 2022, and 

regional PPOs are available to 74 percent of beneficiaries. Since 2006, almost all Medicare 

beneficiaries have had MA plans available (data not shown); 99 percent have an MA plan 

available in 2022.

• The number of plans from which beneficiaries may choose in 2022 is higher than at any 

time during the years examined. In 2022, beneficiaries can choose from an average of 36

plans operating in their counties.
A Data Book: Health care spending and the Medicare program, July 2022 119

Chart 9-3. Changes in enrollment vary among major plan types

Total enrollees

(in thousands)

 Percent change

Plan type 2018 2019 2020 2021 2022 2021–2022

Local CCPs 18,463 20,502 22,704 25,325 27,878 10% 

Regional PPOs 1,327 1,255 1,170 1,003 756 –25

PFFS 154 118 87 61 48 –21

Note: CCP (coordinated care plan), PPO (preferred provider organization), PFFS (private fee-for-service). Local 

CCPs include HMOs and local PPOs.

Source: CMS health plan monthly summary reports, February 2018–2022.

• Almost all MA enrollees (98 percent) choose local CCPs (HMOs or local PPOs), which limit 

or discourage use of out-of-network providers. Enrollment in local CCPs grew by 10

percent over the past year.

• Though network requirements may be looser in regional PPOs and PFFS plans, 

enrollment in both types of plans has been declining for several years and dropped 

sharply in 2022, with enrollment in regional PPOs falling by 25 percent and enrollment in 

PFFS plans falling by 21 percent.

• Combined enrollment in the three types of plans grew by 9 percent from February 2021

to February 2022 (data not shown).
120 Medicare Advantage

Chart 9-4. MA and cost plan enrollment by state and type of plan, 

2022

All MA-eligible beneficiaries Distribution (in percent) of beneficiaries by plan type

State or territory (in thousands) HMO Local PPO Regional PPO PFFS Cost Total

U.S. total 58,591 29% 19% 1% 0% 0% 49%

Alabama 996 27 30 0 0 0 58

Alaska 97 0 2 0 0 0 2

Arizona 1,299 38 13 0 0 0 52

Arkansas 608 20 16 3 1 0 40

California 5,883 48 4 0 0 0 52

Colorado 885 36 17 0 0 0 53

Connecticut 643 21 34 1 0 0 56

Delaware 209 13 15 0 0 0 29

Florida 4,558 36 18 2 0 0 56

Georgia 1,678 16 34 5 0 0 55

Hawaii 255 22 36 1 0 0 59

Idaho 341 29 17 0 0 0 46

Illinois 2,095 14 22 0 0 0 37

Indiana 1,219 19 26 1 0 0 47

Iowa 610 14 16 0 0 2 33

Kansas 517 9 20 1 1 0 31

Kentucky 881 24 25 2 0 1 51

Louisiana 838 43 10 1 0 0 54

Maine 332 30 24 1 0 0 55

Maryland 939 13 9 0 0 0 21

Massachusetts 1,250 18 13 1 0 0 31

Michigan 2,013 21 35 0 0 0 57

Minnesota 1,003 17 36 0 0 6 59

Mississippi 579 21 13 2 0 0 36

Missouri 1,180 27 22 1 0 0 51

Montana 228 9 18 0 0 0 27

Nebraska 336 14 13 0 0 2 30

Nevada 511 42 9 0 0 0 52

New Hampshire 288 13 18 1 0 0 32

New Jersey 1,486 14 27 0 0 0 41

New Mexico 403 26 24 0 0 0 50

New York 3,395 32 17 3 0 0 53

North Carolina 1,964 24 23 4 0 0 51

North Dakota 128 0 10 0 0 19 29

Ohio 2,239 32 19 1 0 0 52

Oklahoma 702 16 21 1 0 0 38

Oregon 839 34 21 0 0 0 55

Pennsylvania 2,588 30 22 0 0 0 53

Puerto Rico 663 93 1 0 0 0 95

Rhode Island 205 42 11 0 0 0 54

South Carolina 1,073 13 25 4 0 0 42

South Dakota 172 1 12 0 0 18 31

Tennessee 1,314 34 17 0 0 0 52

Texas 4,058 30 19 3 0 0 53

Utah 393 37 14 0 0 0 51

Vermont 144 6 19 3 0 0 29

Virgin Islands 19 1 29 0 0 0 29

Virginia 1,434 23 11 2 0 0 36

Washington 1,320 35 11 0 0 0 46

Washington, DC 78 11 22 0 0 0 33

West Virginia 414 7 38 1 0 4 50

Wisconsin 1,164 29 21 1 0 4 55

Wyoming 110 0 5 0 2 1 8

Note: MA (Medicare Advantage), HMO (health maintenance organization), PPO (preferred provider organization), 

PFFS (private fee-for-service). Cost plans are not MA plans; they submit cost reports rather than bids to CMS. 

U.S. total includes beneficiaries in U.S. territories. Component percentages and U.S. total may not sum to 

totals due to rounding. We report MA enrollment as a share of MA-eligible beneficiaries (Medicare 

beneficiaries with both Part A and Part B coverage).

Source: CMS enrollment and population data, February 2022.
A Data Book: Health care spending and the Medicare program, July 2022 121

Chart 9-5. MA plan benchmarks, bids, and Medicare program

payments relative to FFS spending, 2022

All plans after

All plans HMOs Local PPOs Regional PPOs coding estimate

Benchmarks/FFS 108% 108% 109% 97% 112%

Bids/FFS 85 84 89 84 88

Payments/FFS 100 100 102 92 104

Note: MA (Medicare Advantage), FFS (fee-for-service), HMO (health maintenance organization), PPO (preferred 

provider organization), PFFS (private fee-for-service). Employer plans do not submit plan bids and generally 

receive payment based on the bidding behavior of PPOs. Thus, employer plans are included only in the overall 

“Payments/FFS.” All numbers in this table have been risk adjusted and reflect quality bonuses. To account for 

our most recent coding estimate of 3.6 percent, we estimated overall benchmarks, bids, and payments if 

coding differences between MA and FFS were fully reflected (i.e., if the risk-adjusted differences between MA 

and FFS did not include coding differences). The FFS spending denominator used in the table includes all Part 

A and Part B spending. Overall MA payments relative to spending for FFS enrollees with both Part A and Part 

B would decrease by about 1 percentage point.

Source: MedPAC analysis of plan bid data from CMS, October 2021.

• Since 2006, plan bids have partly determined the Medicare payments that plans receive. Plans 

bid to offer Part A and Part B coverage to Medicare beneficiaries (Part D coverage is bid 

separately). The bid includes plan administrative cost and profit. CMS bases the Medicare 

payment for a private plan on the relationship between its bid and its applicable benchmark.

• The benchmark is a bidding target in each county that is set by means of a statutory formula

based on percentages (ranging from 95 percent to 115 percent) of each county’s per capita 

Medicare FFS spending. Plans with quality ratings of 4 or more stars typically have their 

benchmarks raised by 5 percent (and up to 10 percent in some counties).

• If a plan’s bid is above the benchmark, then the plan receives the benchmark as payment from 

Medicare and enrollees have to pay an additional premium that equals the difference. If a plan’s 

bid is below the benchmark, the plan receives its bid plus a “rebate,” defined by law as a 

percentage of the difference between the plan’s bid and its benchmark. The percentage is based 

on the plan’s quality rating, and it is typically 65 percent or 70 percent. After accounting for 

administrative expenses and profit, plans must return rebates to enrollees in the form of lower cost 

sharing, supplemental benefits, or lower premiums.

• We estimate that MA benchmarks average 108 percent of FFS spending when weighted by MA 

enrollment. The ratio varies by plan type, which draws enrollment from different geographic 

areas.

• Plans’ enrollment-weighted bids average 85 percent of FFS spending in 2022. On average, 

each coordinated care plan type (HMO, local PPO, and regional PPO) has demonstrated the 

ability to provide the same services for less than FFS in the areas where they bid. 

• After accounting for risk-coding differences between FFS and MA plans that have not been 

resolved through the coding intensity factor, we estimate that MA payments are 4 percent 

higher than spending for similar beneficiaries in FFS.
122 Medicare Advantage

Chart 9-6. Average monthly rebate dollars, by plan type, 2017–2022

Note: HMO (health maintenance organization), PPO (preferred provider organization), PFFS (private fee-forservice), MA (Medicare Advantage). Employer group waiver and special needs plans are excluded.

Source: MedPAC analysis of bid data from CMS.

• Perhaps the best summary measure of plan benefit value is the average rebate, which 

plans receive to provide additional benefits that are not covered under Medicare Part A 

and Part B. Plans are awarded rebates for bidding under their benchmarks. The rebates 

must be returned to the plan members in the form of extra benefits (after accounting for 

plan margins and administrative costs). The extra benefits may be lower cost sharing, 

supplemental benefits, or lower premiums. The average rebate for all nonemployer, non–

special needs plans rose to a high of $164 per month per beneficiary for 2022.

• HMOs have had, by far, the highest rebates because they tend to bid lower than other 

types of plans. Average rebates for HMOs have risen sharply over the past few years and 

are at a historical high of $185 per month per beneficiary for 2022.

• For local PPOs, rebates have risen sharply in recent years, more than doubling since 2018.

• While the availability of PFFS plans is relatively low, rebates for PFFS plans rose sharply in 

2022 among the relatively small number of PFFS plans. 

105

49

16

40

89

111

59

15

45

95

125

71

18

46

107

141

86

17

49

122

158

103

45

59

140

185

129

57

72

164

0

20

40

60

80

100

120

140

160

180

200

HMO Local PPO PFFS Regional PPO Any MA plan

2017 2018 2019 2020 2021 2022

Average monthly rebate dollars per beneficiary
A Data Book: Health care spending and the Medicare program, July 2022 123

Chart 9-7. Enrollment in employer group MA plans, 2009–2022

Note: MA (Medicare Advantage).

Source: CMS enrollment data, February 2009–2022.

• While most MA plans are available to any Medicare beneficiary residing in a given area, 

some MA plans are available only to retirees whose Medicare coverage is supplemented 

by their former employer or union. These plans are called employer group plans. Such 

plans are usually offered through insurers and are marketed to groups formed by 

employers or unions rather than to individual beneficiaries.

• As of February 2022, about 5.2 million enrollees were in employer group plans, or about 18

percent of all MA enrollees. Employer plan enrollment grew by 3 percent from 2021 and

has more than doubled since 2013.

1.83 1.92 2.08 2.32 2.53

2.96 3.14 3.16

3.68

4.13 4.51 4.73 5.02 5.19

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Enrollment (in millions)
124 Medicare Advantage

Chart 9-8. Number of special needs plan enrollees, 2013–2022

Source: CMS special needs plans comprehensive reports, April 2013–2022.

• The Congress created special needs plans (SNPs) as a new Medicare Advantage (MA) plan 

type in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 to 

provide a common framework for the existing plans serving special needs beneficiaries 

and to expand beneficiaries’ access to and choice among MA plans.

• SNPs were originally authorized for five years, but SNP authority was extended several 

times. The Bipartisan Budget Act of 2018 made SNPs permanent.

• CMS approves three types of SNPs: Dual-eligible SNPs enroll only beneficiaries dually 

entitled to Medicare and Medicaid, chronic condition SNPs enroll only beneficiaries who 

have certain chronic or disabling conditions, and institutional SNPs enroll only 

beneficiaries who reside in institutions or are nursing-home certified.

• Enrollment in dual-eligible SNPs has grown continuously and exceeds 4.2 million in 2022, 

tripling since 2013.

• Enrollment in chronic condition SNPs has grown at varying rates as plan requirements 

have changed, but it has generally risen annually since 2013.

• Enrollment in institutional SNPs increased in 2022, after a decline in 2021.

1,380

1,576 1,678 1,790

1,959

2,210

2,532

2,929

3,453

4,216

266 288 313 332 335 349 349 375 384 400

49 50 50 58 63 74 87 104 87 98

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Dual Chronic Institutional

Number of special needs plan enrollees (in thousands)
A Data Book: Health care spending and the Medicare program, July 2022 125

Chart 9-9. Number of SNPs and SNP enrollment rose from 2021

to 2022

Note: SNP (special needs plan).

Source: CMS special needs plans comprehensive reports, April 2021 and 2022.

• The number of SNPs increased by 18 percent from April 2021 to April 2022. Dual-eligible 

SNPs increased by 16 percent, institutional SNPs increased by 7 percent, and the number 

of chronic condition SNPs increased by 32 percent.

• In 2022, most SNPs (61 percent) are for dual-eligible beneficiaries, while 16 percent are for 

beneficiaries who reside in institutions (or reside in the community but have a similar 

level of need), and 24 percent are for beneficiaries with chronic conditions.

• From April 2021 to April 2022, the number of SNP enrollees increased by 20 percent. 

Enrollment in SNPs for dual-eligible beneficiaries grew by 22 percent, enrollment in SNPs 

for institutionalized beneficiaries increased by 13 percent, and enrollment in SNPs for

beneficiaries with certain chronic conditions grew by 4 percent. Enrollment in all SNPs 

has grown from 0.9 million in May 2007 (data not shown) to 4.7 million in April 2022.

• The availability of SNPs varies by type of special needs population served (data not 

shown). In 2022, 94 percent of beneficiaries reside in areas where SNPs serve dual-eligible 

beneficiaries (up from 92 percent in 2021), 74 percent live where SNPs serve 

institutionalized beneficiaries (up from 72 percent in 2021), and 59 percent live where 

SNPs serve beneficiaries with chronic conditions (up from 57 percent in 2021).

627 729

174

186

214

283

0

200

400

600

800

1000

1200

1400

April 2021 April 2022

Number of SNPs

Chronic or disabling condition

Institutional

Dual eligible

3,453

4,216

87

98

384

400

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

April 2021 April 2022

SNP enrollment (in thousands)

Chronic or disabling condition

Institutional

Dual eligible
126 Medicare Advantage

Chart 9-10. The share of Medicare beneficiaries in MA plans is lower in 

rural areas, 2022

MA-eligible

population

(in millions)

As percent of 

MA-eligible

population

Share of 

MA-eligible 

population

category in 

MA plans

All MA-eligible beneficiaries 58.6 100% 49%

Urban Influence Code designation

Metropolitan 48.2 82 51

Rural: Micropolitan 5.9 10 41

Rural: Adjacent to metropolitan 2.8 5 41

Rural: Not adjacent to metropolitan 1.7 3 33

Note: MA (Medicare Advantage). Beneficiaries in the Virgin Islands, Guam, American Samoa, the Northern 

Mariana Islands, and non-U.S. areas are excluded. MA plans consist of HMOs, local preferred provider 

organizations (PPOs), regional PPOs, private fee-for-service plans, and Medical Savings Account plans. We 

report MA enrollment as a share of MA-eligible beneficiaries (Medicare beneficiaries with both Part A and 

Part B coverage). Urban Influence Codes (UICs) are designated by the Office of Management and Budget 

(OMB) based on the population size of the metropolitan area, and nonmetropolitan counties by the size of 

the largest city or town and proximity to metro- and micropolitan areas (areas with a population of at least 

10,000 people but fewer than 50,000). The UICs were last updated in 2013 and are updated every 10 years. 

Components may not sum to totals due to rounding. 

Source: MedPAC analysis of OMB UICs and CMS enrollment data, February 2022.

• Most (82 percent) of the total 58.6 million Medicare beneficiaries eligible for MA 

enrollment live in metropolitan areas. The share of MA-eligible beneficiaries who live in 

metropolitan areas enrolled in MA plans (51 percent) is higher than the share of rural 

beneficiaries enrolled in MA plans (40 percent; data not shown).

• Nearly all MA-eligible beneficiaries in rural areas reside in a micropolitan county or a 

county that is adjacent to a metropolitan area. More than 40 percent of MA-eligible 

beneficiaries in these areas are enrolled in MA plans. From 2021 to 2022, MA enrollment in 

these rural areas grew faster compared with metropolitan areas (13 percent compared 

with 8 percent; data not shown).

• About 3 percent of MA-eligible beneficiaries reside in a rural county that is not adjacent to 

a metropolitan area. One-third (33 percent) of these beneficiaries are enrolled in MA 

plans. From 2021 to 2022, MA enrollment in these areas grew by 16 percent—faster than 

the overall MA enrollment growth of about 9 percent during this period (data not shown).
A Data Book: Health care spending and the Medicare program, July 2022 127

Chart 9-11. MA enrollment patterns vary based on urban influence 

designation, 2022

MA 

population

(in millions)

As a 

percent of 

MA 

population

Share of category

HMO

Local

PPO

Regional 

PPO

Other 

MA

plans

All MA enrollees 28.7 100% 59% 38% 3% <0.5%

Urban Influence Code designation

Metropolitan 24.6 86 62 36 2 <0.5

Rural: Micropolitan 2.4 8 41 53 6 1

Rural: Adjacent to metropolitan 1.1 4 38 54 7 1

Rural: Not adjacent to metropolitan 0.5 2 34 57 8 1

Note: MA (Medicare Advantage), HMO (health maintenance organization), PPO (preferred provider organization). 

Beneficiaries in the Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, and non-U.S.

areas are excluded. MA plans consist of HMOs, local PPOs, regional PPOs, private fee-for-service plans, and 

Medical Savings Account plans. We report MA enrollment as a share of MA-eligible beneficiaries (Medicare 

beneficiaries with both Part A and Part B coverage). Urban Influence Codes (UICs) are designated by the 

Office of Management and Budget (OMB) based on the population size of the metropolitan area, and 

nonmetropolitan counties by the size of the largest city or town and proximity to metro- and micropolitan 

areas (areas with a population of at least 10,000 people but fewer than 50,000). The UICs were last updated 

in 2013 and are updated every 10 years. Components may not sum to totals due to rounding.

Source: MedPAC analysis of OMB UICs and CMS enrollment and population data, February 2022.

• Local coordinated care plans (HMOs and local PPOs), which represent 97 percent of MA

enrollees, may choose which individual counties to serve. Regional PPOs (3 percent of all 

MA enrollees) cover entire state-based regions.

• HMOs account for the largest share of MA plan enrollment in metropolitan areas (62

percent), but local PPOs account for the largest share (more than 50 percent) of MA plan 

enrollment in rural areas.
128 Medicare Advantage

Chart 9-12. MA plans are available to nearly all beneficiaries in rural 

areas, 2022

As a share

of MAeligible

population

Share of Medicare beneficiaries

living in counties with plans available in 2022

CCPs

Any

MA 

plan HMO

Local 

PPO

HMO 

or local 

PPO

Regional 

PPO

Any 

CCP

All MA-eligible beneficiaries 100% 99% 97% 95% 98% 74% 99%

Urban Influence Code designation

Metropolitan 82 >99.5 99 98 >99.5 73 >99.5

Rural: Micropolitan 10 99 93 95 97 77 98

Rural: Adjacent to metropolitan 5 97 93 95 97 83 97

Rural: Not adjacent to metropolitan 3 92 80 83 87 71 91

Note: MA (Medicare Advantage), CCP (coordinated care plan), HMO (health maintenance organization), PPO 

(preferred provider organization). These data do not include the Virgin Islands, Guam, American Samoa, the 

Northern Mariana Islands, or non-U.S. areas, and they do not include MA plans that have restricted 

enrollment (special needs plans, employer-only plans). We report MA enrollment as a share of MA-eligible 

beneficiaries (Medicare beneficiaries with both Part A and Part B coverage) rather than as a share of all

Medicare beneficiaries. Urban Influence Codes (UICs) are designated by the Office of Management and 

Budget (OMB) based on the population size of the metropolitan area, and nonmetropolitan counties by the 

size of the largest city or town and proximity to metro- and micropolitan areas (areas with a population of at 

least 10,000 people but fewer than 50,000). The UICs were last updated in 2013 and are updated every 10 

years. 

Source: MedPAC analysis of OMB UICs and CMS enrollment and population data February 2022.

• We examined the availability of MA plans to all MA-eligible beneficiaries. Consistent with 

prior work, we exclude employer-only plans and special needs plans. Although about 

one-third of MA enrollees are in these excluded plans, their availability is restricted to 

certain populations. In addition, we do not include other private plans such as cost plans.

• Nearly all Medicare beneficiaries residing in metropolitan areas have access to an MA 

plan.

• Nearly all beneficiaries in rural counties have access to an MA plan. About 99 percent of 

beneficiaries in micropolitan counties have access to an MA plan; 97 percent of those 

adjacent to a metropolitan area have access to an MA plan. Among the 3 percent of 

Medicare beneficiaries residing in a rural county that is not adjacent to a metropolitan area, 

92 percent have access to an MA plan.
A Data Book: Health care spending and the Medicare program, July 2022 129

Chart 9-13. Most Medicare beneficiaries have access to a considerable 

number of MA plans, but rural beneficiaries typically have 

fewer plans from which to choose, 2022

As a share of 

MA-eligible 

population

Average plan 

offerings

per 

beneficiary

Share of Medicare 

beneficiaries living in 

counties with an 

available zero-premium 

plan with drug 

coverage

All MA-eligible beneficiaries 100% 36 98%

Urban Influence Code designation

Metropolitan 82 39 99

Rural: Micropolitan 10 24 93

Rural: Adjacent to metropolitan 5 22 95

Rural: Not adjacent to metropolitan 3 16 84

Note: MA (Medicare Advantage). These data do not include the Virgin Islands, Guam, American Samoa, the 

Northern Mariana Islands, and non-U.S. areas, nor do they include MA plans that have restricted enrollment 

(special needs plans, employer-only plans). Urban Influence Codes (UICs) are designated by the Office of 

Management and Budget (OMB) by the population size of the metro area, and nonmetropolitan counties 

by the size of the largest city or town and proximity to metro and micropolitan areas (areas with a 

population of at least 10,000 people but fewer than 50,000). The UICs were last updated in 2013 and are 

updated every 10 years. 

Source: MedPAC analysis of OMB UICs and CMS enrollment and population data February 2022.

• In 2022, the average beneficiary has 36 plans from which to choose in their county. 

• On average, Medicare beneficiaries residing in metropolitan areas have more MA plans 

from which to choose (an average of 39 plan choices) compared with beneficiaries in rural 

areas. Nevertheless, the average beneficiary in micropolitan counties or counties adjacent 

to a metropolitan area can choose among an average of 24 and 22 plans, respectively. 

Beneficiaries residing in rural counties that are not adjacent to a metropolitan area (3

percent of all beneficiaries) have 16 plans from which to choose, on average.

• At least one zero-premium plan with drug coverage is available to nearly all beneficiaries 

(98 percent). The availability of these plans in rural areas is somewhat less prevalent than 

in metropolitan areas. In metropolitan areas, 99 percent of beneficiaries have access to a 

zero-premium plan. In comparison, about 93 percent of beneficiaries in micropolitan 

counties and 95 percent of those adjacent to a metropolitan area have access to a zeropremium plan. In rural counties that are not adjacent to a metropolitan area, 84 percent 

of beneficiaries have an available zero-premium plan.
130 Medicare Advantage

Chart 9-14. MA enrollment patterns, by age, dual-eligible status, and 

ESRD status, June 2021

All MA-eligible

beneficiaries FFS MA

MA 

enrollment as 

a share of all 

MA-eligible 

category

Enrollment, 

in millions

Share 

of 

total

Enrollment, 

in millions

Share 

of 

total

Enrollment, 

in millions

Share 

of 

total

Total 56.5 100% 30.4 100% 26.1 100% 46%

Aged (65 or older) 49.0 87 26.4 87 22.6 87 46

Under 65 7.5 13 4.0 13 3.5 13 47

Non–dual eligible 45.7 81 25.2 83 20.4 78 45

Aged (65 or older) 42.4 75 23.5 77 18.9 72 44

Under 65 3.3 6 1.7 6 1.6 6 48

Full dual eligibility 7.6 13 4.1 13 3.5 13 46

Aged (65 or older) 4.5 8 2.2 7 2.3 9 51

Under 65 3.1 5 1.8 6 1.2 5 40

Partial dual eligibility 3.3 6 1.1 4 2.2 8 66

Aged (65 or older) 2.1 4 0.7 2 1.5 6 69

Under 65 1.2 2 0.5 2 0.7 3 60

Enrollment subcategories, all ages

ESRD 0.5 1 0.3 1 0.2 1 35

Beneficiaries with partial dual eligibility

QMB only 1.7 3 0.6 2 1.1 4 64

SLMB only 1.0 2 0.3 1 0.7 3 67

QI 0.6 1 0.2 1 0.4 2 68

Note: MA (Medicare Advantage), ESRD (end-stage renal disease), FFS (fee-for-service), QMB (qualified Medicare 

beneficiary), SLMB (specified low-income beneficiary), QI (qualified individual). Data exclude cost plans, 

plans under the Program of All-Inclusive Care for the Elderly (PACE), and Medicare–Medicaid Plans 

participating in CMS’s financial alignment demonstration. MA-eligible beneficiaries are Medicare 

beneficiaries with both Part A and Part B coverage. Dual-eligible beneficiaries are eligible for Medicare and 

Medicaid. Data exclude Puerto Rico because enrollment data undercount dual-eligible categories. As of 

June 2021, Puerto Rico had about 615,000 Medicare beneficiaries enrolled in MA plans, and about 282,000 

were enrolled in dual-eligible special needs plans. Figures may not sum to totals due to rounding.

Source: MedPAC analysis of 2021 common Medicare environment files.

• Medicare beneficiaries with Medicaid benefits who have full dual eligibility (i.e., those who have 

coverage of their Medicare out-of-pocket costs (premiums and cost sharing) as well as coverage for 

services such as long-term care services and supports) are less likely to enroll in MA plans than 

beneficiaries with “partial” dual eligibility. Fully dual-eligible beneficiaries have coverage through state 

Medicaid programs, including certain QMBs (i.e., QMB-Plus) and certain SLMBs (i.e., SLMB-Plus) who 

also have Medicaid coverage for services. Beneficiaries with partial dual eligibility (such as QIs or 

SLMBs) have coverage for Medicare premiums or premiums and Medicare cost sharing (as QMBs).

• Medicare plan enrollment among the dually eligible continues to increase. In 2021, 46 percent of full 

duals were in MA plans (up from 40 percent in 2020; data not shown), and 66 percent of partial 

dual-eligible beneficiaries were in MA plans (up from 60 percent in 2020; data not shown). QI 

beneficiaries have the highest rates of MA enrollment among partial duals (68 percent).

• A substantial share of the dually eligible (39 percent; data not shown) are under the age of 65 and 

entitled to Medicare on the basis of disability or ESRD. Beneficiaries under age 65 who are fully dual 

eligible are far less likely than aged fully dual-eligible beneficiaries to enroll in MA (40 percent vs. 51

percent, respectively). As a result, about the same share (13 percent) of MA enrollees is fully dualeligible compared with FFS enrollees.

• Beginning in 2021, individuals with ESRD are no longer prohibited from joining an MA plan during 

open enrollment. As a result, ESRD beneficiaries had much higher rates of plan enrollment in 2021 

(35 percent) compared with 2020 (23 percent; data not shown).
10

00

S E C T I O N

Prescription drugs

A Data Book: Health care spending and the Medicare program, July 2022 133

Chart 10-1. Medicare spending for Part B drugs furnished by 

physicians, hospital outpatient departments, and 

suppliers, 2009–2020

Note: HOPD (hospital outpatient department). Data include Part B–covered drugs furnished by several provider 

types, including physicians, suppliers, and HOPDs, and exclude those furnished by critical access hospitals, 

Maryland hospitals, and dialysis facilities. “Medicare spending” includes program payments and beneficiary 

cost sharing. Data reflect all Part B drugs whether they were paid based on the average sales price or 

another payment formula. Data exclude blood and blood products (other than clotting factor). 

Components may not sum to totals due to rounding.

Source: MedPAC and Acumen LLC analysis of Medicare claims data.

• The Medicare program and beneficiaries spent about $40.7 billion on Part B drugs 

furnished by physicians, HOPDs, and suppliers in 2020, an increase of about 4.4 percent 

from 2019. 

• Between 2009 and 2020, Part B drug spending grew 9.2 percent per year on average. 

Growth was more rapid between 2009 and 2019 (9.7 percent per year on average) than 

between 2019 and 2020 (4.4 percent). 

• Quarterly spending growth patterns suggest that slower Part B drug spending growth in 

2020 was partly due to the COVID-19 pandemic. Spending declined in the second quarter 

of 2020, coinciding with the first wave of the pandemic. Comparing quarterly spending in 

each quarter of 2020 to the same quarter of 2019, spending increased 7.4 percent in the 

first quarter of 2020, declined 1.2 percent in the second quarter of 2020, increased 8.4 

percent in the third quarter of 2020, and increased 3.6 percent in the fourth quarter of 2020. 

(Chart continued next page)

15.4 16.6 

18.6 

20.3 21.6 22.8 

25.8

29.2

32.1

34.9

39.0 40.7

10.2 10.7 11.6 12.2 12.6 13.2

15.0

16.6

18.0

19.9

22.0

22.9

3.6 4.2 5.2 6.1 6.9 7.5 8.7

10.4

12.3 13.1

15.0 15.7

1.7 1.7 1.8 2.0 2.1 2.2 2.1 2.1 1.8 1.9 2.0 2.2 0

3

6

9

12

15

18

21

24

27

30

33

36

39

42

45

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Medicare spending (dollars in billions)

Total

Physicians

HOPDs

Suppliers
134 Prescription drugs

Chart 10-1. Medicare spending for Part B drugs furnished by 

physicians, hospital outpatient departments, and 

suppliers, 2009–2020 (continued)

• Savings from biosimilar competition also contributed to slower aggregate spending 

growth in 2020. For those categories of biologics with biosimilar availability, Medicare 

spending declined between 2019 and 2020 by about $800 million, from $6.3 billion to $5.5 

billion. This reduction in spending largely reflects both increased biosimilar uptake and 

price reductions by originator biologics; reduced utilization among some categories of 

biologics, likely related to the pandemic, also played a role. 

• Medicare pays for most Part B drugs at a rate of 106 percent of the average sales price 

(ASP + 6 percent). Eligible hospitals that participate in the 340B drug discount 

program receive substantial discounts on outpatient drugs, including those covered 

by Medicare Part B. Beginning in 2018, Medicare reduced the payment rate for certain 

Part B drugs furnished by 340B hospitals to ASP – 22.5 percent. The 340B policy 

reduced 2020 Medicare Part B spending on drugs in outpatient hospitals by about 

$2.3 billion (compared with what 2020 payments would have been in the absence of 

the policy). 

• Of total 2020 Part B drug spending, physicians accounted for 56 percent ($23 billion), 

HOPDs accounted for 38 percent ($16 billion), and suppliers accounted for 5 percent ($2 

billion). 

• Overall, from 2009 to 2020, Part B drug spending has grown more rapidly for HOPDs than 

for physicians and suppliers—at average annual rates of about 14 percent, 8 percent, and 3

percent, respectively. 

• Not included in these data are critical access hospitals and Maryland hospitals, which are 

not paid under the ASP system, and end-stage renal disease facilities, which are paid for 

most Part B drugs through the dialysis bundled payment rate. Medicare and beneficiaries 

spent approximately $1.1 billion in critical access hospitals and $0.4 billion in Maryland 

hospitals for Part B drugs in 2020. Also in 2020, Medicare spent $0.7 billion for calcimimetics 

in dialysis facilities through a transitional drug add-on payment adjustment to the bundled 

dialysis payment rate.
A Data Book: Health care spending and the Medicare program, July 2022 135

Chart 10-2. Change in Medicare payments and utilization for 

separately payable Part B drugs, 2009–2020 

2009 2020

Average 

annual 

growth 

2009–

2020

Total payments: Separately payable Part B drugs (in billions) $11.6* $38.5* 11.5%

Total payments: All Part B drugs excluding vaccines (in billions) $11.4 $37.2 11.3

 Number of beneficiaries using a Part B drug (in millions) 2.5 3.6 3.4

Average total payments per beneficiary who used a Part B drug $4,584 $10,384 7.7

Average number of Part B drugs per beneficiary 1.35 1.32 –0.2

 Average annual payment per Part B drug per beneficiary $3,395 $7,845 7.9

Total payments: All Part B vaccines (in billions) $0.2 $1.3 18.0

 Number of beneficiaries using a Part B vaccine (in millions) 13.4 16.9 2.1

Average total payments per beneficiary who used a Part B vaccine $16 $80 15.6

Average number of Part B vaccines per beneficiary 1.08 1.17 0.7

Average annual payment per Part B vaccine per beneficiary $15 $68 14.8

Note: This analysis includes Part B drugs paid based on the average sales price as well as the small group of Part 

B drugs that are paid based on the average wholesale price or reasonable cost or that are contractor priced.

“Vaccines” refers to three Part B–covered preventive vaccines: influenza, pneumococcal, and hepatitis B. 

Data include Part B drugs furnished by physicians, hospitals paid under the outpatient prospective 

payment system, and suppliers and exclude data for critical access hospitals, Maryland hospitals, and 

dialysis facilities. Yearly figures presented in the table are rounded; the average annual growth rate was 

calculated using unrounded data. 

* For purposes of this analysis, spending on separately payable Part B drugs excludes any drug that was 

bundled in 2009 or 2020 (i.e., drugs that were packaged under the outpatient prospective payment system in 

2009 or 2020 were excluded from both years of the analysis, regardless of the setting where the drug was 

administered), drugs billed under not-otherwise-classified billing codes, and blood and blood products (other 

than clotting factor). Without those exclusions, Part B drug spending was $15.4 billion in 2009 and $40.7 billion 

in 2020, as shown in Chart 10-1.

Source: MedPAC analysis of Medicare claims data for physicians, hospital outpatient departments, and suppliers.

• Total payments by the Medicare program and beneficiaries for separately payable Part B 

drugs increased 11.5 percent per year, on average, between 2009 and 2020.

• Medicare spending on separately payable Part B drugs excluding Part B–covered 

preventive vaccines grew at a similar rate (11.3 percent per year) between 2009 and 2020.

• Growth in the average price that Medicare Part B paid per drug accounted for more than 

half of the growth in separately payable Part B drug spending (excluding vaccines) 

between 2009 and 2020. During that period, the average annual payment per drug 

increased on average by 7.9 percent per year, which reflects increases in the prices of 

existing drugs; adoption of new, higher-priced drugs; and shifts in the mix of drugs. 

Growth in the average payment per drug would have been higher if not for the reduction 

in Medicare’s payment rate for certain Part B drugs provided by 340B hospitals 

beginning in 2018.

(Chart continued next page)
136 Prescription drugs

Chart 10-2. Change in Medicare payments and utilization for 

separately payable Part B drugs, 2009–2020 (continued)

• Growth in the number of beneficiaries using nonvaccine Part B drugs (about 3.4 percent 

per year on average) also contributed to increased spending. The number of Part B drugs 

received per user declined slightly from about 1.35 in 2009 to 1.32 in 2020, which modestly 

offset spending growth.

• In 2020, Medicare Part B covered three preventive vaccines: influenza, pneumococcal, 

and—for beneficiaries at high or medium risk—hepatitis B. Spending on the three 

preventive vaccines furnished by physicians, hospital outpatient departments, and 

pharmacy suppliers was $854 million for influenza, $487 million for pneumococcal, and 

$5 million for hepatitis B (data not shown). (Not included in these data are vaccines 

furnished in other settings such as end-stage renal disease facilities. With other settings 

included, 2020 vaccine spending was $883 million on influenza, $509 million on 

pneumococcal, and $35 million on hepatitis B vaccines.) 

• Although Medicare Part B also covers COVID-19 vaccines, the federal government’s direct 

purchase of COVID-19 vaccines meant that Medicare was not liable for the cost of COVID19 vaccines in 2020.

• Although vaccines are a relatively small share of overall spending on separately payable 

Part B drugs, vaccine spending grew rapidly, at an average rate of about 18.0 percent per 

year, between 2009 and 2020. 

• The largest driver of increased vaccine spending was price growth, as the average 

payment per vaccine grew at an average rate of 14.8 percent per year between 2009 and 

2020. Substantial price growth occurred for both pneumococcal and influenza vaccines 

between 2009 and 2020, with the average payment per vaccine increasing from $36 to 

$155 for pneumococcal vaccines and from $12 to $51 for influenza vaccines over this period 

(data not shown). The growth in the average payment per vaccine reflects higher launch 

prices for new vaccines (e.g., Prevnar-13 for pneumococcal disease and Fluzone HighDose, Fluad, and Flublok for influenza) and price growth over time among existing 

products (e.g., new vaccines after launch and certain older products).
A Data Book: Health care spending and the Medicare program, July 2022 137

Chart 10-3. Top 20 Part B drugs, 2020 

 2020 Percent change, 2019–2020

Total Average Number Total Average Number

spending spending of spending spending of

(billions) per user users per user users

Keytruda Cancer 3.5 $59,400 58,900 31% 11% 18%

Eylea MD 3.0 10,500 286,900 3 –2 6

Prolia/Xgeva OS, cancer SE 1.6 2,800 587,200 1 2 0

Opdivo Cancer 1.6 62,200 25,500 –11 5 –15

Rituxan* Cancer, RA 1.3 22,700 57,400 –25 –7 –20

Lucentis MD 1.1 9,200 121,600 –12 –5 –8

Orencia RA 1.0 34,100 30,100 11 9 2

Neulasta* Cancer SE 0.9 13,300 67,800 –23 –11 –13

Darzalex Cancer 0.8 64,600 13,000 5 –2 8

Avastin* Cancer, MD 0.7 3,900 176,500 –34 –17 –21

Remicade* RA 0.7 14,800 45,100 –27 –21 –8

Tecentriq Cancer 0.6 50,000 12,500 34 8 25

Ocrevus MS 0.6 49,900 12,500 –1 –1 1

Soliris Autoimmune 0.6 363,800 1,700 14 9 4

Cimzia RA 0.5 25,900 19,700 16 8 7

Imfinzi Cancer 0.5 55,000 9,200 13 7 5

Alimta Cancer 0.5 26,700 18,700 –2 6 –8

Fluzone HD Vaccine 0.5 60 8,046,600 11 11 0

Herceptin* Cancer 0.5 34,400 13,500 –42 –13 –33

Sandostatin 

LAR Depot

Cancer SE 0.4 44,800 10,000 3 5 –2

Top 10 drugs 15.6

Top 20 drugs 21.0

All Part B drugs 40.7

Note: MD (macular degeneration), OS (osteoporosis), SE (side effects), RA (rheumatoid arthritis), MS (multiple 

sclerosis), HD (high-dose). “Drug spending” includes Medicare program payments and beneficiary cost 

sharing. The 20 drugs shown in the chart reflect the Part B drug billing codes with the highest Medicare 

expenditures in 2020. Data include Part B–covered drugs furnished by several provider types, including 

physicians, suppliers, and hospital outpatient departments, but exclude those furnished by critical access 

hospitals, Maryland hospitals, and dialysis facilities. Data exclude blood and blood products (other than 

clotting factor). Components may not sum to totals due to rounding.

* For refence biologics that have biosimilar competitors, data in the table reflect only the reference biologic. 

If spending for a reference biologic and its biosimilars is summed, 2020 total spending was $1.6 billion for 

Rituxan, $1.2 billion for Neulasta, $1.0 billion for Avastin, $0.8 billion for Remicade, and $0.7 billion for 

Herceptin and their respective biosimilars. 

Source: MedPAC and Acumen LLC analysis of Medicare claims data.

(Chart continued next page)
138 Prescription drugs

Chart 10-3. Top 20 Part B drugs, 2020 (continued)

• Part B drugs are billed under roughly 900 billing codes, but spending is concentrated. In 

2020, Medicare spending (including cost sharing) on the top 10 products accounted for 

$15.6 billion, or 38 percent of total Part B drug spending. Spending on the top 20 products 

accounted for $21.0 billion, or about 52 percent of total Part B drug spending. 

• The top 20 Part B drugs tend to be concentrated in certain therapeutic areas. Twelve of 

the top 20 drugs are indicated for cancer patients: 9 drugs that treat cancer and 3 

supportive drugs that treat cancer side effects. The top 20 also include 3 products used to 

treat macular degeneration and 4 products used to treat rheumatoid arthritis. Also 

among the top 20 are 1 product for multiple sclerosis, 1 product for rare autoimmune 

conditions, and 1 influenza vaccine product. 

• Most products in the top 20 are biologics. Seventeen of the top 20 are biologics, two are 

drugs, and one is a preventive vaccine (data not shown). 

• Five of the top 20 products have biosimilar competitors. Because the chart displays data 

at the billing code–level, data reflect only the originator biologic and not its biosimilars 

(since each biosimilar has its own billing code). If spending for an originator biologic and 

its biosimilars is summed, total 2020 Medicare Part B spending (including cost sharing) 

was $1.6 billion for Rituxan, $1.2 billion for Neulasta, $1.0 billion for Avastin, $0.8 billion for 

Remicade, and $0.7 billion for Herceptin and their biosimilars (data not shown). 

• Among the top 20 highest-expenditure Part B drugs, average spending per user varies. 

Of eight products used to treat cancer (excluding Avastin, for which costs vary 

substantially depending on whether it is used for cancer or macular degeneration), 

average spending per user ranged from $23,000 to $65,000, with five products averaging 

$50,000 or more per user. Average spending per user ranged from $3,000 to $45,000 for 

three cancer supportive drugs, $15,000 to $34,000 for four drugs used to treat 

rheumatoid arthritis, and from $9,000 to $11,000 for two drugs used to treat macular 

degeneration (excluding Avastin). Soliris, a product used to treat rare autoimmune 

conditions, had the highest average cost per user among the top 20, $364,000.

• Between 2019 and 2020, spending increased for 11 of the top 20 Part B drugs and 

decreased for 9 drugs. For example, Keytruda and Tecentriq experienced the largest total 

spending growth (more than 30 percent), which reflected an increase in both average 

spending per user and number of users. In 2020, total spending also increased more than 

10 percent for Cimzia, Fluzone High-Dose, Imfinzi, Orencia, and Soliris. Among the 

products that experienced spending decreases in 2020, five products are originator 

biologics that now face biosimilar competition. A few other products that experienced 

total spending decreases are in therapeutic classes with multiple brand products; thus, 

the decline in total spending and number of users for some products may reflect shifts in 

market share across therapeutic alternatives. 
A Data Book: Health care spending and the Medicare program, July 2022 139

Chart 10-4. Growth in ASP for the 20 highest-expenditure Part B 

drugs, 2015–2022

Total Medicare

payments in 2020

(in billions)

Average annual percentage 

change in ASP

2015–2021

Percentage 

change in ASP

2021–2022

Keytruda $3.5 2.1%c 3.3%

Eylea 3.0 –1.0 –0.7

Prolia/Xgeva 1.6 5.4 5.5

Opdivo 1.6 2.4c 2.5

Rituxana 1.3 3.9 –6.2

Lucentis 1.1 –3.3 –4.8

Orencia 1.0 9.4 –21.7

Neulastaa 0.9 –2.1 –29.1

Darzalex 0.8 4.5d 2.1

Avastina 0.7 1.7 –9.7

Remicadea 0.7 –8.0 –15.6

Tecentriq 0.6 1.0e 1.8

Ocrevus 0.6 0.1

e 2.8

Soliris 0.6 1.5 –0.6

Cimzia 0.5 4.8 –23.3

Imfinzi 0.5 1.9f –0.3

Alimta 0.5 3.2 3.9

Fluzone High-Doseb 0.5 10.6 7.0

Herceptina 0.5 2.5 –11.8

Sandostatin LAR Depot 0.4 6.2 0.4

Consumer Price Index 

for Urban Consumers

1.9 7.5

Note: ASP (average sales price). Growth rates for ASP are calculated from first quarter to first quarter of each year

and for the Consumer Price Index for Urban Consumers (CPI–U) from January to January of each year. If a 

product launched after 2015, the table displays average annual ASP growth between the earliest year that a 

first-quarter payment rate was available for the product and 2021. ASP at the billing code level is calculated 

using the publicly available Part B drug payment rate data on CMS’s website. “Medicare payments” includes 

Medicare program payments and beneficiary cost sharing for these drugs furnished by physicians, suppliers, 

and hospital outpatient departments, but excludes those furnished by critical access hospitals, Maryland 

hospitals, and dialysis facilities. a Indicates the product is an originator biologic that has experienced biosimilar entry. ASP trends are for the 

originator product only. 

b For Fluzone High-Dose, a preventive vaccine paid 95 percent of the average wholesale price, the table 

displays the percent change in the actual payment rate rather than ASP. c ASP growth for period from 2016 to 2021.

d ASP growth for period from 2017 to 2021.

e ASP growth for period from 2018 to 2021. 

f ASP growth for period from 2020 to 2021.

Source: MedPAC analysis of CMS ASP pricing files and CPI–U data from the Bureau of Labor Statistics and MedPAC 

and Acumen LLC analysis of Medicare claims data.

(Chart continued next page)
140 Prescription drugs

Chart 10-4. Growth in ASP for the 20 highest-expenditure Part B 

drugs, 2015–2022 (continued) 

• From 2015 to 2021, 16 out of 20 of the top Part B drugs have experienced net price

increases, with 11 of these products’ ASPs increasing faster than the CPI–U on net over the

6-year period (or between launch and 2021 if launched after 2015).

• Alimta, Cimzia, Darzalex, Orencia, Prolia/Xgeva, Rituxan, and Sandostatin LAR all

experienced average ASP growth of between 3.2 percent and 9.4 percent per year

between 2015 and 2021 (or since launch if after 2015). Fluzone High-Dose, which is paid 95

percent of the average wholesale price, also experienced substantial price growth (10.6

percent per year on average between 2015 and 2021).

• In the most recent year, more products in the top 20 experienced a price decrease than a

price increase. ASP decreased for 11 products and increased for 9 products between the

first quarters of 2021 and 2022.

• Between the first quarters of 2021 and 2022, a year with high inflation (7.5 percent growth

in CPI–U), none of the nine products with price increases experienced increases greater

than inflation. This contrasts with experience over a longer time horizon. For example,

among 14 of the top 20 drugs that were available prior to 2015, 10 of these products

experienced average annual price growth that exceeded inflation between 2005 and 2015

(or between launch and 2015 if launched after 2005).

• Some of the price declines in 2022 among the top 20 products occurred among biologics

facing biosimilar competition. Avastin, Herceptin, Neulasta, Remicade, and Rituxan have

all faced biosimilar entry since 2019 or earlier. Prices for these originator biologics

declined between 6 percent and 29 percent between 2021 and 2022.

• Price declines in recent years among originator biologics facing biosimilar competition

follow a lengthy period in which the price Medicare paid for these products rose

significantly. For example, on average over the 10-year period between 2005 to 2015, the

ASP increased about 5 percent per year for Herceptin and Rituxan, 4 percent per year for

Neulasta, 3 percent per year for Remicade, and 2 percent per year for Avastin (data not

shown).

• The ASP payment rates for Orencia and Cimzia declined by more than 20 percent

between 2021 and 2022 due to a statutory change. The Consolidated Appropriations Act,

2020, required that the self-administered forms of these products, which are not covered

by Part B, be excluded from the calculation of the ASP payment rates beginning July

2021. Even with the decline in 2022, these products’ payment rates have grown rapidly

since launch. Orencia’s payment rate increased on average 6 percent per year over the 15-

year period from 2007 to 2022. Cimzia’s payment rate increased on average 4.4 percent

per year over the 12-year period from 2010 to 2022 (data not shown).
A Data Book: Health care spending and the Medicare program, July 2022 141

Chart 10-5. Trends in Medicare Part B payment rates for originator 

biologics and their biosimilar products

First

biosimilar

entry

Percent change in 

originator biologic’s ASP

Biosimilars’ 

payment rate 

as a percent of 

originator 

biologic's 

payment rate

(2022 Q1)

Biosimilar 

market 

share

(2021 Q3)

In 10 years 

before 

biosimilar 

entry

Since

biosimilar entry

(through

2022 Q1)

Neupogen and 

biosimilars

2015 Q3 71% –1% 31%–46% 79%

Remicade and 

biosimilars

2016 Q4 54% –55% 105%–120% 19%

Neulasta and 

biosimilars

2018 Q3 117% –54% 111%–148% 31%

Procrit/Epogen 

and biosimilars

2018 Q4 35% –33% 99% 54%

Avastin and 

biosimilars

2019 Q3 42% –17% 59%–75% 56%

Herceptin and 

biosimilars

2019 Q3 69% –19% 55%–71% 56%

Rituxan and 

biosimilars

2019 Q4 68% –10% 66%–75% 43%

Note: ASP (average sales price), Q1 (first quarter), Q3 (third quarter), Q4 (fourth quarter) An originator biologic is a drug 

product derived from a living organism. A biosimilar product is a follow-on product that is approved by the Food 

and Drug Administration (FDA) based on the product being highly similar to the originator biologic. The 

biosimilars included in the analysis are Zarxio, Nivestym, and Granix for originator Neupogen; Inflectra, Renflexis, 

and Avsola for originator Remicade; Fulphila, Udenyca, Nyvepria, and Ziextenzo for originator Neulasta; Retacrit 

for originator Procrit//Epogen; Mvasi and Zirabev for originator Avastin; Ontruzant, Herzuma, Ogivri, Trazimera, 

and Kanjinti for originator Herceptin; and Truxima, Ruxience, and Riabni for originator Rituxan. Although Granix is 

not a biosimilar in the U.S. (because it was approved under the standard FDA approval process for new biologics), 

we include it here because it was approved as a biosimilar to Neupogen in Europe and it functions as a 

competitor to Neupogen in the U.S. market. “First biosimilar entry date” reflects the earliest market date for a 

product approved by the FDA as a biosimilar to the originator biologic.

Source: MedPAC analysis of payment rates from CMS’s ASP pricing files and product market date information from

CMS’s database on drug products in the Medicaid Drug Rebate Program and Acumen LLC analysis of Medicare 

claims data.

• Under Part B, Medicare pays for an originator biologic at 106 percent of its own ASP. 

For biosimilars, Medicare pays 100 percent of the biosimilar’s ASP plus 6 percent of 

the originator product’s ASP. During the first two to three quarters when a biosimilar 

is new to the market, ASP data are unavailable and Medicare pays a rate of wholesale 

acquisition cost plus 3 percent. 

• Biosimilar entry has generated savings for Medicare. Pricing patterns and biosimilar 

uptake vary across products.

(Chart continued next page)
142 Prescription drugs

Chart 10-5. Trends in Medicare Part B payment rates for originator 

biologics and their biosimilar products (continued)

• For some products, biosimilars are priced substantially below originators and 

biosimilar uptake has driven savings. For example, Neupogen, the originator biologic 

that has faced biosimilar competition for the longest period (since the third quarter 

of 2015), has not significantly reduced its price and has lost most of its market share 

to biosimilars. As of the first quarter of 2022, biosimilars’ payment rates were much 

lower than the originator’s payment rate (i.e., 31 percent to 46 percent of the 

originator’s payment rate). Biosimilars accounted for nearly 80 percent of market 

share as of the third quarter of 2021.

• For other products, reference biologics have responded to biosimilar entry by 

lowering their prices, and savings have come from both the originator biologic and 

biosimilars. For example, the price of the originators Procrit/Epogen has fallen 33 

percent since biosimilar entry in the fourth quarter of 2018. Medicare’s payment rate 

for the biosimilar is slightly lower (1 percent) than for the originators, as of the first 

quarter of 2022. Biosimilars accounted for more than half (54 percent) of utilization as 

of the third quarter of 2021.

• In a few cases, originator biologics are priced below biosimilars as of the first quarter 

of 2022. Prices have fallen substantially for originators Remicade (declining 55 

percent since biosimilar entry in the fourth quarter of 2016) and Neulasta (declining 

54 percent since biosimilar entry in the third quarter of 2018). As of the first quarter of 

2022, Medicare’s payment rates for both originator biologics were lower than its 

payment rates for their biosimilars. In the most recently released payment rates for 

the third quarter of 2022, one biosimilar to Remicade and one biosimilar to Neulasta 

have lower payment rates than the originator biologic, while the other biosimilars 

payment rates continue to exceed the originator biologics’ (data not shown).

Remicade has continued to retain most of its market share, accounting for 81 percent 

of utilization in the third quarter of 2021, while Neulasta has retained 69 percent of its 

market share, as of the third quarter of 2021.

• In 2019, three originator biologics used to treat cancer (Avastin, Herceptin, Rituxan) 

faced biosimilar entry, representing the first availability of biosimilar anticancer 

agents. Biosimilars for these three products have rapidly gained market share, with 

biosimilars accounting for between 43 percent and 56 percent of utilization among 

these products as of the third quarter of 2021.

• Although biosimilar competition has resulted in reduced prices for originator 

biologics relative to the products’ prices at the time of biosimilar entry, originator 

biologics experienced substantial price increases prior to biosimilar entry. Across the 

7 originator biologics, cumulative growth in ASP over the 10 years prior to biosimilar 

entry ranged from 35 percent to 117 percent.
A Data Book: Health care spending and the Medicare program, July 2022 143

Chart 10-6. Price indexes for Medicare Part B drugs, 2010–2020

Note: Q1 (first quarter), Q4 (fourth quarter). The Part B price indexes are Fisher price indexes and reflect growth in 

the average sales price of Part B–covered drugs over time, measured for individual drugs at the level of the 

Healthcare Common Procedure Coding System billing code. The price index is different from the change in 

the aggregate average price Medicare pays for drugs (Chart 10-2), which reflects changes in the prices of 

existing products, rising launch prices of new products, and shifts in the mix of drugs. 

Source: Acumen LLC analysis for MedPAC.

• The Part B price indexes reflect growth in the average sales price (ASP) at the individual 

product level, which is a measure of average postlaunch price growth for Part B drugs. 

This is different from the change in the aggregate average price Medicare Part B pays for 

drugs (Chart 10-2), which reflects a broader set of dynamics (including changes in the 

price of existing products, rising launch prices of new products compared with older 

products, and shifts in the mix of drugs). 

• Measured by the change in the ASP of individual Part B–covered drugs, the prices of 

Part B–covered drugs rose by an average of 16 percent cumulatively between 2010 and 

2020 (an index of 1.16). 

• Underlying overall trends in the price index are different patterns by type of product. 

Between 2010 and 2020, the price index for Part B–covered biologics increased by 37

percent (index of 1.37), while the price index for nonbiologics declined by 18 percent (index 

of 0.82).

(Chart continued next page)

0.000

0.200

0.400

0.600

0.800

1.000

1.200

1.400

1.600

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

Q1

2018

Q1

2019

Q1

2020

Q1

2020

Q4

Chain-weighted Fisher price index

Biologics

Nonbiologics

All Part B drugs

1.37

1.16

0.82
144 Prescription drugs

Chart 10-6. Price indexes for Medicare Part B drugs, 2010–2020 

(continued)

• Since the third quarter of 2018, the overall price index for Part B drugs has declined from 

1.20 to 1.16, which is driven by a decline in the biologics’ price index, coupled with the 

continued decline in the nonbiologics’ price index. 

• Between the first quarter of 2019 and the fourth quarter of 2020, the biologics’ price index 

declined from 1.39 to 1.37. Pricing trends differ for biologics that face biosimilar 

competition and biologics that do not. Between the first quarter of 2019 and the fourth 

quarter of 2020, the price index declined for originator biologics and their biosimilar 

competitors (from 1.57 to 1.31) and increased for biologics without biosimilar competition 

(from 1.26 to 1.29) (data not shown).

• The nonbiologic group includes single-source drugs and drugs with generic competition. 

The downward price trend for nonbiologics in part reflects patent expiration and generic 

entry for some of these products. It also reflects the design of the ASP payment system, 

which spurs price competition among generics and their associated brand-name 

products by assigning these products to a single billing code and paying them the same 

average rate. 
A Data Book: Health care spending and the Medicare program, July 2022 145

Chart 10-7. Part D enrollment by plan type, 2007–2021

2007 2013 2017 2021

Average annual 

growth rate 

2007-2021

Total Medicare enrollment, in millions 46.8 55.3 61.5 66.9 2.6%

Part D enrollment, in millions

 Part D plans 26.2 37.8 45.2 51.6 5.0

 Non-Medicare employer plans under the RDS* 7.4 3.5 1.8 1.2 –12.4

 Total Part D 33.5 41.3 47.0 52.8 3.3%

 Total Part D share of Medicare enrollment 72% 75% 76% 79%

 LIS enrollment

 PDP 8.9 9.2 8.8 6.7 –2.0

 MA–PD 1.5 3.2 4.9 7.6 12.2

 Total LIS 10.5 12.4 13.7 14.3 2.3

 Share of LIS enrollees in MA–PD 14% 26% 36% 53%

 Share of Part D plan enrollees with LIS 40% 33% 30% 28%

EGWPs (PDPs and MA–PDs), in millions 2.0 6.4 7.2 7.8 10.1

 EGWP share of total Part D enrollment 6% 15% 15% 15%

Non-EGWP Part D plans, in millions

 PDP 17.5 19.4 22.1 20.9 1.3

 MA–PD 6.6 12.0 15.9 22.9 9.3

 Share of non-EGWP plan enrollees in MA–PD 27% 38% 42% 52%

Note: RDS (retiree drug subsidy), LIS (low-income subsidy), PDP (prescription drug plan), MA–PD (Medicare 

Advantage–Prescription Drug [plan]), EGWP (employer group waiver plan). A beneficiary was classified as 

“LIS” if that individual received Part D’s LIS at some point during the year. If a beneficiary was enrolled in both a 

PDP and an MA–PD during the year, that individual was classified into the type of plan with the greater 

number of months of enrollment. Components may not sum to totals due to rounding. Average annual 

growth rate is calculated on unrounded numbers. Figures include all beneficiaries with at least one month of 

enrollment. Enrollment numbers in this table differ from those in the Commission’s previous years’ data books 

and in its 2022 March report to the Congress because this table counts individuals who were ever enrolled for 

at least one month in the year rather than at a single point in time.

* Excludes federal government and military retirees covered by either the Federal Employees Health Benefit 

Program or the TRICARE for Life program.

Source: MedPAC analysis of common Medicare environment file from CMS.

• In 2021, 79 percent of Medicare beneficiaries were enrolled in Part D plans for at least one 

month during the year or had prescription drug coverage through employer-sponsored 

plans that receive Medicare’s RDS. That share is up from 72 percent in 2007.

• Between 2007 and 2021, the number of enrollees receiving the LIS grew modestly (by 2.3 

percent per year, on average). During the same period, the number of non-LIS enrollees 

grew faster than LIS enrollees (growing by about 7 percent per year, on average) (data not 

shown). Faster enrollment growth among non-LIS enrollees has resulted in a decline in 

the share of Part D enrollees who receive the LIS. In 2021, 28 percent of Part D enrollees

received the LIS (a decrease from 40 percent in 2007). Of all LIS beneficiaries, 53 percent 

were in MA–PDs and just under half (47 percent) were enrolled in stand-alone PDPs.

(Chart continued next page)
146 Prescription drugs

Chart 10-7. Part D enrollment by plan type, 2007–2021 (continued)

• Employer and union health plans continue to be important sources of drug coverage for 

Medicare beneficiaries. In 2021, 7.8 million Medicare beneficiaries (15 percent of Part D 

plan enrollees) were in plans (including PDPs and MA–PDs) set up by employers or unions 

for their retirees. Under these employer group waiver plans (EGWPs), Medicare is the 

primary payer for basic drug benefits, and typically the employer offers wraparound 

coverage. Separately, 1.2 million Medicare beneficiaries were in plans offered by 

employers that receive Medicare’s RDS. (If an employer remains the primary payer of 

creditable drug coverage for its retirees, Medicare provides the employer with a tax-free 

subsidy for 28 percent of each eligible individual’s drug costs that fall within a specified 

range of spending.) 

• In 2021, among non-EGWP plans open to any Part D enrollee, 22.9 million (52 percent) 

were in MA–PDs and 20.9 million (48 percent) were in stand-alone PDPs. Over the 2007 to 

2021 period, enrollment in PDPs has grown much more slowly than that in MA–PDs—an 

annual average of 1.3 percent compared with 9.3 percent.
A Data Book: Health care spending and the Medicare program, July 2022 147

Chart 10-8. Characteristics of Part D enrollees, 2021

All 

Medicare Part D

Plan type Subsidy status

PDP MA–PD LIS Non-LIS

Beneficiaries*

(in millions)

66.9 51.6 25.7 25.9 14.3 37.3

Percent of all 

Medicare

100% 77% 38% 39% 21% 56%

Gender

Male 46% 43% 43% 44% 41% 44%

Female 54 57 57 56 59 56

Race/ethnicity

White, non-Hispanic 73 73 80 66 53 81

Black, 

non-Hispanic 11 11 8 14 21 7

Hispanic 9 9 6 13 17 6

Asian 4 4 3 4 6 3

Other 4 3 4 3 4 3

Age (years)**

<65 15 15 14 16 37 7

65–69 27 25 25 26 20 27

70–74 23 23 23 23 15 26

75–79 15 16 16 16 10 18

80+ 20 20 22 19 17 22

Note: PDP (prescription drug plan), MA–PD (Medicare Advantage–Prescription Drug [plan]), LIS (low-income

subsidy). Components may not sum to totals due to rounding. 

* Figures for “All Medicare” and “Part D” include all beneficiaries with at least one month of enrollment in 

the respective program. A beneficiary was classified as “LIS” if that individual received Part D’s LIS at some 

point during the year. For individuals who switched plan types during the year, classification into plan types 

was based on the greater number of months of enrollment.

** Age as of July 2021.

Source: MedPAC analysis of the common Medicare environment file from CMS. 

• In 2021, 51.6 million Medicare beneficiaries (77 percent) were enrolled in Part D at some 

point in the year. Enrollees were split nearly equally between stand-alone PDPs (25.7 

million) and MA–PDs (25.9 million). Just over 14 million enrollees received Part D’s LIS.

• Demographic characteristics of Part D enrollees are generally similar to the overall 

Medicare population, with the exception of gender (Part D enrollees are more likely to be 

female). MA–PD enrollees are more likely to be Hispanic or Black compared with PDP 

enrollees; LIS enrollees are more likely to be female, minority, and disabled beneficiaries 

under age 65 compared with non-LIS enrollees.
148 Prescription drugs

Chart 10-9. Changes in parameters of the Part D defined standard 

benefit over time, 2006–2022

Average 

annual

change

2006 2021 2022 2006–2022

Deductible $250.00 $445.00 $480.00 4.2%

Initial coverage limit 2,250.00 4,130.00 4,430.00 4.3

Annual out-of-pocket threshold 3,600.00 6,550.00 7,050.00 4.3

Total covered drug spending at annual

out-of-pocket threshold

 Enrollees eligible for manufacturers’ 

 coverage-gap discount 5,100.00 10,048.39 10,690.20 4.7

 Other enrollees 5,100.00 9,313.75 10,012.50 4.3

Cost sharing above the annual

out-of-pocket threshold is the greater of

5% coinsurance or these amounts:

Copay for generic/preferred 

multisource drugs 2.00 3.70 3.95 4.3

Copay for other prescription drugs 5.00 9.20 9.85 4.3

Note: Under Part D’s defined standard benefit, the enrollee pays the deductible and then 25 percent of covered 

drug spending (75 percent is paid by the plan) until total covered drug spending reaches the initial 

coverage limit (ICL). Before 2011, enrollees exceeding the ICL were responsible for 100 percent of covered 

drug spending up to the annual out-of-pocket (OOP) threshold. Beginning in 2011, certain enrollees pay 

reduced cost sharing in the coverage gap because manufacturers of brand-name drugs must provide a 

discount. Criteria to be eligible for the coverage-gap discount exclude most enrollees who receive Part D’s 

low-income subsidy as well as enrollees in qualified retiree drug plans. For 2011 and later years, the amount 

of total covered drug spending at the annual OOP threshold depended on the mix of brand-name and 

generic drugs filled during the coverage gap. The amounts shown are for individuals who have no source of 

supplemental coverage with the average mix of brand and generic spending. Cost sharing paid by most 

sources of supplemental coverage does not count toward this threshold. Above the OOP limit, the enrollee 

pays 5 percent coinsurance or the respective copay shown above, whichever is greater.

Source: CMS Office of the Actuary.

• The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 specified a 

defined standard benefit structure for Part D. In 2022, the standard benefit has a $480

deductible, 25 percent coinsurance on covered drugs until the enrollee reaches $4,430 in total 

covered drug spending, and then a coverage gap until OOP spending reaches the annual 

threshold. (The total dollar amount of drug spending at which a beneficiary reaches the OOP 

threshold varies from person to person, depending on the mix of brand-name and generic 

prescriptions filled. CMS estimates that in 2022, a person who does not receive Part D’s lowincome subsidy and has no supplemental coverage would, on average, reach the threshold at 

about $10,690 in total drug spending.) Before 2011, enrollees were responsible for paying the 

full discounted price of drugs filled during the coverage gap. Subsequently, certain enrollees 

pay reduced cost sharing for drugs filled in the coverage gap because manufacturers of 

brand-name drugs must provide a discount. In 2022, the cost sharing for drugs filled during 

the gap phase is about 25 percent for brand-name drugs and generics. Enrollees with drug 

spending that exceeds the annual threshold pay the greater of $3.95 to $9.85 or 5 percent 

coinsurance per prescription.

(Chart continued next page)
A Data Book: Health care spending and the Medicare program, July 2022 149

Chart 10-9. Changes in parameters of the Part D defined standard 

benefit over time, 2006–2022 (continued)

• Most parameters of this defined standard benefit structure have changed over time 

at the same rate as the annual change in average total drug expenses of Medicare 

beneficiaries enrolled in Part D, with cumulative changes of 92 percent to 110 percent

between 2006 and 2022. 

• Within certain limits, sponsoring organizations may offer Part D plans that have the 

same actuarial value as the defined standard benefit but a different benefit structure, 

and most sponsoring organizations do offer such plans. For example, a plan may use 

tiered copayments rather than 25 percent coinsurance or have no deductible but use 

cost-sharing requirements that are equivalent to a rate higher than 25 percent (see 

Chart 10-15). Defined standard benefit plans and plans that are actuarially equivalent 

to the defined standard benefit are both known as “basic benefits.”

• Once a sponsoring organization offers one plan with basic benefits within a 

prescription drug plan region, it may also offer up to two plans with enhanced 

benefits—basic and supplemental coverage combined.

• Under the Bipartisan Budget Act of 2018, manufacturers of brand-name drugs must 

provide a 70 percent discount to eligible enrollees in the coverage gap, enrollees pay 

25 percent cost sharing, and plan sponsors are responsible for covering only 5 

percent of the cost of brand-name drugs. 
150 Prescription drugs

Chart 10-10. Characteristics of stand-alone Medicare PDPs, 2021–2022

2021 2022

Enrollees as of Enrollees as of

Plans February 2021 Plans February 2022

Number Number

Number Percent (in millions) Percent Number Percent (in millions)Percent

Total 996 100% 19.7 100% 766 100% 19.0 100%

Type of benefit

Defined standard 1 <0.5 0.0 0 0 0 0.0 0

Actuarially equivalent 377 38 9.8 50 302 39 8.7 46

Enhanced 618 62 10.0 50 464 61 10.3 54

Type of deductible

Zero 139 14 2.7 14 136 18 2.7 14

Reduced 192 19 4.5 23 90 12 1.2 6

Defined standard* 665 67 12.5 63 540 70 15.1 79

Some formulary tiers not

 subject to a deductible 587 59 12.0 61 405 53 11.9 63

Participate in SSM 308 31 5.4 28 256 33 6.1 32

Note: PDP (prescription drug plan), SSM (Senior Savings Model). The PDPs and enrollment described here 

exclude employer-only plans and plans offered in U.S. territories. “Actuarially equivalent” includes both 

actuarially equivalent standard and basic alternative benefits. “Enhanced” refers to plans with basic plus 

supplemental coverage. Components may not sum to totals due to rounding.

* The defined standard benefit’s deductible was $445 in 2021 and is $480 in 2022.

Source: MedPAC analysis of CMS landscape, premium, and enrollment data.

• Plan sponsors are offering 766 stand-alone PDPs in 2022 compared with 996 in 2021—a

decrease of more than 23 percent due primarily to mergers among plan sponsors and 

requirements that plan sponsors offer no more than one basic and two enhanced PDPs per 

region. Total enrollment in PDPs declined by 3.6 percent to 19.0 million beneficiaries in 2022

from 19.7 million in 2021, as enrollees shifted to MA–PDs (see Chart 10-7).

• For 2022, 61 percent of PDP offerings include enhanced benefits (basic plus supplemental 

coverage), a small decrease from the share in 2021. Enhanced plans have increased their 

share of enrollment, up to 54 percent in 2022 from 50 percent in 2021.

• In 2022, 70 percent of PDPs use the same $480 deductible as in Part D’s defined standard 

benefit compared with 67 percent in 2021. Only 14 percent of PDP enrollees are in plans 

with no deductible. Also in 2022, 53 percent of all PDPs designate certain formulary tiers 

that are not subject to the deductible. If, for example, a PDP used such a designation for 

preferred generic drugs, an enrollee would pay just the plan’s cost sharing for that tier 

rather than the full cost of the prescription up to the amount of the deductible. In 2022, 63

percent of PDP enrollees were in such plans, up from 61 percent in 2021.

• In 2022, 256 PDPs (33 percent) participate in the Center for Medicare and Medicaid 

Innovation’s Part D Senior Savings Model that covers certain insulins at cost sharing of no 

more than $35 per one-month supply. Those participating PDPs enroll 6.1 million 

beneficiaries (32 percent of all PDP enrollees), compared with 5.4 million SSM enrollees in 

2021. 
A Data Book: Health care spending and the Medicare program, July 2022 151

Chart 10-11. Characteristics of general MA–PDs, 2021–2022

2021 2022

Enrollees as of Enrollees as of

Plans February 2021 Plans February 2022

Number Number

Number Percent (in millions) Percent Number Percent (in millions) Percent

Total 3,133 100% 16.9 100% 3,365 100% 18.1 100%

Type of organization

Local HMO 2,007 64 11.3 67 2,052 61 11.7 64

Local PPO 1,072 34 4.9 29 1,261 37 6.0 33

PFFS 21 1 0.0 0 19 1 0.0 0

Regional PPO 33 1 0.6 3 33 1 0.4 2

Type of benefit

Defined standard 31 1 0.1 1 25 1 0.1 0

Actuarially equivalent 66 2 0.1 1 51 2 0.1 1

Enhanced 3,036 97 16.6 99 3,289 98 17.9 99

Type of deductible

Zero 1,582 50 9.1 54 1,900 56 11.3 63

Reduced 1,317 42 7.2 43 1,229 37 6.2 34

Defined standard* 234 7 0.5 3 236 7 0.6 3

Some formulary tiers not

 subject to a deductible 1,497 48 7.6 45 1,415 42 6.7 37

Participate in SSM 1,045 33 8.0 48 1,512 45 10.5 58

Note: MA–PD (Medicare Advantage–Prescription Drug [plan]), HMO (health maintenance organization), PPO 

(preferred provider organization), PFFS (private fee-for-service), SSM (Senior Savings Model). The MA–PDs

and enrollment described here exclude employer-only plans, plans offered in U.S. territories, 1876 cost plans, 

special needs plans, and Part B–only plans. Components may not sum to totals due to rounding.

“Actuarially equivalent” includes both actuarially equivalent standard and basic alternative benefits.

“Enhanced” refers to plans with basic plus supplemental coverage.

* The defined standard benefit’s deductible was $445 in 2021 and is $480 in 2022.

Source: MedPAC analysis of CMS landscape, premium, and enrollment data.

• Sponsors are offering 3,365 MA–PDs in 2022 compared with 3,133 in 2021 (7 percent more). 

Enrollment in MA–PDs grew 7.3 percent from 16.9 million in 2021 to 18.1 million in 2022—a 

deceleration from more than 10 percent growth in the prior two years (data not shown).

• Between 2021 and 2022, the number of drug plans offered by HMOs grew slightly from 2,007 to 

2,052; HMO drug plans remain the dominant type of MA–PD, making up 61 percent of all 

offerings. But local PPOs are growing in popularity. Over the same period, the number of drug 

plans offered by local PPOs increased nearly 18 percent from 1,072 plans to 1,261 plans, and their 

enrollees grew from 4.9 million to 6.0 million. 

• In 2022, 98 percent of MA–PDs have enhanced benefits compared with 54 percent of PDPs (see 

Chart 10-10). In 2022, those MA–PDs enrolled 99 percent of all MA–PD beneficiaries.

• Fifty-six percent of MA–PDs have no deductible in 2022, and those plans attracted 63 percent of 

all MA–PD enrollees. In addition, 37 percent of enrollees are in plans that designate certain costsharing tiers of their formularies that are not subject to a deductible.

• In 2022, 10.5 million MA–PD enrollees (58 percent) participate in the Part D Senior Savings Model 

that covers certain insulins at cost sharing of no more than $35 per one-month supply.
152 Prescription drugs

Chart 10-12. Characteristics of SNPs, 2021–2022

2021 2022

Enrollees as of Enrollees as of

Plans February 2021 Plans February 2022

Number Number

Number Percent (in millions)Percent Number Percent (in millions) Percent

Total 949 100% 3.5 100% 1,130 100% 4.3 100%

Type of SNP

 Chronic condition 200 21 0.4 11 267 24 0.4 9

 Dual eligible 575 61 3.1 87 679 60 3.8 89

Institutionalized 174 18 0.1 2 184 16 0.1 2

Type of benefit

Defined standard 307 32 1.9 53 347 31 2.0 46

Actuarially equivalent 103 11 0.4 11 68 6 0.5 11

Enhanced 539 57 1.3 37 715 63 1.8 43

Type of deductible

Zero 194 20 0.2 6 241 21 0.2 5

Reduced 136 14 0.4 10 140 12 0.4 9

Defined standard* 619 65 3.0 84 749 66 3.7 86

Some formulary tiers not

 subject to a deductible 399 42 1.3 36 377 33 1.4 33

Participate in SSM 133 14 0.2 7 190 17 0.3 6

Note: SNP (special needs plan), HMO (health maintenance organization), PPO (preferred provider organization), 

PFFS (private fee-for-service), SSM (Senior Savings Model). The SNPs and enrollment described here exclude 

plans offered in U.S. territories. Components may not sum to totals due to rounding. “Actuarially equivalent” 

includes both actuarially equivalent standard and basic alternative benefits. “Enhanced” refers to plans with 

basic plus supplemental coverage.

* The defined standard benefit’s deductible was $445 in 2021 and is $480 in 2022.

Source: MedPAC analysis of CMS landscape, premium, and enrollment data.

• The number of SNPs (MA−PDs designed for certain groups of beneficiaries) has grown rapidly; 

in 2022, there are 19 percent more than in 2021. Enrollment in SNPs grew 21.7 percent from 3.5

million in 2021 to 4.3 million in 2022—continuing the trend of double-digit growth that has 

occurred since 2017.

• SNPs for individuals dually eligible for Medicare and Medicaid (D–SNPs) are the most popular 

type. In 2022, 60 percent of SNPs were D–SNPs, and they enrolled 89 percent of all SNP 

enrollees. Other types of SNPs include those for individuals who have certain chronic 

conditions and those for institutionalized beneficiaries.

• Compared with PDPs and MA–PDs, SNPs are more likely to offer a defined standard benefit,

with 31 percent of SNPs offering such coverage in 2022. These plans enrolled 46 percent of 

SNP beneficiaries. While 63 percent of all SNPs provide enhanced coverage in 2022, they 

enrolled just 43 percent of all SNP enrollees.

• Dually eligible beneficiaries automatically receive Part D’s low-income subsidy, which means 

that most recipients pay nominal copayments while the subsidy pays the remainder of their 

plan’s cost sharing. Because nominal copayments limit the effectiveness of a formulary with 

tiered cost sharing, sponsors of D–SNPs more frequently use Part D’s defined standard benefit 

design. For the same reason, D–SNPs are also less likely to have some formulary tiers not 

subject to a deductible and are less likely to participate in the Part D’s Senior Saving Model.
A Data Book: Health care spending and the Medicare program, July 2022 153

Chart 10-13. Change in average Part D premiums, 2018–2022

Average monthly premium weighted by enrollment Cumulative 

change in 

weighted average

premium,

2018 2019 2020 2021 2022 2018–2022

All plans $32 $29 $27 $26 $26 –17%

Basic plans 30 32 30 32 34 14

Enhanced plans

 Basic benefits 26 22 20 18 15 –41

 Supplemental benefits 7 6 6 6 8 15

 Total premium 33 28 26 24 23 –29

All basic coverage 28 25 23 22 21 –25

PDPs 41 40 38 38 40 –3

Basic plans 31 32 30 32 35 14

Enhanced plans

 Basic benefits 42 35 33 29 23 –45

 Supplemental benefits 15 15 15 16 21 42

 Total premium 57 50 48 45 44 –22

All basic coverage 35 33 31 30 28 –19

MA–PDs, including SNPs 18 16 15 15 15 –19

Basic plans 28 28 26 31 33 19

Enhanced plans

 Basic benefits 15 13 12 12 11 –25

 Supplemental benefits 1 1 1 1 1 –41

 Total premium 17 14 13 13 12 –27

All basic coverage 17 15 14 14 14 –18

Average MA–PD buy-down 

of basic premium 16 16 15 19 22 40

Average MA–PD buy-down 

of supplemental benefits 16 17 20 21 26 59

Base beneficiary premium 35.02 33.19 32.74 33.06 33.37 –5

Note: PDP (prescription drug plan), MA–PD (Medicare Advantage–Prescription Drug [plan]), SNP (special needs 

plan). All calculations exclude employer-only groups and plans offered in U.S. territories. In addition, MA–PDs

exclude Part B–only plans, demonstrations, and 1876 cost plans. The MA–PD data reflect the portion of 

Medicare Advantage plans’ total monthly premium attributable to Part D benefits for plans that offer Part D 

coverage, as well as Part C rebate dollars that were used to offset Part D premium costs. The fact that average 

premiums for enhanced MA–PDs are lower than for basic MA–PDs could reflect several factors such as 

changes in enrollment among plan sponsors and counties of operation and differences in the average health 

status of plan enrollees. Cumulative changes were calculated from unrounded data. Components may not 

sum to totals due to rounding.

Source: MedPAC analysis of CMS landscape, plan report, enrollment data, and bid data.

(Chart continued next page)
154 Prescription drugs

Chart 10-13. Change in average Part D premiums, 2018–2022

(continued)

• Part D enrollees can select between plans with basic or enhanced benefits (the latter

combine basic and supplemental coverage). Medicare aims to subsidize 74.5 percent of 

the average cost of basic benefits; enrollees pay premiums for the remaining 25.5 percent 

and all of the cost of any supplemental benefits. (For more about how plan premiums are 

determined, see Part D Payment Basics at https://www.medpac.gov/wpcontent/uploads/2021/11/medpac_payment_basics_21_partd_final_sec.pdf.)

• The overall average premium paid by enrollees for any type of Part D coverage declined 

only slightly in 2022 from 2021, rounding to $26 per month in both years. Over the period

from 2018 to 2022, year-to-year changes in average premiums have varied by type of 

benefit (basic vs. enhanced) and type of plan (PDP vs. MA−PD); the changes have not 

necessarily corresponded to changes observed in the base beneficiary premium.

• Across all basic plans and the basic portion of enhanced plans, the average premium for 

basic benefits fell from $28 in 2018 to $21 per month in 2022, a cumulative decline of 25

percent. This decline occurred despite very rapid growth in spending for Part D’s 

catastrophic phase of the benefit (data not shown). In the catastrophic phase, Medicare 

subsidizes 80 percent of enrollees’ drug spending. (For more information about 

Medicare’s Part D spending, see Chapter 13 of the Commission’s March 2022 report to the 

Congress at https://www.medpac.gov/wpcontent/uploads/2022/03/Mar22_MedPAC_ReportToCongress_Ch13_SEC.pdf.)

• Over the five-year period, the average enrollee premium for basic coverage in PDPs ranged 

between a low of $30 in 2020 and a high of $35 per month in 2022. Between 2018 and 2022,

the average premium for such plans increased by a cumulative 14 percent. Among 

enhanced plans offered by PDPs, the average enrollee premium has ranged from $44 in 

2022 to $57 in 2018. Over the five-year period, the average premium for these plans decreased

by a cumulative 22 percent. Of the $44 average premium in 2022 among enhanced PDPs, 

$23 was for basic benefits and $21 was for supplemental benefits. The portion of enhanced 

premiums attributable to supplemental benefits has grown, while the portion for basic 

benefits has declined.

• The average Part D premium paid by beneficiaries enrolled in MA−PDs with basic 

coverage ranged between a low of $26 in 2020 and a high of $33 per month in 2022. From 

2018 to 2022, the average premium for such plans increased by a cumulative 19 percent. 

The average premium paid by beneficiaries enrolled in MA−PDs offering enhanced 

coverage has decreased from $17 in 2018 to $12 in 2022, a cumulative 27 percent decrease.

MA−PD sponsors typically use a portion of Medicare’s Part C (Medicare Advantage) 

payments to “buy down” the premiums that plan enrollees would otherwise have to pay 

for Part D basic premiums and supplemental benefits. Because of those Part C payment 

“rebates,” in 2022, MA−PD enrollees avoided having to pay $22 per month in basic 

premiums and an additional $26 per month for supplemental coverage, on average.
A Data Book: Health care spending and the Medicare program, July 2022 155

Chart 10-14. Part D benchmarks for LIS premiums and number of 

qualifying PDPs, by region

 

2007 2022

Cumulative change, 

2007–2022

Region State(s)

Benchmark 

amount

Number 

of PDPs

Benchmark 

amount

Number of 

PDPs

Benchmark 

amount

Number of 

PDPs

1 ME, NH $36 18 $31 5 –15% –72%

2 CT, MA, RI, VT 30 15 36 6 20 –60

3 NY 30 13 42 4 42 –69

4 NJ 31 19 37 6 18 –68

5 DC, DE, MD 33 16 37 6 10 –63

6 PA, WV 33 20 41 7 25 –65

7 VA 34 17 35 7 2 –59

8 NC 36 14 36 6 –1 –57

9 SC 35 16 31 5 –11 –69

10 GA 33 16 32 6 –2 –63

11 FL 29 5 34 4 18 –20

12 AL, TN 32 14 33 7 1 –50

13 MI 33 15 31 7 –5 –53

14 OH 31 13 34 4 9 –69

15 IN, KY 36 17 30 6 –17 –65

16 WI 31 19 42 7 35 –63

17 IL 32 17 29 7 –8 –59

18 MO 31 10 33 5 7 –50

19 AR 35 18 27 5 –25 –72

20 MS 36 15 29 6 –20 –60

21 LA 34 8 36 6 6 –25

22 TX 32 12 25 5 –21 –58

23 OK 35 14 31 7 –12 –50

24 KS 33 16 33 5 –2 –69

25

IA, MN, MT, ND, 

NE, SD, WY 33 16 39 6 17 –63

26 NM 26 9 34 6 32 –33

27 CO 29 15 40 5 38 –67

28 AZ 25 8 40 9 63 13

29 NV 23 7 32 5 35 –29

30 OR, WA 31 16 40 7 32 –56

31 ID, UT 34 18 43 7 28 –61

32 CA 23 9 33 5 43 –44

33 HI 27 13 36 5 31 –62

34 AK 35 15 33 4 –6 –73

Note: LIS (low-income subsidy), PDP (prescription drug plan). All calculations exclude plans offered in U.S. territories. 

Source: MedPAC analysis of CMS benchmark amounts and plan report data.

(Chart continued next page)
156 Prescription drugs

Chart 10-14. Part D benchmarks for LIS premiums and number of 

qualifying PDPs, by region (continued)

• Part D’s LIS covers most premiums and cost sharing for enrollees with low incomes and 

assets. The LIS’s coverage of premiums has a dollar limit, known as the benchmark, that 

encourages beneficiaries to enroll in lower-cost PDPs. Beneficiaries who enroll in plans 

with premiums that are less than the benchmark do not pay a premium; those who 

enroll in plans with higher premiums pay the difference. The PDPs for which LIS 

beneficiaries do not pay a premium are known as benchmark plans. When LIS 

beneficiaries do not select a PDP, Medicare automatically enrolls them in benchmark 

plans.

• The LIS benchmark equals the average premium for basic coverage in a region. CMS 

calculates it using a weighted average of both PDP and MA–PD premiums. For plans that 

offer enhanced coverage, CMS uses the portion of the plan’s premium that reflects the 

cost of basic coverage only. For MA–PDs, CMS uses the amount of the premium for basic 

coverage before the plan sponsor has used any Part C (Medicare Advantage) rebates to 

reduce or eliminate the premium. The weight for each plan equals its share of LIS 

enrollment. CMS calculates separate benchmarks for each Part D region and updates 

them annually.

• In 2022, the lowest benchmark premium was $25 in Region 22 (Texas). This region also 

had the lowest benchmark premium in 2020 and 2021. Region 31 (Idaho and Utah) had 

the highest benchmark premium in 2022 at $43 per month.

• The average benchmark premium across regions (not weighted by numbers of enrollees) 

has been relatively stable over the years, rising from $32 per month in 2007 to $35 in 2022, 

an increase of 9 percent over 15 years (data not shown).

• In 2007, the average number of benchmark plans in a region was 14; by 2022, that figure 

had dropped to 6, a decline of 59 percent (data not shown). The number of benchmark 

plans has declined between 2007 and 2022 in every region except 28 (Arizona), which has 

13 percent more plans in 2022 than in 2007. Several factors explain this decline, 

particularly (1) a change in policy in 2010 under which CMS only permitted plan sponsors 

to offer one basic plan (because any additional basic plan would have the same actuarial 

value) and (2) mergers and acquisitions among plan sponsors. The maximum number of 

benchmark plans in any region in 2022 is 9, compared with 20 in 2007.
A Data Book: Health care spending and the Medicare program, July 2022 157

Chart 10-15. In 2022, about one in two listed drugs is subject to some 

utilization management

Benchmark 

PDPs

PDP 

enrollees

MA–PD 

enrollees

5-tier formulary structure* (in percent) 100% 100% 99%

Drugs on formulary as % of all Part D drugs** 69% 71% 77%

Median cost-sharing amounts

 Tier 1: generic drugs $0 $0 $0

 Tier 2: other generic drugs 5 5 10

 Tier 3: preferred brand-name drugs 38 42 47

 Tier 4: nonpreferred drugs 38% 40% $100

 Tier 5: specialty-tier drugs 25% 25% 33%

Drugs with utilization management requirement 

(in percent)

 Prior authorization 31% 31% 27%

 Step therapy 0 1 1

 Quantity limits 38 40 42

 Any utilization management 51 52 54

Note: PDP (prescription drug plan), MA–PD (Medicare Advantage–Prescription Drug [plan]). Figures exclude 

employer-only groups and plans offered in U.S. territories. In addition, MA–PDs exclude demonstration 

programs, special needs plans, and 1876 cost plans. Values reflect the share of listed chemical entities that 

are subject to utilization management, weighted by plan enrollment. “Prior authorization” means that the 

enrollee must get preapproval from the plan before coverage. “Step therapy” refers to a requirement that 

the enrollee try specified drugs before being prescribed other drugs in the same therapeutic category. 

“Quantity limits” means that plans limit the number of doses of a drug available to the enrollee in a given 

time period. Generic drugs placed on Tier 1 are “preferred” (i.e., lowest cost sharing) relative to generic drugs 

placed on higher tiers, including Tier 2.

* Includes formularies with an additional (sixth) tier used for certain types of drugs, such as over-thecounter medications.

** Number of all Part D drugs is based on the counts of unique chemical entities listed on CMS’s formulary 

reference file for the 2022 benefit year.

Source: MedPAC analysis of formularies submitted to CMS.

• Most Part D enrollees choose plans that have a five-tier structure: two generic, one 

preferred brand-name tier, and one nonpreferred drug tier (which may include both 

brand-name and generic drugs), plus a specialty tier. In 2022, nearly all enrollees are

enrolled in plans with this five-tier structure, including plans with an additional (sixth) tier 

for certain types of drugs (for example, vaccines), typically with no cost sharing.

• The number of drugs listed on a plan’s formulary affects a beneficiary’s access to 

medications. In 2022, on average, PDP enrollees have access to 71 percent of all Part D–

covered drug products compared with 77 percent among MA–PD enrollees. That share 

was lower (69 percent) for beneficiaries enrolled in benchmark plans—basic PDPs for 

which LIS enrollees do not have to pay a premium (see Chart 10-14 for information about 

benchmark plans).

(Chart continued next page)
158 Prescription drugs

Chart 10-15. In 2022, about one in two listed drugs is subject to some 

utilization management (continued)

• For enrollees in PDPs with a five-tier structure, the median copay in 2022 is $0 for a 

generic drug on a lower tier and $5 for other generic drugs. The median copay is $42 for a 

preferred brand-name drug and 40 percent coinsurance for a nonpreferred drug. 

Average cost-sharing amounts for benchmark plans are generally similar to other PDPs, 

with somewhat lower cost sharing for brand-name drugs. For MA–PD enrollees, in 2022, 

the median copays for generic drugs are $0 and $10 for the two generic tiers, respectively. 

The median copay is $47 for a preferred brand and $100 for a nonpreferred drug. About 15

percent of MA–PDs use coinsurance (median is 44 percent) for nonpreferred drugs. Both 

PDPs and MA–PDs use coinsurance (25 percent and 33 percent, respectively) for 

specialty-tier drugs.

• In addition to the number of drugs listed on a plan’s formulary, plans’ processes for 

nonformulary exceptions and use of utilization management tools—prior authorization 

(preapproval for coverage), quantity limits (limitations on the number of doses of a 

particular drug covered in a given period), and step therapy requirements (enrollees 

being required to try specified drugs before being prescribed other drugs in the same 

therapeutic category)—can affect access to certain drugs. 

• In 2022, the use of some form of utilization management, on average, increased to 52

percent of drugs listed on a plan’s formulary in stand-alone PDPs and 54 percent in MA–

PDs. Use of utilization management among benchmark plans is similar to that of other 

PDPs. Part D plans typically use quantity limits or prior authorization to manage 

enrollees’ prescription drug use.

• Among the drugs listed on plan formularies, on average, the share that requires prior 

authorization in 2022 increased for both stand-alone PDPs and MA–PDs (to 31 percent 

and 27 percent, respectively) (2021 data not shown). The share with quantity limits 

increased for both types of plans. In 2022, on average, quantity limits apply to 40 percent 

and 42 percent of drugs listed on formularies of stand-alone PDPs and MA–PDs, 

respectively. The share of drugs listed on plan formularies that require the use of step 

therapy remains very low for both stand-alone PDPs and MA–PDs.
A Data Book: Health care spending and the Medicare program, July 2022 159

Chart 10-16. Components of Part D spending growth, 2009–2020

2009 2020

Average 

annual 

growth 

2009–2020

Total gross spending (in billions) $73.7 $198.6 9.4%

 High-cost beneficiaries 29.2 122.8 14.0%

 Lower-cost beneficiaries 44.6 75.8 4.9%

Number of beneficiaries using a Part D drug (in millions) 26.5 46.3 5.2%

 High-cost beneficiaries 2.4 3.8 4.4%

 Lower-cost beneficiaries 24.1 42.4 5.3%

Amount per beneficiary who used Part D drugs

 Gross drug spending per year $2,781 $4,294 4.0%

 Average price per 30-day prescription $55 $75 2.9%

 Number of 30-day prescriptions 50.4 57.0 1.1%

Amount per high-cost beneficiary who used Part D drugs

 Gross drug spending per year $12,294 $32,108 9.1%

 Average price per 30-day prescription $110 $276 8.7%

 Number of 30-day prescriptions 111.4 116.2 0.4%

Amount per lower-cost beneficiary who used Part D drugs

 Gross drug spending per year $1,846 $1,786 –0.3%

 Average price per 30-day prescription $42 $35 –1.7%

 Number of 30-day prescriptions 44.5 51.7 1.4%

Note: “High-cost beneficiaries” refers to individuals who incurred spending high enough to reach the catastrophic 

phase of the benefit. “Gross spending” reflects payments to pharmacies from all payers, including 

beneficiary cost sharing, but does not include rebates and discounts from pharmacies and manufacturers

that are not reflected in prices at the pharmacies. Changes in the average price per prescription reflect both 

price inflation and changes in the mix of drugs used. Components may not sum to totals due to rounding.

Source: MedPAC analysis of Part D prescription drug event data and common Medicare environment file from CMS.

• Between 2009 and 2020, gross spending on drugs under the Part D program grew by an 

annual average rate of 9.4 percent. The annual growth in spending was considerably 

higher (14 percent) among high-cost beneficiaries (individuals who incurred spending 

high enough to reach the catastrophic phase of the benefit) compared with 4.9 percent

for lower-cost beneficiaries. 

• During the 2009 through 2020 period, the number of beneficiaries who used Part D 

drugs grew by an annual average rate of 5.2 percent. The number of high-cost 

beneficiaries grew more slowly (4.4 percent) compared with lower cost beneficiaries (5.3 

percent). The slower growth in the number of high-cost beneficiaries reflects the 25 

percent increase ($1,250) in the out-of-pocket (OOP) threshold between 2019 and 2020. As 

a result, the number of high-cost enrollees fell by more than 11 percent from 4.3 million to 

3.8 million (data not shown). (For more information about the impact of the increase in 

the OOP threshold in 2020, see Chapter 13 of the Commission’s March 2022 report to the 

Congress at https://www.medpac.gov/wpcontent/uploads/2022/03/Mar22_MedPAC_ReportToCongress_Ch13_SEC.pdf.)

(Chart continued next page)
160 Prescription drugs

Chart 10-16. Components of Part D spending growth, 2009–2020 

(continued)

• The average price per 30-day prescription covered under Part D rose from $55 in 2009 to 

$75 in 2020. Overall, growth in price per prescription accounted for more than two-thirds

(2.9 percentage points) of the 4.0 percent average annual growth in spending per 

beneficiary among beneficiaries who used Part D drugs. Growth in prices per prescription 

reflects increases in the prices of existing drugs and changes in the mix of drugs, 

including the adoption of new, higher-priced drugs.

• The average annual growth rate in overall spending per beneficiary reflects two distinct 

patterns of price and spending growth, one for high-cost beneficiaries and another for

lower-cost beneficiaries. Among high-cost beneficiaries, annual growth in prices (8.7

percent) accounted for nearly all of the spending growth (9.1 percent) during this period.

In contrast, among lower-cost beneficiaries, the average annual decrease in prices (–1.7

percent) resulted in an overall decrease in spending (–0.3 percent annually), despite an

increase in the number of prescriptions filled during the same period.
A Data Book: Health care spending and the Medicare program, July 2022 161

Chart 10-17. Distribution of annual gross Part D drug spending for 

EGWP and other plan enrollees by percentile, 2020

Enrollees in all plans other than EGWPs

EGWP

enrollees All LIS Non-LIS

Number of beneficiaries, in millions 7.6 42.5 14.1 28.4

 Share of beneficiaries with no drug use 5% 8% 9% 8%

Mean annual gross drug spending $4,391 $3,889 $6,565 $2,556

Distribution of annual gross 

drug spending, by percentile

 10th $41 $12 $9 $13

 30th 299 215 374 181

 50th 791 590 1,409 447

 70th 2,767 2,003 4,943 1,162

 90th 8,975 8,050 15,221 5,646

 95th 14,722 14,414 26,409 8,170

 98th 31,332 30,783 50,430 15,331

 99th 65,424 53,884 78,267 28,815

Note: EGWP (employer group waiver plan), LIS (low-income subsidy). Figures include all beneficiaries with at least 

one month of enrollment. A beneficiary was classified as “LIS” if that individual received Part D’s LIS at some 

point during the year. “Gross drug spending” reflects payments to pharmacies from all payers, including 

beneficiary cost sharing, but does not include rebates and discounts from pharmacies and manufacturers

that are not reflected in prices at the pharmacies.

Source: MedPAC analysis of Medicare Part D prescription drug event data and the common Medicare environment 

file from CMS. 

• In 2020, annual gross Part D spending averaged $4,391 among beneficiaries in Part D plans 

operated by employers (EGWPs) compared with $3,889 among beneficiaries in other plans.

EGWPs have distinct characteristics from other Part D plans. For example, in 2020, only 2 

percent of EGWP enrollees received Part D’s LIS, compared with 33 percent of enrollees in 

other plans (data not shown). EGWPs also tend to offer more generous benefits that 

supplement the standard Part D benefit (see Chart 10-7 for more information on EGWP plans).

Among beneficiaries enrolled in non-EGWPs, 8 percent did not have any Part D claims. That 

share was 5 percent among beneficiaries enrolled in EGWPs.

• Based on annual gross spending, about 9 percent of EGWP enrollees and 8 percent of nonEGWP enrollees would have reached the catastrophic phase of the benefit (at about $9,000 

and $9,700 in gross spending for beneficiaries with and without the LIS, respectively).

However, the actual shares of beneficiaries who reach the catastrophic phase of the benefit 

are lower than the numbers estimated using gross drug spending because, under Part D’s 

“true out-of-pocket (OOP)” provision, supplemental benefits that reduce an enrollee’s OOP 

costs delay the point at which the individual reaches the OOP threshold.

• Among beneficiaries enrolled in plans other than EGWPs, beneficiaries who received the LIS 

were more likely to incur higher gross spending (with average annual spending of $6,565) 

compared with beneficiaries without the LIS ($2,556). About 10 percent of beneficiaries with 

the LIS had annual gross spending of more than $15,000 ($15,221 at the 90th percentile of the 

distribution) compared with just under 2 percent among beneficiaries without the LIS ($15,331 

at the 98th percentile of the distribution).
162 Prescription drugs

Chart 10-18. Part D spending and use per enrollee, 2020

Part D

Plan type LIS status

PDP MA–PD LIS Non-LIS

Total gross spending (billions)* $198.6 $113.6 $85.0 $92.8 $105.8

 Above OOP threshold (billions) 83.1 48.6 34.5 47.3 35.9

 Share above OOP threshold 42% 43% 41% 51% 34%

Total number of prescriptions 

(millions) 2,638 1,400 1,238 907 1,731

Average spending per prescription $75 $81 $69 $102 $61

Per enrollee per month

Total spending $349 $376 $318 $588 $257

OOP spending 31 36 24 5 40

Manufacturer gap discount 22 26 18 N/A 31

Plan liability 230 243 215 396 166

Low-income cost-sharing subsidy 52 53 50 186 N/A

Number of prescriptions 4.6 4.6 4.6 5.8 4.2

Note: PDP (prescription drug plan), MA–PD (Medicare Advantage–Prescription Drug [plan]), LIS (low-income

subsidy), OOP (out-of-pocket), N/A (not applicable). “Total gross spending” reflects payments from all payers, 

including beneficiaries (cost sharing) but does not include rebates and discounts from pharmacies and 

manufacturers that are not reflected in prices at the pharmacies. Part D prescription drug event (PDE) records 

are classified into plan types based on the contract identification on each record. For purposes of classifying 

the PDE records by LIS status, monthly LIS eligibility information in Part D’s denominator file was used. 

Estimates are sensitive to the method used to classify PDE records to each plan type and LIS status. “Plan 

liability” includes plan payments for drugs covered by both basic and supplemental (enhanced) benefits. In 

addition to the major categories shown in the chart, total spending includes amounts paid by other relatively 

minor payers such as group health plans, workers’ compensation, and charities. “Number of prescriptions” is 

standardized to a 30-day supply. Components may not sum to totals due to rounding.

* “Total gross spending” includes $12.6 billion in manufacturer discounts for brand-name drugs and biologics

filled by non-LIS enrollees during the coverage gap.

Source: MedPAC analysis of Medicare Part D PDE data and common Medicare environment file from CMS. 

• In 2020, gross spending on drugs for the Part D program totaled $198.6 billion, with about 57 

percent ($113.6 billion) accounted for by Medicare beneficiaries enrolled in stand-alone PDPs. 

Part D enrollees receiving the LIS accounted for about 47 percent ($92.8 billion) of the total. 

Manufacturer discounts for brand-name drugs filled by non-LIS enrollees while they were in the 

coverage gap accounted for 6.3 percent of the total, or 11.9 percent of the gross spending by 

non-LIS enrollees (up from 5.5 percent and 10.5 percent, respectively, in 2019; data not shown).

• Overall, 42 percent of gross spending was incurred after a beneficiary reached the annual OOP 

threshold ($6,350 in 2020). That share was higher among those who received the LIS (51 percent) 

compared with other enrollees (34 percent).

• The number of prescriptions filled by Part D enrollees totaled over 2.6 billion, with 53 percent (1.4

billion) accounted for by PDP enrollees. The 28 percent of enrollees who received the LIS 

accounted for about 34 percent (907 million) of the total number of prescriptions filled.

(Chart continued next page)
A Data Book: Health care spending and the Medicare program, July 2022 163

Chart 10-18. Part D spending and use per enrollee, 2020 (continued)

• In 2020, Part D enrollees filled 4.6 prescriptions at $349 per month on average, an increase from 

$333 per month (for 4.6 prescriptions) in 2019 (2019 data not shown). The average monthly plan 

liability for PDP enrollees ($243) was considerably higher than that of MA–PD enrollees ($215), 

who were more likely to receive supplemental benefits under enhanced benefit plans (see Chart 

10-11). The average monthly OOP spending was smaller for MA–PD enrollees than PDP enrollees 

($24 vs. $36, respectively). The difference in average monthly low-income cost-sharing subsidy 

between PDP enrollees MA–PD enrollees narrowed in 2020 to just $3 ($53 vs. $50), a decrease 

from a difference of about $7 ($50 vs. $43) in 2019 (2019 data not shown).

• Average monthly spending per LIS enrollee ($588) was more than double that of a non-LIS 

enrollee ($257), and the average number of prescriptions filled per month by an LIS enrollee was 

5.8 compared with 4.2 for a non-LIS enrollee. LIS enrollees had much lower monthly OOP 

spending, on average, than non-LIS enrollees ($5 vs. $40, respectively). Part D’s LIS pays for most 

of the cost sharing for LIS enrollees, averaging $186 per month in 2020.
164 Prescription drugs

Chart 10-19. Trends in Part D spending and use per enrollee per month, 

2007–2020

Note: PDP (prescription drug plan), MA–PD (Medicare Advantage–Prescription Drug [plan]), LIS (low-income

subsidy). “Spending” (gross) reflects payments from all payers, including beneficiaries (cost sharing) but 

does not include rebates and discounts from pharmacies and manufacturers that are not reflected in prices 

at the pharmacies. Part D prescription drug event (PDE) records are classified into plan types based on the 

contract identification on each record. For purposes of classifying the PDE records by LIS status, monthly 

LIS eligibility information in Part D’s denominator file was used. Figures are sensitive to the method used to 

classify PDE records to each plan type and LIS status.

Source: MedPAC analysis of Medicare Part D PDE data and Part D denominator file from CMS. 

• Between 2007 and 2020, average per capita spending per month for Part D–covered 

drugs grew from $212 to $349, an average growth rate of 3.9 percent annually, or about 64 

percent cumulatively. The rate of growth in average per capita spending more than 

doubled after 2013, in part reflecting the introduction of new hepatitis C treatments in 

2014 and other new expensive therapies in subsequent years.

• Between 2007 and 2020, monthly per capita spending for LIS enrollees grew faster than 

that for non-LIS enrollees, increasing from $301 to $588 (a cumulative growth of over 95 

percent) compared with an increase from $156 to $257 for non-LIS enrollees (a cumulative 

growth of 65 percent). The number of prescriptions filled by both LIS and non-LIS

enrollees grew by just under 2 percent annually during this period (data not shown).

• The growth in monthly per capita drug spending among MA−PD enrollees exceeded that 

of PDP enrollees during the 2007 to 2020 period (annual average growth of 5.9 percent 

and 3.6 percent, respectively). The average per capita spending for MA−PD enrollees 

continued to be lower than that of PDP enrollees (by $58 per month in 2020); however, 

that difference has been declining since 2014.

$212

$242

$349

$239

$275

$376

$151

$185

$318

$301

$377

$588

$156

$179

$257

$0

$100

$200

$300

$400

$500

$600

$700

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Gross Part D spending per enrollee per month

All Part D

PDP

MA-PD

LIS

Non-LIS
A Data Book: Health care spending and the Medicare program, July 2022 165

Chart 10-20. Top 15 therapeutic classes of drugs covered under Part D, 

by spending, 2020 

Gross spending

Negotiated 

rebates as a 

share of gross 

spending

Coveragegap 

discount

Billions Percent (billions)

Diabetic therapy $34.5 17.4% ≥50% $4.2

Antineoplastics 25.6 12.9 <10% 0.7

Anticoagulants 15.5 7.8 40% to 49% 2.5

Asthma/COPD therapy agents 14.6 7.4 40% to 49% 1.3

Disease-modifying anti-rheumatoid drugs 9.1 4.6 20% to 29% 0.3

Antipsychotics (neuroleptics) 7.1 3.6 10% to 19% 0.1

Antiretrovirals 7.0 3.5 <10% 0.2

Antihypertensive therapy agents 6.4 3.2 <10% 0.3

Ophthalmic agents 5.3 2.7 30% to 39% 0.4

multiple sclerosis agents 5.1 2.6 <10% 0.1

Antihyperlipidemics 4.7 2.4 10% to 19% 0.2

Anticonvulsants 4.1 2.1 <10% 0.1

Antidepressants 2.9 1.4 <10% 0.1

Analgesics (opioid) 2.7 1.3 10% to 19% 0.1

Dermatological (antipsoriatics) 2.6 1.3 <10% 0.1

Subtotal, top 15 drug classes 147.2 74.1 25% 10.7

Total all drug classes 198.6 100.0 22% 12.6

Note: COPD (chronic obstructive pulmonary disease). “Gross spending” reflects payments from all payers, 

including beneficiaries (cost sharing) but does not include rebates and discounts from pharmacies and 

manufacturers that are not reflected in prices at the pharmacies. Therapeutic classification is based on the 

First DataBank Enhanced Therapeutic Classification System. Components may not sum to totals due to 

rounding. 

Source: MedPAC analysis of Medicare Part D prescription drug event and direct and indirect remuneration data 

from CMS.

• In 2020, the top 15 therapeutic classes by spending accounted for more than 74 percent 

of the $198.6 billion spent on prescription drugs covered by Part D plans. 

• In 2020, total manufacturer rebates as a share of gross spending ranged from less than 10 

percent to more than 50 percent. Some of that variation likely reflects the degree of 

competition within each therapeutic class. Overall, rebates for the top 15 classes averaged

25 percent of gross spending, higher than the average of 22 percent for all Part D 

spending. Rebates were the highest (greater than or equal to 50 percent) for diabetic 

therapies, which accounted for about 17 percent of total gross spending in Part D. 

• In addition to negotiated rebates, manufacturers must provide discounts for brand-name 

drugs and biologics filled by non-LIS enrollees when they fill prescriptions in the 

coverage-gap phase of the benefit. In 2020, these top 15 classes accounted for 85 percent 

($10.7 billion) of all coverage-gap discounts. Diabetic therapies alone accounted for 

roughly one-third of all coverage-gap discounts.
166 Prescription drugs

Chart 10-21. Despite high generic use, brand-name drugs accounted 

for the majority of spending in the top 15 therapeutic 

classes by spending, 2020 

Prescriptions* Generic 

dispensing 

rate

Brand 

share of 

gross 

spending

LIS share of 

Millions Percent prescriptions

Diabetic therapy 184.6 7.0% 63% 97% 31%

Antineoplastics 14.6 0.6 87 95 21

Anticoagulants 52.0 2.0 30 98 26

Asthma/COPD therapy agents 80.3 3.0 47 92 44

Disease modifying 

anti-rheumatoid drugs 2.6 0.1 35 99 48

Antipsychotics (neuroleptics) 34.1 1.3 90 80 69

Antiretrovirals 3.3 0.1 16 98 70

Antihypertensive therapy agents 270.6 10.3 99 78 19

Ophthalmic agents 57.1 2.2 77 79 28

Multiple sclerosis agents 0.8 <0.1 24 93 51

Antihyperlipidemics 294.3 11.2 98 39 19

Anticonvulsants 102.2 3.9 98 49 46

Antidepressants 169.5 6.4 99 26 32

Analgesics (opioid) 63.9 2.4 97 43 44

Dermatological (antipsoriatics) 0.6 <0.1 45 97 56

Subtotal, top 15 drug classes 1,330.7 50.5 86 89 29

Total, all drug classes 2,637.1 100.0 90 80 28

Note: COPD (chronic obstructive pulmonary disease). “Gross spending” reflects payments from all payers, including 

beneficiaries (cost sharing) but does not include rebates and discounts from pharmacies and manufacturers 

that are not reflected in prices at the pharmacies. Therapeutic classification is based on the First DataBank 

Enhanced Therapeutic Classification System. Components may not sum to totals due to rounding.

Source: MedPAC analysis of Medicare Part D prescription drug event and direct and indirect remuneration data 

from CMS.

• Prescriptions filled by Part D enrollees in the top 15 therapeutic classes by spending in 

2020 (from Chart 10-20) totaled more than 1.3 billion prescriptions, accounting for about 

50 percent of all prescriptions filled in Part D. While 86 percent of these prescriptions 

were for generic drugs, brand-name products accounted for 89 percent of the gross 

spending for these products in 2020.

• In 2020, LIS beneficiaries filled 29 percent of total prescriptions for products in these 15 

classes, roughly equal to their share of prescriptions among all Part D drugs (28 percent).

Nevertheless, LIS enrollees accounted for a disproportionate share of prescriptions in a 

few classes such as antiretrovirals (70 percent) and antipsychotics (69 percent).

• Even when generic drugs are widely used by Part D beneficiaries, for some therapeutic 

classes, brand-name drugs may still account for the vast majority of spending. For 

example, in 2020, generic drugs accounted for 87 percent of prescriptions for 

antineoplastics, but brand-name drugs accounted for 95 percent of gross spending for 

that class.
A Data Book: Health care spending and the Medicare program, July 2022 167

Chart 10-22. Price growth for Part D–covered drugs, 2010–2020

Note: Q1 (first quarter), Q4 (fourth quarter). Unless noted otherwise, Part D indexes reflect total amounts paid to 

pharmacies and do not reflect retrospective rebates or discounts from manufacturers and pharmacies. 

Source: Acumen LLC analysis for MedPAC.

• Measured by individual national drug codes, prices of drugs and biologics covered under 

Part D rose 68 percent cumulatively between 2010 and 2020 (an index of 1.68). (Prices 

reflect total amounts paid to pharmacies and do not reflect retrospective rebates or 

discounts from manufacturers and pharmacies.)

• Overall, between 2010 and 2020, prices of generic drugs covered under Part D decreased 

to 33 percent of the average price observed at the beginning of 2010. As a result, when

measured by a price index that takes generic substitution into account, Part D prices

have remained relatively flat since 2016, with cumulative increase in prices at the end of 

2020 at 10 percent above the prices at the beginning of 2010 (an index of 1.10). New and 

increased generic competition for selected therapeutic classes, such as anticonvulsants, 

antineoplastics, and drugs for multiple sclerosis, played a key role in slowing the growth 

in overall Part D prices during this period.

• Between 2010 and 2020, prices for all single-source, brand-name drugs (drugs with no 

generic substitutes) grew by a cumulative 163 percent (an index value of 2.63), compared 

with 106 percent (an index value of 2.06) for prices net of manufacturer rebates.

All Part D–covered drugs

1.68

All Part D–covered 

drugs accounting for 

generic substitution

1.10

Single-source 

brand-name drugs

2.63

Generic drugs 0.33

Single-source 

brand-name drugs, 

net of manufacturer 

rebates

2.06

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

Q1

2018

Q1

2019

Q1

2020

Q1

Chain-weighted Fisher price index

2020

Q4
168 Prescription drugs

Chart 10-23. Price growth for therapeutic classes with protected status 

under Part D, 2010–2020

Note: Price indexes reflect total amounts paid to pharmacies and do not reflect retrospective rebates or discounts 

from manufacturers and pharmacies.

Source: Acumen LLC analysis for MedPAC.

• Medicare Part D designates six “protected classes" for which plan sponsors must include 

“all or substantially all” available drugs on their formularies: antidepressants, 

antipsychotics, anticonvulsants, immunosuppressants for treatment of transplant 

rejection, antiretrovirals, and antineoplastics. This policy provides patients with broader 

access to products, but it may also give manufacturers greater market power to raise 

prices for drugs already on the market or set high prices for new drugs. However, there 

are considerable differences in the competitive pressures within each drug class that can 

affect pricing trends. Here we illustrate that variation with three of the protected classes 

that fall within Part D's top 15 therapeutic classes by gross spending (see Chart 10-20). 

• Measured by individual national drug codes, between 2010 and 2020, cumulative price 

growth for single-source brand-name drugs in the three protected classes ranged from 

88 percent (an index of 1.88) for antiretroviral therapies and 188 percent for antipsychotics 

(an index of 2.88). (Prices reflect total amounts paid to pharmacies and do not reflect 

retrospective rebates or discounts from manufacturers and pharmacies.) 

• The availability of generics varies considerably across the protected classes, and 

widespread use of generics can influence overall price growth. Antipsychotics are one 

such class. Despite 188 percent growth over the 10-year period in the price index for 

brand-name antipsychotics, an index for that class that accounts for generic substitution 

fell to roughly half of its 2010 level (index value of 0.51). 

(Chart continued next page)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-10 May-13 Sep-16 Jan-20

Chain-weighted Fisher price index

Antipsychotic

2.88

Antineoplastic

Antiretroviral

2.53

1.88

Single-source brand-name drugs 

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-10 May-13 Sep-16 Jan-20

Chain-weighted Fisher price index

Antipsychotic

Antineoplastic

Antiretroviral

1.64

1.60

0.51

Accounting for generic substitution 
A Data Book: Health care spending and the Medicare program, July 2022 169

Chart 10-23. Price growth for therapeutic classes with protected status 

under Part D, 2010–2020 (continued)

• However, in other protected classes such as antineoplastics, the availability of generics 

does not necessarily constrain price growth. Despite a generic dispensing rate (GDR) of 

87 percent, the price index for antineoplastics that accounts for generic substitution grew 

by 64 percent (an index value of 1.64), similar to growth in prices of antiretrovirals (1.60), 

which consists mostly of brand-name drugs (a GDR of just 16 percent) (see Chart 10-21 for 

GDR data). Generic use may not constrain overall prices for antineoplastic products 

because patients may use a generic product initially and then move to other brand-name 

products if their disease progresses, or the patient may take a combination of generic 

and brand-name products.
170 Prescription drugs

Chart 10-24. Price growth for biologics covered under Part D, 

2010–2020

Note: Q1 (first quarter), Q4 (fourth quarter). Part D biologics indexes were constructed using total amounts paid to 

pharmacies with and without retrospective rebates and discounts from manufacturers. The indexes do not 

reflect retrospective fees and discounts from pharmacies. 

Source: Acumen LLC analysis for MedPAC.

• Measured by individual national drug codes, prices of biologics (without retrospective 

rebates, fees, or discounts) covered under Part D rose 172 percent cumulatively between 

2010 and 2020 (an index of 2.72). This increase is similar to the growth in prices for all 

single-source drugs and biologics (163 percent, or an index value of 2.63). (See Chart 10-22 

for index measuring prices of all single-source drugs and biologics.)

• In comparison, between 2010 and 2020, prices of biologics net of retrospective rebates 

and discounts from manufacturers grew by a cumulative 67 percent (an index value of 

1.67). The effect of manufacturer rebates on the prices of biologics was greater than that 

for all single-source drugs and biologics, which grew by a cumulative 106 percent (an 

index value of 2.06) for prices net of manufacturer rebates. (See Chart 10-22 for index 

measuring prices of all single-source drugs (including biologics) net of manufacturer 

rebates.)

• Prices of biologics are highly influenced by prices of insulins. In 2020, insulins accounted 

for about 40 percent of total gross spending on biologics. Insulins and other antidiabetic 

therapies had some of the highest rebates, totaling more than 50 percent of gross 

spending for therapies in that class (see Chart 10-20).

Part D biologics 2.72

Part D biologics, net of 

manufacturer rebates

1.67

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q1

2017

Q1

2018

Q1

2019

Q1

2020

Q1

Chain-weighted Fisher price index

2020

Q4
A Data Book: Health care spending and the Medicare program, July 2022 171

Chart 10-25. Potential impact of biosimilars and certain follow-on 

biologics on Part B and Part D spending 

Number of 

biosimilars 2020

Brand name

Earliest 

biosimilar 

launch date 

(expected) Approved

In 

pipeline

Part B 

spending on 

originator 

product 

(billions)

Part D 

spending on 

originator 

product 

(billions)

Total Part B 

and Part D 

spending on 

biosimilars 

(billions)

Products with an approved biosimilar on the market

Neupogen 2015 3 1–3 $0.02 $0.02 $0.08

Remicade 2016 4 1–3 0.66 0.10 0.13

Procrit/Epogen 2018 1 1–3 0.10 0.16 0.09

Neulasta 2018 5 4–6 0.90 0.07 0.33

Humalog 2018 2* 1–3 ** 1.66 0.21

Rituxan 2019 3 4–6 1.30 0.05 0.27

Avastin 2019 3 7+ 0.68 0.02 0.34

Herceptin 2019 5 4–6 0.46 0.01 0.22

Lantus 2020 3* 1–3 - 3.72 0.69

Novolog 2020 1* 1–3 - 2.44 0.04

Novolog Mix 2020 1* 0 - 0.53 0.01

 Subtotal 4.12 8.80 2.42

Products with a biosimilar approved but not yet on the market

Lucentis 2022 1 1–3 1.11 0.00 -

Humira (2023) 7 4–6 - 4.17 -

Enbrel (2028) 2 1–3 - 2.15 -

 Subtotal 1.11 6.32 -

Products with a biosimilar in development but none approved

Stelara 7+ 0.30 1.11 -

Toujeo 1–3 - 0.78 -

Soliris 1–3 0.61 0.21 -

Cimzia 1–3 0.51 0.20 -

Actemra 4–6 0.28 0.18 -

Simponi 1–3 0.36 0.16 -

Xolair 4–6 0.40 0.15 -

Tysabri 1–3 0.22 0.04 -

Eylea 7+ 3.01 0.03 -

Prolia/Xgeva 7+ 1.63 - - 

 Subtotal 7.32 2.85 - 

TOTAL 41 87 12.55 17.97 2.42 

Note: Products included in this analysis include those approved or known to be in development as of May 2022. 

* Authorized generics and follow-on insulins are included as biosimilars for purposes of this analysis. While 

the biosimilar approval pathway was created in 2010 following passage of the Biologics Price Competition 

and Innovation Act (included in the Affordable Care Act of 2010), biosimilar insulin products were unable to 

use this pathway until March 2020. For a list of biosimilars currently on the market and available under Part 

B, refer to Chart 10-5. Others included in this analysis: Avastin: Alymsys; Enbrel: Erelzi, Eticovo; Humalog: 

Admelog, insulin lispro AG; Humira: Amjevita, Cyltezo (INT), Hyrimoz, Hadlima, Abrilada, Hulio, Yusimry; 

Lantus: Basaglar, Semglee (INT), Rezvoglar; Lucentis: Byooviz; Neulasta: Fylnetra; Neupogen: Releuko; 

Novolog: insulin aspart AG; Novolog Mix: insulin aspart protamine AG.

** Not able to distinguish spending on Humalog from other insulin lispro products in Part B.

Source: MedPAC analysis of CMS Drug Spending Dashboard.

(Chart continued next page)
172 Prescription drugs

Chart 10-25. Potential impact of biosimilars and certain follow-on 

biologics on Part B and Part D spending (continued)

• The first biosimilar product licensed under the Public Health Service Act was launched in 

the U.S. in 2015. As of May 2022, the Food and Drug Administration (FDA) has approved 41

biological products to compete with innovator biologics (36 biosimilars and 5 follow-on or 

authorized generic insulin products). As of May 2022, manufacturers have launched 21 

biosimilars in the U.S. and another 88 are in development. 

• While most of the biosimilars launched so far have been for top-selling products primarily 

covered under Part B (including Rituxan, Neulasta, Remicade, and Avastin), several 

recently approved biosimilars are for originator products with some of the highest 

spending in Part D, including Humira, Lantus, and Enbrel. Humira and Lantus are the first 

two products for which a biosimilar has been designated as interchangeable, which in 

some states allows a pharmacist to substitute it for the originator product without the 

prescribing doctor’s approval. This option may help increase the biosimilar’s market share 

more rapidly. 

• In 2020, Medicare spent $13.1 billion ($4.12 billion in Part B and $8.80 billion in Part D) on 

originator drugs for which biosimilars were available. Medicare spent another $7.4 billion 

($1.11 billion in Part B and $6.32 billion in Part D) on drugs for which the FDA has approved 

biosimilars but manufacturers have not yet launched their products on the market. 

Spending on products for which biosimilars are in development but none are yet 

approved equaled $10.2 billion ($7.32 billion in Part B and $2.85 billion in Part D). In 2020, 

these products combined accounted for 14 percent of all Medicare spending for 

separately payable drugs in Part B and Part D.

• In 2020, $2.42 billion was spent on biosimilars, with 57 percent of that spending (data not 

shown) occurring in Part B.
 

11

0

S E C T I O N

Other services

Dialysis

Hospice

Clinical laboratory

A Data Book: Health care spending and the Medicare program, July 2022 175

Chart 11-1. Growth in the number of dialysis facilities slowed in 2020;

most facilities are for profit and freestanding 

Average annual percent change

2020 2015–2019 2019–2020

Total number of:

Dialysis facilities 7,800 4% 1%

Hemodialysis stations 135,900 4 1

Mean number of 

hemodialysis stations per facility 18 –0.1 –0.1

Share of total facilities

Hospital based 5% –3 –2

Freestanding 95 4 2

Urban 84 5 2

Rural, micropolitan 10 2 –1

Rural, adjacent to urban 4 2 –3

Rural, not adjacent to urban 2 0.4 –2

Frontier 0.4 1 –3

For profit 89 4 2

Nonprofit 11 2 -1

Note: “Nonprofit” includes facilities designated as either nonprofit or government. “Average annual percent 

change” is based on comparing 2015, 2019, and 2020 end-of-year files. Provider location reflects the county 

where the provider is located, in one of four categories (urban, micropolitan, rural adjacent to urban, and

rural nonadjacent to urban) based on an aggregation of the Urban Influence Codes. Frontier counties have 

six or fewer people per square mile. Components may not sum to totals due to rounding.

Source: Compiled by MedPAC from the institutional outpatient claims files and the Dialysis Compare files from CMS.

• Between 2015 and 2019, the number of facilities increased, on average, 4 percent per year, while 

between 2019 and 2020, the number of facilities increased on average by 1 percent. Likewise, 

facilities’ capacity to provide care—as measured by hemodialysis treatment stations—grew more 

slowly between 2019 and 2020 compared with growth from 2015 through 2019 (1 percent per year 

vs. 4 percent per year, respectively).

• The recent decline in the growth of the total number of dialysis facilities and in-center capacity is 

likely attributable in part to coronavirus pandemic–related restrictions that may have affected the 

development of new facilities in 2020. The decline may also be linked to the growing trend toward 

home dialysis under the end-stage renal disease prospective payment system and the Center for 

Medicare & Medicaid Innovation’s new model that aims to encourage greater use of home dialysis.

• The decline in rural capacity between 2019 and 2020 is also linked to facility size. Rural facilities are, 

on average, smaller than urban facilities. Also, compared with facilities that treated beneficiaries in 

2019 and 2020, facilities that closed in 2019 were more likely to be small (as measured by the 

number of in-center hemodialysis treatment stations) (data not shown). The Commission’s 

recommendation to replace the current low-volume payment adjustment and rural adjustment 

with a single low-volume and isolated adjustment would better protect isolated low-volume rural 

facilities that are necessary for beneficiary access.

• Since 2015, the number of freestanding and for-profit facilities increased, while hospital-based 

facilities decreased. Between 2015 and 2019, the number of freestanding and for-profit facilities 

each increased by 4 percent per year. The average size of a facility has remained relatively constant, 

averaging nearly 18 dialysis treatment stations per facility.
176 Other services

Chart 11-2. Medicare spending for outpatient dialysis services 

furnished by freestanding and hospital-based dialysis 

facilities, 2019 and 2020

Note: ESRD (end-stage renal disease).

Source: Compiled by MedPAC from the institutional outpatient claims files from CMS. 

• In 2020, total spending for dialysis, dialysis drugs, and ESRD-related clinical laboratory 

tests was $12.3 billion. Medicare paid all facilities under a prospective payment system 

(PPS) that includes in the payment bundle certain dialysis drugs and ESRD-related 

clinical laboratory tests that were separately paid before 2011. 

• Six percent of total spending in 2020 consisted of payments for two calcimimetics paid 

under the ESRD PPS’s transitional drug add-on payment adjustment (TDAPA) (data not 

shown); this policy pays providers according to the number of units of a drug and the 

drug’s average sales price (ASP).

• Between 2019 and 2020, total ESRD expenditures decreased by 4 percent. The spending

decline is partly attributable to the coronavirus pandemic, which resulted in slowing the 

initiation of dialysis by new patients and in excess mortality. Sadly, patients with ESRD are 

at increased risk for COVID-19-associated morbidity and mortality. Between 2019 and 

2020, the number of FFS dialysis beneficiaries and the total number of treatments each 

declined by 3 percent (data not shown). A change in Medicare’s TDAPA in 2020, from 106 

percent of ASP to ASP with no percentage add-on, also contributed to the decline in 

spending. 

• Freestanding dialysis facilities treated most dialysis beneficiaries and accounted for 96

percent of expenditures in 2019 and 2020.

0

2

4

6

8

10

12

14

2019 2020

Spending on dialysis, dialysis drugs, 

and other ESRD-related services 

(in billions of dollars)

Freestanding Hospital-based

$12.9 $12.3

4%

4%

96% 96%
A Data Book: Health care spending and the Medicare program, July 2022 177

Chart 11-3. The ESRD population is growing, and most patients with 

ESRD undergo dialysis

2009 2015 2019

Patients Patients Patients

(thousands) Percent (thousands) Percent (thousands) Percent

Total 573.6 100% 714.4 100% 809.1 100%

Dialysis 403.0 70 507.9 71 569.7 70

In-center hemodialysis 365.8 64 446.8 63 492.1 61

Home hemodialysis* 5.3 1 8.7 1 12.2 2

Peritoneal dialysis* 30.3 5 50.0 7 62.3 8

Unknown 1.7 0.3 2.3 0.3 3.1 0.4

Functioning graft and 

kidney transplant 170.6 30 206.5 29 239.4 30

Note: ESRD (end-stage renal disease). Totals may not equal sum of components due to rounding. Data include 

both Medicare (fee-for-service and Medicare Advantage) and non-Medicare patients. The “functioning graft 

and kidney transplant” category includes patients who had a functioning graft at the start of the year in 

question (i.e., 2009, 2015, or 2019), or who received a transplant during the year in question.

* Home dialysis methods.

Source: Compiled by MedPAC from the U.S. Renal Data System.

• People with ESRD require either dialysis or a kidney transplant to live. The total number of 

ESRD patients increased on average by 3.5 percent annually between 2009 and 2019.

• In hemodialysis, a patient’s blood flows through a machine with a special filter that 

removes wastes and extra fluids. In peritoneal dialysis, the patient’s blood is cleansed by 

using the lining of their abdomen as a filter. Peritoneal dialysis is the most common form 

of home dialysis.

• Most people with ESRD undergo hemodialysis administered in a dialysis facility three 

times a week. Between 2009 and 2019, the total number of in-center hemodialysis 

patients grew on average by 3.0 percent annually, while the total number of peritoneal 

dialysis patients increased on average by 7.5 percent annually. Although a smaller

proportion of all dialysis patients undergo home hemodialysis, the number of these

patients grew on average by nearly 9 percent per year during this period.

• Patients with functioning grafts have had a successful kidney transplant. Patients 

undergoing a kidney transplant may receive either a living kidney or a cadaveric kidney 

donation. In 2019, 28 percent of transplanted kidneys were from living donors, and the 

remainder were from cadaver donors (data not shown).
178 Other services

Chart 11-4. Asian Americans and Hispanics are among the 

fastest-growing segments of the ESRD population

Share Average annual

of total percent change

in 2019 2014–2019

Total (N = 809,103) 100% 3%

Age (years)

0–17 1 1

18–44 14 1

45–64 42 2

65–79 34 5

80+ 9 4

Sex

Male 58 4

Female 42 3

Race/ethnicity

White 43 3

Black 29 2

Native American 1 2

Asian American 6 6

Hispanic 19 5

Underlying cause of ESRD

Diabetes 39 4

Hypertension 26 4

Glomerulonephritis 15 2

Other causes 20 3

Note: ESRD (end-stage renal disease). Totals may not equal the sum of the components due to rounding. ESRD 

patients include those who undergo maintenance dialysis and those who have a functioning kidney 

transplant. Data include both Medicare (fee-for-service and Medicare Advantage) and non-Medicare 

patients.

Source: Compiled by MedPAC from the U.S. Renal Data System.

• Among patients with ESRD, nearly 43 percent are over age 65. About 43 percent are 

White.

• Diabetes is the most common cause of renal failure.

• The number of patients with ESRD increased by 3 percent annually between 2014 and 

2019. Among the fastest growing groups are patients between the ages of 65 and 79 and 

patients of Asian and Hispanic origins.
A Data Book: Health care spending and the Medicare program, July 2022 179

Chart 11-5. Characteristics of Medicare fee-for-service dialysis 

patients, 2020

Share of all FFS dialysis patients

Age (years)

Under 45 10%

45–64 37

65–74 29

75–84 18

85+ 6

Sex

Male 57

Female 43

Race

White 46

Black 35

All other 19

Residence

Urban county 83

Rural county, micropolitan 10

Rural county, adjacent to urban 5

Rural county, not adjacent to urban 2

Frontier county 1

Prescription drug coverage status

Enrolled in Part D plan 83*

LIS 57

Dually eligible for Medicare and Medicaid 51

Note: FFS (fee-for-service), LIS (low-income subsidy). Urban counties contain a core area with 50,000 or more 

people, rural micropolitan counties contain at least one cluster of at least 10,000 and fewer than 50,000 

people, rural counties adjacent to urban areas do not have a city of 10,000 people in the county, and rural 

counties not adjacent to urban areas do not have a city of 10,000 people. Frontier counties are counties with 

six or fewer people per square mile. Components may not sum to 100 percent due to rounding.

* Data do not account for FFS beneficiaries with other sources of creditable coverage. 

Source: MedPAC analysis of dialysis claims files and denominator files from CMS.

• Compared with all Medicare patients (see Chart 2-5), FFS dialysis patients are 

disproportionately younger and Black. 

• In 2020, about 17 percent of FFS dialysis patients resided in a rural county.

• Half of all dialysis patients were dually eligible for Medicare and Medicaid services. 

• In 2020, 83 percent of FFS dialysis patients were enrolled in Part D plans. 
180 Other services

Chart 11-6. Aggregate margins varied by type of freestanding dialysis

facility, 2020

Share of freestanding

Type of facility dialysis treatments Aggregate margin

All facilities 100% 2.7%

Urban 88 3.5

Rural 12 –1.5

Treatment volume (quintile)

Lowest 7 –20.2

Second 13 –8.2

Third 18 0.3

Fourth 24 4.8

Highest 39 10.1

Note: Pandemic-related federal relief funds are not accounted for in the data presented in this table. Margins 

include payments and costs for dialysis services commonly provided under treatment, including injectable 

drugs and laboratory tests that were separately paid before 2011. The Commission’s longstanding approach 

to calculating the Medicare end-stage renal disease (ESRD) prospective payment system (PPS) margin uses 

only Medicare-allowable costs for ESRD services. Such an approach is consistent with the methods we use 

to calculate the Medicare margin for other fee-for-service sectors. Our ESRD margin analysis relies on the 

cost data that freestanding dialysis facilities report on the cost reports that they submit to CMS. In 2019, 

there was an anomalous increase in non-ESRD drug costs compared with prior years. Consistent with our 

longstanding approach, non-ESRD drug costs are not included in the Commission’s analysis of ESRD PPS 

costs incurred by freestanding dialysis facilities or in our calculation of the ESRD PPS margin. Components 

may not sum to 100 percent due to rounding.

Source: Compiled by MedPAC from 2020 cost reports and the 2020 institutional outpatient file from CMS.

• For 2020, the aggregate Medicare margin for dialysis-related services, including ESRDrelated drugs and laboratory tests that were separately paid before 2011, was 2.7 percent. 

• Including a portion of the congressional pandemic relief funds (based on fee-for-service

Medicare’s share of 2019 all-payer operating revenue) in our aggregate Medicare margins 

would raise the 2020 aggregate Medicare margin to 3.7 percent (data not shown).

• Between 2019 and 2020, the aggregate Medicare margin decreased (from 8.4 percent to 

2.7 percent) due to increasing cost per treatment for all cost categories with the 

exception of erythropoietin-stimulating agents and labs and due to the transitional drug 

add-on payment adjustment declining from 106 percent of average sales price (ASP) to 

ASP without an add-on.

• Generally, freestanding dialysis facilities’ margins vary by the size of the facility; facilities 

with greater treatment volume have higher margins on average. Differences in capacity 

and treatment volume explain some of the differences observed between the margins of 

urban facilities versus rural facilities. Urban facilities are larger on average than rural 

facilities with respect to the number of in-center hemodialysis treatment stations and 

Medicare treatments provided. Some rural facilities have benefited from the ESRD PPS’s 

low-volume adjustment.
A Data Book: Health care spending and the Medicare program, July 2022 181

Chart 11-7. Dialysis quality of care: Some measures show progress, 

others need improvement, 2014–2019

Outcome measure 2014 2018 2019

Share of in-center hemodialysis patients:

Receiving adequate dialysis 97% 98% 98%

Dialyzed with an AV fistula 66 66 65

Share of peritoneal dialysis patients

receiving adequate dialysis 91 92 91

Share of all dialysis patients managing anemia

Mean hemoglobin <10 g/dL 27 29 30

Mean hemoglobin 10 to <12 g/dL 68 66 65

Mean hemoglobin ≥12 g/dL 5 5 5

Share of all dialysis patients wait-listed for a kidney 17.3 13.7 13.1

Renal transplant rate per 100 patient years 3.3 3.6 3.9

Annual mortality rate per 100 patient years* 16.7 16.4 16.0

Total hospital admissions per patient year* 1.7 1.7 1.7

Hospital days per patient year* 11.3 11.3 11.3

Note: AV (arteriovenous), g/dL (grams per deciliter [of blood]). The rate per patient year is calculated by dividing 

the total number of events by the fraction of the year that patients were followed. Analysis of data on 

dialysis adequacy is based on measures used by CMS in its ESRD Quality Incentive Program. The U.S. Renal 

Data System (USRDS) adjusts hospitalization and mortality measures by age, gender, race, and primary 

diagnosis of end-stage renal disease. 

* Lower values suggest higher quality.

Source: All measures except for share of patients receiving adequate dialysis and anemia management compiled 

by MedPAC using data from the USRDS. Measure of share of patients receiving adequate dialysis and 

anemia management compiled by MedPAC using data from CMS’s 100 percent institutional outpatient 

files. 

• Quality of dialysis care is mixed. Performance has improved on some measures, but 

performance on others remains unchanged or has declined.

• Between 2014 and 2019, overall adjusted mortality rates decreased from 16.7 percent to 

16.0 percent. During this period, the proportion of hemodialysis patients receiving 

adequate dialysis remained high, and rates of hospitalization have held steady.

• All hemodialysis patients require vascular access—the site on the patient’s body where 

blood is removed and returned during dialysis. Use of arteriovenous fistulas, 

considered the best type of vascular access, remained steady between 2014 and 2019.

• Other measures suggest that improvements in dialysis quality are still needed. We look 

at access to kidney transplantation because it is widely believed to be the best 

treatment option for individuals with end-stage renal disease. Between 2014 and 2019, 

the share of dialysis patients accepted on the kidney transplant waiting list declined

from 17.3 to 13.1, and the renal transplant rate per 100 dialysis-patient years increased 

modestly from 3.3 to 3.9.
182 Other services

Chart 11-8. Hospice spending and use increased in 2020

Average annual

change, Change,

2010 2019 2020 2010–2019 2019–2020

Medicare payments (in billions) $12.9 $20.9 $22.4 5.5% 7.4%

Beneficiaries in hospice 1.15 1.61 1.72 3.8% 6.6%

(in millions)

Number of hospice days for all 81.6 121.8 127.8 4.6% 4.9%

hospice beneficiaries (in millions)

Average length of stay 87.0 92.5 97.0 0.7% 4.8%

among decedents (in days)

Median length of stay 18 18 18 0 days 0 days

among decedents (in days)

Note: Lifetime length of stay is calculated for decedents who were using hospice at the time of death or before 

death and reflects the total number of days the decedent was enrolled in the Medicare hospice benefit 

during their lifetime. Total payments, number of hospice users, number of hospice days, and average 

length of stay displayed in the table are rounded; the percentage change for number of users and total 

spending is calculated using unrounded data. 

Source: MedPAC analysis of the Common Medicare Enrollment file and the Medicare Beneficiary Database from 

CMS.

• Total Medicare payments to hospices were about $22.4 billion in 2020, about 7.4 percent 

higher than the prior year. 

• The number of Medicare beneficiaries receiving hospice services, total number of days of 

hospice care, and average length of stay continued to grow in 2020.
A Data Book: Health care spending and the Medicare program, July 2022 183

Chart 11-9. Number of Medicare decedents and number of decedents 

who used hospice grew substantially in 2020

Average annual

percent Percent

change change

2010 2017 2018 2019 2020 2010–2019 2019–2020

Number of Medicare 

decedents (millions) 1.99 2.28 2.31 2.32 2.73 1.7% 17.6%

Number of Medicare 

decedents who used 

hospice (millions) 0.87 1.14 1.17 1.20 1.31 3.6 9.0

Share of decedents 

who used hospice 43.8% 49.8% 50.6% 51.6% 47.8%

Note: The "number of Medicare decedents who used hospice" reflects hospice use in the last calendar year of life. 

Analysis excludes beneficiaries without Medicare Part A because hospice is a Part A benefit. Yearly figures 

presented in the table are rounded, but figures in the percent change columns were calculated using 

unrounded data. 

Source: MedPAC analysis of data from the Common Medicare Enrollment file and hospice claims data from CMS.

• In 2020, with the onset of the coronavirus pandemic, deaths among Medicare 

beneficiaries increased, as did hospice use among Medicare decedents. Between 2019 

and 2020, deaths among Medicare beneficiaries increased by nearly 18 percent and the 

number of Medicare decedents who used hospice in their year of death increased by 9 

percent. 

• Because growth in deaths outpaced growth in the number of hospice users in 2020, the 

share of Medicare decedents using hospice declined between 2019 and 2020, from 51.6 

percent to 47.8 percent. 
184 Other services

Chart 11-10. Share of decedents using hospice increased from 2010 to 

2019 but declined in 2020 as growth in deaths outpaced 

growth in hospice use

Average annual

Share of decedents using hospice percentage Percentage

point change point change

2010 2019 2020 2010–2019 2019–2020

All 43.8% 51.6% 47.8% 0.9 –3.8

FFS beneficiaries 42.8 50.7 47.2 0.9 –3.5

MA beneficiaries 47.2 53.2 48.7 0.7 –4.5

Dual eligible 41.5 49.3 42.3 0.9 –7.0

Non–dual eligible 44.5 52.4 49.8 0.9 –2.6

Age (years)

<65 25.7 29.5 26.5 0.4 –3.0

65–74 38.0 41.0 37.2 0.3 –3.8

75–84 44.8 52.2 48.3 0.8 –3.9

85+ 50.2 62.7 59.0 1.4 –3.7

Race/ethnicity

White 45.5 53.8 50.8 0.9 –3.0

Black 34.2 40.8 35.5 0.7 –5.3

Hispanic 36.7 42.7 33.3 0.7 –9.4

Asian American 30.0 39.8 36.1 1.1 –3.7

North American Native 31.0 38.5 33.5 0.8 –5.0

Gender

Male 40.1 46.7 42.9 0.7 –3.8

Female 47.0 56.3 52.7 1.0 –3.6

Residence

Urban county 45.6 52.8 48.8 0.8 –4.0

Rural county, micropolitan 39.2 49.7 46.7 1.2 –3.0

Rural county, adjacent to urban 39.0 49.5 46.1 1.2 –3.4

Rural county, nonadjacent 

 to urban 33.8 43.8 40.6 1.1 –3.2

Frontier county 29.2 36.2 33.3 0.8 –2.9

Note: FFS (fee-for-service), MA (Medicare Advantage). For each demographic group, the share of decedents who 

used hospice is calculated as follows: The number of beneficiaries in the group who both died and received 

hospice in 2020 is divided by the total number of beneficiaries in the group who died in 2020. “Residence”

reflects the beneficiary’s county of residence in one of four categories (urban, micropolitan, rural adjacent to 

urban, or rural nonadjacent to urban) based on an aggregation of the Urban Influence Codes (UICs). This 

chart uses the 2013 UIC definitions. The frontier category is defined as population density equal to or less 

than six people per square mile and overlaps the beneficiary county of residence categories. Analysis 

excludes beneficiaries without Medicare Part A because hospice is a Part A benefit.

Source: MedPAC analysis of data from the Common Medicare Enrollment file and hospice claims data from CMS.

(Chart continued next page)
A Data Book: Health care spending and the Medicare program, July 2022 185

Chart 11-10. Share of decedents using hospice increased from 2010 to 

2019 but declined in 2020 as growth in deaths outpaced 

growth in hospice use (continued)

• Between 2010 and 2019, the share of decedents using hospice grew across beneficiary 

groups. In 2020, the share of decedents using hospice declined across groups as growth 

in deaths outpaced growth in hospice use. While the share of decedents using hospice 

declined in 2020, the number of Medicare decedents receiving hospice care in each 

group increased in 2020 (data not shown).

• In 2020, hospice use continued to vary by demographic and beneficiary characteristics.

Medicare decedents who were not dual eligible, who were MA enrollees, older, White, 

female, or living in an urban area were more likely to use hospice than their respective 

counterparts.
186 Other services

Chart 11-11. Number of Medicare-participating hospices has 

increased due to growth in for-profit hospices

2010 2018 2019 2020

All hospices 3,498 4,639 4,840 5,058

For profit 1,958 3,234 3,436 3,680

Nonprofit 1,316 1,245 1,255 1,220

Government 224 159 148 147

Freestanding 2,401 3,701 3,936 4,178

Hospital based 609 453 429 415

Home health based 465 463 456 444

SNF based 23 22 19 19

Urban 2,485 3,760 3,976 4,196

Rural 950 872 859 850

Note: SNF (skilled nursing facility). Some categories do not sum to total because of missing data for some

providers. The rural and urban definitions in this chart are based on updated definitions of the core-based 

statistical areas (which rely on data from the 2010 census). 

Source: MedPAC analysis of Medicare cost reports, Provider of Services file, and the standard analytic file of hospice 

claims from CMS.

• There were 5,058 Medicare-participating hospices in 2020. About 73 percent of them 

were for-profit hospices.

• The number of Medicare-participating hospices grew by more than 200 providers 

between 2019 and 2020 and has increased about 45 percent since 2010. For-profit 

hospices accounted for all of the net growth in providers between 2019 and 2020.

• Growth in the number of providers has occurred predominantly among freestanding 

providers. Between 2010 and 2020, the number of hospital-based providers declined 

substantially while the number of home health–based providers has oscillated over the 

period and declined in the last few years. The number of SNF-based providers is small and 

has changed little over the years. (A hospice’s status as freestanding, hospital based, 

home health based, or SNF based reflects the type of cost report submitted by the 

provider and does not necessarily reflect the location of care.)

• The number of hospices located in rural areas has declined in the last several years, 

decreasing about 2.5 percent between 2018 and 2020. The number of providers located in 

rural areas is not necessarily an indicator of access to care. The share of rural decedents 

using hospice grew through 2019 (see Chart 11-10). In addition, the number of rural 

beneficiaries receiving hospice services increased in 2020 (data not shown).
A Data Book: Health care spending and the Medicare program, July 2022 187

Chart 11-12. Hospice cases by primary diagnosis, 2020

Share

Diagnosis of total cases

Alzheimer’s, nervous system disorders, 

 organic psychosis 24%

Cancer 24

Circulatory, except heart failure 21

Heart failure 8

Respiratory disease 6

Other 6

Chronic airway obstruction, NOS 4

Genitourinary disease 2

Digestive disease 2

COVID-19 2

All 100

Note: NOS (not otherwise specified). Cases include all patients who received hospice care in 2020, not just 

decedents. “Diagnosis” reflects primary diagnosis on the beneficiary’s last hospice claim in 2020. Subgroups 

may not sum to 100 percent due to rounding.

Source: MedPAC analysis of 100 percent hospice claims standard analytic file from CMS and the Medicare 

Beneficiary Database.

• In 2020, the most common primary diagnoses among Medicare hospice patients were

neurological conditions (Alzheimer’s disease, nervous system disorders, and organic 

psychosis) and cancer (each accounted for 24 percent of cases), circulatory conditions 

other than heart failure (21 percent), and heart failure (8 percent).

• About 2 percent of Medicare hospice patients had COVID-19 as their hospice primary 

diagnosis in 2020. An additional 3 percent of hospice patients had COVID-19 as a 

secondary diagnosis on their hospice claims in 2020 (data not shown). 
188 Other services

Chart 11-13. Hospice average length of stay among decedents

increased in 2020 

Average 

length 

of stay Percentiles of length of stay (in days)

Year (in days) 10th 25th 50th 75th 90th

2010 87.0 3 6 18 78 242

2017 89.3 2 5 18 80 251

2018 90.3 2 5 18 82 255

2019

2020

92.5

97.0

2

2

5

5

18

18

85

87

266

287

Note: Lifetime length of stay is calculated for decedents who were using hospice at the time of death or before 

death and reflects the total number of days the decedent was enrolled in the Medicare hospice benefit 

during their lifetime. 

Source: MedPAC analysis of the Common Medicare Enrollment file and the Medicare Beneficiary Database from 

CMS. 

• The average length of stay among decedents was 97.0 days in 2020, an increase from 

2019 of over 4 days. 

• There is wide variation in hospice length of stay. In 2020, hospice length of stay among 

decedents ranged from 2 days at the 10th percentile to 287 days at the 90th percentile. 

• Between 2010 and 2020, growth in average length of stay among decedents has largely 

been the result of increases in length of stay for patients with the longest stays. Length of 

stay grew from 78 days to 87 days at the 75th percentile and from 242 days to 287 days at 

the 90th percentile.
A Data Book: Health care spending and the Medicare program, July 2022 189

Chart 11-14. Hospice length of stay among decedents, by

beneficiary and hospice characteristics, 2020

Average length Length-of-stay percentiles (in days)

of stay (in days) 10th 50th 90th

Beneficiary

Diagnosis

Cancer 53 3 16 129

Neurological 161 4 40 483

Heart/circulatory 109 2 19 324

COPD 135 3 32 403

Other 54 2 7 149

Site of service

Home 90 3 23 244

Nursing facility 133 3 26 410

Assisted living facility 172 5 59 491

Hospice

For profit 115 2 22 349

Nonprofit 73 3 13 206

Freestanding 97 2 17 288

Home health based 73 2 15 202

Hospital based 59 2 11 163

Note: COPD (chronic obstructive pulmonary disease). Length of stay is calculated for Medicare beneficiaries who 

died in 2020 and used hospice that year and reflects the total number of days the decedent was enrolled in 

the Medicare hospice benefit during their lifetime. The location categories reflect where the beneficiary 

spent the largest share of their days while enrolled in hospice. “Diagnosis” reflects primary diagnosis on the 

beneficiary’s last hospice claim. 

Source: MedPAC analysis of 100 percent hospice claims standard analytic file data, Medicare Beneficiary Database, 

Medicare hospice cost reports, and Provider of Services file data from CMS.

• Hospice average length of stay among decedents varies by both beneficiary and provider 

characteristics. Most of this variation reflects differences in length of stay among patients 

with the longest stays (i.e., at the 90th percentile). Length of stay varies much less for 

patients with shorter stays (i.e., at the 10th or 50th percentile).

• Beneficiaries with neurological conditions and COPD have the longest stays, while 

beneficiaries with cancer have the shortest stays, on average. 

• For beneficiaries with a hospice primary diagnosis of COVID-19, median length of stay was 

3 days and average length of stay was 26 days (data not shown).

• Beneficiaries who receive hospice services in assisted living facilities have longer stays on 

average than beneficiaries who receive care at home or in a nursing facility.

• For-profit and freestanding hospices have longer average lengths of stay than nonprofit 

and provider-based (home health-based and hospital-based) hospices. 
190 Other services

Chart 11-15. Nearly 60 percent of Medicare hospice spending in 2020

was for patients with stays exceeding 180 days

Medicare hospice spending, 2020

(in billions)

All hospice users in 2019 $22.4

Beneficiaries with LOS > 180 days 13.3

Days 1–180 4.2

Days 181–365 4.1

Days 366+ 4.9

Beneficiaries with LOS ≤ 180 days 9.2

Note: LOS (length of stay). “LOS” reflects the beneficiary’s lifetime LOS as of the end of 2020 (or at the time of

death or discharge in 2020 if the beneficiary was not enrolled in hospice at the end of 2020). All spending 

reflected in the chart occurred only in 2020. Break-out groups do not sum to total because of rounding.

Source: MedPAC analysis of 100 percent hospice claims standard analytical file and an Acumen LLC data file on 

hospice lifetime length of stay (which is based on an analysis of historic claims data).

• In 2020, Medicare hospice spending on patients with stays exceeding 180 days was about 

$13.3 billion, nearly 60 percent of all Medicare hospice spending that year.

• About $4.9 billion, or nearly 22 percent, of Medicare hospice spending in 2020 was on 

hospice care for patients who had already received at least one year of hospice.
A Data Book: Health care spending and the Medicare program, July 2022 191

Chart 11-16. Hospice Medicare aggregate margins, 2015–2019

Share of Medicare margin

hospices

(2019) 2015 2016 2017 2018 2019

All 100% 9.9% 10.9% 12.5% 12.4% 13.4%

Freestanding 81 13.8 14.0 15.3 15.1 16.2

Home health based 9 3.3 6.2 8.1 8.4 9.6

Hospital based 9 –23.8 –16.7 –13.8 –16.5 –18.4

For profit 71 17.7 17.9 20.0 19.0 19.2

Nonprofit 26 0.1 2.2 2.5 3.8 6.0

Government 3 N/A N/A N/A N/A N/A

Urban 82 10.4 11.4 12.9 12.6 13.6

Rural 18 4.8 6.3 8.9 10.3 11.5

Below cap 81 9.9 10.7 12.6 12.5 13.8

Above cap 19 9.8 12.6 12.1 10.1 10.0

Above cap (including 

cap overpayments) 19 21.4 20.2 21.9 21.8 22.5

Note: N/A (not available). Medicare aggregate margins for all provider categories exclude overpayments to abovecap hospices except where specifically indicated. Medicare aggregate margins are calculated based on 

Medicare-allowable, reimbursable costs. Margin by hospice ownership status is based on hospices’ 

ownership designation from the Medicare cost report. The rural and urban definitions used in this chart are 

based on updated definitions of the core-based statistical areas (which rely on data from the 2010 census).

Components may not sum to 100 percent due to rounding.

Source: MedPAC analysis of Medicare hospice cost reports, 100 percent hospice claims standard analytic file, and 

Medicare Provider of Services data from CMS.

• The aggregate Medicare margin was 13.4 percent in 2019, up from 12.4 percent in 2018.

• In 2019, freestanding hospices had higher margins (16.2 percent) than home health–based 

(9.6 percent) and hospital-based hospices (–18.4 percent).

• The 2019 margin among for-profit hospices was high at 19.2 percent. Nonprofit hospices 

as a group had a margin of 6.0 percent in 2019, but the subset of nonprofit hospices that 

were freestanding had a higher margin, 10.5 percent (latter figure not shown in chart).

• The aggregate 2019 margin was slightly higher for urban hospices (13.6 percent) than 

rural hospices (11.5 percent). 

• Hospices that exceeded the cap (Medicare’s aggregate average per beneficiary payment 

limit) had a 2019 margin of about 22.5 percent before the return of the cap overpayments.
192 Other services

Chart 11-17. Medicare aggregate margins were higher among hospices 

with more long stays, 2019

Note: Medicare aggregate margins exclude overpayments to hospices that exceeded the cap on the average 

annual Medicare payment per beneficiary. Margins are calculated based on Medicare-allowable, 

reimbursable costs. For hospice providers in the lowest (first) quintile, the share of stays greater than 180 

days was less than 15 percent; it was between 15 percent and 22 percent in the second quintile; it was 

between 22 percent and 29 percent in the third quintile; it was between 29 percent and 36 percent in the 

fourth quintile; and it was greater than 36 percent in the highest (fifth) quintile. 

Source: MedPAC analysis of Medicare hospice cost reports and 100 percent hospice claims standard analytic file

from CMS.

• Medicare’s per diem payment system for hospice has provided an incentive for longer 

lengths of stay.

• Hospices with more patients who had stays greater than 180 days generally had higher 

margins in 2019. Hospices in the lowest length-of-stay quintile had a margin of –2.5 percent 

compared with a 22.8 percent margin for hospices in the second highest length-of-stay 

quintile. 

• Margins were somewhat lower in the highest length-of-stay quintile (13.4 percent) 

compared with the second highest quintile (22.8 percent) because some hospices in the 

highest quintile exceeded Medicare’s aggregate payment cap and were required to repay 

the overage. Hospices exceeding the cap had a margin of about 22.5 percent before the 

return of overpayments (see Chart 11-16).

-2.5

10.3

19.9

22.8

13.4

-5

0

5

10

15

20

25

1 2 3 4 5

Margin (in percent)

Share of providers' patients with stays greater than 180 days, by quintile
A Data Book: Health care spending and the Medicare program, July 2022 193

Chart 11-18. Hospices that exceeded Medicare’s annual payment cap, 

2015–2019

2015 2016 2017 2018 2019

Share of hospices 

 exceeding the cap 12.3% 12.7% 14.0% 16.3% 19.0%

Average payments over

 the cap per hospice

 exceeding the cap

 (in thousands) $316 $295 $273 $334 $384

Payments over the cap

 as a share of overall

 Medicare hospice spending 1.0% 1.0% 1.0% 1.3% 1.7%

 in cap year

Note: The aggregate cap statistics reflect the Commission’s estimates and may differ from the CMS claims 

processing contractors'. Spending in cap year 2017 reflects an 11-month period from November 1, 2016, to 

September 30, 2017. For years before 2017, the cap year was defined as the period beginning November 1 

and ending October 31 of the following year. Beginning 2018, the cap year is aligned with the federal fiscal 

year (October 1 to September 30 of the following year).

Source: MedPAC analysis of 100 percent hospice claims standard analytic file data, Medicare hospice cost reports,

and Medicare Provider of Services file data from CMS.

• The share of hospices exceeding the aggregate cap was 19.0 percent in 2019, up from 16.3

percent in 2018. 

• On average, above-cap hospices exceeded the cap by about $384,000 per provider in 

2019, up from about $334,000 per provider in 2018.

• Medicare payments over the cap represented 1.7 percent of total Medicare hospice 

spending in 2019.
194 Other services

Chart 11-19. Hospice live-discharge rates, 2018–2020

2018 2019 2020

Live discharges as a share of all discharges,

by reason for live discharge

All live discharges 17.0% 17.4% 15.4%

No longer terminally ill 6.3 6.5 5.6

Beneficiary revocation 6.6 6.5 5.7

Transfer hospice providers 2.2 2.3 2.2

Move out of service area 1.6 1.7 1.6

Discharge for cause 0.3 0.3 0.3

Providers’ overall rate of live discharge as a

share of all discharges, by percentile

(for providers with more than 30 discharges)

10th percentile 8.5 8.6 7.5

25th percentile 12.0 12.3 10.9

50th percentile 17.9 18.9 16.9

75th percentile 27.8 29.5 26.6

90th percentile 42.5 46.6 43.3

Note: Percentages may not sum to totals due to rounding. “All discharges” includes patients discharged alive or 

deceased.

Source: MedPAC analysis of the 100 percent hospice claims standard analytical file, Medicare hospice cost reports, 

and Medicare Provider of Services file from CMS.

• In 2020, the overall live-discharge rate declined from 17.4 percent to 15.4 percent, which 

contrasts with the prior period from 2017 to 2019 when the live discharge rate increased 

modestly from 16.7 percent to 17.4 percent (2017 data not shown). The decline in livedischarge rates in 2020 may reflect the effect of the pandemic and the higher beneficiary 

mortality rates during 2020.

• The most common reasons for live discharge were the beneficiary revoking the hospice 

benefit and the beneficiary no longer being terminally ill, accounting for 5.7 percent and 

5.6 percent, respectively, of all discharges in 2020. Less frequent reasons for live 

discharges included a beneficiary transferring hospice providers, a beneficiary moving 

out of the service area, and a beneficiary being discharged for cause. 

• Among providers with more than 30 discharges, 10 percent of providers had livedischarge rates in excess of 43 percent in 2020.

• Small hospices as a group have substantially higher live-discharge rates than larger 

hospices. In 2020, the aggregate live-discharge rate was 42 percent for hospices with 30 

or fewer discharges, in contrast to a 15 percent aggregate live discharge rate for all 

hospices (data for small hospices not shown).
A Data Book: Health care spending and the Medicare program, July 2022 195

Chart 11-20. Medicare spending for clinical laboratory tests, 2005–2020

 

Note: Spending is for services paid under the clinical laboratory fee schedule. Hospital-based services are 

furnished in laboratories owned or operated by hospitals. The components of each bar may not sum to the 

total at the top of each bar due to rounding. The spending data include only program payments; there is no 

beneficiary cost sharing for clinical laboratory tests. 

Source: The annual report of the Boards of Trustees of the Medicare trust funds, 2015 and 2021.

• Medicare spending for clinical laboratory tests in all settings grew by an average of 3.6

percent per year between 2005 and 2013. 

• From 2013 to 2014, Medicare spending for laboratory tests declined by about 9 percent 

because, beginning in 2014, many laboratory tests provided in hospital outpatient 

departments are no longer paid separately under the clinical laboratory fee schedule. 

Instead, many of these tests are packaged with their associated visits or procedures under 

the hospital outpatient prospective payment system. 

• Medicare spending for laboratory tests decreased by an average of 0.9 percent per year 

from 2014 to 2017.

• Beginning in 2018, clinical laboratory fee schedule payment rates are based on private 

sector rates. From 2017 to 2020, Medicare spending for laboratory tests grew by an 

average of 3.9 percent per year.

3.6 3.7 4.0 4.3 4.7 4.9 4.7 5.2 5.3 5.7 5.7 5.2 5.3 5.8 6.0 6.2

3.4 3.5

3.6

3.7

3.5 3.6 3.8

4.0 4.0 2.7 2.8

2.9 2.9

2.9 2.8

3.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Dollars (in billions)

Calendar year

Independent and physician office Hospital based

8.5

8.1

8.7

8.2

8.8

9.2

7.3

7.6

7.0

8.0 8.2

8.6 8.5

9.3 9.3

8.5

425 I Street, NW | Suite 701 | Washington, DC 20001

(202) 220-3700 | www.medpac.gov

ME AC

ME AC

Medicare Payment Advisory Commission

Advising the Congress on Medicare issues