A DATA BOOK 

Health Care Spending 

and the 

Medicare Program 

J UNE 2012
A DATA BOOK 

Health Care Spending 

and the 

Medicare Program 

J UNE 2012

iii 

Introduction 

MedPAC’s Data Book is the result of discussions with congressional staff members regarding 

ways that MedPAC can better support them. Some of the information it contains is derived from 

MedPAC’s March and June reports to the Congress; other information presented is unique to the 

Data Book. The format is condensed into tables and figures with brief discussions. Website links 

to MedPAC publications and other websites are included on a “Web links” page at the end of 

each section. 

The 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. 

Several charts in this Data Book use data from the Medicare Current Beneficiary Survey 

(MCBS). We use the MCBS to compare beneficiary groups with different characteristics. The 

MCBS is a survey, so expenditure amounts that we show may not match actual Medicare 

expenditure amounts from CMS’s program offices or the Office of the Actuary. 

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

reflect changes in Medicare enrollment between the traditional fee-for-service program and 

Medicare Advantage. Increased enrollment in Medicare Advantage may be a significant factor in 

instances in which Medicare spending in a given sector has leveled off or even declined. In these 

instances, fee-for-service spending per capita may present a more complete picture of spending 

changes. 

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

the MedPAC website: www.medpac.gov. 

v 

Table of contents 

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

Sections 

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

1-1 Aggregate Medicare spending among FFS beneficiaries, by sector, 2000–2010 ................................... 3

1-2 Per capita Medicare spending among FFS beneficiaries, by sector, 2000–2010 .................................... 4

1-3 Medicare made up over one-fifth of spending on personal health care in 2010 ...................................... 5

1-4 Medicare’s share of total spending varies by type of service, 2010 ........................................................6

1-5 Health care spending has grown more rapidly than GDP, with public financing making 

up nearly half of all funding ...................................................................................................................... 7

1-6 Trustees project Medicare spending to increase as a share of GDP ........................................................ 8

1-7 Changes in spending per enrollee, Medicare and private health insurance ............................................. 9

1-8 Trustees and CBO project Medicare spending to grow at an annual average rate of 

around 6 percent over the next 10 years ................................................................................................ 10

1-9 Medicare spending is concentrated in certain services and has shifted over time ................................ 11

1-10 FFS program spending is highly concentrated in a small group of beneficiaries, 2008 ...................... 12

1-11 Medicare HI trust fund is projected to be insolvent in 2024 under actuaries’ 

intermediate assumptions ....................................................................................................................... 13

1-12 Medicare faces serious challenges with long-term financing ............................................................... 14

1-13 Average monthly SMI premiums and cost sharing are projected to grow faster than the 

average monthly Social Security benefit ............................................................................................... 15

1-14 Medicare HI and SMI program payments and cost sharing per beneficiary in 2010 ........................... 16

Web links ................................................................................................................................................. 17

2 Medicare beneficiary demographics........................................................................... 19 

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

program spending, 2008 ......................................................................................................................... 21

2-2 Medicare enrollment and spending by age group, 2008 ....................................................................... 22

2-3 Beneficiaries who report being in poor health account for a disproportionate share of 

Medicare spending, 2008 ....................................................................................................................... 23

2-4 Enrollment in the Medicare program is projected to grow rapidly in the next 20 years ..................... 24

2-5 Characteristics of the Medicare population, 2008 ................................................................................. 25

 Web links ................................................................................................................................................. 26

3 Dual-eligible beneficiaries............................................................................................ 27 

3-1 Dual-eligible beneficiaries account for a disproportionate share of Medicare spending, 2008 ........... 29

3-2 Dual-eligible beneficiaries are more likely than non-dual eligibles to be disabled, 2008 .................... 30

3-3 Dual-eligible beneficiaries are more likely than non-dual eligibles to report 

poorer health status, 2008 ....................................................................................................................... 31
vi 

3-4 Demographic differences between dual-eligible beneficiaries and non-dual eligibles, 2008 .............. 32

3-5 Differences in spending and service use rate between dual-eligible beneficiaries and 

non-dual eligibles, 2008 ......................................................................................................................... 33

3-6 Both Medicare and total spending are concentrated among dual-eligible beneficiaries, 2008 ............ 34

 

 Web links ...................................................................................................................................... 35

4 Quality of care in the Medicare program................................................................... 37 

4-1 In-hospital and 30-day post-discharge mortality rates improved from 2007 to 2010 .......................... 39

4-2 Hospital inpatient patient safety indicators improved or were stable from 2007 to 2010 .................... 40

4-3 Risk-adjusted SNF quality measures show mixed results since 2000 .................................................. 41

4-4 Home health quality measures show limited change in 2011 ............................................................... 42

4-5 Dialysis quality of care: Some measures show progress, others need improvement ........................... 43

4-6 Medicare Advantage quality measures show improvement between 2010 and 2011 ......................... 44

 Web links ................................................................................................................................................. 46

5 Medicare beneficiary and other payer financial liability ......................................... 49 

5-1 Sources of supplemental coverage among noninstitutionalized Medicare beneficiaries, 2009 ........... 51

5-2 Sources of supplemental coverage among noninstitutionalized Medicare beneficiaries, 

by beneficiaries’ characteristics, 2009 ................................................................................................... 52

5-3 Total spending on health care services for noninstitutionalized FFS Medicare beneficiaries, 

by source of payment, 2009 ................................................................................................................... 53

5-4 Per capita total spending on health care services among noninstitutionalized FFS 

beneficiaries, by source of payment, 2009 ............................................................................................ 54

5-5 Variation in and composition of total spending among noninstitutionalized FFS beneficiaries, 

by type of supplemental coverage, 2009 ............................................................................................... 55

5-6 Out-of-pocket spending for premiums and health services per beneficiary, 

by insurance and health status, 2009 ...................................................................................................... 56

Web links ...................................................................................................................................... 57

6 Acute inpatient services ............................................................................................... 59 

Short–term hospitals 

6-1 Annual changes in number of acute care hospitals participating in the 

Medicare program, 2000–2010 .............................................................................................................. 61

6-2 Percent change in hospital employment, by occupation, 2008–2010 ................................................... 62

6-3 Growth in Medicare’s FFS payments for hospital inpatient and outpatient services, 1999–2010 ...... 63

6-4 Proportion of Medicare acute care hospital inpatient discharges by hospital group, 2010 .................. 64

6-5 Major diagnostic categories with highest volume, fiscal year 2010 ..................................................... 65

6-6 Cumulative change in total admissions and total outpatient visits, 1999–2010 ................................... 66

6-7 Cumulative change in Medicare outpatient services and inpatient discharges per 

FFS beneficiary, 2004–2010 .................................................................................................................. 67

6-8 Trends in Medicare inpatient and non-Medicare inpatient length of stay, 1999–2010 ........................ 68

6-9 Share of inpatient admissions preceded by emergency department visit, 2005–2010 ......................... 69
vii 

6-10 Share of Medicare Part A beneficiaries with at least one hospitalization, 2000–2010 ........................ 70

6-11 Hospital occupancy rates, 1999–2010 ................................................................................................... 71

6-12 Medicare inpatient payments, by source and hospital group, 2010 ...................................................... 72

6-13 Medicare acute inpatient PPS margin, 1999–2010 ............................................................................... 73

6-14 Medicare acute inpatient PPS margin, by urban and rural location, 1999–2010 ................................. 74

6-15 Overall Medicare margin, 1999–2010 ................................................................................................... 75

6-16 Overall Medicare margin, by urban and rural location, 1999–2010 ..................................................... 76

6-17 Hospital total all-payer margin, 1999–2010 .......................................................................................... 77

6-18 Hospital total all-payer margin, by urban and rural location, 1999–2010 ............................................ 78

6-19 Hospital total all-payer margin, by teaching status, 1999–2010 ........................................................... 79

6-20 Medicare margins by teaching and disproportionate share status, 2010 .............................................. 80

6-21 Financial pressure leads to lower costs .................................................................................................. 81

6-22 Change in Medicare hospital inpatient costs per discharge and private payer 

payment-to-cost ratio, 1987–2010 ......................................................................................................... 82

6-23 Markup of charges over costs for Medicare services, 1999–2010 ........................................................ 83

6-24 Number of critical access hospitals, 1999–2012 ................................................................................... 84

Specialty psychiatric facilities

6-25 Medicare payments to inpatient psychiatric facilities, 2002–2011 ....................................................... 85

6-26 Number of inpatient psychiatric facility cases has fallen under the PPS, 2002–2009 ......................... 86

6-27 Inpatient psychiatric facilities, 2003–2009 ............................................................................................ 87

6-28 One diagnosis accounted for almost three-quarters of IPF cases in 2009 ............................................ 88

6-29 IPF discharges by beneficiary characteristics, 2009 .............................................................................. 89

 Web links ................................................................................................................................................. 90

7 Ambulatory care .......................................................................................................... 91 

Physicians

7-1 Medicare spending per FFS beneficiary on physician fee-schedule services, 2001–2011 ................. 93

7-2 Volume growth has raised physician spending more than input prices 

and payment updates, 2000–2010 .......................................................................................................... 94

7-3 Most beneficiaries report that they can always or usually get timely care, 2011 ................................. 95

7-4 Medicare beneficiaries report better ability to get timely appointments with physicians, 

compared with privately insured individuals, 2008–2011 .................................................................... 96

7-5 Medicare and privately insured patients who are looking for a new physician report 

more difficulty finding one in primary care, 2008–2011 ...................................................................... 97

7-6 Access to physician care is better for Medicare beneficiaries compared with privately insured 

individuals, but minorities in both groups report problems more frequently, 2011 ............................. 98

7-7 Differences in access to new physicians are most apparent among minority Medicare 

and privately insured patients who are looking for a new specialist, 2011 .......................................... 99

7-8 Growth in volume of physician fee schedule services per beneficiary, 2000–2010 .......................... 100

7-9 Changes in physicians’ professional liability insurance premiums, 2004–2011 ................................ 101

Hospital outpatient services 

7-10 Spending on all hospital outpatient services, 2001–2011 ................................................................... 102

7-11 Most hospitals provide outpatient services .......................................................................................... 103

7-12 Payments and volume of services under the Medicare hospital outpatient PPS, 

by type of service, 2010 ....................................................................................................................... 104
viii 

7-13 Hospital outpatient services with the highest Medicare expenditures, 2010 ...................................... 105

7-14 Medicare coinsurance rates, by type of hospital outpatient service, 2010 .......................................... 106

7-15 Effects of hold-harmless and SCH transfer payments on hospitals’ 

outpatient revenue, 2008–2010 ............................................................................................................ 107

7-16 Medicare hospital outpatient, inpatient, and overall Medicare margins, 2004–2010 ......................... 108

7-17 Number of observation hours has increased, 2006–2010 ................................................................... 109

Ambulatory surgical centers

7-18 Number of Medicare-certified ASCs increased by 33 percent, 2004–2011 ....................................... 110

Imaging services

7-19 Medicare spending for imaging services under the physician fee schedule, by type of 

service, 2010 ......................................................................................................................................... 111

7-20 Rapid growth in the number of CT and MRI scans per 1,000 beneficiaries, 2000-2010 ............ 112

 Web links .............................................................................................................................................. 113

8 Post-acute care ........................................................................................................... 115 

8-1 Number of post-acute care providers increased or remained stable in 2011 ...................................... 117

8-2 Medicare’s spending on home health care and skilled nursing facilities fueled growth 

in post-acute care expenditures ............................................................................................................ 118

Skilled nursing facilities

8-3 Since 2006, the share of Medicare stays and payments going to freestanding SNFs and 

for-profit SNFs has increased ............................................................................................................... 119

8-4 Small declines in SNF days and admissions between 2009 and 2010 ............................................... 120

8-5 Case mix in freestanding SNFs shifted toward highest rehabilitation case-mix groups 

and away from other categories ........................................................................................................... 121

8-6 Freestanding SNF Medicare margins have exceeded 10 percent for seven years, and 

have increased steadily since 2005 ...................................................................................................... 122

8-7 Freestanding SNFs with relatively low costs and relatively high quality 

maintained high Medicare margins ...................................................................................................... 123

Home health agencies

8-8 Spending for home health care, 1997–2011 ........................................................................................ 124

8-9 Provision of home health care changed after the prospective payment system started ...................... 125

8-10 Trends in provision of home health care ............................................................................................. 126

8-11 Margins for freestanding home health agencies .................................................................................. 127

Inpatient rehabilitation facilities

8-12 Most common types of inpatient rehabilitation facility cases, 2011 ................................................... 128

8-13 Volume of IRF FFS patients declined slightly in 2010 ....................................................................... 129

8-14 Overall IRFs’ payments per case have risen faster than costs since implementation 

of the PPS in 2002 ................................................................................................................................ 130

8-15 Inpatient rehabilitation facilities’ Medicare margin by type, 2002–2010 .......................................... 131 
ix 

Long-term care hospitals

8-16 The top 25 MS-LTC-DRGs made up nearly two-thirds of LTCH discharges in 2010 ..................... 132

8-17 LTCH spending per FFS beneficiary continues to rise ....................................................................... 133

8-18 LTCHs’ per case payments rose more quickly than costs in 2010 ..................................................... 134

8-19 LTCHs’ aggregate Medicare margin rose in 2010 .............................................................................. 135

8-20 LTCHs in the top quartile of Medicare margins in 2010 had much lower costs ................................ 136

 Web links .............................................................................................................................................. 137

9 Medicare Advantage.................................................................................................. 139 

9-1 MA plans available to virtually all Medicare beneficiaries ............................................................ 141

9-2 Access to zero-premium plans with MA drug coverage, 2006–2012 ............................................. 142

9-3 Enrollment in MA plans, 1994–2012 .............................................................................................. 143

9-4 Changes in enrollment vary among major plan types ..................................................................... 144

9-5 MA and cost plan enrollment by state and type of plan, 2012 ........................................................ 145

9-6 MA plan benchmarks, bids, and Medicare program payments relative to FFS spending, 2012 ... 146

9-7 Enrollment in employer group MA plans, 2006–2012 ................................................................... 147

9-8 Number of special needs plan enrollees, 2007–2012 ...................................................................... 148

9-9 Number of SNPs and SNP enrollment rose from 2011 to 2012 ..................................................... 149 

9-10 Twenty most common condition categories among MA beneficiaries, defined in 

the CMS–HCC model, 2008 ............................................................................................................ 150

9-11 Distribution of MA plans and enrollment by CMS overall star ratings, April 2012 ...................... 151

 Web links .............................................................................................................................................. 153

10 Prescription drugs ...................................................................................................... 155 

10-1 Medicare spending for Part B drugs administered in physicians’ offices or 

furnished by suppliers .......................................................................................................................... 157

10-2 Top 10 Part B drugs administered in physicians’ offices or furnished by suppliers, 

by share of expenditures, 2010............................................................................................................. 158

10-3 In 2010, about 90 percent of Medicare beneficiaries were enrolled in Part D plans or 

had other sources of creditable drug coverage .................................................................................... 159

10-4 Parameters of the defined standard benefit increase over time ........................................................... 161

10-5 Characteristics of Medicare PDPs ....................................................................................................... 162

10-6 Characteristics of MA–PDs ................................................................................................................. 163

10-7 Average Part D premiums .................................................................................................................... 164

10-8 Number of PDPs qualifying as premium-free to LIS enrollees remained stable in 2012 .................. 165

10-9 In 2012, most Part D enrollees are in plans that charge higher copayments 

for nonpreferred brand-name drugs ..................................................................................................... 166

10-10 In 2012, use of utilization management tools continues to increase for both PDPs and MA–PDs ... 167

10-11 Characteristics of Part D enrollees, 2010 ............................................................................................. 168

10-12 Part D enrollment trends, 2006–2010 .................................................................................................. 170

10-13 Part D enrollment by region, 2010 ....................................................................................................... 171

10-14 The majority of Part D spending is incurred by fewer than half of all Part D enrollees, 2010 .......... 173

10-15 Characteristics of Part D enrollees, by spending levels, 2010 ............................................................ 174

10-16 Part D spending and utilization per enrollee, 2010.............................................................................. 175
x 

10-17 Part D risk scores vary across regions, by plan type and by LIS status, 2010 .................................... 176

10-18 Top 15 therapeutic classes of drugs under Part D, by spending and volume, 2010 ........................... 178

10-19 Generic dispensing rate for the top 15 therapeutic classes, by plan type, 2010 .................................. 179

10-20 Generic dispensing rate for the top 15 therapeutic classes, by LIS status, 2010 ................................ 180

 Web links .............................................................................................................................................. 181

11 Other services ............................................................................................................. 183

Dialysis

11-1 Number of dialysis facilities is growing and share of for-profit and freestanding 

dialysis providers is increasing ............................................................................................................ 185

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

hospital-based dialysis facilities, 2005 and 2010................................................................................. 186

11-3 Dialysis facilities’ capacity increased between 2006 and 2010 .......................................................... 187

11-4 Characteristics of Medicare fee-for-service dialysis patients, 2010.................................................... 188

11-5 The ESRD population is growing, and most ESRD patients undergo dialysis .................................. 189

11-6 Diabetics, middle-aged and the elderly, Asian Americans, and Hispanics are among 

the fastest growing segments of the ESRD population ....................................................................... 190

11-7 Aggregate margins vary by type of freestanding dialysis facility, 2010............................................. 191

Hospice

11-8 Medicare hospice use and spending grew substantially from 2000 to 2010 ...................................... 192

11-9 Hospice use increased across beneficiary groups from 2000 to 2010 ................................................ 193

11-10 Number of Medicare-participating hospices has increased, largely driven by for-profit hospices .... 194

11-11 Hospice cases and length of stay, by diagnosis, 2009 ......................................................................... 195

11-12 Long hospice stays are getting longer, while short stays remain virtually unchanged, 

2000 and 2010 ...................................................................................................................................... 196

11-13 Hospice average length of stay among decedents, by beneficiary and hospice 

characteristics, 2009 ............................................................................................................................. 197

11-14 Hospice aggregate Medicare margins, 2003–2009 ............................................................................. 198

11-15 Medicare margins are higher among hospices with more long stays, 2009 ....................................... 199

11-16 Hospices that exceeded Medicare’s annual payment cap, selected years ........................................... 200

11-17 Length-of-stay and live discharge rates for above- and below-cap hospices, 2009 ........................... 201

11-18 Margins are higher among hospices with a greater share of their patients in 

nursing facilities, 2009 ......................................................................................................................... 202

Clinical laboratory

11-19 Medicare spending for clinical laboratory services, 2002–2011 ........................................................ 203

 Web links .............................................................................................................................................. 204

 
 

S E C T I O N 

National health care and 

Medicare spending 

Chart 

Note: FF

be

Source: C

• Medi

throu

2008

2007

of Me

-20

0

20

40

60

80

100

120

140

160

Medicare spending (dollars in billions)

1-1. A

b

FS (fee-for-servic

eneficiary cost sh

MS Office of the 

care spendin

gh 2004. Sp

 and 2009, t

 is partially a

edicare Adva

86.6

9

37.0

4

21.2 2

9.3 1

3.2

1.1

2000 2

A

Aggregate

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haring. Spending

Actuary and the

ng among F

pending grow

then modera

attributable t

antage enro

93.9

102.3

42.0 44.8

22.2

27.8

2.8 13.3

3.3 3.5

1.3 1.5

2001 2002

A Data Book: H

e Medica

ries, by s

atory surgical ce

g for Medicare Ad

e 2012 annual rep

FFS beneficia

wth slowed s

ating in 2010

to a decline 

llees increas

108.5

11

48.3

5

29

15.3 1

3.5 3

1.8 2

2003 20

Health care spe

are spen

sector, 2

enter). Dollars are

dvantage enrolle

port of the Board

aries grew s

slightly from 

0. The slowin

in the numb

sed. 

14.3

122.7

54.1 57.7

32 35.4

7.7 20.2

3.8 4.0

2.0 2.2

004 2005

ending and the 

nding am

2000–201

e Medicare spen

ees is not include

ds of Trustees of 

strongly in m

2005 to 200

ng in aggreg

ber of FFS be

122.1 12

58.2 5

36.4 3

21.2 22

4.0 4

2.3 2

2006 20

Medicare prog

mong FFS

10 

nding only and do

ed in these aggre

f the Medicare Tr

ost sectors f

07, rebound

gate spendin

eneficiaries 

25.9 128.8

58.9 60.8

38.8 40.8

2.8 23.7

4.1 4.2

2.3 3.0

007 2008

Hospital inp

Physician

Post-acute 

Hospital ou

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ASC

gram, June 201

S

o not include 

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rust Funds. 

from 2000 

ing briefly in

ng from 2005

as the numb

132.7 13

62.5 64

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26.6

3

4.2 4

3.2 3

2009 20

patient

care

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sychiatric hosp

2 3

n

5 to 

ber 

36.1

4.5

46

1.9

4.3

3.4

010

pital
4 Nation

Chart 

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be

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• Medi

2000

-50

50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

Medicare spending (dollars per capita)

nal health care a

1-2. P

b

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MS Office of the 

care spendin

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2,638

1,128

645

283

98

34

00

0

00

00

00

00

00

00

00

00

00

2000

and Medicare s

er capita

eneficiar

ce), ASC (ambul

haring. 

Actuary and the

ng per bene

09, with som

2,768

2,92

1,238 1,28

656

793

377 380

97 100

38 43

2001 200

spending

a Medica

ries, by s

atory surgical ce

e 2012 annual rep

eficiary in FF

me sectors sl

24 3,025

81 1,346

3 809

0 426

0 98

3 49

02 2003

are spend

sector, 2

enter). Dollars are

port of the Board

S Medicare 

lowing in 20

3,130

3,332

1,481 1,567

876 962

485 549

104 109

55 59

2004 2005

ding am

2000–201

e Medicare spen

ds of Trustees of 

increased s

10. 

2 3,373

3

7 1,608 1

1,006 1

586

111

64

5 2006 2

ong FFS

10 

nding only and do

f the Medicare Tr

steadily in m

3,545

3,707

1,658 1,751

1,092 1,175

642 682

115 121

65 86

2007 2008

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Physician

Post-acute c

Hospital outp

Inpatient psy

ASC

S

o not include 

rust Funds. 

ost sectors f

3,791 3,

1,786 1,

1,280

1,

760

9

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91 9

2009 20

atient

care

patient

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655

862

446

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18

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ugs. 

on
Chart 

Note: G

on

Source: C

• Total

for a 

• As a 

abou

spen

growt

mana

• Medi

when

spen

• In 20

privat

perce

0

5

10

15

20

25

1

Health spending as a percent of GDP

1-5. H

G

al

DP (gross dome

ne component of

MS Office of the 

 health spen

double-digit

share of GD

t 18 percent

ding’s share

th associate

aged plans, 

care spendin

n it was start

ding will ma

10, all public

te spending 

ent and 51 p

966 1971

T

A

A

Health ca

GDP, with

ll fundin

estic product). To

f all public spend

Actuary, Nationa

nding consum

t share of GD

DP, total hea

t in 2010, an

e of GDP wa

ed with great

as well as a 

ng has also 

ted in 1965 t

ke up 4 perc

c spending m

made up 55

percent, resp

1976 19

Total health s

All public spen

A Data Book: H

re spend

h public f

g 

otal health spend

ing. 

al Health Expend

mes an incre

DP annually 

alth spending

nd is projecte

s stable thro

ter use of ma

strong econ

grown as a 

to about 3.6 

cent of GDP

made up abo

5 percent. By

pectively. 

981 1986

pending

nding

Health care spe

ding has

financin

ing is the sum of

diture Accounts, 

easing propo

since 1982.

g has increa

ed to reach 2

oughout muc

anaged care

nomy. 

share of the

percent toda

 by 2020. 

out 45 perce

y 2020, thos

1991 19

All pr

Medi

ending and the 

 grown m

g makin

f all private and p

2012. 

ortion of nat

.

sed from ab

20 percent o

ch of the 199

e techniques

e economy fr

ay. Projectio

ent of total h

se percentag

996 2001

rivate spendin

icare spendin

Ac

Medicare prog

more rap

g up nea

public spending. 

tional resour

bout 6 percen

of GDP in 20

90s due to s

s and higher 

rom less tha

ons suggest 

ealth care s

ges are proje

2006 201

ng

ng

ctual

gram, June 201

pidly tha

arly half 

Medicare spend

rces, accoun

nt in 1965 to

020. Health 

slower spend

enrollment 

an 1 percent 

that Medica

pending and

ected to be 4

11 2016

Projected

2 7

n 

of 

ding is 

nting 

o

ding 

in 

are 

d

49 
8 Nation

Chart 

Note: G

Source: 20

• Over 

perce

• Nomi

2010,

year o

than G

avera

spend

share

• Begin

expec

resou

by 20

insura

increa

0

1

2

3

4

5

6

7

8

Share of GDP (percent)

nal health care a

1-6. T

sh

DP (gross dome

012 annual repor

time, Medica

ent in 1970, it

nal Medicare

, considerabl

over the sam

GDP, averag

age growth ra

ding is projec

e of GDP is p

nning in 2010

ctancy, and t

urces devoted

040. Additiona

ance (which 

ases in healt

0.7

1.3

1970 198

Part D

Part B

Part A

and Medicare s

rustees 

hare of G

estic product). Th

rt of the Boards o

are spending

t is projected

e spending g

ly faster than

me time frame

ging 5.5 perc

ate of 4.6 per

cted to contin

projected to re

0, the aging o

the Medicare

d to Medicare

al factors, su

shields indiv

h care spend

3

1.9

80 1990 2

D

B

A

spending

project M

GDP 

ese projections a

of Trustees of the

g has accoun

d to reach 6.7

rew on avera

n nominal gro

e. Future Me

ent per year 

rcent for the 

nue rising as 

each 6.7 per

of the baby-b

e drug benefit

e, growing fr

uch as innova

iduals from f

ding. 

2.3

3.6

2000 2010

Medicare

are based on the

e Medicare Trust

ted for an inc

7 percent of G

age 9.1 perce

owth in the ec

dicare spend

between 201

economy as 

a share of G

rcent in 2080

boom genera

t are likely to

rom 3.6 perce

ation in medi

facing the ful

4.0

5.3

2020 203

e spendi

e trustees’ interm

t Funds. 

creasing sha

GDP in 2080

ent per year 

conomy, whi

ding is projec

10 and 2080

a whole. In o

GDP, but at a

0. 

tion, an expe

o increase the

ent of GDP in

cal technolog

l price of serv

3

6.0 6

30 2040 2

ng to inc

mediate set of ass

are of GDP. F

0. 

over the per

ch averaged

cted to contin

0 compared w

other words,

a slower pace

ected increas

e proportion 

n 2010 to 6.0

gy and the w

rvices), will a

6.2 6.3

2050 2060

crease a

sumptions. 

From less tha

riod from 198

d 5.7 percent 

nue growing f

with an annua

 Medicare 

e. Medicare’s

se in life 

of economic

0 percent of G

widespread us

lso contribute

6.5 6.7

2070 2080

s a 

an 1 

80 to 

per 

faster 

al 

s

c

GDP 

se of 

e to 

7

0
Chart 

Note: PH

M

Source: C

• Altho

differ

comp

growt

Medi

not a

the g

spen

• Differ

the p

since

privat

bene

Thes

the s

-5

0

5

10

15

20

25

1

Per enrollee change (percent)

1-7. C

p

HI (private health

edicare expendit

MS Office of the 

ough rates of

r from year to

parison is se

th rates. Als

care covers 

llow analysis

enerosity of

ding. 

rences appe

rospective p

e the mid-198

te payers by

fits offered b

e factors ma

ame period.

970 19

A

Changes 

rivate he

h insurance). For

tures include bot

Actuary, Nationa

f growth in p

o year, over 

ensitive to the

o, private in

an older po

s of the exte

f covered be

ear to be mo

payment sys

80s, Medica

y using its la

by private ins

ake the com

975 198

A Data Book: H

in spend

ealth ins

r the most part, d

th fee-for-service

al Health Expend

per capita sp

the long ter

e end points

surers and M

pulation that

ent to which 

nefits and, in

re pronounc

stem for hosp

are has had g

rger purchas

surers have 

parison prob

80 1985

Health care spe

ding per 

urance 

during this period

e and private plan

diture Accounts, 

pending for M

rm they have

s of the time 

Medicare do

t tends to be

these spend

n turn, chan

ced since 19

pital inpatien

greater succ

sing power. 

expanded a

blematic, as

5 1990

19

19

19

19

19

20

ending and the 

enrollee

d, Medicare and 

ns. 

2012. 

Medicare and

e been quite

one uses fo

o not buy the

e more costl

ding trends w

ges in enrol

985, when M

nt services. S

cess at conta

Others main

and cost-sha

Medicare’s 

1995

Average ann

970-2010

970-1993

993-1997

997-1999 

999-2002 

002-2010 

Medicare prog

e, Medica

PHI did not cove

d private ins

e similar. How

or calculating

e same mix o

y. In addition

were affecte

lees’ out-ofedicare beg

Some analys

aining cost g

ntain that, si

aring require

benefits cha

2000

Medicare

nual percent ch

8.8

11.0

7.3

-0.3 

6.4

6.4

gram, June 201

are and 

er the same serv

surance ofte

wever, this 

g average 

of services, a

n, the data d

d by change

-pocket 

gan introduci

sts believe t

growth than 

nce the 197

ements decli

anged little o

2005

PH

hange by perio

9.9

12.9

3.7

6.2

9.4

6.2

2 9

ices. 

n 

and 

do 

es in 

ing 

that, 

70s, 

ned. 

over 

2010

HI

od
10 Natio

Chart 

Note: C

ex

Source: 20

• Medi

to $5

admi

• Medi

Medi

• CBO 

6.1 p

2011

spen

abou

volum

0

200

400

600

800

1000

1200

1

Dollars (in billions)

onal health care

1-8. T

g

ov

BO (Congression

xpenses) by cale

012 annual repor

care spendin

22 billion in 

nistrative ex

care spendin

care’s volun

projects tha

ercent betw

 to 2021 als

ding are inh

t the econom

me and inten

980 1984

T

T

C

T

e and Medicare

rustees 

row at a

ver the n

nal Budget Office

endar year. 

rt of the Boards o

ng has grow

2010 (see C

xpenses). 

ng increased

ntary outpatie

at mandatory

een 2011 an

o assume 6

erently unce

my (which af

nsity of servi

1988

Trustees - hig

Trustees - inte

CBO

Trustees - low

e spending

and CBO

n annua

next 10 y

e). All data are n

of Trustees of the

wn 14-fold ov

Chart 1-3; the

d significant

ent prescript

y spending fo

nd 2021. The

.1 percent a

ertain, and d

ffect provide

ces delivere

1992 199

gh

ermediate

w

O project

l average

years 

ominal, gross pr

e Medicare Trust

ver the past 

ese data inc

ly after 2006

tion drug ben

or Medicare

e Medicare t

verage annu

ifferences ca

er payment a

ed to Medica

96 2000

t Medica

e rate of

rogram outlays (m

t Funds; CBO M

three decad

clude benefit

6 with the int

nefit. 

e will grow at

trustees’ inte

ual growth. F

an stem from

annual upda

are beneficia

2004 20

Actua

are spend

f around 

mandatory plus a

arch 2012 basel

des, from $37

t payments a

troduction of

t an average

ermediate p

Forecasts of

m different a

tes) and abo

aries, among

008 2012

al Pro

ding to 

6 percen

administrative 

ine. 

7 billion in 1

and 

f Part D, 

e annual rate

rojections fo

f future Med

assumptions

out growth in

g other facto

2016 2

ojected

nt 

980 

e of 

or 

icare 

n the 

rs. 

2020
Chart 

 Tota

Note: SN

in

be

an

ot

 Source: 20

• The d

• In 20

were 

servic

drugs

• Altho

for th

2001

care 

mana

Physician 

schedul

17%

DME

2%

Othe

hospit

5%

1-9. M

se

al spending 2

NF (skilled nursin

clude spending f

ehalf) for cost-sh

nd do not include

ther intermediary

012 President’s B

distribution o

11, Medicar

the largest 

ces reimburs

s provided u

ough inpatien

ose services

, falling from

plans has gr

aged care en

fee 

e

er 

tal

Other

12%

A

Medicare 

ervices a

2001 = $251 b

ng facility), DME

financed by bene

aring requiremen

e spending on pro

y. Totals may not

Budget; CMS Off

of Medicare 

re spent abo

spending ca

sed under th

nder Part D 

nt hospital se

s was a sma

m 38 percent

rown from 1

nrollment is 

Managed 

care

15%

SNF

5%

A Data Book: H

spendin

and has 

billion

 (durable medica

eficiary premiums

nts of Medicare-c

ogram administr

t sum to 100 perc

fice of the Actuar

spending am

out $549 billio

ategory (24 p

he physician

(12 percent

ervices still m

aller share o

t to 24 perce

5 percent to

higher than 

Inpatie

hospita

38%

Home h

Hospice 3%

1%

Health care spe

ng is con

shifted o

al equipment). Sp

s but do not inclu

covered services

ation. “Other” inc

cent due to round

ry, 2012. 

mong service

on for benef

percent), foll

n fee schedu

t), and other 

made up the

f total Medic

ent. Spendin

o 23 percent 

it was a dec

nt 

al

health

% P

D

Other

hospita

6%

Other

9%

Pres

drugs 

unde

1

ending and the 

ncentrate

over time

Total spe

pending amounts

ude spending by 

s. Values are rep

cludes carrier lab

ding. 

es has chan

fit expenses

lowed by ma

le (12 perce

r fee-for-serv

e largest spe

care spendin

g on benefic

over the sa

cade ago. 

Physician fee 

schedule

12%

DME

1%

r 

al

r

scription 

provided 

er Part D

12%

Medicare prog

ed in cer

e

ending 2011 

s are gross outla

y beneficiaries (o

ported on a fisca

b, other carrier, in

nged substan

. Inpatient h

anaged care

ent), outpatie

vice settings

ending categ

ng in 2011 th

ciaries enrol

me period. C

SNF

6%

gram, June 201

rtain 

= $549 billio

ays, meaning tha

r spending on th

l year, incurred b

ntermediary lab, 

ntially over t

ospital servi

e (23 percent

ent prescript

 (9 percent)

gory, spendin

han it was in

led in manag

Current Med

Inpat

hosp

24

Managed 

23%

2 11

on 

at they 

eir 

basis 

and 

ime. 

ices 

t), 

tion 

. 

ng 

n

ged 

dicare 

tient 

pital

%

Home 

health

4%

Hospice

3%

care
12 Natio

Chart 

Note: FF

Source: M

• Medi

the c

spen

half o

• Costl

inpat

year 

1

2

3

4

5

6

7

8

9

10

Percent

onal health care

1-10. F

sm

FS (fee-for-servic

edPAC analysis 

care FFS sp

ostliest 5 pe

ding and the

of beneficiari

y beneficiar

ient hospital

of life. 

Most 

costly 1

0

10

20

30

40

50

60

70

80

90

00

e and Medicare

FS progr

mall gro

ce). Excludes be

of 2008 Medicar

pending is co

ercent of ben

e costliest qu

ies accounte

ies tend to in

l services, a

Least c

Second

Nex

Nex

Nex

%

Percent of 

e spending

ram spe

up of be

eneficiaries with a

re Current Benef

oncentrated 

neficiaries ac

uartile accou

ed for only 5

nclude those

re dually elig

costly half

d quartile

xt 15%

xt 5%

xt 4%

beneficiaries

nding is 

eneficiari

any group health

ficiary Survey, C

among a sm

ccounted for

unted for 81

5 percent of F

e who have 

gible for Med

highly c

ies, 2008

h enrollment durin

ost and Use files

mall number 

r 38 percent 

percent. By 

FFS spendin

multiple chro

dicare and M

Percen

concentr

8

ng the year. 

s. 

of beneficia

of annual M

 contrast, th

ng. 

onic conditio

Medicaid, an

14

26

17

24

14

nt of program

rated in a

aries. In 2008

Medicare FFS

e least costl

ons, are usin

nd are in the 

5

m spending

8

a

8, 

S

ly 

ng 

last 

81
Chart 

Estimate

High 

Intermedia

Low 

Note: H

tra

 * U

th

Source: 20

• The M

provid

Supp

presc

spen

excee

perce

reven

of inc

• The S

analy

proje

bene

• HI’s e

the in

assum

assum

1-11. M

in

ate 

I (Hospital Insura

ansfer), income f

Under the low-co

e projection peri

012 annual repor

Medicare pro

ded by hosp

plementary M

cription drug

ding and are

eds payroll t

ent of SMI se

nues are fed

come and ot

SMI trust fun

ysts believe t

cted spendin

ficiaries and

expenses ex

ntermediate 

mptions, the

mptions, it w

A

Medicare 

n 2024 un

ance). Income in

from the fraud an

ost assumption, t

od. 

rt of the Boards o

ogram is fina

pitals and oth

Medical Insu

 benefit. Ded

e held in the

tax revenues

ervices, and

deral tax doll

her taxes on

nd is finance

that the leve

ng for SMI s

d on growth i

xceeded its i

assumptions

e HI trust fun

would remain

A Data Book: H

HI trust 

nder actu

Yea

excee

2

2

2

cludes taxes (pa

nd abuse program

trust fund assets

of Trustees of the

anced throug

her providers

rance (SMI)

dicated payr

HI trust fund

s and fund re

 beneficiary 

ars that are 

n individuals

ed with gene

els of premiu

services wou

in the U.S. e

ncome in 20

s, the HI trus

nd could be e

n able to pay

Health care spe

fund is p

uaries’ in

ar costs 

ed income

2008

2008

2008

ayroll and Social 

m, and interest fr

 would start to in

e Medicare Trust

gh two trust 

s such as sk

 services, su

roll taxes on

d. The HI tru

eserves. Ge

premiums f

not dedicate

 and corpora

ral revenues

ums and gen

uld impose a

economy. 

008. In 2012

st fund will b

exhausted a

y full benefits

ending and the 

projecte

ntermed

Security benefits

rom trust fund as

ncrease in 2014 a

t Funds; CMS O

funds: one f

killed nursing

uch as phys

n current wor

ust fund can

eneral revenu

finance abou

ed to a partic

ations.) 

s and benefi

neral revenu

a significant b

2, Medicare t

be exhausted

as early as 2

s indefinitely

Medicare prog

d to be i

iate assu

Year H

fund assets

20

20

Neve

s taxes, railroad 

ssets. 

and continue to i

ffice of the Actua

for HI, which

g facilities, a

ician visits a

rkers largely

 be exhaust

ues finance 

ut 25 percen

cular use, bu

iciary premiu

es required 

burden on M

trustees rep

d in 2024. U

017. Under 

y. 

gram, June 201

nsolvent

umption

HI trust

s exhausted

17

24

er*

retirement tax 

increase through

ary. 

h covers ser

and one for 

and Medicare

y finance HI 

ted if spendi

roughly 75 

nt. (General 

ut are made

ums. Some 

to finance 

Medicare 

ort that, und

Under high-co

low-cost 

2 13

t 

s 

hout 

rvices 

e’s 

ng 

e up 

der 

ost 
14 Natio

Chart 

Note: G

as

be

wi

as

Pr

fe

Source: 20

• Unde

rapid

by 20

0

1

2

3

4

5

6

7

8

1

Percent of GDP

onal health care

1-12. M

fi

DP (gross dome

ssumptions. Tax 

enefits that is des

ithin the Medicar

ssuming primary 

rotection and Aff

es are deposited

012 annual repor

er an interme

ly, from abo

080. 

966 1976

e and Medicare

Medicare 

nancing 

estic product), HI 

on benefits refer

signated for Med

re Prescription D

responsibility fo

fordable Care Ac

d in the Part B ac

rt of the Boards o

ediate set of

ut 3.6 perce

1986 199

e spending

faces se

(Hospital Insura

rs to the portion 

dicare. State tran

Drug, Improvemen

r prescription dru

ct of 2010 on man

ccount of the SM

of Trustees of the

f assumption

ent of GDP to

96 2006 2

Actual P

erious ch

nce). These proj

of income taxes 

sfers (often calle

nt, and Moderniz

ug spending. The

nufacturers and i

I trust fund. 

e Medicare Trust

ns, trustees p

oday to 6.0 p

2016 2026

Projected

State t

hallenge

jections are base

that higher incom

ed the Part D “cla

zation Act of 200

e drug fee refers 

importers of bran

t Funds. 

project that 

percent by 2

2036 204

transfers and

Tax on bene

HI defi

s with lo

ed on the trustee

me individuals pa

awback”) refer to

03 from the states

 to the fee impos

nd-name prescri

Medicare sp

2040 and ab

46 2056

Total expe

General rev

d drug fee

efits

icit

ong-term

es’ intermediate s

ay on Social Sec

o payments calle

s to Medicare for

sed in the Patien

ption drugs. The

pending will g

bout 6.7 perc

2066 2076

nditures

venue transfe

Premiums

Payroll taxe

m

set of 

curity 

d for 

r

nt 

se 

grow 

cent 

6

rs

es
Chart 

Note: SM

be

inc

Source: 20

• Betw

incre

prem

total 

• Grow

Socia

Socia

comp

• Most 

mont

Secu

5

1,0

1,5

2,0

2,5

3,0

Monthly amounts per person (in 2011 dollars)

1-13. A

ar

m

MI (Supplementa

eneficiary enrolled

cluded. 

012 annual report

een 1970 an

ased by an a

iums plus co

SMI benefit 

wth over time

al Security in

al Security b

pared with ab

Medicare b

hly Social S

rity benefits 

0

500

000

500

000

500

000

1970 198

A

Average m

re projec

monthly S

ry Medical Insura

d in Part B and (af

t of the Boards of 

nd 2010, the

annual avera

ost sharing g

grew by an 

e in Medicare

ncome. Med

enefit will gr

bout 1.9 per

eneficiaries 

ecurity bene

is projected

80 1990

A Data Book: H

monthly 

cted to g

Social Se

nce). Average SM

fter 2006) Part D. 

Trustees of the M

e average mo

age rate of 1

grew by an a

annual aver

e premiums 

icare trustee

row by 1 per

rcent annual

pay their Pa

efits. The De

d to be 1.8 pe

2000 2010

Actual P

Health care spe

SMI prem

grow fast

ecurity b

MI benefit and ave

Beneficiary spen

Medicare Trust Fun

onthly Socia

1.6 percent. 

annual avera

rage of 6.3 p

and cost sh

es project th

rcent annual

 growth in av

art B premium

ecember 201

ercent unde

2020 20

Avera

Avera

Avera

Projected

ending and the 

miums a

ter than t

benefit 

erage SMI premiu

nding on outpatien

nds. 

al Security b

Over the sa

age of 5.2 pe

percent. 

haring will co

at between 

ly (after adju

verage SMI 

m by having

12 cost-of-liv

er intermedia

030 2040

age Social Secu

age SMI premiu

age SMI benefit

Medicare prog

and cost 

the aver

um plus cost-shar

nt prescription dru

enefit (adjus

ame period, 

ercent, and 

ontinue to ou

2010 and 20

usting for inf

premiums p

g it withheld f

ving adjustm

ate assumpti

2050 2060

urity benefit

um plus cost sh

t

gram, June 201

sharing

rage 

ring values are for

ugs before 2006 is

sted for infla

average SM

the value of

utpace growt

040 the aver

flation), 

plus cost sha

from their 

ment for Soci

ions. 

0 2070 20

haring

2 15

r a 

s not 

tion) 

MI 

f the 

th in 

rage 

aring. 

al 

080
16 Natio

Chart 

HI 

SMI 

Note: H

ar

am

pa

an

Source: M

• In ca

$4,81

• In the

and S

• Most 

medig

requi

onal health care

1-14. M

sh

I (Hospital Insura

re for fee-for-serv

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ase in Medic

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because we exc

re Current Benef

 employer-spo

ve 200 percen

g those who a

ible due to ag

mon among th

due to disabili

(Medicare cov

below 200 pe

oor health. 

iability

emental 

ed Medic

aracterist

red Medigap

e insurance

% 21%

4

20

24

25

26

29

12

16

21

24

26

24

4

24

20

27

19

23

25

19

14

e assigned to the

in other categori

yment plans. “Oth

was defined as $

etropolitan statis

g in the commun

r who had Medic

cluded beneficiar

ficiary Survey, C

onsored supp

nt of poverty), 

are age 70 or 

e or ESRD, a

hose who are 

ty or ESRD, a

verage only) i

rcent of pove

coverag

care ben

tics, 200

e Medicaid

12%

41

8

7

7

6

7

44

29

11

1

1

7

40

43

11

16

12

12

5

15

32

e supplemental co

ies during 2009. 

her public sector

10,289 for peopl

stical areas (MSA

nity. It excludes b

care as a second

ries with missing

ost and Use file.

plemental cov

are eligible d

older, are mid

are rural dwell

 under age 65

are rural dwel

s most comm

rty, are eligibl

ge among

neficiarie

09 

Medicare 

managed 

care 

27% 

21 

27 

31 

31 

29 

24 

25 

30 

32 

29 

22 

29 

21 

9 

31 

14 

26 

28 

27 

29 

22 

overage categor

Medicare mana

r” includes federa

le living alone an

As). “Rural” indic

beneficiaries who

dary payer. Numb

 values. Number

erage are tho

ue to age, an

ddle or higher

ing, are fema

5, are low inco

ling, and repo

mon among be

le due to disa

g

es, by 

Other 

public Med

sector o

1% 

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0 

1 

1 

1 

0 

0 

1 1

2 1

0 

0 

1 

2 1

1 

1 

1 1

1 

1 

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1 

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ry that applied fo

ged care include

al and state prog

nd $12,982 for m

ates beneficiarie

o were not in bot

ber of beneficiar

rs may not sum d

ose who are a

d report bette

r income (abo

le, and report

ome (below 1

ort poor health

eneficiaries wh

bility, are rura

dicare 

nly 

7% 

7 

8 

5 

4 

4 

4 

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2 

6 

3 

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7 

6 

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r the 

es 

rams 

married 

es living 

th Part 

ies 

due to 

bove 

er 

ove 

t

25 

h. 

ho 

al 
Chart 

Note: FF

Pu

M

be

Source: M

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(defin

secto

avera

the h

bene

beca

institu

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and m

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per b

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bene

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n

by

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ublic supplement

edicare cost sha

eneficiaries not li

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ng FFS bene

ned as bene

or sources, a

aged $13,75

ealth care c

ficiary. The 

use this cha

utions, while

ate sources o

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eficiaries paid

beneficiary. 

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14%

s

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otal spe

oninstitu

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ts include Medica

aring and noncov

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of Medicare Cur

eficiaries livi

ficiaries’ dire

and all privat

51 in 2009. M

osts for FFS

level of Med

art excludes 

e Chart 2-1 r

of suppleme

aid 16 perce

d 14 percen

f supplemen

alth care cos

aries' 

nding

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upplements

16%

P

Data Book: He

nding on

utionaliz

e of paym

plements include

aid, Department 

vered services, b

ns such as nursin

rrent Beneficiary 

ng in the co

ect spending

te-sector sou

Medicare is t

S beneficiarie

dicare spend

beneficiaries

represents a

ntal coverag

ent of benefi

t of their hea

ntal coverage

sts, an avera

Public 

supplement

6%

Per capita tot

ealth care spen

n health 

ed FFS M

ment, 200

 employer-spons

of Veterans Affa

ut not suppleme

ng homes. 

Survey, Cost an

mmunity, th

g, as well as

urces on all 

the largest s

es living in th

ding in this c

s in Medicar

ll Medicare b

ge—primarily

ciaries’ cost

alth care cos

e—primarily 

age of $769

ts

al spending 

nding and the M

care ser

Medicare

09 

sored plans and 

airs, and other pu

ntal premiums. A

nd Use file, 2009

e total cost o

s expenditure

health care 

ource of pay

he communi

hart differs f

re Advantag

beneficiaries

y employer-s

ts, an averag

sts out of po

y Medicaid—

per benefici

M

= $13,751

Medicare progr

rvices fo

e benefic

individually purc

ublic coverage. D

Analysis includes

9. 

of health car

es by Medic

goods and s

yment; it pay

ity, an avera

from the leve

e and those

s. 

sponsored r

ge of $2,259

ocket, an ave

—paid 6 perce

iary. 

Medicare

64%

ram, June 2012

r 

ciaries, 

chased coverage

Direct spending i

s only FFS 

re services 

are, other pu

services) 

ys 64 percen

age of $8,84

el in Chart 2

e living in 

retiree cover

9 per benefic

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ent of 

2 53

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s on 

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5 per 

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rage 

ciary. 

877 
54 Medi

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nu

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the c

spen

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total s

as tot

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the h

spen

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10,0

20,0

30,0

40,0

50,0

60,0

70,0

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icare beneficiar

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am

so

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ursing homes. O

edPAC analysis 

 spending o

ommunity. P

ding averag

st total spen

ng FFS bene

spending inc

tal spending

ficiaries but 

ighest total s

ding for all b

ficiaries with

39

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000

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< 1

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ry and other pa

er capita

mong no

ource of

ce). Analysis exc

ut-of-pocket spe

of Medicare Cur

n health car

Per capita sp

es $65,642. 

ding averag

eficiaries livi

creases, and

g increases. 

pays 75 per

spending. B

beneficiaries

h the highest

91 1

10 1

Groups of b

edicare

upplemental p

ut of pocket

ayer financial li

a total sp

oninstitu

f paymen

cludes those who

nding includes M

rrent Beneficiary 

re services v

pending for t

Per capita s

es $391. 

ng in the co

d beneficiari

For example

rcent of total

eneficiaries’

s, but only 9

t total spend

1,951

0-25

beneficiaries

payers

iability

pending 

utionalize

nt, 2009

o are not in FFS 

Medicare cost sha

Survey, Cost an

varies drama

the 10 perce

spending for

mmunity, M

es’ out-of-po

e, Medicare 

l spending fo

’ out-of-pock

percent of to

ding. 

4,477

25-50

s ranked by t

on healt

ed FFS b

Medicare and th

aring and noncov

nd Use file, 2009

atically amon

ent of benefic

r the 10 perc

edicare pay

ocket spend

pays 64 per

or the 10 pe

ket spending

otal spendin

9,853

50-75

total spendin

th care s

beneficia

hose living in inst

vered services. 

9. 

ng FFS bene

ciaries with t

cent of bene

s a larger pe

ing is a sma

rcent of tota

rcent of ben

g covers 14 p

ng for the 10 

21,781

75-90

ng (percentil

services 

aries, by 

titutions such as 

eficiaries livi

the highest t

eficiaries with

ercentage as

aller percenta

l spending fo

neficiaries wi

percent of to

percent of 

65,64

> 90

e ranges)

ng in 

total 

h the 

s

age 

or all 

ith 

otal 

42

0
Chart 

Note: FF

20

pr

pu

An

be

O

Source: M

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expe

healt

the ty

bene

supp

spen

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categ

spons

cover

those

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the s

0

5,000

10,000

15,000

20,000

25,000

Dollars

5-5. V

am

by

FS (fee-for-servic

009. They could h

rograms not inclu

urchased coverag

nalysis excludes 

eneficiaries who w

ut-of-pocket spen

edPAC analysis 

evel of total 

nditures by M

h care good

ype of supple

ficiaries with

lemental cov

ding, 98 per

care is the la

gory, but the

sored, medi

rage—public

e who have o

ng those wh

econd large

8,530

3,289

1,883

0

0

0

0

0

0

Employe

sponsore

A 

Variation 

mong no

y type of

ce). Beneficiaries 

have had coverag

ded in the other c

ge. “Public supple

beneficiaries who

were not in both P

nding includes Me

of Medicare Curr

spending (d

Medicare, ot

s and servic

emental cov

h no supplem

verage. Ben

rcent higher 

argest sourc

 second larg

gap plus em

c and private

only mediga

o have Med

st source of 

9,1

1,5

432 2,1

ered

Med

Medicare

Data Book: He

in and c

oninstitu

f supple

are assigned to t

ge in other catego

categories. “Priva

emental” includes

o are not in FFS 

Part A and Part B

edicare cost shar

rent Beneficiary S

defined as be

ther public-s

ces) among 

verage they h

mental cover

eficiaries wi

than those w

ce of paymen

gest source 

mployer, Med

e combined—

ap, suppleme

icare-only co

payment. 

197

543

476

198

digap M

e

Private suppl

ealth care spen

composit

utionalize

mental c

the supplementa

ories during 2009

ate supplemental

s Medicaid, Depa

Medicare or live i

B throughout their

ring and noncove

Survey, Cost and 

eneficiaries’ 

sector source

FFS benefic

have. Total s

rage than fo

th Medicaid 

with no supp

nt for benefi

of payment 

dicaid, and o

—is the seco

ental covera

overage, be

10,482

3,436

654

2,115

edigap &

employer

lemental P

nding and the M

tion of to

ed FFS b

coverage

al coverage categ

9. “Other public s

l” includes emplo

artment of Vetera

in institutions suc

r enrollment in 20

ered services, but

 Use file, 2009 

 out-of-pock

es, and all p

ciaries living 

spending is 

r those bene

coverage h

plemental co

ciaries in ea

differs. Amo

other public,

ond largest s

ge and out o

eneficiaries’ o

16,762

1

1,768

1,390

Medicaid

Public supplem

Medicare progr

otal spen

beneficia

e, 2009 

gory that applied f

sector” includes fe

yer-sponsored pl

ans Affairs, and ot

ch as nursing hom

009 or had Medic

t not supplement

ket spending

private-secto

in the comm

much lower

eficiaries wh

ave the high

overage. 

ach supplem

ong those wi

supplement

source of pa

of pocket are

out-of-pocke

6,763

1

1,032

2,251

No suppleme

coverage

mental Out 

ram, June 2012

nding 

aries, 

for the most time 

ederal and state 

lans and individu

ther public covera

mes. It excludes 

care as a second 

tal premiums. 

g, as well as 

or sources on

munity varies

r for those 

ho have 

hest level of 

mental insura

th employer

tal coverage

ayment. Amo

e about equ

et spending 

7,20

22

3,12

2,47

ntal Othe

public se

of pocket

2 55

in 

ally 

age. 

payer. 

n all 

s by 

total 

ance 

re

ong 

al. 

is 

7

62

3

1

er

ector
56 Medi

Chart 

Note: ES

Source: M

• This d

insura

only) a

on ser

averag

• Insura

who re

very g

• Despit

is com

result 

have s

• What b

out-ofBenefi

but ma

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Dollars

icare beneficiar

5-6. O

se

st

SI (employer-spo

edPAC analysis 

iagram illustrat

nce and health

and report fair o

rvices. Those w

ge of $1,079 in

ance that supple

eport being in f

ood, or excelle

te having supp

mparable to or m

likely reflects t

stronger prefere

beneficiaries a

-pocket spendi

iciaries with ES

ay pay more in 

1,128 1,07

3,446

1,64

Medicare

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Out-of-

- +

- Beneficiaries

+ Beneficiarie

ry and other pa

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ervices p

tatus, 20

onsored supplem

of Medicare Cur

tes out-of-pock

h status. For ex

or poor health 

who have Medic

 out-of-pocket 

ements Medica

fair or poor hea

ent health regar

lemental cover

more than thos

he fact that ben

ences for healt

ctually pay out

ng generally re

SI usually pay l

Medicare ded

79

2,341 2

43

2,985

1

e only ESI

ums paid by b

pocket spend

s who report the

es who report th

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ayer financial li

ocket spe

per bene

009 

mental insurance)

rrent Beneficiary 

ket spending on

xample, benefic

had an averag

care-only cove

spending on p

are does not sh

alth spend more

rdless of the ty

rage, beneficia

e who have on

neficiaries who

th care.

t of pocket varie

eflects the prem

ess out of pock

uctibles and co

2,354

3,19

1,631

3,38

I Me

eneficiaries

ding by benef

ey are in fair or p

ey are in good, 

+

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ending fo

eficiary, b

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Survey, Cost an

n services and 

ciaries who hav

e of $1,128 in 

erage and repo

remiums and $

hield beneficiar

e out of pocket

ype of coverage

ries who have 

nly coverage un

o have ESI or m

es by type of s

miums and cost

ket for Medicar

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91 3,264

3

82

1,900

3

edigap

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poor health

very good, or e

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or premi

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nd Use file, 2009

premiums by b

ve only traditio

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$1,643 on serv

ries from all ou

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nder traditional

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3,927 4,138

12

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1,813

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2 57

on on 

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S E C T I O N 

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hospitals

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ment 

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ed nurse 

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neral, chang

m May 2008 t

d, the hospi

number of ph

r occupation 

agnostic son

number of co

 to May 201

ementation o

s and LVNs w

duals emplo

e time period

ent (62,880 r

er level of tra

vices

ercent c

ccupatio

s 

er 

cience 

ial science (sc

nical 

ctical nurse), LV

of Bureau of Lab

ges reported

to May 2010

tal industry e

hysician ass

from 2008 t

nographers,

omputer and

0, at 8.9 per

of electronic 

were among

oyed by hosp

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registered n

aining. 

change in

on, 2008–

T

 em

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5

cience)

 1

2

N (licensed voca

bor Statistics, Oc

d here contin

0, hospital em

employed ne

sistants emp

to 2010, at 1

at 10.0 perc

d math scien

rcent. Growt

health recor

g the few occ

pitals from 2

er of register

urses), sugg

n hospita

–2010 

Total U.S.

mployment

May 2008)

5,096,190 

16,820

28,930

52,180

175,390

25,550

55,530

92,160

,458,520

125,640

2,712,350

8,100

5,730

163,360

ational nurse). 

ccupational Emp

nue trends w

mployment i

early 5.2 mil

ployed by ho

1.2 percent

cent. 

nce staff at h

th of this occ

rd systems.

cupations to

2008 to 2010

red nurses e

gesting a shi

al emplo

Total U

employ

(May 2

5,159,

18,

31,

56,

189,

27,

58,

96,

1,521,

129,

2,782,

8,

5,

145,

ployment Statistic

we observed 

ncreased 1.

lion individu

spitals incre

t. Growth wa

hospitals incr

cupation may

o experience

0, declining b

employed by

ift toward em

oyment, b

U.S. 

yment 

2010)

,860

,710

,830

,820

,430

,160

,680

,960

,400

,750

,610

,280

,830

,130

cs data set as of 

last year. 

2 percent. B

uals. 

eased more r

as also well a

reased rapid

y reflect hos

e a decline in

by 11.2 perc

y hospitals in

mploying nur

by 

Percent chan

total employ

(2008–20

1.2%

11.2

10.0

8.9

8.0

6.3

5.7

5.2

4.3

3.3

2.6

2.2

1.7

–11.2

September 2011

By the end o

rapidly than 

above avera

dly from May

spitals’ 

n the numbe

cent. During 

ncreased 4.3

rses with a 

nge in 

yment 

010) 

%

1. 

f this 

any 

age 

y

er of 

the 

3
Chart 

Note: FF

(P

by

gr

in

Source: C

• Aggre

$37 b

outpa

• A free

spen

2004

bene

More

• Outpa

years

spen

spen

• Outpa

$590

0

20

40

60

80

100

120

140

160

180

200

Billions of dollars

6-3. G

in

FS (fee-for-servic

PPS); psychiatric

y the outpatient P

rowth in spending

cluded in these a

MS, Office of the

egate Medic

billion in 201

atient spend

eze in inpati

ding growth 

, but reverte

ficiaries swit

e rapid paym

atient spend

s. In 1999, o

ding; in 2010

ding. 

atient spend

 in 1999, an

95 97

18 18

1999 200

Outpatie

Inpatien

A 

Growth in

npatient 

ce). Analysis inc

, rehabilitation, lo

PPS; and other o

g was slowed in 

aggregate totals.

e Actuary. 

care FFS inp

0. From 200

ing increase

ent paymen

from 1999 t

ed to relative

tched from t

ment growth r

ding has incr

utpatient sp

0, outpatient

ding per FFS

 increase of

7 106

8

20

00 2001 2

ent

t

Data Book: He

n Medica

and outp

ludes inpatient s

ong-term care, c

outpatient service

2006 by large in

.

patient spend

09 to 2010, i

ed about 6 p

t rates in the

to 2000. Spe

ely slow grow

raditional FF

resumed in 2

reased as a 

ending acco

t spending g

S beneficiary

f over 100 pe

114 120

21 22

2002 2003

ealth care spen

are’s FFS

patient s

ervices covered 

ancer, and childr

es. Payments inc

creases in the nu

ding was $14

npatient spe

ercent. 

e Balanced B

ending increa

wth from 200

FS Medicare

2008 for inpa

share of tota

ounted for al

grew to more

y was about

ercent.

127 13

25

2

2004 20

Calendar y

nding and the M

S paymen

services,

by the acute inp

ren’s hospitals a

clude program ou

umber of Medica

46 billion an

ending incre

Budget Act o

ased substa

05 to 2007 b

e to the Med

atient and o

al hospital-b

most 16 per

e than 20 pe

$1,181 in 20

34 135

8 29

005 2006

year

Medicare progr

nts for h

 1999–20

patient prospectiv

nd units; outpatie

utlays and benef

are Advantage en

nd outpatient

ased about 

of 1997 redu

antially betwe

because a la

icare Advan

utpatient se

based spend

rcent of all h

ercent of tota

010, up from

136 140

31 32

2007 2008

ram, June 2012

ospital 

010 

ve payment syste

ent services cov

ficiary cost sharin

nrollees, who are

t spending w

2 percent, w

uced inpatie

een 2001 an

rge number 

ntage progra

rvices. 

ding in the la

ospital 

al hospital 

m approxima

143 1

35 3

8 2009 20

2 63

em 

ered 

ng. The 

e not 

was 

while 

nt 

nd 

of 

am. 

st 12 

tely 

146

37

010
64 Acute

Chart 

Hospital g

All PPS h

and CAHs

PPS hosp

Urban 

Large u

Other u

Rural (exc

Rural re

Sole co

Medicar

Other ru

Other ru

Voluntary

Proprietar

Governme

Major teac

Other teac

Nonteach

CAHs 

Note: PP

in

m

ho

C

to

Source: M

• In 20

prosp

The n

servic

• Appro

(rural

depe

facilit

incre

• Abou

these

e inpatient serv

6-4. P

d

group 

ospitals 

s

pitals 

rban 

rban 

cluding CAHs

eferral 

mmunity 

re dependent

ural <50 beds

ural >50 beds

ry 

ent

ching 

ching 

ing 

PS (prospective 

patient PPS alon

illion. Major teac

ospitals have a ra

hart 6-24 for mor

 those with comp

edPAC analysis 

10, 3,332 ho

pective paym

number of P

ces from the

oximately 15

l referral cen

ndent hospi

ties account 

ased approx

ut 90 percent

e four types 

vices

roportio

ischarge

Numb

4,6

3,3

2,4

1,3

1,0

s) 9

1

3

t 1

s

s 1

1,9

8

5

2

7

2,3

1,3

payment system

ng with CAHs. M

ching hospitals ar

atio below 0.25. 

re information ab

plete hospital cos

of PPS impact f

ospitals prov

ment system

PS discharg

e inpatient to

5 percent of 

nters (RRC),

tals (MDHs)

for more tha

ximately 1 pe

t of rural hos

of hospitals 

on of Med

es by hos

Hospitals

ber Sh

636 

332 

410 

319 

091 

922 

123 

385 

195 

91 

128 

945 

818 

569 

268 

751 

313 

304 

m), CAH (critical a

aryland hospitals

re defined by a r

Data are limited 

bout CAHs. Num

st reports in 2010

iles and Medicar

vided 10.3 m

 (IPPS) and

ges declined

o the outpatie

all hospitals

, sole comm

)) intended to

an 11 percen

ercent from 

spitals were 

provide 87 p

dicare ac

spital gr

hare of total

100.0%

71.9

52.0

28.5

23.5

19.9

2.7

8.3

4.2

2.0

2.8

42.0

17.6

12.3

5.8

16.2

49.9

28.1

access hospital).

s are excluded. L

atio of interns an

to providers with

bers may not su

0. 

re cost report dat

million discha

 1,304 CAHs

 from 2009 t

ent setting. 

s are covered

unity hospita

o help rural f

nt of all disc

2009 to 201

CAHs, SCH

percent of al

cute care

roup, 201

Nu

(thou

. Analysis include

Large urban area

nd residents to be

h complete cost r

m to totals due t

ta from CMS. 

arges under 

s provided a

to 2010, prim

d by three s

als (SCHs), 

facilities tha

charges. The

0. 

Hs, MDHs, o

ll rural disch

e hospita

10 

Medicare d

umber 

usands) 

10,721 

10,331 

8,913 

4,903 

4,010 

1,418 

384 

588 

208 

48 

189 

7,356 

1,651 

1,323 

1,584 

3,730 

5,017 

390 

es all hospitals c

as have populatio

eds of at least 0.

reports in the CM

to rounding. Sam

Medicare’s 

about 400,00

marily due to

pecial paym

and small ru

t are not CA

e number of 

r RRCs in 2

harges. 

al inpatie

discharges 

Share of t

100.

96.

83.

45.

37.

 13.

3.

5.

1.

0.

1.

68.

15.

12.

14.

34.

46.

3.

covered by Medic

ons of more than

.25. Other teachi

MS database. Se

mple of hospitals 

acute inpatie

00 discharge

o a shift in 

ment provisio

ural Medicar

AHs; these 

these hospit

010. Collect

ent 

total 

.0% 

.4 

.1 

.7 

.4 

.2 

.6 

.5 

.9 

.5 

.8 

.6 

.4 

.3 

.8 

.8 

.8 

.6 

care’s 

n 1 

ing 

ee 

limited 

ent 

es. 

ons 

retals 

tively, 
Chart 

MDC 

number 

 5 

 4 

 

 8 

 

 6 

 

 1 

 11 

 18 

 

 10 

 

 

 

 7 

 

 

 9 

 

 

Note: M

Source: M

• In fisc

disch

• Circu

• Resp

• Musc

6-5. M

fis

MDC name

Circulatory

Respirator

Musculosk

and conne

Digestive 

Nervous s

Kidney an

Infectious 

Endocrine

metabolic 

disorders 

Hepatobili

and pancr

Skin, subc

tissue, and

Total 

DC (major diagn

edPAC analysis 

cal year 201

harges at hos

ulatory syste

piratory syste

culoskeletal 

A 

Major diag

scal yea

e

y system 

ry system 

keletal system

ective tissue 

system 

system 

d urinary trac

and parasitic

e, nutritional, a

diseases and

ary system 

reas 

cutaneous 

d breast 

nostic category). 

of MedPAR data

0, 10 major 

spitals paid 

m cases acc

em cases ac

system case

Data Book: He

gnostic c

ar 2010 

m

ct

c diseases

and 

d

Numbers may no

a from CMS. 

diagnostic c

under the ac

counted for a

ccounted for 

es accounted

ealth care spen

categori

Sha

disc

ot sum to totals d

categories a

cute inpatien

about one-q

nearly 20 p

d for 35 perc

nding and the M

es with h

are of all

charges

24%

15

12

11

8

7

5

4

3

3

92

due to rounding.

accounted fo

nt prospectiv

quarter of me

ercent of me

cent of surgi

Medicare progr

highest v

Share of 

medical 

discharges 

23% 

19 

4 

11 

9 

8 

6 

5 

3 

3 

91 

or 92 percent

ve payment 

edical and su

edical discha

ical discharg

ram, June 2012

volume, 

Share

surg

discha

26

3

35

10

5

4

2

2

4

2

93

t of all 

system. 

urgical case

arges. 

ges. 

2 65

e of 

ical 

arges 

6% 

3

5

0

5 

4 

2

2 

4 

2 

3

s. 
66 Acute

Chart 

Note: C

ou

Source: Am

• Hosp

servic

Total

2008

• There

comm

• The c

points

• The c

from 

the la

0

5

10

15

20

25

30

35

Percent

e inpatient serv

6-6. C

o

umulative chang

utpatient visits at

merican Hospita

pital outpatie

ce use. Tota

 admissions

. 

e were 651 m

munity hospi

cumulative p

s from 2009

cumulative p

2009 to 201

ast 10 years

0.0

2.3

5.3

1999 200

To

To

vices

Cumulativ

utpatien

e is the total per

t about 5,000 com

l Association, AH

nt service us

al hospital ou

s grew by ov

million outpa

itals in 2010

percent chan

 to 2010, or 

percent chan

0, or nearly 

. Inpatient ad

3

4.5 3

8.7

00 2001 2

otal admission

otal outpatient

ve chang

t visits, 

rcent increase fro

mmunity hospital

HA Hospital Stati

se grew muc

utpatient visi

er 10 percen

atient visits a

. 

nge in total o

nearly 10 m

nge in inpatie

380,000 ad

dmission de

6.5

7.5

12.3

13.7

2002 2003

ns

t visits

ge in tota

1999–20

om 1999 through

ls. 

stics. 

ch more rap

its increased

nt between 1

and approxim

outpatient vis

million visits. 

ent admissio

missions. It

eclined slight

8.4 8.

15.4

18

2004 200

Fiscal yea

al admis

010 

h 2010. Data are 

pidly from 19

d about 31 p

1999 and 20

mately 35 m

sits increase

ons decreas

was the larg

tly less from 

.9 9.3

8.0

21.0

05 2006

ar

sions an

admissions (all 

999 to 2010 t

percent from

008, but hav

illion admiss

ed by nearly 

ed by 1.2 pe

gest single-y

 2008 to 200

9.2

10.5

21.8

26.0

2007 2008

nd total 

payers) to and 

than inpatien

 1999 to 201

e declined s

sions to 

2 percentag

ercentage po

year decreas

09. 

5 9.8

8

29.6

3

8 2009 20

nt 

10. 

since 

ge 

oints 

se in 

8.6

1.5

010
Chart 

Note: FF

ho

Source: M

• From

declin

but b

• From

perce

• Toge

settin

-10

-5

0

5

10

15

20

25

30

Percent

6-7. C

an

20

FS (fee-for-servic

ospitals. 

edPAC analysis 

m 2004 to 20

ned 6.0 perc

eginning in 2

m 2004 to 20

ent. 

ether these tw

ng. 

0.0

2004

Ou

FF

Inp

FF

A 

Cumulativ

nd inpat

004–201

ce). Data are for 

of MedPAR and

10, the num

cent. From 2

2007, the vo

10, the num

wo trends su

4.1

0.3

2005

utpatient serv

FS beneficiary

patient discha

FS beneficiary

Data Book: He

ve chang

ient disc

0 

short-term gene

d hospital outpati

ber of Medic

2004 to 2006

olume of disc

ber of outpa

uggest a shif

8.5

0.2

2006

ices per

y

arges per

y

ealth care spen

ge in Med

charges 

eral and surgical 

ent claims data f

care inpatien

6, inpatient v

charges beg

atient service

ft in services

14.8

-1.1

2007

Calendar ye

nding and the M

dicare o

per FFS 

hospitals, includ

from CMS. 

nt discharge

volume per b

gan to declin

es per FFS b

s from the in

18.2

-2.1

2008

ear

Medicare progr

utpatien

benefici

ding critical acces

es per FFS b

beneficiary w

ne. 

beneficiary in

npatient to th

23.2

-4.8

2009

ram, June 2012

t service

iary, 

ss and children’s

beneficiary 

was relatively

ncreased 28

he outpatient

28

-6.0

2010

2 67

es 

s

y flat, 

8

t

8.0
68 Acute

Chart 

Note: Le

pr

Source: M

• Avera

non-M

• Avera

days 

an av

declin

• Avera

days 

0

1

2

3

4

5

6

Inpatient days

e inpatient serv

6-8. T

in

ength of stay is c

rospective payme

edPAC analysis 

age length o

Medicare inp

age length o

in 1999 to 4

verage annu

ne was most

age length o

between 19

5.41 5.31

3.97 3.96

1999 2000

vices

rends in

npatient 

calculated from d

ent system. Excl

of Medicare cos

of inpatient s

patients in 20

of inpatient s

4.67 days in 

ual rate of ap

t rapid betwe

of stay for all

999 and 2010

5.23 5

3.95 3

0 2001 20

 Medicar

length o

ischarges and p

udes critical acc

st report data from

stay for Medi

010. 

stay for Medi

2010. From

pproximately

een 2008 an

 non-Medica

0. 

5.20 5.13

3.95 3.96

002 2003

re inpatie

of stay, 19

atient days for m

ess hospitals.

m CMS. 

care benefic

care benefic

 1999 to 201

y 1.3 percent

nd 2010, dec

are inpatient

5.06 5.0

3.91 3.9

2004 200

Fiscal yea

ent and 

999–201

more than 3,000 h

ciaries was n

ciaries fell ne

10, Medicare

t. Over the c

clining at mo

ts remained 

00 4.93

91 3.90

05 2006

ar

non-Med

0 

hospitals covered

nearly 1 day

early 14 per

e length of s

course of the

ore than 2 pe

nearly unch

4.91 4.89

3.91 3.95

2007 2008

Medicare b

Non-Medic

dicare 

d by the acute in

y longer than

rcent, from 5

stay declined

e decade, th

ercent per ye

hanged at 3.

9 4.78 4

5 3.96 3

8 2009 2

beneficiaries

are inpatients

npatient 

n for

5.41 

d at 

e 

ear. 

93 

4.67

3.93

2010

s
Chart 

Note: 

Source: 

• The s

from 

appro

• The s

consi

same

provid

appro

by an

emer

urban

• The s

faste

Chart

emer

for-pr

visit i

hosp

2 per

50

55

60

65

70

75

Percent

6-9. S

em

IPPS (inpatient 

MedPAC analys

share of inpa

approximate

oximately 4 p

share of inpa

istently high

e rate from 2

ded at rural 

oximately 66

n emergency

rgency depa

n hospitals. 

share of inpa

r between 2

t 6-9). For n

rgency depa

rofit hospital

ncreased fro

itals experie

rcentage poi

62.2

61.6

65.1

0

5

0

5

0

5

2005

A

A 

hare of i

mergenc

prospective pay

sis of MedPAR d

atient admis

ely 62 perce

percentage 

atient admis

er for rural h

2005 to 2010

hospitals we

6 percent of 

y departmen

rtment visit 

atient admis

005 and 201

onprofit hos

rtment visit 

s, the share

om 62 perce

enced a 4 pe

nt increase.

62.

62.

65.

200

All IPPS hosp

Data Book: He

inpatient

cy depar

ment system). 

data from CMS. 

sions preced

ent to 66 perc

points. 

sions preced

hospitals tha

0. In 2010, a

ere precede

inpatient ad

nt visit. The s

increased be

sions preced

10 at nonpro

pitals, the sh

increased fro

e of inpatient

ent to 64 per

ercentage po

.7

6

.2

6

.4

6

06 2

pitals

ealth care spen

t admiss

rtment vi

ded by an em

cent from 20

ded by an em

an urban hos

pproximately

d by an eme

missions pro

share of inpa

etween 4 an

ded by an em

ofit hospitals 

hare of inpat

om 63 perce

t admissions

rcent from 20

oint increase

63.9

63.5

66.7

2007

Fiscal ye

Urban hos

nding and the M

sions pre

sit, 2005

mergency d

005 to 2010,

mergency d

spitals, but in

y 70 percen

ergency dep

ovided at urb

atient admis

nd 5 percent

mergency d

 than at fortient admiss

ent to 67 per

s preceded b

005 to 2010

e, for-profit h

65.7

65.3

68.5

2008

ear

pitals

Medicare progr

eceded b

5–2010 

epartment v

, an increase

epartment v

ncreased at 

t of inpatien

partment visi

ban hospital

sions preced

tage points f

epartment v

profit hospita

sions preced

rcent from 2

by an emerg

. Therefore, 

ospitals exp

66.5

66.1

69.4

2009

Rural hosp

ram, June 2012

by 

visit increase

e of 

visit is 

approximate

t admissions

t. By contras

ls were prec

ded by an 

for both rura

visit increase

als (not show

ded by an 

005 to 2010

ency depart

as nonprofit

perienced on

66.4

65.9

69.9

2010

pitals

2 69

ed 

ely 

s

st, 

ceded 

l and 

ed 

wn in 

0. For 

tment 

t

nly a 
70 Acute

Chart 

Note: An

as

Source: M

• The s

hosp

21.5 

• Since

care 

to the

bene

and 5

15.0

16.0

17.0

18.0

19.0

20.0

21.0

22.0

23.0

24.0

25.0

Percent

e inpatient serv

6-10. S

o

nalysis excludes

s critical access h

edPAC analysis 

share of Med

italization in 

percent of M

e 2005, the d

may be in p

e outpatient 

ficiary declin

5.6 percent, 

23.3

0

0

0

0

0

0

0

0

0

0

0

2000

vices

hare of M

ne hosp

Medicare Advan

hospitals and ho

of MedPAR data

dicare benef

a given yea

Medicare ben

decline in the

art attributab

setting. In th

ned more ra

respectively

23.4 23.3

2001 2002

Medicare

italizatio

ntage claims and

spitals located in

a from CMS. 

ficiaries with

ar declined b

neficiaries h

e share of M

ble to the rap

he inpatient s

pidly than m

y. 

3 23.0 2

2 2003 2

e Part A 

on, 2000–

d claims for non–

n Maryland. 

h Part A cove

by 2 percenta

ad at least o

Medicare Par

pid shift of s

setting, the 

medical cases

23.3 23.5

2004 2005

Fiscal ye

benefici

–2010 

–inpatient prospe

erage who h

age points fr

one inpatient

rt A benefici

surgical case

number of s

s from 2005

23.4

2

2006 20

ear

aries wit

ective payment sy

had at least o

rom 2005 to

t stay covere

aries using i

es from the i

surgical case

5 to 2010, at 

22.9

22.6

007 2008

th at leas

ystem hospitals,

one inpatien

o 2010. In 20

ed under Pa

inpatient hos

npatient sett

es per 

12.7 percen

21.8

21

2009 20

st 

such 

nt 

010, 

art A. 

spital 

ting 

nt 

1.5

010
Chart 

Note: PP

av

st

in 

en

Source: M

• In the

but h

perce

• Occu

rates

perce

• Occu

includ

bed s

 

0

10

20

30

40

50

60

70

80

Occupancy rate (percent)

6-11. H

PS (prospective 

vailable bed days

affed for inpatien

each unit on a g

nd of 2010. 

edPAC analysis 

e aggregate,

ave edged d

ent across a

upancy rates

 stood at 67

entage point

upancy rates

de outpatien

space. 

64 65

49 50

61 61

1999 2000

A 

Hospital o

payment system

s in the hospital o

nt service (i.e., th

given day. Hospit

of data from the

, hospital oc

down slightly

ll hospitals, 

s are genera

 percent for 

t difference. 

s may unders

nt observatio

65 6

51 5

62 6

0 2001 20

Data Book: He

occupan

m). Hospital occup

over the reportin

he units are open

tals’ group desig

e American Hosp

cupancy rate

y in more rec

returning to 

lly higher for

urban hosp

state overall

on cases, wh

67 68

51 52

63 64

002 2003

ealth care spen

cy rates

pancy rate is me

g period. Bed da

n and operating),

nations for the e

ital Association A

es have bee

cent years. I

levels obser

r urban than

itals and 49

 facility occu

hich are often

68 69

52 53

65 66

2004 200

Fiscal yea

nding and the M

s, 1999–2

easured as total i

ays available are

 but the beds ma

entire 1999–2010

Annual Survey o

en relatively 

In 2010, occ

rved prior to

n rural hospit

percent for 

upancy level

n placed in b

9 69

3 52

6 65

05 2006 2

r

Medicare progr

2010 

inpatient days as

e based on beds 

ay not be staffed

0 period are base

of Hospitals. 

stable over 

cupancy rate

o 2004. 

tals. In 2010

rural hospita

ls because t

beds counte

68 69

51 50

65 66

2007 2008

U

R

A

ram, June 2012

s a percent of tot

that are set up a

d for a full patient

ed on their status

the last dec

es were 64 

0, occupancy

als, an 18 

they do not 

ed as inpatie

68 67

49 49

65 64

2009 20

Urban PPS

Rural PPS

All hospitals

2 71

tal 

and 

t load 

s at the 

cade, 

y

ent 

7

9

4

10
72 Acute

Chart 

Hospital g

All hospi

Urban 

Rural 

Large ur

Other urb

Rural ref

SCH (fed

SCH (HS

Medicare

Other rur

Other rur

Voluntary

Proprieta

Governm

Major tea

Other tea

Nonteac

Note: IM

pa

bo

20

M

no

*A

in

vo

ra

pr

po

do

in 

Source: M

• Medica

than $1

hospita

for CAH

• Specia

additio

payme

• Outlier

outlier 

plus ou

than th

e inpatient serv

6-12. M

g

group 

tals 

ban 

ban 

ferral 

deral rate) 

SP rate) 

e dependent 

ral <50 beds 

ral >50 beds 

y 

ary 

ment

aching 

aching 

hing 

ME (indirect medic

ayment [rate]). Inc

oth operating and

010 payment rule

edicare-depende

ot sum to 100 per

Additional rural ho

cludes rural addolume add-on (the

ate, this category 

rograms, low-inco

olicies, while SCH

oes not include w

urban areas. 

edPAC analysis 

are inpatient pay

111 billion. Abou

als. This figure d

Hs amounts to a

al payments—wh

nal payments to

ents. This propor

r payments acco

payments uses 

utlier payments. 

he annual goal o

vices

Medicare 

roup, 20

Base 

80.9% 

80.5 

84.9 

78.6 

82.9 

89.3 

87.1 

76.7 

84.2 

91.6 

91.2 

81.8 

84.3 

73.0 

65.8 

82.9 

87.5 

cal education), D

cludes all hospita

d capital payment

es applied to actu

ent hospital categ

rcent due to roun

ospital payments 

-on payments suc

e enhanced low-v

also includes the

ome patients, and

Hs paid the federa

wage index adjust

of claims and im

yments in 2010 t

ut $100 billion (9

does not reflect t

an increase of ap

hich include indi

o rural hospitals 

rtion is higher fo

ounted for 3.2 pe

a different calcu

Measured in thi

f 5.1 percent.

inpatien

10 

Percent 

IME

5.0%

5.5

0.7

6.7

3.9

1.1

3.2

0.1

0.0

0.2

0.5

5.3

1.4

7.1

16.1

3.8

0.0

SH (disproportion

als covered by Me

ts but excludes d

al number of cas

gories include fac

ding. 

are the total paym

ch as the SCH ad

volume adjustme

e payments they r

d outlier cases. T

al rate are eligible

tments or critical a

mpact file data fro

to hospitals cove

90 percent) was 

the $2.7 billion in

pproximately $3

rect medical edu

through the SCH

r urban (19.6 pe

ercent of total inp

ulation, displayin

s way, CMS’s o

nt payme

of total paym

DSH

9.7%

10.2

5.2

10.7

9.6

8.1

8.5

0.0

8.2

7.5

7.4

8.8

11.4

12.4

12.4

9.7

8.1

nate share), SCH

edicare’s acute in

irect graduate me

ses in 2010. Exclu

ilities paid at eithe

ments made to h

dd-on, the Medica

ent did not start un

received indirectly

hese SCHs are n

e for these three 

access hospitals’

om CMS. 

ered by the acut

paid to hospitals

n payments to C

300 million above

ucation, disprop

H and MDH prog

ercent) than for r

patient payment

ng outlier payme

outlier share ratio

ents, by s

ments

Ad

Outlier

3.2%

3.5

0.9

4.0

2.7

1.6

1.1

0.2

0.8

0.7

0.9

2.9

2.3 

5.7

5.6

2.8

2.3

H (sole communit

npatient prospect

edical education 

udes critical acce

er the hospital sp

hospitals beyond t

are-dependent ho

ntil fiscal year 20

y attributable to t

not eligible for the

policies. The add

’ (CAHs’) cost-ba

te inpatient pros

s located in urba

CAHs for inpatien

e the standard IP

ortionate share,

grams—accoun

rural hospitals (1

ts in 2010. The l

ents as a ratio of

o was 4.7 percen

source a

dditional rura

hospital*

1.3% 

0.4 

8.9 

0.0 

1.0 

0.0 

0.0 

22.9 

6.9 

0.0 

0.0 

1.3 

0.6 

2.0 

0.1 

0.9 

2.3 

ty hospital), HSP 

tive payment syst

payments. Simul

ess hospitals and 

pecific rate or the 

the federal base 

ospital (MDH) ad

11). For SCHs pa

the costs associa

e operating IME, 

ditional rural hosp

ased payments. A

spective paymen

an areas and $1

nt care. Cost-ba

PPS rate. 

, and outlier pay

nt for 19 percent 

15.7 percent). 

egislative mand

f outlier paymen

nt in fiscal year 2

and hosp

Tota

l payme

(millio

$111,

99,

11,

57,

41,

3,

1,

3,

1,

1,

79,

15,

15,

25,

40,

45,

(hospital specific

tem (PPS). Includ

lated payments re

their special pay

 federal rate. Row

rate. This catego

d-on, and the low

aid the hospital s

ated with residenc

DSH, and outlier

pital payments ca

A few SCHs are lo

nt system totaled

1 billion went to

ased reimbursem

yments as well a

of all inpatient 

ate for the level 

ts to base paym

2010, slightly low

pital 

al 

ents 

ns) 

057 

701 

356 

790 

911 

212 

190 

957 

428 

284 

285 

761 

837 

459 

234 

249 

574 

c

des 

eflect 

yments. 

ws may 

ory 

wspecific 

cy 

r

ategory 

ocated 

d more 

o rural 

ment 

s 

of 

ments 

wer 
Chart 

Note: PP

on

co

Source: M

• Medi

Medi

influe

data 

how o

• Follow

declin

incre

2009

• Medi

inpat

that w

Medi

-10

-5

0

5

10

15

Margin (percent)

6-13. M

PS (prospective 

n Medicare-allow

overed by the ac

edPAC analysis 

care’s acute

care’s inpati

enced by how

for all major

overhead co

wing the imp

ned over the

ase in Medic

. 

care inpatien

ient margins

were –16.3 p

care margin

13.7

12

1999 20

A 

Medicare 

payment system

wable costs and e

ute care inpatien

of Medicare cos

e inpatient m

ient hospital

w hospitals a

r services ca

osts are alloc

plementation

e next 10 yea

care paymen

nt margins v

s that were 8

percent or lo

s in 2010. 

2.0

10.3

00 2001

Data Book: He

acute in

m). A margin is ca

exclude critical a

nt PPS. 

st report data from

margin reflect

prospective

allocate ove

an we estima

cated (see C

n of the Bala

ars as costs

nts. In 2010,

vary widely. 

8.4 percent o

ower. Forty-t

6.6

2.4

2002 2003

ealth care spen

npatient P

alculated as reve

ccess hospitals. 

m CMS. 

ts payments

e payment sy

rhead costs 

ate Medicare

Chart 6-15).

anced Budge

 rose faster 

, the margin 

In 2010, one

or higher, an

hree percen

-0.3 -0

2004 20

Fiscal ye

nding and the M

PPS mar

enue minus costs

Medicare acute 

s and costs f

ystem. The i

 across serv

e costs witho

et Act of 199

than the 3 p

 was –1.7 pe

e-quarter of 

nd another q

nt of hospital

0.5

-2.2

005 2006

ar

Medicare progr

rgin, 199

s, divided by reve

inpatient margin

for services c

inpatient ma

vice lines. O

out the poten

97, inpatient 

percent aver

ercent, up s

hospitals ha

uarter had in

s had positiv

-3.7

-4.8

2007 2008

ram, June 2012

99–2010

enue. Data are b

n includes service

covered by 

argin may be

nly by comb

ntial influenc

margins 

rage annual 

lightly from 

ad Medicare

npatient ma

ve inpatient 

-2.3 -1

8 2009 20

2 73

based 

es 

e

bining 

ce of 

rgins 

1.7

010
74 Acute

Chart 

Note: PP

on

co

Source: M

• Urba

this d

those

been

• The g

1999

contr

2001

marg

urban

these

raisin

which

-10

-5

0

5

10

15

20

Margin (percent)

e inpatient serv

6-14. M

ru

PS (prospective 

n Medicare-allow

overed by the ac

edPAC analysis 

n hospitals h

difference be

e of rural hos

 higher than

gap between

 and 2001. O

rolling cost g

 to 2004, the

ins were slig

n hospitals w

e two groups

ng rural hosp

h removed m

14.6

12.9

6.0

4.1

1999 2000

vices

Medicare 

ural loca

payment system

wable costs and e

ute care inpatien

of Medicare cos

historically h

egan to narro

spitals. In re

n those of urb

n urban and 

One factor in

growth, at lea

e difference 

ghtly higher 

were 0.6 per

s of hospitals

pital paymen

many rural ho

11.1

7

3.8

1

2001 20

acute in

ation, 199

m). A margin is ca

exclude critical a

nt PPS. 

st report data from

had higher M

ow in 2002,

cent years, 

ban hospital

rural hospita

n this gap wa

ast partly in 

narrowed, a

than those f

rcent and –2

s as of 2001

nts, as well a

ospitals with

7.2

2.6

1.6

0.7

002 2003

npatient P

99–2010

alculated as reve

ccess hospitals. 

m CMS. 

Medicare inpa

and today u

Medicare inp

s. 

als’ Medicar

as that urba

response to 

and from 200

for urban ho

.0 percent, r

 was the res

as growth in 

h low margin

-0.4 -0.

0.5 0.2

2004 200

Fiscal yea

PPS mar

enue minus costs

Medicare acute 

atient margi

rban hospita

patient marg

re inpatient m

n hospitals h

 pressures f

04 to 2010, r

spitals. In 20

respectively

sult of paym

the number 

ns from the p

6

-2.2

2

-1.6

05 2006

ar

rgin, by u

s, divided by reve

inpatient margin

ns than rura

als’ margins 

gins of rural 

margins was

had greater 

from manage

rural hospita

010, the ma

. The narrow

ent policies 

r of critical ac

prospective p

-3.8

-4.9

-2.6 -3.2

2007 2008

urban an

enue. Data are b

n includes service

al hospitals, b

are lower th

hospitals ha

s wide betwe

success in 

ed care. Fro

als’ inpatient

rgins of rura

wing betwee

targeted at 

ccess hospit

payment sys

-2.4 -

-1.6

8 2009 2

Urb

Ru

nd 

based 

es 

but 

han 

ave 

een 

om 

t

al and 

n 

tals, 

stem. 

-2.0

0.6

2010

ban

ral
Chart 

Note: A 

ex

in

ed

Source: M

• The o

outpa

servic

follow

• The o

–4.5 

• In 20

anoth

differ

points

perce

-8

-6

-4

-2

0

2

4

6

8

Margin (percent)

6-15. O

margin is calcula

xclude critical acc

patient psychiatr

ducation and bad

edPAC analysis 

overall Medi

atient, skilled

ces, as well 

ws a trend si

overall Medi

percent. 

10, one-qua

her quarter h

rence in perf

s to 22 perc

ent of hospit

6.3

5.3

1999 200

A 

Overall M

ated as revenue 

cess hospitals. O

ric and rehabilitat

d debts. 

of Medicare cos

care margin

d nursing, ho

as direct gra

milar to that

care margin

arter of hosp

had margins

formance be

entage poin

als had posi

3 5.2

00 2001 2

Data Book: He

edicare 

minus costs, div

Overall Medicare

tion unit, skilled n

st report data from

 incorporate

ome health c

aduate med

t for the Med

 in 1999 was

itals had ove

of –15.8 pe

etween the to

ts, but narro

itive overall 

2.2

-1.2

2002 2003

ealth care spen

margin, 

vided by revenue

 margins cover t

nursing facility, a

m CMS. 

es payments

care, and inp

ical educatio

dicare inpatie

s 6.3 percen

erall Medica

ercent or low

op and botto

owed to 20 p

Medicare m

-3.0 -3

2004 20

Fiscal ye

nding and the M

1999–20

e. Data are based

the costs and pay

and home health 

s and costs f

patient psyc

on and bad d

ent margin.

nt. In fiscal y

are margins o

wer. Between

om quartile w

percentage p

argins in 20

3.1

-4.6

005 2006

ear

Medicare progr

010 

d on Medicare-al

yments of acute 

 services, as we

for acute inp

hiatric and r

debts. The o

year 2010, it 

of 4.6 perce

n 2000 and 2

widened from

points in 201

10. 

-6.0

-7.

2007 200

ram, June 2012

llowable costs an

inpatient, outpat

ll as graduate m

patient, 

rehabilitative

overall marg

was 

nt or higher,

2008, the 

m 17 percen

0. About 37

1

-5.1

08 2009

2 75

nd 

tient, 

edical 

e

in 

, and 

tage 

7

-4.5

2010
76 Acute

Chart 

Note: A 

ex

ou

gr

Source: M

• As w

hosp

have 

• The d

1997

11.6 

marg

Policy

Act o

rural 

-10

-8

-6

-4

-2

0

2

4

6

8

10

Margin (percent)

e inpatient serv

6-16. O

lo

margin is calcula

xclude critical acc

utpatient, inpatie

raduate medical 

edPAC analysis 

ith inpatient 

itals than for

gradually be

difference in

 and 2000, b

percent, com

in for urban 

y changes m

of 2003 targe

hospitals. F

7.3

6.3

-1.5

-2.2

1999 2000

vices

Overall M

ocation, 

ated as revenue 

cess hospitals. O

nt psychiatric an

education and ba

of Medicare cos

margins, ov

r rural hospit

egun to sligh

 overall Med

but has since

mpared with 

hospitals wa

made in the M

eted to rural 

urther legisla

6.0

2

-0.5

-2

0 2001 20

edicare 

1999–20

minus costs, div

Overall Medicare

d rehabilitation u

ad debts. 

st report data from

verall Medica

tals, but sinc

htly exceed t

dicare margi

e narrowed.

6.1 percent

as –4.8 perc

Medicare Pr

hospitals he

ation to assi

2.8

-0.9

2.3

-3.8

002 2003

margin, 

10 

vided by revenue

 margins cover t

unit, skilled nursin

m CMS. 

are margins 

ce 2005 ove

those for urb

ns between 

 In 1997, the

t for rural ho

cent, compa

rescription D

elped to impr

ist rural hosp

-3.0

-3.3 -3.

-2.

2004 200

Fiscal yea

by urban

e. Data are based

the costs and pay

ng facility, and h

historically w

erall Medicar

ban hospital

urban and r

e overall ma

spitals. In 20

red with –2.

Drug, Improv

rove the rela

pitals was im

1

-4.7

8

-4.4

05 2006

ar

n and ru

d on Medicare-al

yments of acute 

ome health serv

were higher 

re margins fo

s. 

rural hospita

argin for urba

010, the ove

6 percent fo

vement, and 

ative financia

mplemented 

-6.1

-7.3

-5.1

-6.0

2007 2008

ral 

llowable costs an

hospital inpatien

ices, as well as d

for urban 

or rural hosp

als grew betw

an hospitals 

erall Medicar

or rural hosp

Modernizati

al position of

after 2008.

-5.2 -4

-4.4

-2

8 2009 20

Urb

Rur

nd 

nt, 

direct 

pitals 

ween 

was 

re 

itals. 

ion 

f

4.8

2.6

010

ban

ral
Chart 

Note: A 

al

 *T

Source: M

• The t

paye

inpat

nonp

Medi

includ

• From

total 

syste

inves

2010

• In 20

less t

prosp

while

perce

marg

0

1

2

3

4

5

6

7

8

9

10

Margin (percent)

6-17. H

margin is calcula

l payers, plus non

The significant dro

edPAC analysis 

total hospita

rs⎯reflects 

ient, outpatie

atient reven

care inpatien

de investme

m 1999 to 200

margin decli

em was imple

stment losse

, total margi

10, 75 perce

than the Med

pective paym

e another one

entage point

ins and a 20

3.6 3.9

1999 200

A 

Hospital t

ated as revenue m

npatient revenue

op in total margin

of Medicare cos

l margin for 

the relations

ent, post-ac

ue, such as 

nt margin an

nt revenue. 

07, total mar

ined to 1.8 p

emented. Th

s for hospita

n increased

ent of hospit

dicare inpati

ment system

e-quarter ha

ts compared

0 percentage

9 3.7

0 2001 2

Data Book: He

total all-p

minus costs, divid

. Analysis exclud

n includes investm

st report data from

all payers⎯

ship of all ho

ute, and non

investment 

nd overall Me

rgins increas

percent, its lo

he 2008 dec

als, which re

again to 6.4

tals had pos

ient or overa

 hospitals ha

ad margins th

 with a 25 pe

e point sprea

3.7

4.3

2002 2003

ealth care spen

payer ma

ded by revenue. T

es critical access

ment losses stem

m CMS. 

⎯Medicare, M

ospital reven

npatient serv

revenues. O

edicare mar

sed to the hi

owest level s

cline of the U

esulted in a c

4 percent, th

itive total ma

all Medicare 

ad total mar

hat were at o

ercentage p

ad for overa

4.3

4

2004 20

Fiscal yea

nding and the M

argin, 19

Total margin inclu

s hospitals. 

mming from the de

Medicaid, oth

nues to all ho

vices. The to

Other types o

rgin, are ope

ighest level 

since the inp

U.S. stock m

correspondin

he highest it 

argins. The t

margin. In 2

rgins that we

or below zer

point spread 

ll Medicare m

.8

5.4

005 2006

ar

Medicare progr

999–2010

udes all patient c

ecline of the U.S. 

her governm

ospital costs

otal margin a

of margins w

erating marg

in a decade

patient prosp

arket resulte

ng decline in

has been in

total margin 

2010, one-qu

ere 9.0 perce

ro, a spread

for Medicare

margins. 

6.0

1.8

2007 200

ram, June 2012

0

care services fund

stock market in 2

ment, and pri

s, including 

also includes

we track, 

ins that do n

. In 2008, th

pective paym

ed in signific

n total margi

 over a deca

varied muc

uarter of 

ent or higher

 of roughly 9

e inpatient 

8

4.2

8 2009 2

*

2 77

ded by 

2008. 

ivate 

s

not 

he 

ment 

cant 

n. In 

ade. 

h 

r, 

9

6.4

2010
78 Acute

Chart 

Note: A 

by

 *S

Source: M

• In 20

In 20

hosp

privat

• In 20

marg

by all

the U

result

Medi

includ

0

1

2

3

4

5

6

7

8

9

10

Margin (percent)

e inpatient serv

6-18. H

lo

margin is calcula

y all payers, plus

Significant drop in

edPAC analysis 

09 and 2010

10, total ma

itals. The gr

te payer reim

08, both rura

ins in the las

l payers, plu

U.S. stock ma

ted in a corr

care inpatien

de investme

5.1 5.1

3.4 3.7

1999 2000

vices

Hospital t

ocation, 

ated as revenue 

s nonpatient reve

n total margin inc

of Medicare cos

0, urban hos

rgins were 6

owth in marg

mbursement

al and urban

st 15 years. 

us non-patien

arket resulte

responding d

nt margin an

nt revenue. 

4.5

3

3.6 3

0 2001 20

total all-p

1999–20

minus costs, div

enue such as inve

cludes investmen

st report data from

spitals had h

6.5 percent f

gins in 2009

t rates. 

n hospitals e

Hospitals’ to

nt revenue, s

ed in significa

decline in tot

nd overall Me

3.9

4.2

3.6

4.3

002 2003

payer ma

10 

vided by revenue

estment revenue

nt losses resultin

m CMS. 

higher total (a

for urban ho

9 and 2010 r

experienced 

otal margin i

such as inve

ant investme

tal margins. 

edicare mar

5.1

5.

4.2

4.

2004 200

Fiscal yea

argin, by

e. Total margin in

es. Analysis exclu

ng from the U.S. 

all-payer) m

spitals and 5

reflects low c

their lowest 

includes all 

estment reve

ent losses fo

Other types

rgin, are ope

7 6.0

7

5.3

05 2006

ar

y urban a

ncludes all patien

udes critical acce

stock market dec

argins than 

5.5 percent f

cost growth 

t level of tota

patient care 

enues. The 2

or hospitals, 

s of margins 

erating marg

6.0

2.4

6.0

1.7

2007 2008

and rural

nt care services f

ess hospitals. 

cline of 2008. 

rural hospita

for rural 

and increas

al (all-payer)

services fun

2008 decline

which in tur

we track, 

ins that do n

4 3.6

4.3

8 2009 2

Rur

Urb

*

*

l

funded 

als. 

ing 

nded 

e of 

rn 

not 

5.5

6.5

2010

ral

ban
Chart 

Note: M

ho

re

cr

 *S

Source: M

• The p

Medi

hosp

hosp

comp

perce

• In 20

more

(all-p

steep

-2

0

2

4

6

8

10

Margin (percent)

6-19. H

19

ajor teaching ho

ospitals have a ra

evenue. Total ma

ritical access hos

Significant drop in

edPAC analysis 

pattern of tot

care inpatien

itals have co

itals. In 2010

pared with ot

ent, respectiv

10, major te

e than two de

ayer) margin

p decline in t

4.6 4.5

4.2 4.3

1.6

2.3

1999 2000

A 

Hospital t

999–201

spitals are define

atio of greater th

argin includes all 

spitals. 

n total margin inc

of Medicare cos

tal margins b

nt and overa

onsistently b

0, the total m

ther teaching

vely. 

eaching hosp

ecades, at 5

ns reached 5

their investm

5

4.9

3 4.3

3

1.1

0 2001 2

Data Book: He

total all-p

0 

ed by a ratio of in

an 0 and less tha

patient care serv

cludes investmen

st report data from

by teaching 

all Medicare 

been lower th

margin for m

g hospitals a

pitals’ total (a

.3 percent. T

5.2 percent. 

ment revenue

4.7

5.1

4.4

4.9

1.3

2.4

2002 2003

ealth care spen

payer ma

nterns and reside

an 0.25. A margi

vices funded by a

nt losses resultin

m CMS. 

status is the

margins. Th

han those fo

ajor teachin

and nonteac

all-payer) ma

Their previou

However, in

es. 

4.6

5

4.9

5

3.0

3

2004 20

Fiscal yea

nding and the M

argin, by

ents to beds of 0

in is calculated a

all payers, plus n

ng from the U.S. 

e opposite of

he total marg

or other teac

g hospitals s

ching hospita

argins reach

us high cam

n 2008, this 

.2 5.3

.2

6.2

.5

4.5

005 2006

ar

Medicare progr

y teachin

0.25 or greater, w

as revenue minus

nonpatient reven

stock market dec

f the pattern

gins for majo

hing and no

stood at 5.3 

als at 6.9 pe

hed their hig

me in 2007, w

trend was in

5.9

2.9

6.8

2.2

5.2

-0.4

2007 200

No

Ot

M

ram, June 2012

ng status

while other teach

s costs, divided b

nue. Analysis exc

cline of 2008. 

n for the 

or teaching 

nteaching 

percent 

ercent and 6.

hest point in

when their to

nterrupted by

9

4.9

2

4.9

4

2.4

8 2009 2

onteaching

ther teaching

ajor teaching

*

*

*

2 79

s, 

ing 

by 

cludes 

.6 

n

otal 

y a 

6.6

6.9

5.3

2010
80 Acute

Chart 

Hospital g

All hospita

Major teac

Other teac

Nonteach

Both IME 

IME only 

DSH only

Neither IM

Note: IM

Source: M

• Majo

2010

receiv

• Hosp

2010

below

perce

e inpatient serv

6-20. M

sh

group 

als 

ching 

ching 

ing 

and DSH 

ME nor DSH 

ME (indirect medi

edPAC analysis 

r teaching h

. Their bette

ved from the

pitals that rec

, the Medica

w those of m

entage point

vices

Medicare 

hare stat

Sha

hos

10

2

6

2

5

1

ical education), D

of 2010 Medicar

ospitals had

er financial p

e IME and D

ceived neithe

are inpatient

major teachin

ts lower. 

margins

tus, 2010

are of

spitals

00%

8 

23 

69 

27 

4 

53 

16 

DSH (disproporti

re cost report da

d the highest

performance 

DSH adjustm

er IME nor D

margins of 

ng hospitals,

s by teac

0

Share of

Medicare

inpatient

payments

100% 

23

36

41

54

6

32

9

onate share). Nu

ta from CMS. 

t Medicare in

was largely 

ents. 

DSH paymen

these hospit

and overall 

ching and

f

e M

in

s m

–

umbers may not 

npatient and

y due to the a

nts had the l

tals were ab

Medicare m

d dispro

Medicare 

npatient

margin 

–1.7% 

7.5

–2.3

–6.4

2.7

–9.8

–3.2

–17.5

sum to totals du

d overall Med

additional pa

lowest Medi

bout 25 perc

margins were

oportiona

Overal

Medicar

margin

–4.5%

–0.1

–4.4

–7.0

–1.8

–10.9

–4.9

–14.3

e to rounding. 

dicare margi

ayments the

care margin

entage poin

e nearly 15 

ate 

l 

re 

n

%

ins in 

y 

ns. In 

ts 
Chart 

 

Number o

Financial

Non-Medi

 (private

Standardi

(as a shar

 For-prof

 Nonpro

 For-prof

Annual gr

discharge

Overall 20

Patient c

Total hosp

Medicare 

Medicaid 

Medicare 

 

Note: St

ef

co

Source: M

• Highe

Hosp

be un

6-21. F

of hospitals 

l characteris

icare margin 

e, Medicaid, u

zed cost per 

re of the natio

fit and nonpro

fit hospital 

fit hospital 

rowth in cost p

e, 2007–2010 

010 Medicare

haracteristic

pital discharg

share of inpa

share of inpa

case mix ind

tandardized cost

ffect of teaching a

omplete cost repo

edPAC analysis 

er financial p

pitals with low

nder financia

A 

inancial 

tics, 2010 (m

uninsured) 

discharge 

onal median) 

ofit 

per 

e margin (med

cs (medians) 

es in 2010 

atient days 

atient days 

ex 

ts are adjusted fo

and low-income 

orts on file with C

of Medicare cos

pressure ten

wer volume, 

al pressure. 

Data Book: He

pressur

High

(non

ma

medians) 

dians)

4

or hospital case m

Medicare patien

CMS by August 2

st report and claim

nds to lead to

lower case 

ealth care spen

re leads t

Level of 

h pressure

n-Medicare

rgin ≤ 1%)

742

–3.6%

90

89

92

3.3%

5.5%

,500

44%

12

1.31

mix, wage index,

ts on hospital co

2011. 

ms files from CM

o lower cost 

mix, and hig

nding and the M

to lower 

financial pres

Me

pre

4

–

7,7

1

, outliers, transfe

osts. The sample

MS. 

growth and 

gher Medica

Medicare progr

costs 

ssure, 2005–2

edium

ssure

438

3.3%

97

97

96

3.3%

–1.6%

728

41%

12

.42

er cases, interest

e includes all hos

 lower costs

aid charges a

ram, June 2012

2009 

Low pres

(non-Med

margin >

1,712

12.4

105

106

101

3.7

–9.2

7,475

42

10

1.48

t expense, and th

spitals that had 

s per dischar

are more like

2 81

ssure 

icare 

5%) 

2

4% 

5

6

1

7% 

2% 

5

2% 

0

8

he 

rge. 

ely to 
82 Acute

Chart 

Note: Da

th

pa

pa

Source: M

sy

• The pa

the inc

betwe

• During

patien

compl

these 

• As HM

payer 

percen

• As pre

hospit

growth

• In 201

increa

losses

-4

-2

0

2

4

6

8

10

12

19

Percent change in cost per discharge

e inpatient serv

6-22. C

d

19

ata are for comm

ird of observatio

ayment-to-cost ra

ayment-to-cost ra

edPAC analysis 

ystem and Ameri

attern of growth

centives posed

en 1987 and 2

g the first period

ts (seen in the 

ete lack of pres

years, more th

MOs and other 

payment-to-co

nt per year, wh

essure from priv

al cost growth 

h in private pay

0, the private p

ses. The slow 

s and economic

9.1

8.6

1.22

1.28

987 1989

Cha

vices

Change in

ischarge

987−201

munity hospitals a

ns). Data for 200

atio. The private 

atio for 2010 wou

of Medicare Cos

can Hospital Ass

h in Medicare c

 by the rise an

010. 

d, 1987–1992, 

chart as a stee

ssure from priv

an 3 percentag

private insurers

ost ratio droppe

ich was more t

vate payers wa

exceeded grow

yer profit margi

payer payment

cost growth in 

c uncertainty (s

5.3

0

1.32

1.2

1991 1993

ange in Medicare

n Medica

e and pri

0 

and cover all hos

06–2010 exclude

payment-to-cost

uld be higher, at 

st Report files fro

sociation Annual

costs per disch

d fall of financi

private payers

ep increase in 

vate payers. Me

ge points a yea

s exerted more

ed substantially

than 2 percenta

aned after 1999

wth in the mark

ns slowed, and

t-to-cost ratio in

2010 may refle

see Chart 6-17

.8

-1.2

24

1.22

1

1995 1997

Fis

e acute inpatient 

are hosp

vate pay

spital services. Im

e Medicare and M

t ratio includes se

approximately 1

om CMS and CM

 Survey of Hosp

harge makes it 

al pressure fro

s’ payments ros

the payment-to

edicare costs p

ar above the inc

e pressure duri

y. The rate of co

age points belo

9, the private p

ket basket by 2

d in 2007, cost 

ncreased as co

ect financial pre

). 

1.1

1.16 2.4

1.16

1999 200

scal year

costs per discha

pital inpa

yer paym

mputed values w

Medicaid manage

elf-pay patients. 

.42. 

MS’s rules for the

itals. 

clear that hosp

om private paye

se much faster

o-cost ratio). Th

per discharge r

crease in Medi

ng the second 

ost growth plum

ow the average

payer payment2 percentage po

growth more c

ost growth was 

essure stemmi

8.1

5.6

1.19

1.29

01 2003 20

arge

tient cos

ment-to-c

were used for mis

ed care patients 

If we excluded s

e acute inpatient 

pitals have resp

ers over three d

r than the cost 

his result sugg

rose 8.3 percen

icare’s market 

 period, 1993–

mmeted to an a

e increase in th

-to-cost ratio ro

oints a year. In

closely matched

lower than pay

ing from 2008 

5.1 5.5

1.30

1.27

005 2007

Payment-to-c

sts per

cost ratio

ssing data (about

from the private 

self-pay patients,

prospective paym

ponded strongl

distinct periods

of treating thei

ests an almost

nt per year duri

basket index.

–1999, the priva

average of only

he market bask

ose sharply, an

n 2005–2007, th

d the market b

yment rate 

investment por

2.2

7

1.36

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

2009

cost ratio

o, 

t one- 

, the 

ment 

ly to 

s

r 

t

ing 

ate 

y 0.8 

ket. 

nd 

he 

asket. 

rtfolio 

0

5

0

5

0

5

0

5

0

Payment-to-cost ratio
Chart 

Note: An

Source: Am

• The m

2010

• Rapid

few p

patie

costs

struct

charg

outlie

an at

exces

• The m

2010

0

50

100

150

200

250

Percent

6-23. M

19

nalysis includes 

merican Hospita

markup of ch

. Charges n

d growth in c

patients pay 

nts, who ma

s) may reflec

ture their pa

ges in 2002 

er payments

ttempt to cur

ssive increa

markup of ch

) than for ru

104

1

1999 20

A 

Markup of

999–201

all community ho

l Association Ann

harges over 

ow exceed c

charges may

full charges

ay pay full ch

ct hospitals’ a

ayments as a

and 2003 m

. Toward the

rb hospitals’ 

ses in charg

harges over 

ral hospitals

14

125

000 2001

Data Book: He

f charge

0 

ospitals. 

nual Survey of H

costs rose f

costs by mo

y have little i

. However, c

harges. More

attempts to 

a discount of

ay have res

e end of fisca

opportunity 

ges. 

costs is gen

s (179 perce

139

157

2002 200

ealth care spen

es over c

Hospitals. 

from about 1

re than a fac

impact on ho

charge grow

e rapid grow

maximize re

ff charges). 

ulted from s

al year 2003

to increase 

nerally highe

nt in 2010). 

7

167

3 2004 2

Fiscal y

nding and the M

costs for 

104 percent 

ctor of 3. 

ospital finan

wth may sign

wth in charge

evenue from 

The unusua

some hospita

3, Medicare 

their outlier 

er for urban h

176 181

2005 2006

year

Medicare progr

Medicar

in 1999 to 2

cial perform

nificantly affe

es (relative to

private pay

ally large incr

als manipula

revised its o

payments th

hospitals (23

185

19

2007 20

ram, June 2012

re servic

218 percent i

mance, becau

ect uninsured

o growth in 

ers (who oft

reases in 

ating Medica

outlier policy 

hrough 

36 percent in

93

207

008 2009

2 83

ces, 

in 

use 

d

ten 

are 

in 

n

218

2010
84 Acute

Chart 

Source: 

• The n

since

• The i

to CA

Curre

outpa

swing

• Befor

15 m

requi

no lo

they a

conve

of CA

20

40

60

80

1,00

1,20

1,40

Number of critical access hospitals

e inpatient serv

6-24. N

The Medicare R

number of cr

e leveled off 

ncrease in C

AH status ea

ently, CAHs 

atient service

g beds. 

re 2006, a h

iles by seco

rement by d

nger waive t

are grandfat

erted, most w

AHs to rema

41

13

0

0

0

0

0

0

0

0

1999 20

vices

umber o

Rural Hospital Fle

ritical access

at approxim

CAHs is in p

asier and exp

are paid the

es (including

ospital could

ndary road f

declaring the

the distance

thered into t

would not m

in fairly cons

39

341

5

000 2001 20

of critica

exibility Program

s hospitals (

ately 1,300 

art due to a 

panded the s

eir Medicare 

g laboratory 

d convert to 

from the nea

e hospital a “

e requiremen

he program.

meet the dista

stant. 

63

722

8

002 2003 20

l access

 and CMS. 

CAHs) grew

facilities. 

series of leg

services tha

costs plus 1

and therapy

CAH status 

arest hospita

necessary p

nt. While mo

. Among sm

ance require

875

1,055

1

004 2005 2

Calendar

s hospita

w rapidly from

gislative cha

at qualify for 

1 percent for

y services), a

if it was (1) 

al, or (2) the 

provider.” Sta

st existing C

all rural hos

ement. There

,280 1,283 1

2006 2007 2

r year

als, 1999–

m 1999 to 20

anges that m

cost-based 

r inpatient se

and post-acu

35 miles by

state waive

arting in 200

CAHs fail the

pitals that ha

efore, we ex

,291 1,302 1

2008 2009 2

–2012 

006, but has

made convers

reimbursem

ervices, 

ute services

y primary roa

d the distan

06, states co

e distance te

ave not 

xpect the num

1,306 1,324

2010 2011

s

sion 

ment. 

 in 

ad or 

ce 

ould 

est, 

mber 

1,329

2012
Chart 

Source: C

• The i

• Medi

estim

• Inpat

the a

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

Dollars (in billions)

6-25. M

20

MS, Office of the

npatient psy

care program

mated 2.3 pe

tient psychia

cute care in

3.5

2002

A 

Medicare 

002–201

e Actuary. 

ychiatric faci

m spending 

rcent per ye

atric care furn

patient pros

3.5

3.8

2003 200

Data Book: He

paymen

1 

lity prospect

for beneficia

ear between 

nished in sc

pective paym

8

4.0

04 2005

ealth care spen

nts to inp

tive paymen

aries’ care in

2002 and 20

atter beds in

ment system

4.1

2006 2

Fiscal ye

nding and the M

patient ps

nt system sta

n inpatient p

011. 

n acute care

m is not inclu

4.0 4.0

2007 2008

ear

Medicare progr

sychiatr

arted Januar

sychiatric fa

e hospitals a

uded in this c

4.1

8 2009

ram, June 2012

ric faciliti

ry 1, 2005. 

acilities grew

nd paid und

chart. 

4.2 4

2010 2

2 85

ies, 

w an 

er 

4.3

011
86 Acute

Chart 

Cases 

Cases per 1

 beneficiarie

Spending p

 beneficiary

Payment pe

Payment pe

Length of st

Note: PP

N

(IP

Ad

Source: M

• Since

numb

the n

betwe

e inpatient serv

6-26. N

fa

1,000 FFS 

es 

per FFS 

y

er case 

er day 

tay (in days) 

PS (prospective 

umbers of cases

PFs). Scatter bed

dvantage plans. 

edPAC analysis 

e a prospect

ber of cases 

umber of be

een 2004 an

vices

umber o

allen und

 TEFRA

2002 

464,780 4

13.3 

$90.6 

$6,822 

$570 

13.0 

payment system

s and patients ref

d cases and spe

of MedPAR data

tive payment

in IPFs has

eneficiaries e

nd 2009. 

of inpatie

der the P

A 

2004

483,271 47

13.2

$96.8 $

$7,328 $

$627

12.7

m), TEFRA (Tax E

flect Medicare FF

nding are exclud

a from CMS. 

t system for 

s fallen, on a

enrolled in F

ent psych

PPS, 2002

2006 2

74,417 44

13.1

$104.7 $

$7,989 $

$677

13.0

Equity and Fisca

FS utilization of s

ded, as are cases

IPFs was im

verage, abo

FS Medicare

hiatric fa

2–2009 

PPS

2008 2

2,759 431

12.5

109.5 $1

8,742 $9

$728 $

13.1

l Responsibility A

services furnishe

s and spending f

mplemented 

out 2.3 perce

e, IPF cases

acility ca

 Ave

 ann

 cha

009 2002–

1,276 2

12.3 –0

111.3 3

9,080 3

$763 4

13.1 –1

Act of 1982), fee

ed in inpatient ps

for beneficiaries 

in January 2

ent per year.

s fell 1.5 per

ases has

rage Ave

nual ann

ange cha

–2004 2004

2.0% –2

0.2 –1

3.4 2

3.6 4

4.9 4

1.2 0

e-for-service (FFS

sychiatric facilities

enrolled in Medi

2005, the 

. Controlling 

rcent per yea

erage 

nual 

ange 

–2009 

2.3% 

1.5 

2.8 

4.4 

4.0 

0.6 

S). 

s

care 

for 

ar 
Chart 

Type of IP

 

All 

Urban 

Rural 

Freestand

Hospital-b

Nonprofit 

For profit 

Governme

Note: IP

sy

 

Source: M

• Betw

in 20

an av

units 

contin

amon

• The d

not b

hosp

servic

to clo

6-27. In

PF 

ding 

based units 

ent

PF (inpatient psyc

ystem). Numbers

edPAC analysis 

een 2003 an

05, when the

verage of 3.9

in acute car

nued after th

ng nonprofit 

drop in the n

e as profitab

ital services

ces in hospi

ose their psy

A 

npatient 

TEFRA 

2003 200

1,703 1,65

1,298 1,27

405 37

353 35

1,350 1,30

 

974 94

349 32

380 38

chiatric facility), T

s are facilities tha

of Medicare cos

nd 2004, the

e IPF PPS b

9 percent pe

re hospitals 

he PPS was 

and rural fac

number of ps

ble as they o

. Other facto

tal emergen

ychiatric units

Data Book: He

psychiat

04 2005

7 1,623

7 1,283

8 340

2 366

5 1,257

9 910

7 344

1 369

TEFRA (Tax Equ

at submitted valid

st report files from

e number of 

began to be 

er year. By c

fell by 3.3 pe

implemente

cilities. 

sychiatric un

once were, p

ors, such as 

cy departme

s. 

ealth care spen

tric facili

PPS

2006 200

1,590 1,584

1,267 1,262

323 322

396 412

1,194 1,172

878 849

343 359

369 376

uity and Fiscal Re

d Medicare cost r

m CMS. 

freestanding

implemente

omparison, 

ercent betwe

ed. Much of 

its likely has

particularly w

the availabi

ents, may al

nding and the M

ities, 200

S

7 2008 2

4 1,564 1

2 1,251 1

2 313

2 420

2 1,144 1

9 831

9 352

6 381

esponsibility Act 

reports in the giv

g IPFs rema

d, the numb

the number 

een 2003 an

the decline 

s several cau

when compa

ility of psych

so affect acu

Medicare progr

03–2009 

Ann

cha

2009 2003–

,536 –2

,210 –1

326 –6

426 –0

,110 –3

802 –2

368 –6

366 0

t of 1982), PPS (

ven fiscal year. 

ained fairly st

ber of freesta

of distinct-p

nd 2004, a d

in psychiatri

uses. Psych

ared with oth

hiatrists to pr

ute care hos

ram, June 2012

Ave

nual an

ange cha

–2004 2004–

2.7% –1

1.6 –1

6.7 –2

0.3 3

3.3 –3

2.6 –3

6.3 2

0.3 –0

prospective paym

teady. Begin

anding IPFs 

part psychiat

decline that 

c units occu

hiatric units m

er acute car

rovide on-ca

spitals’ decis

2 87

erage 

nual 

ange 

–2009 

1.5% 

1.1 

2.9 

 

3.9 

3.2 

 

3.3 

2.4 

0.8 

ment 

nning 

grew 

tric 

urred 

may 

re 

all 

sions 
88 Acute

Chart 

MS–DRG

 885 

 057 

 884 

 897 

 881 

 882 

 895 

 056 

 880 

 886 

883 

 894 

 896 

 876 

 887 

 081 

 080 

 

 

 

 

Note: IP

 co

Source: M

• Medi

diagn

for 73

accou

e inpatient serv

6-28. O

of

 Diagnoses

Psychosis 

Degenerat

Organic di

Alcohol/dru

Depressive

Neurosis e

Alcohol/dru

Degenerat

Acute adju

Behaviora

Disorders 

Alcohol/dru

Alcohol/dru

OR proced

Other men

Nontrauma

Nontrauma

Nonpsychi

Total 

PF (inpatient psyc

omplication), AMA

edPAC analysis 

care patient

nosis related

3 percent of 

unting for alm

vices

One diagn

f IPF cas

s

tive nervous s

sturbances &

ug abuse or d

e neurosis 

except depres

ug abuse or d

tive nervous s

ustment react

l and develop

of personality

ug use—left A

ug abuse or d

dure with prin

ntal disorders 

atic stupor & c

atic stupor & c

iatric MS–DR

chiatric facility), M

A (against medic

of MedPAR data

s in IPFs are

d groups. In 2

IPF dischar

most 8 perce

nosis ac

ses in 20

system disord

& mental retar

dependency, 

ssive

dependency w

system disord

ion & psychos

pmental disord

y & impulse co

AMA

dependency w

cipal diagnos

coma without

coma with MC

RGs 

MS–DRG (Medic

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 Pr

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2011, 86 pe

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n 2011. Sample s

Medicare and pri

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minority ben

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are most

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75.9

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Chart 

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15

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cent change. 

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total payme

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m, June 2012 

lity 

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pending amounts

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outpatien

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2004 

2006 

2008 

2010 

2012 

Note: In

re

*T

be

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Source: M

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paym

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cost b

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cludes services 

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rm hospitals. Exc

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likely due to

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surgery

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90

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cludes long-term

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rgency 

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nce, psychiatric, 

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 emergency serv

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dr

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n their outpat

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aid 

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under th

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Volume

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tient departm

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ments, includ

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sts

%

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care 

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Chart 

APC Title

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S E C T I O N 

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, June 2012 117

Chart 8-1. Number of post-acute care providers increased or 

remained stable in 2011 

 Average 

 annual 

 percent 

 change Percent 

 2003- change 

 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 2010–2011 

Home health 

 agencies 7,342 7,804 8,314 8,955 9,404 10,040 10,961 11,654 12,026 6.4% 3.2% 

 

Inpatient 

 rehabilitation 

 facilities 1,207 1,221 1,235 1,225 1,202 1,202 1,196 1,179 1,165 –0.4 –1.2 

 

Long-term 

 care hospitals 334 366 392 398 406 425 435 437 436 3.4 –0.2 

Skilled nursing 

 facilities 15,144 15,156 15,185 15,178 15,207 15,190 15,190 15,207 15,161 0.1 –0.3 

Note: The skilled nursing facility count does not include swing beds. 

Source: MedPAC analysis of data from certification and Survey Provider Enhanced Reporting on CMS’s Survey and Certification’s 

Providing Data Quickly system for 2003–2011 (home health agencies, long-term care hospitals, and skilled nursing 

facilities) and CMS Provider of Service data (inpatient rehabilitation facilities). 

• The number of home health agencies has increased substantially since 2003. The number 

of agencies increased by over 350 in 2011. The growth in new agencies is concentrated in a 

few areas of the country. 

• The number of inpatient rehabilitation facilities (rehabilitation hospitals and rehabilitation 

units) declined slightly in 2011. 

• In spite of a moratorium on new long-term care hospitals (LTCHs) beginning in October 

2007, the number of these facilities continued to grow through 2010. The number of LTCHs 

declined by one facility in 2011. 

• The total number of skilled nursing facilities has remained about the same since 2003, but 

the mix of facilities continues to shift from hospital-based to freestanding facilities. Hospitalbased facilities make up 6 percent of all facilities, down from 9 percent in 2003. 
118 Post-acute care

Chart 8-2. Medicare’s spending on home health care and 

skilled nursing facilities fueled growth in post-acute 

care expenditures 

26.6

32.6 34.3

37.5

42.1 43.5

48.6

51.9

55.7

58.0

63.5

12.1

14.8 15.0 16.7

18.6 19.6

22.4

24.2 25.8 27.0

31.8

8.0 9.6 10.1 10.8 12.6 13.0

15.4 16.9

18.8 19.4 19.6

4.5

5.7 6.2 6.4 6.5 6.3 6.1 6.0 6.0 6.3 6.7

2.0 2.5 3.0 3.6 4.4 4.6 4.7 4.8 5.1 5.3 5.4 0

10

20

30

40

50

60

70

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Dollars (in billions)

All post-acute care

Skilled nursing facilities

Home health agencies

Inpatient rehabilitation hospitals

Long-term care hospitals

Note: These numbers are program spending only and do not include beneficiary copayments. 

 

Source: CMS Office of the Actuary. 

• Increases in fee-for-service (FFS) spending on post-acute care have slowed in part due to 

expanded enrollment in managed care, whose spending is not included in this chart. 

• Despite the slower growth, spending on all post-acute care still grew close to 9 percent 

between 2010 and 2011, fueled primarily by increases in skilled nursing facility 

expenditures. 

• Fee spending on inpatient rehabilitation hospitals has declined since 2005 and 2008, 

reflecting policies intended to ensure that patients who do not need this intensity of services 

are treated in less intensive settings. However, spending on inpatient rehabilitation hospitals 

has increased since 2009. 

• FFS spending on skilled nursing facilities increased sharply in 2011, reflecting providers’ 

responses to the implementation of the new case-mix groups (resource utilization groups, 

version IV) beginning October 2010. 
A Data Book: Health care spending and the Medicare program, June 2012 119

Chart 8-3. Since 2006, the share of Medicare stays and 

payments going to freestanding SNFs and for-profit 

 SNFs has increased 

 Facilities Medicare-covered stays Medicare payments 

Type of SNF 2006 2010 2006 2010 2006 2010 

All SNFs 100% 100% 100% 100% 100% 100% 

Freestanding 92 94 89 93 94 96 

Hospital based 8 6 11 7 6 4 

Urban 67 70 79 81 81 83 

Rural 33 30 21 19 19 17 

For profit 68 70 67 70 73 74 

Nonprofit 26 25 29 25 24 22 

Government 5 5 4 3 3 3 

Note: SNF (skilled nursing facility). Totals may not sum to 100 percent due to rounding or missing information about facility 

characteristics. 

Source: MedPAC analysis of the Provider of Services and Medicare Provider Analysis and Review files 2006–2010. 

• Freestanding SNFs made up 94 percent of facilities in 2010. 

• Freestanding SNFs treated 93 percent of stays (up 4 percentage points from 2006) and 

accounted for 96 percent of Medicare payments. 

• For-profit facilities made up 70 percent of facilities in 2010. Between 2006 and 2010, forprofit SNFs’ share of Medicare-covered stays increased 3 percentage points and payments 

increased 1 percentage point. 

• Urban SNFs’ share of facilities, Medicare-covered stays, and payments increased between 

2006 and 2010. 
120 Post-acute care

Chart 8-4. Small declines in SNF days and admissions between 

 2009 and 2010 

 Change 

 2008 2009 2010 2009–2010 

 

Volume per 1,000 fee-for-service beneficiaries 

 Covered admissions 73 72 71 –1.4% 

 Covered days 1,977 1,963 1,938 –1.3 

 Covered days per admission 27.0 27.3 27.1 –0.7 

Note: SNF (skilled nursing facility). Data include 50 states and the District of Columbia. 

Source: Calendar year data from CMS, Office of Research, Development and Information. 

• Between 2009 and 2010, covered days and admissions declined. The decline in admissions 

is expected because inpatient hospital stays, which are required for Medicare coverage of 

skilled nursing facility services, also declined. Despite the reductions, covered days and 

covered days per admission were higher than in 2006 (not shown). 
A Data Book: Health care spending and the Medicare program, June 2012 121

Chart 8-5. Case mix in freestanding SNFs shifted toward 

highest rehabilitation case-mix groups and away 

from other categories 

24 20 16 11 9

39

32

29

23

15

37

47

56

65

76

0

10

20

30

40

50

60

70

80

90

100

2002 2004 2006 2008 2010

Share of Medicare days

Days assigned to ultra and very high rehabilitation case-mix groups

Days assigned to low, medium, and high rehabiliation case-mix groups

Days assigned to non-rehabilitation case-mix groups

Note: SNF (skilled nursing facility). Days are for freestanding SNFs with valid cost reports. Totals may not sum to 100 percent

due to rounding. 

Source: MedPAC analysis of freestanding SNF cost reports. 

• In 2010, rehabilitation resource utilization groups (RUGs) accounted for 91 percent of all 

Medicare days in SNFs. The two highest payment rehabilitation case-mix groups (ultra high 

and very high) made up 76 percent of all days (compared with 37 percent in 2002). Days not 

classified into a rehabilitation case-mix group declined from 24 percent in 2002 to 9 percent 

in 2010. 

 

• Some of the growth in total rehabilitation days may be explained by a shift in the site of care 

from inpatient rehabilitation facilities to SNFs. It also could reflect the payment incentives to 

furnish the services necessary to get patients classified into higher paying rehabilitation RUGs. 
122 Post-acute care

Chart 8-6. Freestanding SNF Medicare margins have exceeded 

10 percent for seven years, and have increased 

steadily since 2005 

Type of SNF 2004 2005 2006 2007 2008 2009 2010

All 13.7% 13.1% 13.3% 14.7% 16.6% 18.0% 18.5% 

 

Urban 13.2 12.6 13.1 14.5 16.3 17.9 18.5 

Rural 16.1 15.2 14.3 15.5 18.0 18.7 18.4 

 

For profit 16.1 15.2 15.7 17.2 19.1 20.2 20.7 

Nonprofit 3.5 4.5 3.5 4.1 6.9 9.6 9.5 

Government* N/A N/A N/A N/A N/A N/A N/A 

Note: SNF (skilled nursing facility), N/A (not applicable). 

 *Government-owned providers operate in a different context from other providers, so their margins are not necessarily 

comparable. 

Source: MedPAC analysis of freestanding SNF cost reports. 

• Although aggregate Medicare margins for freestanding SNFs have varied over the past 7 

years, they have exceeded 10 percent every year since 2001 (early years not shown). 

• Aggregate Medicare margins increased from 2009 to 2010 due to costs per day growing 

more slowly than payments per day. The growth in payments reflected the increased share 

of days classified into the highest paying resource utilization groups. 

• Examining the distribution of 2010 margins, one-half of freestanding SNFs had margins of 

18.9 percent or more (not shown). One-quarter had Medicare margins at or below 9 percent 

and one-quarter had margins of 26.9 percent or higher. 
A Data Book: Health care spending and the Medicare program, June 2012 123

Chart 8-7. Freestanding SNFs with relatively low costs and 

relatively high quality maintained high Medicare 

margins 

 SNFs with relatively low 

 costs and good 

Characteristic quality (10 percent) Other SNFs 

Performance in 2009 

 Relative* community discharge rate 1.38 0.95 

 Relative* rehospitalization rate 0.83 1.02 

 Relative* cost per day 0.90 1.02 

 Medicare margin 22.0% 18.2% 

Performance in 2010 

 Relative* cost per day 0.92 1.01 

 Medicare margin 22.0% 18.9% 

 Total margin 5.1 3.8 

 Medicaid share of facility days 59% 63% 

Note: SNF (skilled nursing facility). SNFs with relatively low costs and good quality were those in the lowest third of the 

distribution of cost per day, in the top third for one quality measure, and not in the bottom third for the other quality 

measure. Costs per day were standardized for differences in case mix (using the nursing component relative weights) and 

wages. Quality measures were rates of risk-adjusted community discharge and rehospitalization for five conditions 

(congestive heart failure, respiratory infection, urinary tract infection, sepsis, and electrolyte imbalance) within 100 days of 

hospital discharge. Increases in rates of discharge to the community indicate improved quality; increases in 

rehospitalization rates for the five conditions indicate worsening quality. Quality measures were calculated for all facilities

with more than 25 stays. 

 *Measures are relative to the national average. 

Source: MedPAC analysis of quality measures for 2006–2009 and Medicare cost report data for 2006–2010. 

• Freestanding SNFs can have relatively low costs and provide good quality of care while 

maintaining high margins. 

• In 2009, compared with average SNFs, relatively efficient SNFs had community discharge 

rates that were 38 percent higher and rehospitalization rates that were 17 percent lower. 

• In 2010, relatively efficient SNFs had costs per day that were 8 percent lower than average 

 SNFs. Relatively efficient SNFs had median Medicare margins in 2010 of 22 percent 

compared with a median margin for other SNFs of 18.9 percent. 

• Relatively efficient SNFs were more likely to be located in a rural area and more likely to be 

nonprofit than other SNFs (not shown). 
124 Post-acute care

Chart 8-8. Spending for home health care, 1997–2011 

18.0

13.9

9.0 9.2

8.0

9.6 10.1 10.8

12.6 13.0

15.4

16.9

18.8 19.4 19.6

0

5

10

15

20

25

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Dollars (in billions)

Source: CMS, Office of the Actuary, 2012. 

• Medicare home health care spending grew at an average annual rate of 20 percent from 

1992 to 1997. During that period, the payment system was cost based. Eligibility had been 

loosened just before this period, and enforcing the program’s standards became more 

difficult. Providers delivering billing for fraudulent or uncovered services were also a 

significant factor in the increase in expenditures. 

• Spending began to fall after 1997, concurrent with the introduction of the interim payment 

system (IPS) based on costs with limits, tighter eligibility, and increased scrutiny from the 

Office of Inspector General. 

• In October 2000, the prospective payment system (PPS) replaced the IPS. At the same 

time, eligibility for the benefit broadened slightly. 

• Home health care has risen rapidly under PPS. Spending has risen by about 10 percent a 

year between 2001 and 2009, but growth slowed in 2010 and 2011. 
A Data Book: Health care spending and the Medicare program, June 2012 125

Chart 8-9. Provision of home health care changed after the 

prospective payment system started 

 Percent change 

1997 2001 2010 1997–2001 2001–2010

Number of visits (in millions) 258 74 125 –71% 69% 

 

Visit type (percent of total) 

 Home health aide 48% 25% 16% 

 Skilled nursing 41 50 52 

 Therapy 10 24 33 

 Medical social services 1 1 1 

Visits per home health patient 73 33 36 –55 9 

 

Note: The prospective payment system began in October 2000. Totals may not sum to 100 percent due to rounding. 

 

Source: Home health Standard Analytic File; Health Care Financing Review, Medicare and Medicaid Statistical Supplement, 2002. 

• The types and amount of home health care services that beneficiaries receive have 

changed. In 1997, home health aide services were the most frequently provided visit type, 

and beneficiaries who used home health care received an average of 73 visits. 

• CMS began to phase in the interim payment system in October 1997 to stem the rise in 

spending for home health services and implemented a prospective payment system (PPS) 

in 2000 (see Chart 8-8). By 2001, total visits dropped by 72 percent, and average visits per 

user had dropped to 33. The increase in visits per user between 2001 and 2010 reflects 

home health users getting more episodes. The mix of services changed as well, with skilled 

nursing and therapy visits now accounting for over 80 percent of all services. Since PPS 

was implemented, the number of users and episodes has risen rapidly (see Chart 8-10). 
126 Post-acute care

Chart 8-10. Trends in provision of home health care 

 Average annual 

 percent change 

 2002 2005 2010 2002–2010 

 

Number of users (in millions) 2.5 3.0 3.4 3.9% 

 

Percent of beneficiaries who 

 used home health 7.2% 8.1% 9.6% 3.6 

 

Episodes (in millions) 4.1 5.2 6.8 6.6 

Episodes per home health patient 1.6 1.8 2.0 2.6 

 

Visits per home health patient 31 32 36 2.2 

 

Average payment per episode $2,335 $2,465 $2,839 2.5 

Source: MedPAC analysis of the home health Standard Analytic File. 

• Under the prospective payment system, in effect since 2000, the number of users and the 

number of episodes have risen significantly. In 2010, 3.4 million beneficiaries used the home 

health benefit. 

• The number of home health episodes increased rapidly from 2002 to 2010. The number of 

beneficiaries using home health has also increased since 2002, but at a lower rate than the 

growth in episodes. 

• The number of visits per home health patient increased from 31 in 2002 to 36 in 2010. This 

increase is primarily due to a rise in the number of home health episodes per patient. 
A Data Book: Health care spending and the Medicare program, June 2012 127

Chart 8-11. Margins for freestanding home health agencies 

 Percent of 

 agencies 

 2009 2010 2010 

 

All 18.2% 19.4% 100%

Geography 

 Mostly urban 18.5 19.4 86

 Mostly rural 17.0 19.7 14 

Type of control 

 For profit 19.8 20.7 87

 Nonprofit 13.0 15.3 13

Volume quintile 

First 8.9 9.9 20 

 Second 10.2 11.6 20 

 Third 14.9 13.9 20 

 Fourth 18.1 18.2 20 

 Fifth 20.3 22.1 20

Note: Agencies characterized as urban or rural based on the residence of the majority of their patients. Agencies with outlier 

payments that exceeded 10 percent of Medicare revenues are excluded from the reported statistics. 

Source: MedPAC analysis of 2009–2010 Cost Report files. 

• In 2010, about 80 percent of agencies had positive margins (not shown in chart). These 

estimated margins indicate that Medicare’s payments are above the costs of providing 

services to Medicare beneficiaries for both rural and urban home health agencies (HHAs). 

• These margins are for freestanding HHAs, which composed about 85 percent of all HHAs in 

 2010. HHAs are also based in hospitals and other facilities. 

• HHAs that served mostly urban patients in 2010 had an aggregate average margin of 19.4 

percent; those that served mostly rural patients had an aggregate average margin of 19.7 

percent. The 2009 margin is consistent with the historically high margins the home health 

industry has experienced under the prospective payment system. The aggregate average 

margin from 2001 to 2009 averaged 17.5 percent, indicating that most agencies have been 

paid well in excess of their costs under prospective payment. 

• For-profit agencies in 2010 had an aggregate average margin of 20.7 percent, and nonprofit 

agencies had an aggregate average margin of 15.3 percent. 

• Agencies that serve more patients have higher margins. The agencies in the lowest volume 

quintile in 2010 have an aggregate average margin of 9.9 percent, while those in the highest 

quintile have an aggregate average margin of 22.1 percent. 
128 Post-acute care

Chart 8-12. Most common types of inpatient rehabilitation 

facility cases, 2011 

Type of case Share of cases 

Stroke 19.8% 

Fracture of the lower extremity 13.9 

Major joint replacement 10.5 

Debility 10.4 

Neurological disorders 10.3 

Brain injury 7.5 

Other orthopedic 7.0 

Cardiac conditions 5.1 

Spinal cord injury 4.3 

Other 11.1 

Note: Other includes conditions such as amputations, major multiple trauma, and pain syndrome. Numbers may not sum to 100 

percent due to rounding. 

Source: MedPAC analysis of Inpatient Rehabilitation Facility–Patient Assessment Instrument data from CMS (January through 

June of 2011). 

• In 2011, the most frequent diagnosis for Medicare patients in inpatient rehabilitation facilities 

 (IRFs) was stroke, representing close to 20 percent of cases, up from 2004, when stroke 

represented fewer than 17 percent of cases. 

• Major joint replacement cases represented close to 11 percent of IRF admissions in 2011, 

down from 24 percent of cases in 2004, when major joint replacement was the most 

common IRF Medicare case type. 
A Data Book: Health care spending and the Medicare program, June 2012 129

Chart 8-13. Volume of IRF FFS patients declined slightly in 2010 

 Average 

 annual percent Percent 

 change change 

 2004 2008 2009 2010 2004–2009 2009–2010 

Number of IRF cases 495,000 356,000 364,000 359,000 –6.2% –1.3% 

Unique patients per 10,000 123.0 91.5 93.0 91.1 –5.8 –2.1 

 FFS beneficiaries 

Payment per case $13,290 $16,646 $16,552 $17,085 5.2 3.2 

Medicare spending 

 (in billions) $6.43 $5.95 $6.03 $6.32 –0.3 4.8 

Average length of stay 

 (in days) 12.7 13.3 13.1 13.1 0.6 0 

Note: IRF (inpatient rehabilitation facility), FFS (fee-for-service). Numbers of cases reflect Medicare FFS utilization only. 

Source: MedPAC analysis of MedPAR data from CMS. Total Medicare spending for IRF services from CMS Office of the Actuary. 

• IRF volume is measured by the number of IRF cases and the number of unique patients per 

10,000 beneficiaries, which controls for changes in FFS enrollment. 

• IRF volume declined after 2004 when enforcement of the compliance threshold (60 percent 

rule) was renewed. 

• Medicare FFS spending on IRFs declined between 2004 and 2008 as more IRFs complied 

with the 60 percent rule and more Medicare beneficiaries enrolled in Medicare Advantage 

plans. 

• The number of IRF cases increased between 2008 and 2009. This increase was due to an 

increase in both the number of unique beneficiaries receiving IRF care and an increase in 

the number of beneficiaries with more than one IRF stay in a year. 

• In 2010, the number of IRF cases declined slightly by 1.3 percent. This decline may in part 

be due to the revised coverage criteria for an IRF stay that went into effect in January 2010. 

 The revised coverage criteria did not change, but more clearly defined, which Medicare 

beneficiaries are appropriate for IRFs. Therefore, some patients that IRFs would have 

admitted previously might not have met the more specific coverage criteria in 2010. 
130 Post-acute care

Chart 8-14. Overall IRFs’ payments per case have risen faster 

than costs since implementation of the PPS in 2002 

11.3

22.3

24.9

31.8

40.1

44.9

47.2 47.6

50.5

0.3

2.6

6.5

17.6

27.3

32.7

37.8 39.3

41.8

0

10

20

30

40

50

60

2002 2003 2004 2005 2006 2007 2008 2009 2010

Cumulative percent change

Payment per case

Cost per case

Note: IRF (inpatient rehabilitation facility), PPS (prospective payment system). Data are from consistent two-year cohorts of 

 IRFs. Costs are not adjusted for changes in case mix. 

Source: MedPAC analysis of cost report data from CMS. 

• Since implementation of the PPS in 2002, overall Medicare payments per case have 

increased faster than costs, even when costs per case grew rapidly between 2004 and 2006 

as a result of enforcement of the compliance threshold. 

• These trends in Medicare per case payments and costs are reflected in IRFs’ Medicare 

margins, shown in Chart 8-15. 
A Data Book: Health care spending and the Medicare program, June 2012 131

Chart 8-15. Inpatient rehabilitation facilities’ Medicare margin 

by type, 2002–2010 

 2002 2004 2006 2008 2009 2010 

All IRFs 10.8% 16.7% 12.4% 9.5% 8.4% 8.8% 

Hospital based 6.1 12.2 9.7 4.1 0.4 -0.2 

Freestanding 18.5 24.7 17.5 18.2 20.3 21.4 

Urban 11.3 16.9 12.6 9.7 8.6 9.1 

Rural 5.9 13.9 10.6 7.6 6.3 5.5 

Nonprofit 6.5 12.8 10.7 5.6 2.3 2.0 

For profit 18.5 24.4 16.3 16.7 19.0 19.8 

Note: IRF (inpatient rehabilitation facility). 

Source: MedPAC analysis of cost report data from CMS. 

• The aggregate Medicare margin increased rapidly during the first two years (2002–2004) of 

the IRF prospective payment system (PPS). Aggregate margins rose from just under 2 

percent in 2001 to almost 17 percent in 2004. 

• From 2004 to 2009, margins declined, but remained high. This decline was largely due to 

reductions in patient volume over this time period that resulted in fewer patients among 

whom to distribute fixed costs. The 2007 to 2009 margin decrease was mainly a result of a 

zero update to the base rates for half of 2008 and for all of 2009 that resulted in Medicare 

payment rates remaining at 2007 levels. 

• Margins increased in 2010 from 8.4 percent in 2009 to 8.8 percent in 2010. 

• Freestanding and for-profit IRFs had substantially higher aggregate Medicare margins than 

hospital-based and nonprofit IRFs, continuing a trend that began with implementation of the 

IRF PPS in 2002. 
132 Post-acute care

Chart 8-16. The top 25 MS–LTC–DRGs made up nearly twothirds of LTCH discharges in 2010 

MS-LTC Change 

DRG Description Discharges Percentage 2008-2010 

207 Respiratory system diagnosis with ventilator support 96+ hours 16,024 11.9% 6.9% 

189 Pulmonary edema and respiratory failure 11,148 8.3 27.5 

871 Septicemia or severe sepsis without ventilator support 96+ hours 

 with MCC 7,474 5.5 15.3 

177 Respiratory infections & inflammations with MCC 5,067 3.8 16.8 

592 Skin ulcers with MCC 3,568 2.6 –10.9 

949 Aftercare with CC/MCC 3,046 2.3 –18.8 

208 Respiratory system diagnosis with ventilator support <96 hours 2,851 2.1 14.7 

193 Simple pneumonia and pleurisy with MCC 2,847 2.1 5.6 

190 Chronic obstructive pulmonary disease with MCC 2,654 2.0 3.8 

539 Osteomyelitis with MCC 2,415 1.8 26.9 

573 Skin graft and/or debridement for skin ulcer or cellulitis with MCC 2,059 1.5 7.7 

862 Postoperative and post-traumatic infections with MCC 2,033 1.5 21.6 

314 Other circulatory system diagnosis with MCC 1,983 1.5 33.4 

919 Complications of treatment with MCC 1,950 1.4 17.5 

682 Renal failure with MCC 1,937 1.4 11.4 

166 Other respiratory system OR procedures with MCC 1,911 1.4 12.9 

559 Aftercare, musculoskeletal system and connective tissue with MCC 1,877 1.4 –3.4 

291 Heart failure and shock with MCC 1,821 1.4 7.9 

 4 Tracheostomy with ventilator support 96+ hours or primary 1,656 1.2 17.1 

 diagnosis except face, mouth, and neck without major OR 

593 Skin ulcers with CC 1,646 1.2 –36.4 

178 Respiratory infections and inflammations with CC 1,644 1.2 –16.3 

602 Cellulitis with MCC 1,593 1.2 40.0 

870 Septicemia or severe sepsis with ventilator support 96+ hours 1,592 1.2 47.7 

603 Cellulitis without MCC 1,432 1.1 2.3 

194 Simple pneumonia and pleurisy with CC 1,285 1.0 –22.3 

 

 Top 25 MS–LTC–DRGs 83,513 62.0 8.5 

 

 Total 134,683 100.0 2.9

Note: MS–LTC–DRG (Medicare severity long-term care diagnosis related group), LTCH (long-term care hospital), MCC (major 

complication or comorbidity), CC (complication or comorbidity), OR (operating room). MS–LTC–DRGs are the case-mix 

system for LTCHs. 

 Columns may not sum due to rounding. 

Source: MedPAC analysis of MedPAR data from CMS. 

 

• Cases in LTCHs are concentrated in a relatively small number of MS–LTC–DRGs. In 2010, 

the top 25 MS–LTC–DRGs accounted for nearly two-thirds of all cases. 

• The most frequent diagnosis in LTCHs in 2010 was respiratory system diagnosis with 

ventilator support for more than 96 hours. Ten of the top 25 diagnoses, representing 35 

percent of all cases, were respiratory conditions. 
A Data Book: Health care spending and the Medicare program, June 2012 133

Chart 8-17. LTCH spending per FFS beneficiary continues 

to rise 

Average annual change 

 2003− 2005– 2009−

 2003 2004 2005 2006 2007 2008 2009 2010 2005 2009 2010 

Cases 110,396 121,955 134,003 130,164 129,202 130,869 131,446 134,683 10.2% -0.5% 2.5% 

 

Cases per 10,000 30.8 33.4 36.4 36.0 36.3 37.0 37.1 38.4 8.8 0.5 3.5 

FFS beneficiaries 

 

Spending (in billions) $2.7 $3.7 $4.5 $4.5 $4.5 $4.6 $4.9 $5.2 29.1 2.2 6.0 

Spending per $75.2 $101.3 $122.2 $124.3 $126.5 $130.2 $138.3 $148.1 27.5 3.1 7.1 

FFS beneficiary 

Payment per 

 case $24,758 $30,059 $33,658 $34,859 $34,769 $35,200 $37,465 $38,582 16.6 2.7 3.0 

 

Length of stay 

 (in days) 28.8 28.5 28.2 27.9 26.9 26.7 26.4 26.6 –1.0 –1.6 0.8 

Note: LTCH (Long-term care hospital), FFS (fee for service) 

Source: MedPAC analysis of MedPAR data from CMS. 

• Between 2009 and 2010, the number of LTCH cases per FFS beneficiary rose 3.5 percent. 

Medicare LTCH spending per fee-for-service beneficiary rose more than twice as much over 

the same period (7.1 percent). 
134 Post-acute care

Chart 8-18. LTCHs’ per case payments rose more quickly than 

costs in 2010 

-4.0

-5.6

0.4

3.5

9.4

22.5

32.0

36.0 34.6 36.0

41.4

43.4

-2.1

-3.9

1.6

2.8 3.5

12.1

18.2

24.2

28.1

30.2

32.5 33.4

-10

0

10

20

30

40

50

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Cumulative percent change

Payments per case

Cost per case

TEFRA PPS

Note: LTCH (long-term care hospital), TEFRA (Tax Equity and Fiscal Responsibility Act of 1982), PPS (prospective payment 

system). Percent changes are calculated based on consistent two-year cohorts of LTCHs. 

Source: MedPAC analysis of Medicare cost report data from CMS. 

• Payment per case increased rapidly after the PPS was implemented, climbing an average 

16.6 percent per year between 2003 and 2005. Cost per case also increased rapidly during 

this period, albeit at a somewhat slower pace. 

• Between 2005 and 2008, growth in cost per case outpaced that for payments, as regulatory 

changes to Medicare’s payment policies for LTCHs slowed growth in payment per case to 

an average of 1.4 percent per year. 

• After the Congress delayed implementation of some of CMS’s recent regulations, payments 

per case climbed 5.3 percent between 2008 and 2009, about twice as much as the growth in 

costs. However, between 2009 and 2010, payment growth slowed to 2 percent, while cost 

growth was held under 1 percent. 

 
A Data Book: Health care spending and the Medicare program, June 2012 135

Chart 8-19. LTCHs’ aggregate Medicare margin rose in 2010 

 Share of 

Type of LTCH discharges 2003 2004 2005 2006 2007 2008 2009 2010 

 

All 100% 5.2% 9.0% 11.9% 9.8% 4.8% 3.5% 5.6% 6.4% 

Urban 96 5.2 9.2 11.9 10.0 5.1 3.8 5.9 6.7 

Rural 5 4.5 2.6 10.1 4.9 –0.7 –3.3 –2.8 –0.5 

Freestanding 70 5.6 8.4 11.3 9.3 4.4 3.1 4.7 5.6 

Hospital within hospital 30 4.2 10.6 13.1 10.8 5.8 4.4 7.6 8.1 

Nonprofit 16 1.7 6.9 9.1 6.4 1.3 –2.5 –0.6 –1.2 

For profit 83 6.3 10.0 13.1 10.9 5.9 5.1 7.2 8.0 

Government 2 N/A N/A N/A N/A N/A N/A N/A N/A 

Note: LTCH (long-term care hospital), N/A (not available). Share of discharges column groupings may not sum to 100 percent 

due to rounding or missing data. Margins for government-owned providers are not shown. They operate in a different 

context from other providers, so their margins are not necessarily comparable. 

Source: MedPAC analysis of cost report data from CMS. 

• After implementation of the prospective payment system, LTCHs’ Medicare margins 

increased rapidly, from 5.2 percent in 2003 to 11.9 percent in 2005. Margins then fell as 

growth in payments per case leveled off. In 2009, however, LTCH margins began to 

increase again, reaching 6.4 percent in 2010. 

• Financial performance in 2010 varied across LTCHs. Margins increased between 2009 and 

2010 for all types of LTCHs except nonprofits, whose margins fell from –0.6 percent to –1.2 

percent. The aggregate Medicare margin for for-profit LTCHs (which accounted for 83 

percent of all Medicare discharges from LTCHs) was 8.0 percent. Rural LTCHs’ aggregate 

margin was –0.5 percent, compared with 6.7 percent for their urban counterparts. Rural 

providers account for about 5 percent of LTCHs discharges, caring for a smaller volume of 

patients on average, which may result in poorer economies of scale. 
136 Post-acute care

Chart 8-20. LTCHs in the top quartile of Medicare margins in 

 2010 had much lower costs 

 High-margin Low-margin 

Characteristics quartile quartile 

 

Mean Medicare margin 20.9% –11.3% 

Mean total discharges (all payers) 576 444 

Medicare patient share 68% 64% 

Medicaid patient share 8 5 

Occupancy rate 74 62 

Average length of stay (in days) 26 27 

Adjusted CMI 0.9743 0.8981 

Mean per discharge: 

Standardized costs $26,660 $36,251 

Total Medicare payment* $38,557 $38,157 

High-cost outlier payments $1,316 $5,005 

Share of: 

Cases that are SSOs 26% 34%

Medicare cases from primary-referring ACH 35 41 

LTCHs that are for-profit 90 64 

Note: LTCH (long-term care hospital), CMI (case-mix index), SSO (short-stay outlier), ACH (acute care hospital). Includes only 

established LTCHs—those that filed valid cost reports in both 2009 and 2010. Top margin quartile LTCHs were in the top 

25 percent of the distribution of Medicare margins. Bottom margin quartile LTCHs were in the bottom 25 percent of the 

distribution of Medicare margins. Standardized costs have been adjusted for differences in case mix and area wages. 

 Adjusted case-mix indices have been adjusted for differences in SSOs across facilities. Average primary referring ACH 

referral share indicates the mean share of patients referred to LTCHs in the quartile from the ACH that refers the most 

patients to the LTCH. Government providers were excluded. 

 *Includes outlier payments. 

Source: MedPAC analysis of LTCH cost reports and MedPAR data from CMS. 

• A quarter of all LTCHs had margins in excess of 20.9 percent, while another quarter had 

margins below –11.3 percent. 

• Lower per discharge costs, rather than higher payments, drove the differences in financial 

performance between LTCHs with the lowest and highest Medicare margins. Low-margin 

LTCHs had standardized costs per discharge that were 36 percent higher than high-margin 

LTCHs ($36,251 vs. $26,660). Low-margin LTCHs served more patients overall and had a 

lower average occupancy rate; thus, they benefit less from economies of scale. 

• High-cost outlier payments per discharge for low-margin LTCHs were almost four times 

those of high-margin LTCHs ($5,005 vs. $1,316). At the same time, SSOs made up a larger 

share of low-margin LTCHs’ cases. Low-margin LTCHs thus cared for disproportionate 

shares of patients who are high-cost outliers and patients who have shorter stays. 
A Data Book: Health care spending and the Medicare program, June 2012 137

Web links. Post-acute care 

Skilled nursing facilities 

• Chapter 7 of MedPAC’s March 2012 Report to the Congress provides information about the 

supply, quality, service use, and Medicare margins for skilled nursing facilities. Chapter 7 of 

MedPAC’s June 2008 Report to the Congress provides information about alternative designs for 

Medicare’s prospective payment system that would more accurately pay providers for their 

skilled nursing facility services. Medicare payment basics: Skilled nursing facility payment 

system provides a description of how Medicare pays for skilled nursing facility care. 

http://www.medpac.gov/chapters/Mar12_Ch07.pdf 

 

 http://www.medpac.gov/chapters/Jun08_Ch07.pdf 

 http://www.medpac.gov/documents/MedPAC_Payment_Basics_11_SNF.pdf 

• The official Medicare website provides information on skilled nursing facilities, including the 

payment system and other related issues. 

http://www.cms.gov/medicare/medicare-fee-for-service-payment/SNFPPS/ 

Home health services 

• Chapter 8 of MedPAC’s March 2012 Report to the Congress provide information on home health 

services. Medicare payment basics: Home health care services payment system provides a 

description of how Medicare pays for home health care. 

http://www.medpac.gov/chapters/Mar12_Ch08.pdf 

 http://www.medpac.gov/documents/MedPAC_Payment_Basics_11_HHA.pdf 

• The official Medicare website provides information on the quality of home health care and 

additional information on new policies, statistics, and research as well as information on home 

health spending and use of services. 

 http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/index.html 

Inpatient rehabilitation facilities

• Chapter 9 of MedPAC’s March 2011 Report to the Congress provides information on inpatient 

rehabilitation facilities. Medicare payment basics: Rehabilitation facilities (inpatient) payment 

system provides a description of how Medicare pays for inpatient rehabilitation facility services. 

 http://www.medpac.gov/chapters/Mar12_Ch09.pdf 

 http://www.medpac.gov/documents/MedPAC_Payment_Basics_11_IRF.pdf 

• CMS provides information on the inpatient rehabilitation facility prospective payment system. 

http://www.cms.gov/medicare/medicare-fee-for-service-payment/InpatientRehabFacPPS/ 
138 Post-acute care

Long-term care hospitals 

• Chapter 10 of MedPAC’s March 2011 Report to the Congress provides information on long-term 

care hospitals. Medicare payment basics: Long-term care hospital services payment system

provides a description of how Medicare pays for long-term care hospital services. 

http://www.medpac.gov/chapters/Mar12_Ch10.pdf 

 http://www.medpac.gov/documents/MedPAC_Payment_Basics_11_LTCH.pdf 

• CMS also provides information on long-term care hospitals, including the long-term care hospital 

 prospective payment system. 

 http://www.cms.gov//medicare/medicare-fee-for-service-payment/LongTermCareHospitalPPS/
S E C T I O N 

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144 Med

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Plan type 

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Chart 

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 US total 

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Alaska 

Arizona 

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California 

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Florida 

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Iowa 

Kansas 

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146 Med

Chart 

Benchma

Bids/FFS

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cilities billed

5.1

6.4

2000 2001

Data Book: Hea

spendin

ns’ office

s administered in

cal equipment). D

facilities. 

ms data. 

dministered 

2010, up 4.3

B drugs incre

the Medicare

06 percent o

ing declined

 at an avera

ent system, a

use of darbe

declined by 

in response

policy. Exclu

5.4 per year

rugs provide

l disease in 

eparately bil

$4.1 billion in

d Medicare a

8.5

10.

2002 200

lth care spendi

ng for Pa

es or furn

n physicians’ offic

Data do not inclu

in physician

3 percent fro

eased at an 

e payment r

of the avera

d 8 percent in

age rate of 2

another facto

epoetin alfa a

more than $

e to changes

uding these 

r since 2005

ed through o

dialysis facil

led drugs pr

n 2010. We 

an additional

3

10.9

1

03 2004 2

ding and the Me

art B drug

nished b

ces or furnished 

ude Part B–cove

s’ offices or 

om the 2009

average rate

rate changed

ge sales pric

n 2005. Sinc

.7 percent p

or contributi

and epoetin 

$1 billion bet

s in Food an

two product

. 

utpatient de

lities. MedPA

rovided in ho

estimate tha

 $3.0 billion 

10.1

10.6

2005 2006

edicare program

gs admin

by suppli

by suppliers (e.g

red drugs furnish

furnished by

9 level. 

e of 25 perc

d from one b

ce. With the

ce then, spe

per year sinc

ng to slower

alfa. Annua

tween 2005 

nd Drug Adm

ts, Part B dru

epartments o

AC estimate

ospital outpa

at freestandi

for drugs in

11.0 10.

2007 200

m, June 2012 

nistered 

ers 

g., certain oral dr

hed in hospital 

y suppliers 

cent per year

based on the

 move to the

ending has 

ce 2005. 

r growth in P

al Part B 

and 2010 as

ministration 

ug spending

of hospitals o

es that paym

atient 

ing and hosp

 2010. 

.7 11.1 1

08 2009 2

157

in 

rugs 

r

e

e

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s use 

g has 

or to 

ments 

pital11.5

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158 Pre

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ood and Drug Ad

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s

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ffices or

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ng cancer 

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de Part B drugs fu

program paymen

ole source in 200

of Medicare clai

dministration web

approximate

he top 10 dru

biologic for a

re expenditu

st expenditu

ncer domina

chemotherap

quirement for

B drugs adm

art B dru

r furnishe

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ns 

ration

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ritis 

ated 

ration

hritis,

ion 

urnished in hosp

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09, but generic ve

ms data from CM

bsite (http://www

ely 600 outp

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age-related m

res in 2010,

ure products 

ates the list (

py) because

r coverage o

ministered in

gs admi

ed by su

10 

Allowed

Charges

(in millions)

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$276

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$259

pital outpatient de

ary cost-sharing.

ersions have sinc

MS and informati

.fda.gov). 

patient drugs

for about 47

macular deg

 exceeding $

are biologic

(7 of the top 

 most cance

of most Part 

n physicians’

nistered

uppliers, 

Competit

Sole sour

Sole sour

Sole sour

Sole sour

Sole sour

Sole sour

Multisour

biologic 

Sole sour

Sole sour

Multisour

epartments or dia

Clinical indicatio

ce become avail

ion on drug and 

s under Part 

7 percent of 

generation, w

$1.1 billion. 

cs. 

10 drugs tre

er drugs mus

B drugs. 

’ offices or fu

d in phys

by share

Percen

tion spend

rce 9.7

rce 7.4

rce 6.6

rce 5.6

rce 4.8

rce 3.2

rce 2.8

rce 2.4

rce* 2.3

rce 2.2

alysis facilities. A

ons may include 

lable. 

biologic approva

t B, but spen

all Part B dr

was the Part

 

eat cancer o

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urnished by 

sicians’ 

e of 

nt of Rank

ding 200

7% 2

4 1

6 3

6 4

8 5

2 6

8 7

4 not list

3 9

2 10

Allowed charges 

on- and off-label

al information fro

nding is very

rug spending

t B drug with

or the side ef

stered by 

suppliers. 

k in 

9 

ted 

l use. 

m the 

y

g. 

h the 

ffects 
Chart 

Note: LI

(re

TR

*C

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of

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throu

provid

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emplo

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6.4 m

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w

cr

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etiree drug subsi

RICARE is the he

Creditable covera

MS Managemen

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atabase. 

f February 2

percent) were

gh employe

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ter in value t

oyer with a t

within a speci

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million are du

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gh the Medi

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continued ne

Prim

throug

re

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throug

TRICAR

active w

Medicare 

p

1

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n 2010, a

were enro

reditable

ubsidy), PDP (pr

idy), FEHB (Fede

ealth program fo

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nt Information Inte

rtment of Veteran

010, CMS e

e either sign

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drug coverag

than that of P

tax-free subs

ified range o

beneficiaries

ually eligible 

5 million qua

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plied directly

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ext page) 

LIS enroll

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4

mary coverage 

h employers that

eceive RDS

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y coverage 

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worker with 

as secondary 

payer

13%

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creditable cov

4%

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about 90 

olled in P

e drug co

rescription drug p

eral Employees H

or military retirees

benefits whose v

egrated Reposito

ns Affairs; CMS C

estimated tha

ned up for Pa

d plans unde

ge to its retir

Part D (calle

sidy for 28 p

of spending.)

s (nearly 22

to receive M

alified for ext

gs Program o

y to the Soci

 (17 percent

percent) are

lees in MAPDs

4%

t

ces of 

verage*

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1

M

lth care spendi

percent 

Part D pla

overage

plan), MA–PD (M

Health Benefits p

s and their depen

value is equal to 

ory, February 16

Coordination of B

at 34 million 

art D plans o

er Medicare’s

rees with an 

ed creditable

percent of ea

)

percent) rec

Medicare and

tra help eith

or Suppleme

ial Security A

t of all Medic

e in MA–PD

Non-LI

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Non-LIS enr

MA-PD

17%

ble coverage

0%

MA-PDs 21%

ding and the Me

of Medic

ans or h

Medicare Advanta

program), VA (D

ndents. 

or greater than t

, 2010; Office of 

Benefits Databas

of the 46 m

or had presc

s RDS. (If an

 average be

e coverage), 

ach eligible i

ceive Part D

d all Medica

er because 

ental Securit

Administratio

care benefic

plans. 

IS enrollees in 

PDPs

21%

enrollees in PDP

17%

rollees in 

Ds

%

edicare program

care ben

ad other

age–Prescription

epartment of Ve

that of the basic 

Personnel Mana

se; CMS Credita

illion Medica

cription drug 

n employer a

enefit value t

Medicare p

ndividual’s d

D’s LIS. Of th

aid benefits o

they receive

ty Income P

on. Among a

ciaries) are e

Ps

P

3

m, June 2012 

neficiarie

r sources

n Drug [plan]), R

terans Affairs). 

Part D benefit. 

agement; Depart

able Coverage 

are beneficia

coverage 

agrees to 

that is equal 

rovides the 

drug costs th

hese individu

offered in the

e benefits 

rogram or 

all LIS 

enrolled in st

PDPs

38%

159

es 

s of 

DS 

tment 

aries 

to or 

hat 

uals, 

eir 

tand-
160 Pre

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• Othe

bene

Medi

millio

spen

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affect

receiv

indivi

other

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escription drugs

10-3. In

w

cr

r enrollees in

ficiaries. An

care health 

on, or 14 per

ding. 

r Medicare b

t Medicare p

ve drug cove

dual is still a

r sources of 

stimated 4.7

s

n 2010, a

were enro

reditable

n stand-alon

other 7.9 mi

plans. Indivi

cent. Those 

beneficiaries

program spe

erage throug

an active wo

creditable co

7 million bene

about 90 

olled in P

e drug co

ne PDPs num

llion enrollee

duals whose

groups of b

s have credit

ending. For e

gh the FEHB

orker. CMS e

overage. 

eficiaries (10

percent 

Part D pla

overage

mbered 9.7 m

es (17 perce

e employers

beneficiaries 

table drug co

example, 6.2

B, TRICARE

estimates tha

0 percent) h

of Medic

ans or h

(continu

million, or 21

ent) are in M

s receive Me

directly affe

overage, bu

2 million ben

E, VA, or curr

at another 1

ave no cred

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ad other

ued) 

1 percent of

MA–PD plans

edicare’s RD

ect Medicare

t that covera

neficiaries (1

rent employ

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itable drug c

neficiarie

r sources

f all Medicare

s or other pr

DS numbered

e program 

age does no

3 percent) 

ers because

dividuals hav

coverage. 

es 

s of 

e

ivate 

d 6.4 

ot 

e the 

ve 
Chart 

Deductible

Initial cove

Annual ou

Total cove

 out-of-p

Maximum

 coverag

Minimum 

 out-of-p

 Copay

 mul

 Copay

Note: U

(7

en

po

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co

en

Source: C

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define

cover

cover

enroll

cover

2010,

sharin

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great

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the an

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actua

plan m

deduc

perce

define

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plan r

comb

10-4. P

ov

e

erage limit 

ut-of-pocket th

ered drug spe

pocket thresho

m amount of co

ge gap 

cost sharing 

pocket thresho

y for generic/p

ltisource drug

y for other pre

nder Part D’s de

75 percent paid b

nrollees exceedin

ocket threshold. 

$6,657.50) is for a

overage gap. Cos

nrollee pays nom

MS, Office of the

Medicare Pre

ed standard 

red drugs unt

rage gap unt

lees were res

rage gap. Be

, enrollees fa

ng for drugs 

eneric drugs.

er of $2.60 to

parameters o

nnual increas

n certain limi

arial value as

may use tiere

ctible, but us

ent. Both defi

ed standard 

e a sponsorin

region, it may

bined. 

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aramete

ver time 

hreshold 

ending at ann

old

ost sharing in

above the an

old

preferred 

g

escription dru

fined standard b

by the plan) until 

ng the ICL were 

Beginning in 201

an individual with

st sharing paid b

minal cost sharing

e Actuary. 

escription Dru

benefit struct

til the enrolle

il annual outsponsible for

ecause of cha

ace reduced c

filled during t

 Enrollees w

o $6.50 per p

of this defined

se in average

ts, sponsorin

 the defined 

ed copaymen

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ned standard

benefit are k

g organizatio

y also offer a

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ers of the

2

$25

2,2

3,6

ual 

5,1

n the 

2,8

nnual 

gs 

enefit, the enroll

total covered dru

responsible for p

11, enrollees face

h no other source

by most sources 

g above the limit.

ug, Improvem

ture. In 2012

ee reaches $2

-of-pocket sp

r paying the f

anges made 

cost sharing

the gap phas

ith drug spen

prescription o

d standard be

e total drug e

ng organizati

standard ben

nts rather tha

ng requireme

d benefit plan

nown as “ba

on offers one

a plan with en

lth care spendi

e defined

2006 2

50.00 $2

250.00 2,7

600.00 4,3

00.00 6,1

850.00 3,4

2.00

5.00

ee pays the dedu

ug spending reac

paying 100 perce

e reduced cost s

es of supplemen

of supplemental 

.

ment, and Mo

2, it has a $32

2,930 in tota

pending reac

full discounte

by the Patien

for drugs fille

se is 50 perc

nding that ex

or 5 percent c

enefit structu

expenses of 

ons may offe

nefit, but a d

an 25 percen

ents that are 

ns and plans

sic benefits.”

e plan with ba

nhanced ben

ding and the Me

d standar

2009 2

295.00 $3

700.00 2,8

350.00 4,5

153.75 6,4

453.75 3,6

2.40

6.00

uctible and then 

ches the initial co

ent of covered dr

sharing in the cov

ntal coverage fillin

coverage does n

odernization 

20 deductible

l covered dru

ches the annu

ed price of co

nt Protection

ed in the cov

cent for brand

xceeds the an

coinsurance.

ure increase 

Medicare be

er Part D plan

ifferent bene

nt coinsuranc

equivalent to

s that are act

”

asic benefits 

nefits—basic 

edicare program

rd benef

2010 

310.00 $3

830.00 2,8

550.00 4,5

440.00 6,4

610.00 3,6

2.50

6.30

25 percent of co

overage limit (IC

rug spending up 

verage gap. The 

ng only brand-na

not count toward

Act of 2003 s

e, 25 percent

ug spending,

ual threshold

overed drugs

n and Afforda

verage gap. I

d-name drugs

nnual thresho

.

over time at 

eneficiaries. 

ns that have 

efit structure. 

ce. Or a plan 

o a rate highe

tuarially equiv

within a pres

and supplem

m, June 2012 

fit increa

2011 2

310.00 $32

840.00 2,93

550.00 4,70

447.50 6,65

607.50 3,72

2.50 

6.30 

overed drug spen

L). Before 2011, 

to the annual ou

amount for 2012

ame drugs during

d this threshold. T

specified a 

t coinsurance

, and then a 

d. Before 201

s filled during

able Care Act

n 2012, the c

s and 86 per

old would pa

the same rat

the same 

For example

may have no

er than 25 

valent to the 

scription drug

mental covera

161

ase 

2012 

20.00 

30.00 

00.00 

57.50 

27.50 

2.60 

6.50 

nding 

ut-of2

g the 

The 

e on 

1, 

g the 

t of 

cost 

rcent 

ay the 

te as 

e, a 

o

g

age 
162 Pre

Chart 

 

Total 

Type of or

 Nationala

 Other 

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 Defined 

 Actuaria

 Enhance

Type of de

 Zero 

 Reduced

 Defined 

Drugs cov

 Some ge

 no bran

 Some ge

 brand-n

 None 

Note: PD

U

du

a R

b I

c $

Source: M

• Part D

are of

• In 201

each 

enroll

• Spons

supple

avera

perce

• A sma

27 pe

about

• In 201

Howe

begin

10-4).

elimin

escription drugs

10-5. C

rganization 

a

enefit 

standard 

lly equivalentb

ed 

eductible 

d

standardc

vered in the ga

enerics but 

nd-name drugs

enerics and som

name drugs 

DP (prescription 

.S. territories. Ex

ue to rounding. 

Reflects total num

ncludes “actuaria

$310 in 2011 and

edPAC analysis 

D drew about 

ffering 1,041 P

12, 80 percen

of the 34 PDP

ment. 

sors are offeri

emental cove

ge value as th

nt) are in actu

aller proportio

rcent of all pla

t a third in 201

12, 94 percen

ever, because 

ning in 2011, 

. In addition, m

nates the cove

s

Character

Plans 

Number P

1,109 

851 

258 

133 

474 

502 

464 

197 

448 

ap 

 259 

me 

106 

744 

drug plan). The 

xcluded plans ha

mbers of plans fo

ally equivalent st

d $320 in 2012. 

of CMS landsca

6 percent few

PDPs in 2012

t of all PDPs a

P regions. Pla

ing about the 

rage) for 2012

he defined sta

uarially equiva

on of PDPs inc

ans with some

11. 

t of PDP enro

of the change

beneficiaries 

many PDP en

erage gap. 

ristics of

 2011

Enro

Feb

Num

ercent (in mill

100% 17.

77 13.

23 3.

12 1.

43 12.

45 3.

42 7.

18 2.

40 7.

23 2.

10 0.

67 14.

PDPs and enroll

ve 2 million enro

or organizations w

tandard” and “ba

ape, premium, an

wer stand-alon

 compared wi

are offered by

ns offered by 

same numbe

2 and fewer P

andard benefit

alent plans. 

clude some be

e gap coverag

ollees are in p

es made by th

no longer fac

rollees receiv

f Medica

ollees as of 

bruary 2011

ber 

ions) Percent

0 100%

9 82

0 18

3 8

6 74

0 18

3 43

1 13

6 45

2 13

3 2

4 85

lment described 

ollees in 2012 an

with at least 1 PD

asic alternative” b

nd enrollment dat

ne PDPs into t

ith 1,109 in 20

y sponsoring o

those nationa

r of PDPs wit

PDPs with actu

t, but with alte

enefits in the c

ge offer gener

lans that offer

he Patient Pro

ce 100 percen

ve Part D’s low

are PDPs

P

t Number

1,041

838

203

95

446

500

488

108

445

197

73

771

here exclude em

d had 1.6 million

DP in each of the

benefits. 

ta. 

the field for 20

011. 

organizations 

al sponsors a

h enhanced b

uarially equiva

ernative benef

coverage gap

rics and brand

r no additiona

otection and A

nt coinsurance

w-income sub

s

2012

lans

r Percent (

100% 

80 

20 

9 

43 

48 

47 

10 

43 

19 

7 

74 

mployer-only plan

n in 2011. Sums 

e 34 PDP region

012 than in 20

that have at l

ccount for 85 

benefits (basic

alent benefits

fit designs. M

p for 2012 tha

d-name drugs

al benefits in th

Affordable Car

e in the covera

bsidy, which ef

2 

Enrollees a

February 20

Number

in millions) Pe

17.5 1

14.9 

2.6 

1.0 

13.2 

3.3 

7.3 

1.8 

8.3 

0.8 

0.3 

16.4 

ns and plans offe

may not add to t

ns. 

011. Plan spo

least 1 PDP in

percent of all

c plus 

s—having the 

ost enrollees 

n in 2011. Ab

s, compared w

he coverage g

re Act of 2010

age gap (see 

ffectively 

as of 

012 

ercent 

100% 

85 

15 

5 

75 

19 

42 

11 

48 

4 

2 

94 

ered in 

totals 

nsors 

n

l PDP 

same 

(75 

bout 

with 

gap. 

0, 

Chart 
Chart 

 

Totals 

Type of org

 Local HM

 Local PP

 PFFS 

 Regional

Type of be

 Defined s

 Actuarial

 Enhance

Type of de

 Zero 

 Reduced

 Defined s

Drugs cove

 Some ge

 brand-n

 Some ge

 brand-n

 None 

Note: M

pr

em

on

PD

di

 *B

st

 **

Source: M

• There

compa

plans,

declin

prefer

• A larg

(comp

with 9

enrollm

• Most M

PD pla

• MA–P

50 pe

name 

plans 

10-6. C

ganization 

MO 

PO 

l PPO 

nefit 

standard 

ly equivalent*

ed 

ductible 

d

standard**

ered in the gap

enerics but no 

name drugs 

enerics and som

name drugs 

A–PD (Medicare

rovider organizat

mployer-only pla

nly plans. Sums 

D as separate pl

stinguish betwee

Benefits labeled a

andard” and “bas

$310 in 2011 an

edPAC analysis 

e are slightly m

ared with 1,50

, making up 62

e, from 137 in

rred provider o

er share of MA

pare Chart 10-

2 percent of M

ment. 

MA–PD plans 

ans with no de

PD plans are m

rcent of MA–P

drug coverag

account for 52

A D

Character

Plans 

Number Pe

1,506 10

 

909 6

421 2

137 

39 

 

42 

108 

1,356 9

 

1,320 8

110 

76 

p 

441 2

me 

350 2

715 4

e Advantage–Pre

tion), PFFS (priva

ns, plans offered

may not add to to

ans for the purpo

en different segm

actuarially equiva

sic alternative” b

d $320 in 2012. 

of CMS landsca

more MA–PD p

06 the year bef

2 percent of al

n 2011 to 125 

organizations d

A–PD plans th

-6 with Chart 1

MA–PD plans. 

have no dedu

eductible attrac

more likely tha

PD plans includ

e and 26 perc

2 percent of M

Data Book: Hea

ristics of

2011

En

Fe

Num

ercent (in mill

00% 8.

0 5.

8 1.

9 0.

3 0.

3 0.

7 0.

0 7.

8 7.

7 0.

5 0.

9 3.

3 1.

7 3.

escription Drug [p

ate fee-for-servic

d in U.S. territorie

otals due to roun

ose of reporting t

ments of a plan. 

alent to Part D’s 

benefits. 

ape, premium, an

plans in 2012 t

fore (about 2 p

ll (unweighted

in 2012. The n

decreased slig

han stand-alon

10-5). In 2012,

In 2012, enha

ctible: 89 perc

cted about 88 p

n PDPs to pro

ded some gap

cent with some

MA–PD enrollm

lth care spendi

f MA–PD

nrollees as of 

ebruary 2011

ber 

ions) Percent

6 100%

7 66

7 20

5 5

7 8

1 1

6 7

9 92

8 91

5 6

2 3

0 36

6 19

9 46 

plan]), HMO (hea

ce). The MA–PD

es, 1876 cost pla

nding. In previous

the number of pl

standard benefit

nd enrollment dat

than in 2011. S

percent more)

) offerings in 2

number of dru

ghtly between 

ne prescription

, 48 percent of

anced MA–PD

cent of MA–PD

percent of tota

ovide some ad

p coverage—2

e generics and

ment. 

ding and the Me

Ds 

Pla

t Number

1,541

951

430

125

35

37

86

1,418

1,372

98

71

373

397

771

alth maintenance

 plans and enrol

ans, special need

s years, we have

ans available. Th

t include what CM

ta. 

Sponsors are 

). HMOs rema

2012. The num

g plans offere

2011 and 201

n drug plans (P

f all PDPs had

D plans attracte

D offerings in 20

al MA–PD enro

dditional benef

24 percent with

d some brandedicare program

2012 

ans

Percent (in

100% 

62

28

8

2

2

6

92

89

6

5

24

26

50

e organization), P

lment described 

ds plans, demons

e treated differen

he figures shown

MS calls “actuari

offering 1,541

ain the domina

mber of PFFS 

ed by both loca

12. 

PDPs) offer en

d enhanced be

ed 94 percent

012 and 88 pe

ollment in 2012

fits in the cove

h some gener

-name drug co

m, June 2012 

Enrollees as o

February 201

Number 

n millions) Pe

8.5 1

5.9 

1.5 

0.4 

0.7 

0.1 

0.5 

7.9 

7.5 

0.8 

0.2 

2.1 

2.3 

4.0 

PPO (preferred 

here exclude 

strations, and Pa

nt segments of an

n above no longe

ially equivalent 

1 MA–PD plan

ant kind of MA–

plans continu

al and regiona

nhanced bene

enefits compa

t of total MA–P

ercent in 2011.

2. 

erage gap. In 2

rics, but no bra

overage. Thos

163

of 

2 

ercent 

100% 

69 

18 

5 

8 

1 

6 

94 

88 

9 

2 

25 

27 

48 

art Bn MA–

er 

ns 

–PD 

ues to 

al 

efits 

red 

PD 

. MA–

2012, 

andse 
164 Pre

Chart 

PDPs 

 Basic co

 Enhance

covera

 Any cove

MA–PDs

including

 Basic co

 Enhance

covera

 Any cove

All plans

 Basic co

 Enhance

covera

 Any cove

Note: PD

PD

an

de

 *R

of

be

of

or

Source: M

• The a

2012

• The a

mont

• MA–P

dollar

the p

plans

rebat

prem

• The p

rema

$14 p

escription drugs

10-7. A

e

(in

overage 

ed 

age 

erage 

s, 

g SNPs* 

overage 

ed 

age 

erage 

s

overage 

ed 

age 

erage 

DP (prescription 

DPs and enrollm

nd enrollment de

emonstrations, a

Reflects the portio

ffer Part D covera

etween a plan’s p

ffset Part D prem

rganizations and 

edPAC analysis 

average prem

. 

average prem

h, a decreas

PD plans ca

rs—a portion

lan’s payme

s may also e

te dollars in 

iums compa

portion of Me

ained flat (inc

per month. 

s

Average P

2011 

nrollment 

n millions) 

Av

20

w

13.9 

3.0 

17.0 

 

1.1 

7.5 

8.6 

 

 

15.0 

10.6 

25.5 

drug plan), MA–

ment described he

escribed here exc

nd Part B-only p

on of Medicare A

age. MA–PD pre

payment benchm

mium costs. Lowe

counties of oper

of CMS landsca

mium paid b

miums for be

se of less tha

n lower the 

n (between 6

ent benchma

enhance thei

these ways,

ared with PD

edicare Adva

crease of les

Part D pr

erage monthly 

011 premium 

weighted by 

2011 

enrollment 

 

$33

63

38

27

12

14

33

26

30

–PD (Medicare A

ere exclude emp

clude employer-o

lans. 

Advantage plans

emiums reflect re

mark and its bid f

er average premi

ration than MA–P

ape, plan report, 

by Part D en

eneficiaries 

an $1. 

part of their 

67 percent a

ark and its bi

r Part D ben

 resulting in 

DPs. 

antage prem

ss than $1) i

remiums

2012 

enrollment 

(in millions)

 

14.1 

3.3

17.5 

1.3 

8.0

9.3 

15.5 

11.3

26.8 

Advantage–Presc

loyer-only plans 

only plans, plans 

’ total monthly pr

ebate dollars (bet

for providing Part

ums for enhance

PD plans with ba

and enrollment d

rollees rema

enrolled in P

monthly pre

and 73 perce

id for providi

nefit with reb

more enhan

miums attribu

n 2012, with

s

Average mo

 2012 prem

weighted 

 2012

enrollme

 

$33

58

38

27

12

14

33

26

30

cription Drug [pla

and plans offere

 offered in U.S. t

remium attributa

tween 67 percen

t A and Part B se

ed MA–PD plans

asic coverage. 

data. 

ained stable 

PDP remain

emium attribu

ent in 2012)

ing Part A a

bate dollars. 

nced offering

utable to pre

h the averag

onthly 

mium 

by 

nt 

Doll

chan

$

–4.

–0.

–0.

0.

0.

–0.

–1.

–0.

an]), SNPs (spec

ed in U.S. territor

territories, 1876 c

ble to Part D ben

nt and 73 percent

ervices in 2012) 

s reflect a differe

at around $

ed flat in 20

utable to Pa

of the differ

nd Part B se

Many MA–P

gs and lowe

escription dru

e MA–PD en

lar 

nge 

Perce

chan

weig

aver

prem

 

$0 

5 –

6 –

 

1 –

1 

3 

 

 

1 

0 –

5 –

ial needs plans).

ries. The MA–PD

cost plans, 

nefits for plans th

t of the difference

that were used t

nt mix of sponso

$30 per mont

12 at $38 pe

art D using re

ence betwee

ervices. MA–

PD plans use

r average 

ug benefits 

nrollee payin

entage 

ge in 

hted 

rage 

mium 

0 % 

–7

–1

–1

1

2

0

–4

–2

. The 

D plans 

hat 

e 

o 

oring 

th in 

er 

ebate 

en 

–PD 

e

ng 
Chart 

PDP regio

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

 

Note: PD

Source: M

• The nu

median

• Hawaii

• In 2012

premiu

• Each r

premiu

10-8. N

en

on State(s)

ME, NH

CT, MA

NY 

NJ 

DC, DE

PA, WV

VA 

NC 

SC 

GA 

FL 

AL, TN 

MI 

OH 

IN, KY 

WI 

IL 

MO 

AR 

MS 

LA 

TX 

OK 

KS 

IA, MN,

 NE, SD

NM 

CO 

AZ 

NV 

OR, WA

ID, UT 

CA 

HI 

AK 

Total 

DP (prescription 

edPAC based on

umber of stand-a

n number of plan

i and Alaska had

2, enrollees who

um. In 2012, 327

egion has at lea

um plans availab

A D

umber o

nrollees 

)

H

A, RI, VT 

E, MD 

V

 MT, ND, 

D, WY 

A

drug plan), LIS (

n 2012 PDP land

alone PDPs dec

ns offered in eac

d the fewest stan

o receive Part D’

7 PDPs qualified

ast two PDPs av

ble. 

Data Book: Hea

of PDPs q

remaine

Numbe

2011 2

30 

34 

33 

33 

33 

38 

32 

33 

34 

32 

32 

34 

35 

34 

32 

32 

35 

32 

34 

32 

32 

33 

33 

33 

33 

32 

31 

30 

31 

32 

35 

33 

28 

29 

1,109 1

(low-income sub

dscape file provid

reased by 6 per

ch region in 201

nd-alone PDPs w

’s LIS have abou

d to be premiumailable to LIS en

lth care spendi

qualifyin

ed stable

er of PDPs 

2012 Differe

28 –

30 –

29 –

30 –

31 –

36 –

30 –

30 –

32 –

30 –

33 

32 –

34 –

33 –

31 –

29 –

33 –

30 –

30 –

30 –

30 –

33 

30 –

31 –

33 

30 –

28 –

30 

29 –

30 –

33 –

33 

25 –

25 –

,041 –6

sidy). 

ded by CMS. 

rcent around the

2 is 30 compare

with 25; the Pen

ut the same num

-free to those en

nrollees at no pre

ding and the Me

ng as pre

e in 2012

Nu

ence 20

–2 

–4 

–4 

–3 

–2 

–2 

–2 

–3 

–2 

–2 

1 

–2 

–1 

–1 

–1 

–3 

–2 

–2 

–4 

–2 

–2 

0 

–3 

–2 

0 

–2 

–3 

0 

–2 

–2 

–2 

0 

–3 

–4 

68 3

e country, from 1

ed with 33 in 201

nnsylvania–Wes

mber of options f

nrollees, compar

emium; most reg

edicare program

emium-fr

2

umber of PDPs t

premium for LIS

011 2012 

7 8 

12 10 

11 12 

6 9 

12 13 

12 12 

10 10 

11 9 

15 12 

14 12 

4 3 

11 12 

12 12 

8 8 

14 13 

10 10 

10 10 

5 8 

17 15 

14 12 

10 12 

12 13 

10 9 

12 10 

10 9 

8 6 

7 5 

9 10 

4 2 

8 9 

11 12 

5 6 

6 10 

5 4 

332 327 

,109 in 2011 to 

11. 

st Virginia region

for PDPs in whic

red with 332 in 2

gions have subs

m, June 2012 

ree to LIS

that have zero 

S enrollees 

Difference

1 

–2 

1 

3 

1 

0 

0 

–2 

–3 

–2 

–1 

1 

0 

0 

–1 

0 

0 

3 

–2 

–2 

2 

1 

–1 

–2 

–1 

–2 

–2 

1 

–2 

1 

1 

1 

4 

–1 

–5 

1,041 in 2012. T

n had the most w

ch they pay no 

2011. 

stantially more z

165

S

The 

with 36. 

zero 
166 Pre

Chart 

Note: PD

en

ex

Source: M

su

• In 20

nonp

brand

distin

perce

• For e

drugs

brand

media

gene

• Most 

all dr

or mo

and 3

speci

0

10

20

30

40

50

60

70

80

90

100

200

Percent

escription drugs

10-9. In

ch

b

DP (prescription 

nrollment. All calc

xclude demonstra

edPAC-sponsore

ubmitted to CMS

12, 48 perce

referred bra

d-name tiers

nctions. Near

ent in 2006. 

enrollees in P

s, the media

d. The media

an copay is 

ric drug. 

plans, exce

ugs, also us

ore. In 2012

33 percent a

ialty tiers. 

06 2007 20

s

n 2012, m

harge hi

rand-nam

drug plan), MA–

culations exclude

ation programs, 

ed analysis by N

. 

ent of PDP e

nd-name dr

s. In 2006, o

rly all (97 pe

PDPs that di

n copay in 2

an copay for

$42 for a pr

ept those tha

se a specialty

, median cos

among MA–P

08 2009 20

PDP enrolle

Other tier 

Two gene

Generic, p

Generic a

25% coins

most Part

gher cop

me drugs

–PD (Medicare A

e employer-only 

special needs pl

NORC/Georgetow

enrollees are

ugs; anothe

nly 59 perce

ercent) MA–P

istinguish be

2012 is $41 f

r generic dru

referred bran

at use the de

y tier for dru

st sharing fo

PD plans. En

6

4

4

010 2011 20

ees

structure

eric and two bran

preferred brand, 

and brand-name 

surance

t D enrol

payment

s

Advantage–Presc

groups and plan

ans, and 1876 c

wn University/Soc

e in plans tha

r 47 percent

ent of PDP e

PD enrollees

etween prefe

for a preferre

ugs is $5. Fo

nd, $84 for a

efined standa

gs that have

or a specialty

nrollees may

6

48

47

012 20

nd-name tiers

and nonpreferre

tiers

llees are

ts for no

cription Drug [pla

ns offered in U.S

cost plans. Sums

cial and Scientifi

at distinguis

t are in plans

enrollees we

s are in such

erred and no

ed brand an

or MA–PD en

a nonpreferre

ard benefit’s

e a negotiate

y tier drug is

y not appeal

006 2007 20

ed brand-name ti

e in plans

npreferr

an]). Calculations

. territories. In ad

 may not add to 

ic Systems analy

sh between p

s with two ge

re in plans w

h plans in 20

onpreferred b

nd $93 for a 

nrollees, in 2

ed brand, an

s 25 percent 

ed price of $

s 30 percent 

 cost sharin

008 2009 20

MA-PD enrollee

ers

s that 

red 

s are weighted by

ddition, MA–PD p

totals due to rou

ysis of formularie

preferred an

eneric and tw

with such 

012, up from

brand-name

nonpreferre

2012, the 

nd $6 for a 

coinsurance

$600 per mo

among PDP

g for drugs i

1

1

1

010 2011 2

es

y

plans 

unding. 

es 

d 

wo 

m 73 

e

d 

e for 

nth 

Ps 

in 

50

47

012
Chart 

Note: PD

en

ex

en

en

sp

av

Source: M

su

• The n

acces

(prea

partic

must 

For e

which

on-fo

autho

that a

• In 20

utiliza

31 pe

prior 

0

5

10

15

20

25

30

35

40

a

Percent

10-10. In

co

DP (prescription 

nrollment. All calc

xclude demonstra

ntities that are su

nrollee must get 

pecified drugs firs

vailable to the en

edPAC-sponsore

ubmitted to CMS

number of dr

ss to medica

approval from

cular drug co

try specified

example, unl

h may be rel

ormulary drug

orization req

are no longe

12, the aver

ation manag

ercent for the

authorizatio

Prior

authorization t

2007 2008

A D

n 2012, u

ontinues

drug plan), MA–

culations exclude

ation programs, 

ubject to utilizatio

preapproval from

st before moving

nrollee in a given

ed analysis by N

. 

rugs listed o

ations. Plans

m plan befor

overed in a g

d drugs befo

isted drugs 

latively easy

gs may not b

uest. Also, a

er used in co

rage enrollee

gement for 36

e average M

n to manage

Step

therapy

Qua

lim

2009 2010

PDPs

Data Book: Hea

use of uti

s to incre

–PD (Medicare A

e employer-only 

special needs pl

on management,

m the plan before

g to other drugs. 

 time period. 

NORC/Georgetow

on a plan’s fo

s’ processes

re coverage)

given time pe

ore moving to

may be cove

y for some pl

be covered i

a formulary’s

ommon pract

e in a stand6 percent of

MA–PD plan

e enrollees’ 

antity

mits

Any

utilizati

managem

0 2011 201

lth care spendi

ilization

ease for 

Advantage–Presc

groups and plan

ans, and 1876 c

weighted by pla

e coverage. Step

Quantity limits m

wn University/Soc

ormulary doe

s for nonform

), quantity lim

eriod), and s

o other drug

ered through

lans and mo

in cases in w

s size can be

tice. 

-alone presc

f drugs listed

enrollee. Pa

prescription 

on

ment

2

0

5

10

15

20

25

30

35

40

ding and the Me

manage

both PD

cription Drug [pla

ns offered in U.S

cost plans. Value

an enrollment. Pr

p therapy refers to

mean that plans li

cial and Scientifi

es not neces

mulary excep

mits (plans li

step therapy

gs) can affec

h the nonfor

ore burdenso

which a plan

e deceptivel

cription drug 

d on a plan’s

art D plans ty

 drug use. 

0

5

0

5

0

5

0

5

0

Prior

authorization

2007 2

edicare program

ment too

DPs and M

an]). Calculations

. territories. In ad

s reflect the perc

rior authorization

o a requirement 

imit the number o

ic Systems analy

ssarily repre

ptions, prior 

imit the num

y requiremen

ct access to 

rmulary exce

ome for othe

n does not ap

y large if it in

plan faces s

s formulary, 

ypically use 

Step

therapy

Q

2008 2009

MA-PD

m, June 2012 

ols 

MA–PDs

s are weighted by

ddition, MA–PD p

cent of listed che

 means that the 

that the enrollee

of doses of a dru

ysis of formularie

esent benefic

authorizatio

mber of doses

nts (enrollee

certain drug

eptions proce

ers. Alternati

pprove a prio

ncludes drug

some form o

compared w

quantity lim

Quantity

limits

A

utiliz

manag

2010 2011

Ds

167

s

y

plans 

emical 

e try 

ug 

es 

ciary 

n 

s of a 

es 

s. 

ess, 

ively, 

or 

gs 

of 

with 

its or 

Any

zation

gement

2012
168 Pre

Chart 

Beneficiarie

Percent o

Gender

 Male 

 Female 

Race/ethn

 White, no

 African A

 non-His

 Hispanic 

 Asian 

 Other 

Age (years

 <65 

 65–69 

 70–74 

 75–79 

 80+ 

Urbanicity

 Metropol

 Micropoli

 Rural 

Average ris

 Percent re

Note: PD

m

a F

A 

sw

Abb U

co

th

st

c P

be

 

Source: M

• In 20

the ye

plans

(Chart co

escription drugs

10-11. C

esa (in millions

of all Medicare 

icity 

on-Hispanic 

American, 

spanic 

s) 

yb

itan 

itan 

sk scorec

elative to all Pa

DP (prescription 

ay not sum to 10

Figures for Medic

beneficiary is cla

witch plan types d

bout 200,000 en

Urbanicity based

ore urban area of

an 50,000) popu

atistical area des

Part D risk score

efore 2006. Risk 

edPAC analysis 

10, 29.7 mil

ear. Most of

s. A little ove

ontinued nex

s

Character

All 

Medicare

) 49.9 

100% 

45% 

55 

77 

10 

8 

3 

2 

22 

24 

18 

14 

22 

78 

12 

8 

1.062 

rt D 

drug plan), MA–

00 percent due to

care and Part D i

assified as LIS if 

during the year, 

rollees could not

 on the Office of 

f 50,000 or more

ulation. About 1 p

signation. 

s are calculated 

scores shown he

of Medicare Par

lion Medicar

f them (18.9 

er 11 million 

xt page) 

ristics of

 Part D 

29.7 

60% 

41% 

59 

74 

11 

10 

3 

2 

23 

22 

18 

14 

22 

79 

12 

9 

1.117 

100% 

–PD (Medicare A

o rounding. 

include all benef

that individual re

classification into

t be classified int

Management an

e population, and

percent of Medica

by CMS using th

ere are not adjus

rt D denominator

re beneficiar

million) wer

enrollees re

f Part D e

 PDP

18.9

 38

 40%

 60

 76

 11

8

3

 2

 27

 20

 17

 13

 23

 74

 15

 11

 1.137

 102%

Advantage–Presc

ficiaries with at le

eceived Part D’s 

o plan types is ba

to a plan type du

nd Budget’s core

 a micropolitan a

are beneficiaries

he prescription d

sted for LIS or in

r and Risk Adjust

ries (60 perc

re in stand-a

eceived Part 

enrollees

Plan type 

 MA–PD

9 10.6 

8% 21%

 

% 43%

0 57 

 

6 71 

 11 

8 14 

3 3 

2 1 

 

7 17 

0 26 

7 20 

3 16 

3 21 

 

4 88 

5 7 

 4 

7 1.083 

% 97%

cription Drug [pla

east one month o

LIS at some poi

ased on a greate

e to missing data

e-based statistica

area contains an

s were excluded 

rug hierarchical 

stitutionalized st

tment System file

cent) enrolle

alone PDPs, 

D’s LIS. 

s, 2010 

S

D L

 11.3

% 2

 3

 6

5

 2

 1

 4

 1

 1

 1

 2

 7

 1

 1

 1.21

 109

an]), LIS (low-inco

of enrollment in t

int during the yea

er number of mo

a. 

al area. A metrop

 urban core of at

due to an uniden

condition catego

tatus (multipliers)

es from CMS. 

d in Part D a

with 10.6 m

Subsidy status

IS Non-L

3 18.4

3% 37

9% 43

61 57

58 84

0 6

5 7

5 2

2 1

42 12

4 27

3 21

1 16

0 24

77 80

3 11

0 8

7 1.055

9% 94%

ome subsidy). To

he respective pro

ar. For individual

nths of enrollme

politan area conta

t least 10,000 (bu

ntifiable core-bas

ory model develo

). 

at some poin

million in MA–

LIS 

4 

7% 

3% 

7 

4 

6

7 

2 

 

2 

7 

 

6 

4 

0 

1 

8 

5 

% 

otals 

ogram. 

ls who 

nt. 

ains a 

ut less 

sed 

oped 

nt in 

–PD 
Chart 

• Comp

fema

age 6

likely

LIS e

• Patte

popu

rema

• The a

enrol

10-11. C

pared with th

le and non-W

65 and more

y to be femal

enrollees. 

erns of enroll

lation with 7

aining 9 perc

average risk

lees (1.117)

A D

Character

he overall M

White. MA–P

e likely to be 

e, non-White

lment by urb

79 percent in

cent in rural a

k score for P

), while the a

Data Book: Hea

ristics of

Medicare pop

PD enrollees

Hispanic co

e, and disab

banicity for P

n metropolita

areas. 

DP enrollees

average risk 

lth care spendi

f Part D e

pulation, Part

s are less lik

ompared with

bled benefici

Part D enrolle

an areas, 12 

s is higher (

score for MA

ding and the Me

enrollees

rt D enrollees

kely to be dis

h PDP enrol

iaries under 

ees were sim

percent in m

1.137) than 

A–PD enroll

edicare program

s, 2010 (

s are more l

sabled bene

llees; LIS en

age 65 com

milar to the o

micropolitan 

the average

lees is lower

m, June 2012 

(continue

ikely to be 

eficiaries und

nrollees are 

mpared with n

overall Medi

areas, and 

e for all Part 

r (1.083). 

169

ed) 

der 

more 

noncare 

the 

D 
170 Pre

Chart 

Part D en

 Total 

 By plan t

 PDP 

 MA–PD

 By subsid

 LIS 

 Non-LI

 By race/e

 White, 

 African

 Hispan

 Other 

 By age (y

 <65 

 65–69 

 70-79 

 80+ 

Enrollme

 Total 

 By plan t

 PDP 

 MA–PD

 By subsid

 LIS 

 Non-LI

 By race/e

 White, 

 African

 Hispan

 Other 

 By age (y

 <65 

 65–69 

 70–79 

 80+ 

Note: PD

 *F

re

th

en

Source: M

• Betwe

betwe

less th

remai

perce

LIS en

escription drugs

10-12. P

nrollment, in m

type 

D

dy status 

S 

ethnicity 

non-Hispanic 

n American, no

nic 

years) 

ent growth, in 

type 

D

dy status 

S 

ethnicity 

non-Hispanic 

n American, no

nic 

years) 

DP (prescription d

Figures include al

eceived Part D’s L

e year, that indiv

nrollees could not

edPAC analysis 

een 2006 and

een 2006 and

han 5 percen

ined relatively

ent in 2007, 8 

nrollees was 

s

art D en

millions* 

n-Hispanic 

percent 

n-Hispanic 

drug plan), MA–P

l beneficiaries wi

LIS at some point

idual was classifi

t be classified into

of Medicare Par

d 2010, MA–P

 2009, and by

t per year for 

y flat between

percent in 20

3 percent and

rollment

2006 

24.5 

17.7 

6.8 

10.2 

14.3 

17.2 

2.6 

2.2 

2.5 

5.6 

5.0 

8.3 

5.6 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

PD (Medicare Adv

th at least one m

t during the year. 

ed into the type o

o a plan type due

rt D denominator

PD plan enroll

y 6 percent be

prescription d

n 2006 and 20

008, and 6 pe

d 4 percent, r

t trends, 

2007 

 

 26.1 

 

 18.3 

 7.8 

 

 10.4 

 15.7 

 

 19.4 

 2.9 

 2.5 

 1.3 

 

 6.1 

 5.4 

 8.7 

 6.0 

 

 7%

 

 4 

 14 

 

 2 

 10 

 

 13 

 13 

 14 

 –49 

 

 8 

 8 

 5 

 7 

vantage–Prescrip

onth of enrollmen

If a beneficiary w

of plan with a gre

e to missing data.

r file from CMS. 

lment grew fa

etween 2009 

drug plans. T

009, while the

rcent in 2009

respectively, b

2006–20

2008 

 

 27.5 

 

 18.6 

 8.9 

 

 10.7 

 16.9 

 

 20.5 

 3.1 

 2.7 

 1.3 

 

 6.4 

 5.9 

 9.0 

 6.3 

 

 5%

 

 2 

 14 

 

 2 

 8 

 

 5 

 5 

 6 

 6 

 

 6 

 8 

 4 

 4 

ption Drug [plan])

nt. A beneficiary 

was enrolled in bo

eater number of m

. Numbers may n

aster (by more

and 2010) co

The number o

e number of n

9. The growth 

between 2009

010 

2009 

 

 28.7 

 

 18.7 

 10.0 

 

 10.9 

 17.8 

 

 21.4 

 3.2 

 2.8 

 1.3 

 

 6.6 

 6.3 

 9.3 

 6.4 

 

4% 

 

 <1 

 12 

 

 2 

 6 

 

 4 

 4 

 6 

 <1 

 

 4 

 7 

 4 

 3 

), LIS (low-incom

is classified as LI

oth a PDP and an

months of enrollm

not sum to totals d

e than 10 per

ompared with

f enrollees re

non-LIS enroll

in the numbe

9 and 2010. 

2010

 

 29.7 

 

 18.9 

 10.6 

 

 11.3 

 18.4 

 

 22.0 

 3.3 

 3.0 

 1.4 

 

 6.9 

 6.6 

 9.6 

 6.6 

 

4%

 

 1 

 6 

 

 4 

 3 

 

 3 

 4 

 6 

 6 

 

 4 

 5 

 3 

 2 

me subsidy). 

IS if that individua

n MA–PD plan du

ment. About 200,0

due to rounding.

rcent per year

h growth rates

eceiving the L

lees grew by 

er of LIS and 

al 

uring 

000 

r

s of 

IS 

10 

non-
Chart 

PDP 

region 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

Note: PD

(lo

 

Source: M

• Amon

bene

where

and R

perce

bene

• A wid

PD p

enrol

(Chart co

10-13. P

State(s) 

ME, NH 

CT, MA, RI, VT 

NY 

NJ 

DE, DC, MD 

PA, WV 

VA 

NC 

SC 

GA 

FL 

AL, TN 

MI 

OH 

IN, KY 

WI 

IL 

MO 

AR 

MS 

LA 

TX 

OK 

KS 

IA, MN, MT, NE

 ND, SD, WY 

NM 

CO 

AZ 

NV 

OR, WA 

ID, UT 

CA 

HI 

AK 

Mean 

Minimum 

Maximum 

DP (prescription 

ow-income subsi

edPAC analysis 

ng Part D re

ficiaries enro

e a low take

Region 33 (H

ent and 66 p

ficiaries enro

de variation w

lans across 

lment in Me

ontinued nex

A D

art D en

P

Medica

Part D 

56% 

59

60

53

47

63

53

60

55

61

61

61

48

55

60

55

56

63

61

65

62

57

60

63

, 

66

62

59

61

56

59

58

70

66

39

60

39

70

drug plan), RDS

dy). Definition of

of Part D enrollm

gions, in 20

olled in Part

e-up rate for 

Hawaii), the 

percent, resp

olled in emp

was seen in

PDP region

dicare Adva

xt page) 

Data Book: Hea

rollment

Percent of 

are enrollment 

RDS 

12% 

18

18

22

17

13

10

16

16

10

13

13

31

23

14

15

19

11

9

6

13

15

8

7

9

8

13

12

13

11

10

9

4

26

14

4

31

S (retiree drug su

f regions based o

ment data from C

10, between

D. Beneficia

the RDS wa

shares of M

pectively. In t

ployer-spons

the shares 

s. The patte

ntage plans

lth care spendi

t by regio

P

8

6

5

8

8

5

7

7

7

6

5

6

7

6

8

6

8

6

8

8

6

6

7

8

7

6

4

4

4

5

5

5

4

9

6

4

9

ubsidy), MA–PD (

on PDP regions u

CMS. 

n 39 percent 

aries were m

as observed.

edicare ben

these two re

sored plans t

of Part D en

ern of MA–P

. 

ding and the Me

on, 2010

Perce

Plan type 

PDP MA–

85% 1

69 3

55 4

81 1

86 1

56 4

78 2

75 2

77 2

69 3

53 4

65 3

73 2

63 3

80 2

63 3

87 1

69 3

80 2

88 1

65 3

69 3

79 2

85 1

73 2

62 3

49 5

45 5

48 5

59 4

56 4

51 4

44 5

99

64 3

44

99 5

(Medicare Advan

used in Part D. 

t and 70 perc

more likely to

. For examp

neficiaries en

egions, fewe

that received

nrollees who

D enrollmen

edicare program

nt of Part D enro

–PD 

5% 

31 

45 

9 

4 

44 

22 

25 

23 

31 

47 

35 

27 

37 

20 

37 

3 

31 

20 

2 

35 

31 

21 

5 

27

38 

51 

55 

52 

41 

44 

49 

56 

1 

36 

1 

56 

ntage–Prescriptio

cent of all M

o enroll in Pa

ple, in Region

nrolled in Pa

er than 10 pe

d the RDS. 

o enrolled in 

nt is generall

m, June 2012 

ollment

Subsidy statu

LIS Non

49% 5

43 5

46 5

35 6

41 5

33 6

37 6

43 5

45 5

43 5

35 6

47 5

40 6

36 6

39 6

33 6

38 6

35 6

45 5

54 4

49 5

45 5

38 6

29 7

27 7

39 6

29 7

32 6

29 7

31 6

28 7

39 6

29 7

62 3

38 6

27 3

62 7

on Drug [plan]), L

Medicare 

art D in regio

n 32 (Califor

art D were 70

ercent of 

PDPs and M

ly consistent

171

s

n-LIS

51% 

57

54

65

59

67

63

57

55

57

65

53

60

64

61

67

62

65

55

46

51

55

62

71

73

61

71

68

71

69

72

61

71

38

62

38

73

LIS 

ons 

rnia) 

0

MA–

t with 
172 Pre

Chart 

• The s

Minne

in Re

50 pe

LIS e

escription drugs

10-13. P

share of Par

esota, Mont

egion 34 (Ala

ercent of enr

enrollees acc

s

art D en

rt D enrollees

ana, North D

aska). In 26 

rollment. In t

count for mo

rollment

s receiving t

Dakota, Neb

of the 34 PD

two regions,

ore than half 

t by regio

the LIS rang

braska, South

DP regions, L

 Region 20 (

of Part D en

on, 2010

ged from 27 p

h Dakota, an

LIS enrollee

(Mississippi)

nrollment.

 (continu

percent in R

nd Wyoming

es account fo

) and Region

ued) 

Region 25 (Io

g) to 62 perc

or 30 percen

n 34 (Alaska

owa, 

cent 

nt to 

a), 
Chart 

Note: N

Source: M

• Medi

perce

were 

unde

Part D

• The c

thres

spen

D’s lo

conce

bene

and t

1

2

3

4

5

6

7

8

9

10

Percent

10-14. T

th

umbers may not 

edPAC analysis 

care Part D 

ent of Part D

responsible

r the defined

D spending.

costliest 9 pe

hold under t

ding. Slightly

ow-income s

entrated tha

ficiaries acc

the costliest 

0

0

0

0

0

0

0

0

0

0

0

Percen

A D

he majo

han half 

sum to 100 perc

of Medicare Par

spending is 

D enrollees h

e for 100 per

d standard b

ercent of be

the defined s

y over three

subsidy (see

n Medicare 

counted for 3

quartile acc

24

48

19

5

4

nt of beneficia

Data Book: Hea

rity of Pa

of all Pa

cent due to round

rt D prescription 

concentrate

had annual s

rcent of the c

benefit. Thes

neficiaries, t

standard ben

-quarters of 

e Chart 10-15

Part A and P

38 percent of

ounted for 8

aries

lth care spendi

art D spe

rt D enro

ding. 

drug event data 

ed among a 

spending of $

cost of the d

se beneficiar

those with dr

nefit, accoun

beneficiarie

5). Spending

Part B spend

f annual Me

81 percent of

25

31

14

30

Percent of sp

ding and the Me

ending is

ollees, 20

from CMS. 

subset of be

$2,830 or m

drug until the

ries account

rug spendin

nted for 44 p

es with the h

g on prescrip

ding. In 2010

dicare fee-fo

f Medicare F

pending

edicare program

s incurre

010 

eneficiaries. 

ore, at whic

eir spending 

ted for 74 pe

g above the

percent of to

ighest spend

ption drugs i

0, the costlie

or-service (F

FFS spendin

1

≥ $

$6,4

$2,8

$31

$0-

74

Annual

prescr

m, June 2012 

ed by few

In 2010, 28

h point enro

reached $6,

ercent of tota

 catastrophi

otal Part D 

ding receive

is less 

est 5 percen

FFS) spendin

ng 

10,000

440-$9,999

830-$6,439

10-$2,829

$309

l spending on

ription drugs

173

wer 

llees 

,440 

al 

c 

e Part 

nt of 

ng, 

n
174 Pre

Chart 

Sex 

 Male 

 Female 

Race/ethn

 White, n

African A

 Hispanic

 Other 

Age (year

 <65 

 65–69 

 70–74 

 75–80 

 80+ 

LIS status

 LIS 

 Non-LIS

Plan type

 PDP 

 MA–PD 

Note: LI

nu

to

 *A

 **

of

 

Source: M

• In 20

fema

comp

• Bene

bene

below

• Most 

perce

annu

highe

that m

escription drugs

10-15. C

le

nicity 

non-Hispanic 

American, no

c

rs) 

s* 

S

e** 

S (low-income s

umber of benefic

 rounding. 

A beneficiary is a

If a beneficiary w

f plan with a grea

edPAC analysis 

10, beneficia

le than bene

pared with 58

eficiaries with

ficiaries und

w $2,830. 

beneficiarie

ent) compare

al spending 

er annual sp

most LIS enr

s

Character

evels, 20

n-Hispanic 

ubsidy), PDP (pr

ciaries were exclu

assigned LIS stat

was enrolled in bo

ater number of m

of Medicare Par

aries with an

eficiaries wit

8 percent). 

h annual spe

der age 65 a

es with spend

ed with MA–

below $2,83

ending (39 p

rollees are m

ristics of

10 

<$

rescription drug p

uded from the an

us if that individu

oth a PDP and a

months of enrollm

rt D prescription 

nnual drug s

h annual sp

ending great

nd receive t

ding greater

–PD plans (2

30 are more

percent com

more costly o

f Part D e

$2,830 

42%

58

74

11

10

5

21

24

19

14

21

31

69

61

39

plan), MA–PD (M

nalysis because o

ual received Part

an MA–PD plan d

ment. 

drug events data

spending of m

ending below

ter than $6,4

he LIS comp

r than $6,440

20 percent). 

 likely to be

mpared with 2

on average a

enrollees

Annual drug

$2,830–$6

38%

62

75

11

9

5

22

19

18

15

26

46

54

70

30

Medicare Advanta

of missing data. 

t D’s LIS at some

during the year, t

a and Part D den

more than $

w $2,830 (6

440 are more

pared with th

0 are enrolle

On the othe

in MA–PDs 

20 percent). 

and are in P

s, by spe

g spending 

6,440 

age–Prescription

Totals may not s

e point during the

that individual wa

nominator file from

2,830 were 

2 percent an

e likely to be

hose with an

ed in stand-a

er hand, ben

compared w

This finding

PDPs. 

ending 

>$6,440 

39%

61 

71 

14 

10 

5 

44 

14 

13 

11 

19 

77 

23 

80 

20 

n Drug [plan]). A 

sum to 100 perce

e year. 

as classified in th

m CMS. 

more likely t

nd 61 percen

e disabled 

nnual spend

alone PDPs 

eficiaries wit

with those w

g reflects the

small 

ent due 

he type 

to be 

nt 

ing 

(80 

th 

with 

e fact 
Chart 

Total gro

Total num

(million

Average

Per enro

 Total s

 Out-of-

 Plan lia

 Low-inc

 Numbe

Note: PD

ap

on

de

st

a N

b O

c P

 

Source: M

• In 201

quarte

receiv

• The n

(944 m

accou

• Medic

PDP 

MA–P

• The a

PDP 

of pla

MA–P

• Avera

non-L

enroll

spend

sharin

10-16. P

oss spending 

mber of presc

ns) 

 spending pe

ollee per mon

pending 

-pocket spend

abilityc

come cost sh

er of prescript

DP (prescription 

pplicable). Part D

n each record. Fo

enominator file w

atus. Numbers m

Number of presc

Out-of-pocket (O

Plan liability inclu

edPAC analysis 

10, gross spe

ers ($56.7 bil

ving the LIS a

number of pre

million) accou

unted for abo

care beneficia

enrollees hav

PD plan enro

average mont

enrollees ($1

ans ($37 vs. $

PD enrollees 

age monthly s

LIS enrollee (

lee is 5.1 com

ding, on aver

ng for LIS en

A D

art D spe

(billions) 

criptionsa

r prescription

nth 

dingb

haring subsidy

tionsa

drug plan), MA–

D prescription dru

or purposes of cl

was used. Estima

may not sum to to

riptions standard

OP) spending in

udes plan payme

of Medicare Par

ending on dru

llion) account

accounted fo

escriptions fill

unted for by P

out 45 percen

aries enrolled

ve higher ave

llees. 

thly plan liabi

154), while av

$41). The ave

($23) compa

spending per

$163), while 

mpared with 3

rage, than no

rollees, avera

Data Book: Hea

ending a

Part D

$77.7

1,406

n $55

$231

40

138

y 53

4.2

–PD (Medicare A

ug event (PDE) r

lassifying the PD

ates are sensitive

otals due to roun

dized to a 30-day

cludes all payme

nts for drugs cov

rt D PDE data an

ugs for the Pa

ted for by Me

r about 56 pe

led by Part D

PDP enrollee

nt (629 million

d in Part D pl

erage monthl

ility for MA–P

verage month

erage monthl

ared with PDP

r enrollee for 

the average 

3.7 for a nonn-LIS enrolle

aging $142 p

lth care spendi

and utiliz

D PD

$56

94

$6

$26

4

15

7

4

Advantage–Presc

records are class

DE records by LIS

e to the method u

nding. 

y supply. 

ents that count to

vered by both ba

nd denominator f

art D program

edicare benef

ercent ($43.3

D enrollees to

es. The 38 pe

n) of the total 

ans fill 4.2 pr

y spending a

PD enrollees 

hly OOP spen

y low-income

P enrollees ($

an LIS enroll

number of pr

-LIS enrollee.

ees ($8 vs. $5

per month. 

ding and the Me

zation pe

Plan type 

DP MA–P

.7 $20.9

44 462

60 $45

65 $172

41 37

54 11

70 23

.4 3.8

cription Drug [pla

sified into plan ty

S status, monthly

used to classify P

oward the annua

asic and supplem

file from CMS. 

m totaled $77

ficiaries enro

3 million) of th

otaled 1.41 bil

ercent of enro

number of pr

rescriptions a

and more pre

($111) is con

nding is simil

e cost sharing

$70). 

lee ($348) is 

rescriptions f

. LIS enrollee

59). Part D’s 

edicare program

er enrolle

PD 

9 $

2

5

2 $

7 

1 

3

8

an]), LIS (low-inco

ypes based on th

y LIS eligibility in

PDE records to e

al OOP spending

mental (enhanced

7.7 billion, wit

lled in PDPs.

he total. 

llion, with abo

ollees who re

rescriptions f

at $231 per m

scriptions fille

nsiderably low

ar for enrolle

g subsidy is m

more than do

filled per mon

es have much

LIS pays for 

m, June 2012 

ee, 2010

LIS status

LIS No

$43.3 $3

629 7

$69 $

$348 $

8 

197 

142 N

5.1 

ome subsidy), N/

e contract identif

nformation in Par

each plan type an

 threshold. 

d) benefits. 

th roughly thr

. Part D enro

out 67 percen

eceived the LI

filled. 

month on aver

ed compared

wer than that 

ees in both typ

much lower fo

ouble that of 

nth by an LIS 

h lower OOP

most of the c

175

n-LIS 

34.4

777

$44

163

59

103

N/A

3.7

/A (not 

fication 

rt D’s 

nd LIS 

reellees 

nt 

IS 

rage. 

d with 

of 

pes 

or 

a 

cost 
176 Pre

Chart 

PDP 

region 

All regions 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

Note: LI

(p

de

no

PD

m

 

Source: M

(Chart con

escription drugs

10-17. P

an

State(s) 

ME, NH 

CT, MA, RI, VT

NY 

NJ 

DE, DC, MD 

PA, WV 

VA 

NC 

SC 

GA 

FL 

AL, TN 

MI 

OH 

IN, KY 

WI 

IL 

MO 

AR 

MS 

LA 

TX 

OK 

KS 

IA, MN, MT, N

 ND, SD, WY 

NM 

CO 

AZ 

NV 

OR, WA 

ID, UT 

CA 

HI 

AK 

Mean 

Minimum 

Maximum 

S (low-income s

prescription drug 

eveloped before 

ormalized, so tha

DP and an MA–P

onths of enrollm

edPAC analysis 

ntinued next p

s

art D ris

nd by LIS

Perc

enrolle

PDPs

MA–P

T

E, 

ubsidy), PDP (pr

hierarchical cond

2006. Risk score

at the average ac

PD plan during th

ent. 

of Medicare enr

page) 

k scores

S status

cent 

ed in 

s vs. 

PDs 

Perc

Pa

enro

receiv

85%

69 

55 

81 

86 

56 

78 

75 

77 

69 

53 

65 

73 

63 

80 

63 

87 

69 

80 

88 

65 

69 

79 

85 

73 

62 

49 

45 

48 

59 

56 

51 

44 

99 

64 

44 

99 

rescription drug p

dition category). 

es shown here a

cross Part D enro

he year, that indi

rollment and Risk

s vary ac

, 2010 

cent of 

art D 

ollees 

ving LIS Pa

1

49% 0

43 1

46 1

35 1

41 1

33 1

37 1

43 1

45 1

43 1

35 1

47 1

40 1

36 1

39 1

33 0

38 0

35 0

45 0

54 1

49 1

45 1

38 0

29 0

27 0

39 0

29 0

32 0

29 0

31 0

28 0

39 0

29 0

62 0

38 1

27 0

62 1

plan), MA–PD (M

Part D risk score

re not adjusted f

ollees in each gro

vidual was class

k Adjustment Sys

cross reg

Aver

art D PD

Ave

.117 1.1

Average nor

0.974 0.9

.009 1.0

.029 1.0

.036 1.0

.028 1.0

.008 1.0

.000 0.9

.020 1.0

.026 1.0

.027 1.0

.058 1.0

.047 1.0

.016 1.0

.029 1.0

.013 1.0

0.954 0.9

0.988 0.9

0.999 1.0

0.997 0.9

.008 0.9

.021 1.0

.035 1.0

0.995 0.9

0.959 0.9

0.910 0.9

0.928 0.9

0.918 0.9

0.964 0.9

0.963 0.9

0.917 0.9

0.914 0.9

0.953 0.9

0.928 0.9

0.916 0.9

.000 1.0

0.910 0.9

.058 1.0

Medicare Advanta

es are calculated

for LIS or instituti

oup equals 1.0. 

sified in the type 

stem files from C

gions, by

rage risk score

DP MA–PD

rage absolute 

37 1.083 

rmalized risk sc

971 0.925 

008 1.001 

055 1.007 

038 0.981 

016 1.025 

015 1.008 

993 0.991 

017 1.008 

009 1.058 

025 1.023 

067 1.060 

031 1.076 

033 0.950 

042 1.009 

011 0.987 

968 0.930 

981 0.949 

006 0.975 

985 1.006 

993 1.022 

027 1.007 

031 1.037 

990 0.977 

949 0.950 

909 0.897 

917 0.949 

911 0.938 

929 1.011 

962 0.979 

910 0.933 

915 0.921 

964 0.953 

919 0.952 

900 0.935 

000 1.000 

900 0.897 

067 1.076 

age–Prescription

d by CMS using 

ionalized status 

If a beneficiary w

of plan with a gre

CMS. 

y plan ty

e (RxHCC) 

D LIS 

risk score 

 1.217

core (mean = 1

 0.956

 1.007

 1.015

 1.032

 1.028

 1.009

 1.003

 1.024

 1.011

 1.018

 1.061

 1.033

 1.030

 1.057

 1.016

 0.991

 0.988

 1.023

 0.973

 0.971

 0.996

 1.026

 0.994

 0.977

 0.949

 0.905

 0.942

 0.963

 0.967

 0.920

 0.932

 0.939

 0.899

 0.886

 1.000

 0.886

 1.061

n Drug [plan]), Rx

the RxHCC mod

(multipliers) and 

was enrolled in b

eater number of 

pe 

Non-LIS 

1.055 

1.0) 

0.962

0.995

1.019

1.045

1.021

1.018

0.999

1.004

1.021

1.020

1.062

1.034

1.002

1.018

1.008

0.945

0.988

0.992

0.998

1.006

1.015

1.022

0.995

0.970

0.914

0.942

0.924

0.978

0.980

0.929

0.927

0.960

0.959

0.885

1.000

0.885

1.062

xHCC 

del 

are 

oth a 
Chart 

• Unde

differ

age, 

is tru

future

beca

mode

• In 20

25) to

abou

acros

• The o

enrol

Arizo

contr

regio

Jerse

• The o

non-L

contr

regio

33), w

10-17. P

an

er Part D, pa

rences in enr

gender, disa

e for any ris

e payments.

use there ar

el uses diagn

10, the norm

o 1.058 (Reg

t 9 percent b

ss regions. 

overall avera

lees (1.083)

ona (Region 

rast, normaliz

ns, with the 

ey (Region 4

overall avera

LIS enrollees

rast, normaliz

ns, with the 

where a rela

A D

art D ris

nd by LIS

ayments to s

rollees’ expe

ability status

k-adjustmen

 The model 

re more oppo

noses amon

malized aver

gion 11), me

below the na

age risk scor

) and is cons

28), where m

zed risk sco

difference e

4), Michigan 

age risk scor

s (1.055) an

zed risk sco

difference e

atively small 

Data Book: Hea

k scores

S status

tand-alone P

ected costs u

s, and medic

nt model, the

may also pr

ortunities to 

ng other facto

rage risk sco

eaning that a

ational avera

re for PDP e

sistently so a

most (55 per

ores for both 

exceeding 0.

(Region 13)

re for enrolle

d is consiste

ores for both 

exceeding 0.

share of enr

lth care spendi

s vary ac

, 2010 (c

PDPs and M

using the Rx

cal diagnosis

e RxHCC mo

roduce highe

make diagn

ors in its sco

ores for Part 

average expe

age to about

enrollees (1.

across all reg

rcent) Part D

PDP and M

05 (5 percen

), and Arizon

ees receiving

ently so acro

LIS and non

05 (5 percen

rollees recei

ding and the Me

cross reg

continue

MA–PD plans

xHCC mode

s to predict P

odel does no

er scores in 

noses in thos

ore. 

D enrollees

ected costs 

t 5.8 percent

137) is highe

gions (not s

D enrollees a

MA–PD enrol

ntage points

na (Region 2

g the LIS (1.

oss all region

n-LIS enrolle

ntage points

ives the LIS 

edicare program

gions, by

d) 

s are adjuste

el. The RxHC

Part D benef

ot explain al

areas with h

se areas and

s varied from

per enrollee

t above the n

er than that 

hown in tabl

are enrolled 

lees are sim

s) in only thr

28). 

.217) is high

ns (not show

ees are simi

s) only in Ha

(29 percent

m, June 2012 

y plan ty

ed to accoun

CC model us

fit spending. 

l variation in

high service 

d the RxHCC

m 0.91 (Regio

e ranged from

national ave

of MA–PD 

le), except in

in MA–PDs

milar in most 

ee regions: 

her than that

wn in table). 

lar in most 

awaii (Region

t). 

177

pe 

nt for 

ses 

As 

n

use 

C

on 

m

erage 

n

. In 

New 

t of 

In 

n
178 Pre

Chart 

Top 15

Antihyperli

Antipsycho

Diabetic th

Antihyperte

Asthma/CO

Peptic ulce

Platelet ag

Cognitive d

(antidemen

Antidepres

Analgesics

Antivirals 

Anticonvul

Analgesics

 antipyretic

Calcium & 

regulator

Antibacteri

 Subtotal, t

 Total, all c

Note: CO

Th

no

 

Source: M

• In 20

The t

• Abou

by vo

• Eleve

Centr

cardi

list by

agen

calciu

50 pe

escription drugs

10-18. T

P

5 therapeutic

pidemics 

otics 

herapy 

ensive therapy

OPD therapy 

er therapy 

ggregation inhi

disorder therap

ntia) 

ssants 

s (narcotic) 

sants 

s (anti-inflamma

c, non-narcotic)

bone metabol

rs 

ial agents 

top 15 classes

classes 

OPD (chronic ob

herapeutic classi

ot sum to totals d

edPAC analysis 

10, gross sp

top 15 therap

ut 1.4 billion 

olume accou

en therapeut

ral nervous s

ovascular ag

y spending, 

ts (antihype

um channel 

ercent of the

s

op 15 th

art D, by

c classes by

Bill

agents 

agents 

bitors 

py 

atory/ 

)

lism 

s

bstructive pulmon

ification based o

due to rounding. 

of Medicare Par

pending on p

peutic classe

prescriptions

unting for 73 

tic classes a

system agen

gents (antihy

each accou

rlipidemics, 

blockers, an

e prescription

erapeuti

y spendin

spending 

Dollars 

ions Percen

 

$6.7 8.6%

6.5 8.4

6.2 8.0

5.1 6.5

4.9 6.3

4.1 5.2

3.4 4.4

3.2 4.2

3.1 4.0

3.0 3.9

2.7 3.5

2.2 2.9

1.8 2.3

1.7 2.2

1.5 1.9

56.2 72.4

77.7 100.0

nary disease). Vo

n the First DataB

rt D prescription 

prescription d

es by spend

s were dispe

percent of t

are among th

nts (antipsyc

yperlipidemi

nting for abo

antihyperten

nd diuretics) 

ns in the top

c classe

ng and v

T

nt 

% Antihyp

agent

 Antihyp

 Beta ad

 Diabeti

Diuretic

 Antidep

 Peptic 

Analge

 Calcium

 Thyroid

 Antibac

 Anticon

 Asthma

Analge

antipy

 Calcium

regul

 

 Subtot

 

 Tota

olume is the num

Bank Enhanced T

drug event data 

drugs cover

ding account

ensed in 201

he total. 

he top 15 ba

chotics, antic

cs, antihype

out one-fifth

nsive therap

dominate th

 15 therapeu

es of dru

volume, 2

Top 15 therap

pertensive ther

ts 

perlipidemics

drenergic bloc

ic therapy 

cs 

pressants 

ulcer therapy

esics (narcotic)

m channel bloc

d therapy 

cterial agents 

nvulsants 

a/COPD thera

esics (anti-inflam

yretic, non-nar

m & bone meta

ators 

tal, top 15 clas

al, all classes

mber of prescripti

Therapeutic Clas

from CMS. 

red by Part D

ted for about

10, with the 

ased on both

convulsants

ertensive the

of the spend

py agents, be

he list by vol

utic classes.

gs unde

2010 

peutic classe

rapy 

ckers 

)

ckers 

apy agents 

mmatory/ 

rcotic) 

abolism 

sses 

ions standardize

ssification System

D plans total

t 72 percent

top 15 thera

h spending a

, and antide

erapy agents

ding, while c

eta adrenerg

ume, accou

.

er 

es by volume

Prescriptio

Millions Pe

145.6 10

136.2 9

88.9 6

88.2 6

77.4 5

76.8 5

67.7 4

67.2 4

60.3 4

49.5 3

39.4 2

38.6 2

38.5 2

26.5 1

25.7 1

1,026.6 73

1,406.0 100

d to a 30-day su

m 1.0. Numbers 

ed $77.7 bil

t of the total.

apeutic class

and volume. 

pressants) a

s) dominate 

cardiovascul

gic blockers,

nting for nea

e

ns 

ercent 

0.4% 

9.7 

6.3 

6.3 

5.5 

5.5 

4.8 

4.8 

4.3 

3.5 

2.8 

2.7 

2.7 

1.9 

1.8 

3.0 

0.0 

pply. 

may 

lion. 

ses 

and 

the 

lar 

arly 
Chart 

By order o

Antihyperli

Antipsycho

Diabetic th

Antihyperte

Asthma/CO

Peptic ulce

Platelet ag

Cognitive d

Antidepres

Analgesics

Antivirals 

Anticonvul

Analgesics

 antipyretic

Calcium & 

Antibacter

All therap

Note: PD

pu

cla

de

re

 

Source: M

• In 20

dispe

presc

presc

about

• Overa

follow

perce

• The G

77 pe

enroll

asthm

• There

antihy

point 

receiv

medic

10-19. G

cl

of aggregate 

pidemics 

otics 

herapy 

ensive therapy

OPD therapy a

er therapy 

ggregation inhi

disorder therap

ssants 

s (narcotic) 

sants 

s (anti-inflamma

c, non-narcotic)

bone metabol

rial agents 

peutic classes

DP (prescription 

ulmonary disease

assification is ba

efined as the pro

ecords are classif

edPAC analysis 

10, Part D en

ensed under P

criptions for c

criptions in th

t 80 percent 

all, analgesic

wed by antiba

ent across all

GDR for PDP

ercent for MA

lees were ge

ma/chronic ob

e were large 

yperlipidemic

differences. 

ving the LIS 

cation in a gi

A D

Generic d

lasses, b

spending 

agents 

agents 

bitors 

py (antidemen

atory/ 

)

lism regulators

s

drug plan), MA–

e). Shares are ca

ased on the First 

oportion of generi

fied as PDP or M

of Medicare Par

nrollees in sta

Part D. PDP 

classes such 

ese classes 

are enrolled 

cs (narcotic) 

acterial agent

 therapeutic 

P enrollees av

A–PD plan en

enerally lowe

bstructive pu

differences i

cs, peptic ulc

Some of the

are in PDPs.

ven therapeu

Data Book: Hea

dispensin

by plan t

PDP s

pres

tia) 

s 

–PD (Medicare A

alculated as a pe

DataBank Enha

ic prescriptions d

MA–PD records b

rt D prescription 

and-alone PD

enrollees ac

as antipsych

were taken b

in PDPs. 

have the hig

ts (89 percen

classes. 

verages 72 p

nrollees. Acro

r than for MA

lmonary dise

n GDRs for P

cer therapy, a

e difference in

. On average

utic class (se

lth care spendi

ng rate fo

ype, 201

share of all 

scriptions 

63%

83

64

63

71

68

68

74

71

72

76

75

66

65

69

67

Advantage–Presc

ercent of all presc

nced Therapeuti

dispensed within 

based on the con

drug event data 

DPs account

ccounted for a

hotics, antico

by low-incom

hest generic 

nt) and antico

percent acros

oss the 15 th

A–PD enrolle

ease therapy

PDPs and MA

and antivirals

n the GDRs r

e, LIS enrolle

ee Chart 10-2

ding and the Me

or the to

10 

Gen

All 

65%

38

61

78

9

77

8

5

80

94

38

85

82

63

89

74

cription Drug [pla

criptions standar

ic Classification S

a therapeutic cla

ntract identificatio

from CMS. 

ted for 67 pe

a disproporti

onvulsants, a

me subsidy (L

dispensing r

onvulsants (8

ss all therape

herapeutic cla

ees with the e

y. 

A–PDs. The 

s, with betwe

reflects the fa

ees are less l

20). 

edicare program

op 15 the

neric dispens

PDPs 

60% 

38 

58 

75 

10 

74 

8 

4 

78 

93 

34 

84 

80 

60 

89 

72 

an]), COPD (chro

rdized to a 30-da

System 1.0. Gen

ass. Part D presc

on on each recor

ercent of pres

onately high

and antivirals

LIS) beneficia

rate (GDR) (9

85 percent) c

eutic classes

asses, GDRs

exception of a

largest diffe

en 11 and 17

act that most

ikely to take 

m, June 2012 

erapeutic

sing rate 

MA–PD

72%

39

66

81

7

85

10

6

85

95

51

87

86

69

91

77

onic obstructive 

ay supply. Therap

neric dispensing 

cription drug eve

rd. 

scriptions 

 share of 

. Most of the

aries, of who

94 percent), 

compared wit

s, compared w

s for PDP 

agents for 

rences were

7 percentage

t beneficiarie

a generic 

179

c

s 

%

peutic 

rate is 

ent 

m 

th 74 

with 

 for 

e

es 
180 Pre

Chart 

By order o

Antihyperli

Antipsycho

Diabetic th

Antihyperte

Asthma/CO

Peptic ulce

Platelet ag

Cognitive d

(antidemen

Antidepres

Analgesics

Antivirals 

Anticonvul

Analgesics

 antipyretic

Calcium & 

Antibacter

All therap

Note: LI

pr

Th

di

re

us

 

Source: M

• In 20

dispe

presc

the s

• The g

thera

thera

bene

agen

• There

The l

GDR

the tw

escription drugs

10-20. G

cl

of aggregate 

pidemics 

otics 

herapy 

ensive therapy

OPD therapy a

er therapy 

ggregation inhi

disorder therap

ntia) 

ssants 

s (narcotic) 

sants 

s (anti-inflamma

c, non-narcotic)

bone metabol

rial agents 

peutic classes

S (low-income s

rescriptions stand

herapeutic Class

spensed within a

ecords based on 

sed to classify PD

edPAC analysis 

10, Part D e

ensed under 

criptions disp

hare was gr

generic disp

apeutic class

apeutic class

ficiaries in a

ts and non-n

e are large d

argest differ

s for this the

wo groups. 

s

Generic d

lasses, b

spending 

agents 

agents 

bitors 

py 

atory/ 

)

lism regulators

s

ubsidy), COPD (

dardized to a 30-

sification system 

a therapeutic clas

monthly LIS elig

DE records as LI

of Medicare Par

enrollees rec

Part D. In 1

pensed to LI

eater than 6

ensing rate 

ses, compare

ses, GDRs fo

all but two cla

narcotic ana

differences in

rence is for a

erapeutic cla

dispensin

by LIS st

LIS sha

prescrip

3

8

4

3

5

5

4

52

5

5

6

64

4

s 3

44

4

(chronic obstruct

-day supply. The

1.0. Generic disp

ss. Part D prescr

ibility information

IS or non-LIS. 

rt D prescription 

ceiving the L

0 of 15 thera

IS beneficiar

60 percent. 

(GDR) for no

ed with 71 p

or non-LIS b

asses (asthm

algesics). 

n GDRs acro

antivirals (45

ass likely refl

ng rate fo

tatus, 20

are of 

ptions 

5%

3

8

6

9

1

3

2

3

9

7

4

8

5

4

5

tive pulmonary di

erapeutic classific

pensing rate is d

ription drug even

n in Part D’s den

drug event data 

IS accounte

apeutic clas

ries was gre

on-LIS bene

ercent for LI

beneficiaries 

ma/chronic o

oss classes 

5 percentage

lects differen

or the to

10 

Gener

All 

65%

38

61

78

9

77

8

5

80

94

38

85

82

63

89

74

isease). Shares 

cation is based o

defined as the pro

nt (PDE) records 

ominator file. Es

and Part D deno

ed for 45 per

sses ranked 

eater than 45

eficiaries ave

IS beneficia

are higher t

obstructive p

between LIS

e points). So

nces in the m

op 15 the

ric dispensing

LIS 

59% 

37 

53 

75 

11 

73 

7 

3 

77 

92 

24 

84 

82 

59 

87 

71 

are calculated a

on the First Data

oportion of gene

are classified as

stimates are sens

ominator file from

rcent of pres

by spending

5 percent, an

erages 76 pe

ries. Across 

than those fo

pulmonary d

S and non-L

ome of the d

mix of drugs

erapeutic

g rate 

Non-LIS

67%

41

68

79

6

82

9

6

84

95

67

87

82

65

91

76

s a percent of al

Bank Enhanced 

ric prescriptions 

s LIS or non-LIS 

sitive to the meth

m CMS. 

scriptions 

g, the share 

nd in 3 class

ercent acros

the top 15 

or LIS 

isease thera

LIS beneficia

ifference in 

 taken betwe

c

S

l 

hod 

of 

ses 

ss all 

apy 

aries. 

the 

een 
Web li

• Chap

Part D

http://

http://

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http://

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• A ser

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inks. P

pters in sever

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/www.medpa

/www.medpa

/www.medpa

/www.medpa

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ysis of Medic

Report to th

/www.medpa

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/www.medpa

ries of Kaiser

care Part D b

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information o

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A D

rescripti

 

ral of MedPA

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ac.gov/chapte

ac.gov/chapte

ac.gov/chapte

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ac.gov/chapte

ac.gov/chapte

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r Family Foun

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ov/Prescriptio

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ov/Prescriptio

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Data Book: Hea

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AC’s Reports 

PAC’s March

ers/Mar12_Ch

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ments/Mar10_

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ers/Jun07_C

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cations/congr

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drugbenefits

onDrugCovG

AdvPartDEn

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onDrugCovG

lth care spendi

s 

to the Congr

h 2011 Part D

h13.pdf 

h13.pdf

h05.pdf

_PartDDataB

h04.pdf

Ch04.pdf

Ch05.pdf

Ch07.pdf

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ressional_rep

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drugs can be 

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biologics can

found in Me

dated_report.

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potlights prov

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edicare program

information o

and Paymen

_Ch07.pdf

_Ch08.pdf

5_ch1.pdf

4_ch1.pdf

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 be found in 

edPAC’s Janu

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Oncology_ma

vide informat

ata.asp#TopO

ts.asp 

m, June 2012 

on the Medic

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MedPAC’s J

uary 2007 an

 

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OfPage 

181

care 

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June 

nd 

ort.pdf 

 

S E C T I O N 

Other services

Dialysis 

Hospice 

Clinical laboratory 

 

Chart 

 

Total num

Dialysis

Hemodi

 

Mean num

 hemodial

Hospital b

Freestand

Urban 

Rural, mic

Rural, adj

Rural, not

Frontier 

For profit 

Nonprofit 

 

Note: No

 

Source: Co

• Betw

hosp

perce

perce

• Betw

relativ

• The n

facilit

per fa

11-1. N

fo

in

mber of: 

s facilities 

ialysis station

mber of 

lysis stations 

based 

ding 

cropolitan 

acent to urba

t adjacent to u

onprofit includes

ompiled by MedP

een 2006 an

ital-based an

ent to 90 per

ent of all faci

een 2006 an

vely constan

number of fa

ty has increa

acility, which

A D

umber o

or-profit 

ncreasing

ns 

per facility 

an 

urban 

s facilities designa

PAC from the CM

nd 2011, the

nd nonprofit 

rcent of all fa

ilities. 

nd 2011, the

nt. 

acilities has i

ased slightly

h increased f

Data Book: Hea

of dialysi

and free

g 

ated as either no

MS Dialysis Com

e number of 

facilities de

acilities, and

e proportion 

increased 4 

, as evidenc

from 17 in 2

alth care spend

is faciliti

estanding

2011

 5,560

98,603

18

 10

 90

 78

 14

 5

 3

 1

 83

 17

onprofit or govern

mpare file. 

freestanding

creased. Fre

 for-profit fa

of facilities l

percent per 

ced by the m

006 to 18 in 

ding and the M

es is gro

g dialysi

nment. 

g and for-pro

eestanding f

cilities incre

ocated in ru

r year since 2

mean numbe

 2011. 

Medicare progra

owing an

is provid

Aver

perc

2006–20

4%

5 

0.3 

–2 

5 

4 

3 

4 

4 

1 

5 

−1 

ofit facilities 

facilities incr

ased from 7

ral areas ha

2006. The a

r of hemodia

am, June 2012 

nd share

ders is 

rage annual 

cent change

11 2010–2

% 3%

4

0.5

–3

3

3

1

 3

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 3

4

−3

increased, w

reased from 

79 percent to

as remained 

average size

alysis station

 185

 of 

2011 

%

while 

86 

o 83 

 of a 

ns 
186 Oth

Chart 

Source: Co

• Betw

incre

servic

0.5 p

• Frees

of ex

MedP

servic

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propo

regul

Medi

• In ad

stimu

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appro

new (

bund

0

1

2

3

4

5

6

7

8

9

10

Dollars (in billions)

her services

11-2. M

fu

d

ompiled by MedP

een 2005 an

ased by abo

ces increase

ercent per y

standing dia

penditures in

PAC’s June 

ces at freest

decline in the

ortion of tota

atory chang

care’s paym

dition to the 

ulating agent

ned between

opriate use o

(lower) pres

led payment

0

2

3

4

5

6

7

8

9

0

Drug

Com

Medicare 

urnished

ialysis fa

PAC from the 20

nd 2010, tota

out 4 percen

ed by 5 perc

year. 

lysis facilitie

n 2005 and 

2011 Data B

tanding dialy

e proportion

al dialysis sp

es. Beginnin

ment rate for 

change in t

ts, the drug c

n 2009 and 2

of these drug

cribing proto

t method in 

$5.

$2.

200

gs

mposite rate se

spendin

d by frees

acilities, 

005 and 2010 ins

al expenditu

t per year. D

cent per year

es treat most

91 percent o

Book) and 20

ysis facilities

 of spending

pending for c

ng in 2005, C

composite r

he drug pay

class accou

2010. This d

gs. Also, som

ocols for dial

2011 that no

0

9

05

ervices

69%

31%

ng for ou

standing

2005 an

titutional outpatie

res for comp

During this ti

r while expe

t dialysis ben

of expenditu

010, total Me

s increased b

g for dialysis

composite ra

CMS implem

rate services

yment rate, th

nting for thre

decline is link

me providers

lysis drugs in

o longer pay

37%

63%

utpatient 

g and hos

nd 2010 

ent files from CM

posite rate s

me, expend

nditures for 

neficiaries a

ures in 2010.

edicare expe

by 4 percent

s drugs and t

ate services 

mented polic

s but lowered

he per capita

ee-quarters 

ked to new c

s, beginning

n anticipatio

ys separately

58%

42%

dialysis

spital-ba

MS. 

services and

itures for co

dialysis drug

and accounte

. Between 20

enditures fo

t to $8.7 billi

the increase

is due to sta

cies that incre

d the rate fo

a use of eryt

of dialysis d

clinical evide

g in 2010, be

on of Medica

y for these d

$6.5

$3.0

2010

s services

ased 

d dialysis dru

omposite rate

gs increased

ed for 88 per

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r dialysis 

on. 

e in the 

atutory and 

eased 

r dialysis dru

thropoiesisdrugs spendi

ence about t

egan to phas

are’s change

drugs. 

68%

32%

s

ugs 

e

d by 

rcent 

ed in 

ugs. 

ing, 

the 

se in 

e to a 
Chart 

Source: Co

• Provi

patie

statio

• Betw

annu

50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

5,00

5,50

6,00

6,50

Dialysis facilities

11-3. D

an

ompiled by MedP

ders have m

nts by openi

ons. 

een 2006 an

ally, and the

0

00

00

00

00

00

00

00

00

00

00

00

00

00

A D

Dialysis fa

nd 2011 

PAC from the Dia

met the dema

ing new faci

nd 2011, the

e number of 

4,596

80.4

2006

Data Book: Hea

acilities’

alysis Compare d

and for furni

lities. In 201

e total numbe

hemodialysi

6

alth care spend

 capacity

database from C

shing care t

1, an averag

er of dialysis

is stations g

ding and the M

y increas

CMS. 

to an increas

ge facility ha

s facilities gr

rew by 5 pe

5,560

98.6

2011

Dialysis fac

Hemodialy

Medicare progra

sed betw

sing number

ad about 18 

rew by abou

rcent annua

0

cilities

sis stations

am, June 2012 

ween 200

r of dialysis 

hemodialys

t 4 percent 

ally. 

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

 187

06 

is Hemodialysis stations (in thousands)
188 Oth

Chart 

 

Age (yea

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45-64

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85+ 

Sex 

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Medicare 

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were 

disea

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her services

11-4. C

p

rs) 

r 45 

4

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ale 

e

an American 

her 

ce 

n county 

county, micro

county, adjac

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tion drug cov

led in Part D 

rage through 

rage through 

editable cove

as the secon

gible for Medi

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opulation, rural c

djacent to urban 

quare mile. Total

2009 estimates 

edPAC analysis 

pared with all 

an American. 

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y half of all di

care was the s

insured by an

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atients, 2

 

opolitan 

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verage statu

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employers th

other credita

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ndary payer 

icaid 

ce). RDS (retiree

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ounties adjacent

areas do not hav

s may not sum to

of dialysis claim

Medicare pat

percent of FF

alysis patient

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n employer gr

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ristics of

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hat receive RD

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micropolitan coun

t to urban areas 

ve a city of 10,00

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s files and denom

tients, FFS di

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ts were dually

ayer (for Part 

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s patients we

f Medica

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nties contain at le

do not have a cit

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minator files from

alysis patient

tients resided

y eligible for M

A and Part B

lan at the time

ere enrolled in

are fee-fo

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ty of 10,000 peo

ier counties are c

m CMS. 

ts are disprop

d in a rural co

Medicare and

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n Part D plans

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all FFS dialysi

12% 

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25 

19 

7 

54 

46 

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81 

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47 

n counties contai

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ple in the county

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s or have othe

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n a core area wit

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rvices. 

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end-stage re

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is 

th 

50,000 

ties not 

 per 

who 

enal 

f
Chart 

Total 

Dialysis 

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Note: ES

bo

Source: Co

• Perso

numb

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waste

lining

home

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week

incre

moda

of all 

perce

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Patie

dona

from 

11-5. T

p

r hemodialysis

emodialysis 

al dialysis 

n

ng graft and 

transplants 

SRD (end-stage 

oth Medicare and

ompiled by MedP

ons with ES

ber of ESRD

modialysis, 

es and extra

g of his or he

e. 

ESRD patie

k. Between 1

ased by 4 pe

ality⎯periton

dialysis pati

ent annually 

tioning graft

ents undergo

tion. In 2009

cadaver don

A D

he ESRD

atients u

Patient

(thousan

372.

269.

s 240.

2.4

25.

1.

102.4

renal disease). T

d non-Medicare p

PAC from the Un

RD require e

D patients inc

a patient’s b

a fluids. In pe

er abdomen 

ents undergo

1999 and 20

ercent annu

neal dialysis

ients underg

during this t

t patients are

oing kidney t

9, 36 percen

nors. 

Data Book: Hea

D popula

undergo 

1999

ts 

ds) Perce

0 100%

7 73

3 65

4 1

9 7

1 <1

4 28

Totals may not e

patients. 

nited States Rena

either dialys

creased by 4

blood flows t

eritoneal dia

as a filter. P

o hemodialys

09, the total

ally while th

s⎯remained

go home hem

time period.

e patients wh

ransplant m

nt of the kidn

alth care spend

ation is g

dialysis

 Patie

ent (thous

% 487

343

314

2

26

0

143

equal sum of com

al Data System.

is or a kidne

4 percent an

through a ma

lysis, the pa

Peritoneal dia

sis administ

 number of i

e number of

 about the s

modialysis, t

ho have had

ay receive e

neys were fro

ding and the M

growing, 

2005

ents

sands) Pe

.6 100

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mponents due to 

ey transplant

nnually betwe

achine with 

atient’s blood

alysis is usu

tered in dialy

in-center he

f patients us

same. Althou

the number o

d a successf

either a living

om living don

Medicare progra

and mos

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rcent (tho

0% 5

1 3

5 3

1

5

1

9 1

rounding. The a

t to maintain

een 1999 an

a special filt

d is cleaned 

ally perform

ysis facilities

modialysis p

sing the pred

ugh only a sm

of these pat

ful kidney tra

g or a cadav

nors and 64

am, June 2012 

st ESRD

2009

atients 

ousands) Pe

571.4 10

398.9 7

365.8 6

4.5 

27.6 

1.0 <

72.6 3

bove data includ

n life. The tot

nd 2009. 

ter that remo

by using the

ed in a patie

s three times

patients 

dominant hom

mall proport

ients grew 7

ansplant. 

veric kidney 

 percent we

 189

D

ercent

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70 

64 

1 

5 

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des 

tal 

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e

ent’s 

s a 

me 

ion 

7

re 
190 Oth

Chart 

Total (n =

Age (yea

 0–19 

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 45–64 

 65–79 

 80+ 

Sex 

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 Female

Race/eth

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 African 

 Native A

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 Hispani

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Underlyin

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Note: ES

th

Source: Co

 

• Amon

• Diabe

• The n

Amon

age 8

her services

11-6. D

A

g

 571,414) 

rs) 

 

nicity 

American 

American 

American 

c 

spanic 

ng cause of E

es 

ension 

ulonephritis 

auses 

SRD (end-stage 

ose who underg

ompiled by MedP

ng ESRD pa

etes is the m

number of E

ng the fastes

80, Asian Am

Diabetics

American

rowing s

ESRD 

renal disease). T

o maintenance d

PAC from the Un

atients, 37 pe

most commo

SRD patient

st growing g

mericans, an

, middlens, and H

segment

P

i

Totals may not e

dialysis and those

nited States Rena

ercent are o

n cause of r

ts increased

roups of pat

nd Hispanics

-aged an

Hispanics

s of the 

Percent

of total

in 2009

100%

1

 18

 45

 28

 9

 57

 43

 61

 32

 1

5

 15

 85

 38

 25

 15

 23

equal sum of the 

e who have a fun

al Data System.

ver age 65. 

renal failure.

d by 4 percen

tients are tho

s. 

nd the eld

s are am

ESRD po

components due

nctioning kidney 

About 61 pe

nt annually b

ose who are

derly, As

mong the 

opulatio

Av

 pe

2

e to rounding. ES

transplant. 

ercent are W

between 200

e between 45

sian 

fastest 

n 

verage annua

ercent change

2004–2009

4% 

1 

1 

5 

4 

5 

4 

4 

4 

4 

4 

8 

7 

4 

5 

4 

2 

5 

SRD patients inc

White. 

04 and 2009

5 and 64, ov

l 

e

clude 

9. 

ver 
Chart 

Type of fa

All facilitie

Urban 

Rural 

LDOs 

Non-LDO

 

Note: LD

Source: Co

• For 2

was 2

• As in

large

per tr

comp

highe

• In 20

beca

comp

treatm

The C

and r

adjus

in 20

11-7. A

d

acility 

es 

s 

DO (large dialysi

ompiled by MedP

2010, the agg

2.3 percent. 

 earlier year

st dialysis o

reatment and

posite rate co

er for the two

10, the gap 

use of differ

pared to urba

ments they p

Commission

rural facilities

stment that is

11. 

A D

Aggregate

ialysis fa

s organization). 

PAC from 2010 c

gregate Med

rs, we contin

rganizations

d drug paym

ost per treat

o largest cha

between the

ences in the

an facilities, 

provide, and

n will continu

s in upcomin

s included in

Data Book: Hea

e margin

acility, 20

Percentage o

going to fre

Margins include 

cost reports and 

dicare margi

nue to see hi

s. This findin

ment per trea

tment was lo

ains. 

e Medicare m

e volume of d

rural facilitie

 have highe

e to monitor

ng years. So

n the new en

alth care spend

ns vary b

010 

of Medicare p

eestanding fa

100%

85

15

69

31

payments and c

the 2010 institut

in for compo

igher margin

g stems from

atment. Com

ower and the

margins for u

drugs furnish

es are on av

r cost per tre

r the adequa

ome rural fac

nd-stage ren

ding and the M

by type o

payments

acilities

costs for compos

tional outpatient f

osite rate ser

ns for facilitie

m difference

mpared with t

e drug paym

urban and ru

hed across p

verage small

eatment for 

acy of Medic

cilities may b

nal disease p

Medicare progra

of freesta

Ag

ite rate services 

file from CMS. 

rvices and in

es affiliated w

es in the com

their counter

ent per treat

ural facilities

providers. In

er, in terms 

composite r

care’s payme

benefit from 

payment me

am, June 2012 

anding 

ggregate marg

2.3% 

3.4 

−3.7 

3.4 

0.1 

and injectable d

njectable dru

with the two

mposite rate 

rparts, the 

tment was 

s widened 

n addition, 

of the numb

rate services

ents for urba

the low-volu

ethod that be

 191

gin 

rugs. 

ugs 

o

cost 

ber of 

s. 

an 

ume 

egan 
192 Oth

Chart 

Beneficiar

Medicare 

Average l

among 

Median le

among 

Note: Av

to

 *A

Source: M

An

• The n

the la

incre

• The a

subst

an in

lengt

• Total

incre

her services

11-8. M

su

ries in hospic

payments (in

ength of stay 

decedents (in

ength of stay 

decedents (in

verage length of 

tal number of da

Average annual c

edPAC analysis o

nalytic File from C

number of M

ast decade a

ased. 

average leng

tantially ove

crease in len

h of stay has

 Medicare p

ased enrollm

Medicare 

ubstanti

2

e 513

n billions) 

n days) 

n days) 

stay is calculate

ays the decedent

change. 

of the denominato

CMS. 

Medicare ben

and continue

gth of stay a

r the decade

ngth of stay 

s changed li

ayments to 

ment and lon

hospice

ally from

000 

3,000 1,09

$2.9

54

17

ed for decedents 

 was enrolled in 

or file, the Medica

neficiaries re

ed to grow in

mong Medic

e, from 54 da

among hosp

ttle (see Cha

hospices mo

nger lengths 

e use and

m 2000 to

2009

90,000 1,1

$12.1

84

17

who used hospic

the Medicare ho

re Beneficiary Da

eceiving hosp

n 2010, sugg

care decede

ays in 2000 

pice users w

art 11-12). 

ore than qua

of stay. 

d spendi

o 2010 

2010

159,000

$13.0

86

18

ce at the time of 

ospice benefit du

atabase, and the 1

pice service

gesting that a

ents who use

to 86 days i

with the longe

adrupled from

ing grew

Annual 

change, 

2000–2009 

8.7%* 

17.2* 

5.0* 

0 days 

death or before 

ring his/her lifetim

100 percent hosp

es more than

access to ho

ed hospice g

in 2010. This

est stays wh

m 2000 to 2

w

 

Chang

 2009–20

6.3%

7.2

2.1

1 da

death and reflec

me. 

ice claims Standa

n doubled ov

ospice care 

grew 

s growth refl

hile median 

010 due to 

e, 

010 

%

ay 

cts the 

ard 

ver 

has 

lects 
Chart 

 

All 

FFS bene

MA benef

Dual eligib

Nondual e

Age (yea

 <65 

 65–84 

 85+ 

Race/eth

 White 

 Minority

Gender 

 Male 

 Female

Beneficia

 Urban 

 Micropo

 Rural, a

 Rural, n

 Frontier

 

Note: FF

U

po

Source: M

• Hosp

incre

• Desp

chara

eligib

11-9. H

fr

eficiaries 

ficiaries 

bles 

eligibles 

rs) 

nicity 

y

ary location 

olitan 

adjacent to ur

nonadjacent to

r

FS (fee-for-servic

rban, micropolita

opulation density

edPAC analysis 

pice use grew

ased hospic

pite this grow

acteristics. M

ble, or lived i

A D

Hospice u

rom 2000

Pe

2

2

2

30

1

24

1

24

2

23

1

22

23

24

18

ban 1

o urban 15

13

ce), MA (Medica

an, and rural des

y equal to or less

of data from the

w in all bene

ce use rates.

wth, hospice 

Medicare dec

n an urban a

Data Book: Hea

use incre

0 to 2010

ercent of dece

000 

2.9%

1.5 4

0.9 4

7.5 

4.5 4

7.0 

4.7 4

1.4 4

3.8 4

7.3 

2.4 

3.3 4

4.3 4

8.5 

7.6 

5.8 

3.2 

re Advantage). 

ignations are bas

 than 6 persons 

e denominator file

eficiary group

.

use continu

cedents who

area were m

alth care spend

eased ac

0

edents using h

2009

42.0%

41.0

46.1

37.5

43.4

26.0 

41.0 

48.0 

43.7

32.0 

38.6

45.1

43.5

37.5

36.9

32.8

27.1

Beneficiary loca

sed on the urban

per square mile.

e and the Medica

ps in 2010, c

ed to vary b

o were older

more likely to

ding and the M

cross ben

A

hospice

2010

44.0%

43.0

47.8

39.2

45.5

27.2 

42.6 

50.4 

45.8

33.6 

40.4

47.1

45.4

39.8

38.7

34.5

30.1

ation reflects the 

n influence codes

.

are Beneficiary D

continuing a

by demograp

r, White, fem

o use hospice

Medicare progra

neficiary

Average annu

percentage 

point change

2000–2009 

2.1 

2.2 

1.7 

2.2 

2.1 

1.0 

1.8 

3.0 

2.2 

1.6 

1.8 

2.4 

2.1 

2.1 

2.1 

1.9 

1.5 

beneficiary’s cou

s. The frontier c

Database from C

a decade lon

phic and ben

male, MA enr

e than their 

am, June 2012 

y groups

ual 

 Percenta

e point cha

 2009–20

2.0

2.0

1.7

1.7

2.1

1.2

1.6

2.4

2.1

1.6

1.8

2.0

1.9

2.3

1.8

1.7

3.0

unty of residence

ategory is define

MS. 

g trend of 

neficiary 

rollees, not d

counterparts

 193

s

age 

ange 

010 

e. 

ed as 

dual 

s. 
194 Oth

Chart 

Source: CM

• There

were 

• Betw

1,300

• In 20

merg

0

500

1,000

1,500

2,000

2,500

Number of providers

her services

11-10. N

in

S Providing Data

e were more

for-profit ho

een 2002 an

0. For-profit 

11, just over

er, compare

1,122

840

387

2002

No

umber o

ncreased

a Quickly Query.

e than 3,600 

ospices. 

nd 2011, the

hospices ac

r 45 hospice

ed with over 

1,134

1,655

7

4

37

200

onprofit F

of Medica

d, largely

 https://pdq.cms

Medicare-p

e number of 

ccounted for 

es voluntarily

60 hospices

1,142

5

1,

457

67

07

For profit

are-parti

y driven b

.hhs.gov/index.js

participating 

Medicare-pa

over 90 per

y exited the 

s annually fro

1,14

756

468

64

2008

Government

cipating

by for-pr

sp. 

hospices in 

articipating h

rcent of that 

Medicare pr

om 2007 to 

46 1

1,840

470

69

2009

t/other V

g hospice

rofit hos

2011. A maj

hospices gre

growth. 

rogram due t

2009. 

1,149

1,923

477

4

2010

Voluntary closu

es has 

spices 

jority of them

ew by about

to a closure 

1,143

2,017

49

45

2011

ure or merger

m

or 

90

46

1

r
Chart 

Cancer (e

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Debility, N

Lung canc

Heart failu

Unspecific

Alzheimer

Chronic a

Dementia

Organic p

Respirato

Genitourin

Nervous s

Other 

Digestive 

All 

Note: NO

m

Source: M

Da

• In 20

cance

heart

deme

• Leng

disea

of sta

with g

11-11. H

d

except lung ca

ry, except hea

NOS 

cer 

ure 

c symptoms/s

r’s and simila

airway obstruc

a

psychoses 

ory disease 

nary disease 

system, excep

disease 

OS (not otherwis

ultiple diagnoses

edPAC analysis 

atabase. 

09, the mos

er, accountin

t failure and 

entia, organi

th of stay va

ase, dementi

ay exceeding

genitourinary

A D

Hospice c

iagnosis

ancer) 

art failure 

signs 

r diseases 

ction, NOS 

pt Alzheimer’s

se specified). Pe

s. Share of case

of 100 percent h

t common te

ng for nearly

other circula

c psychoses

aries by diag

ia, organic p

g 180 days. 

y disease, d

Data Book: Hea

cases an

s, 2009 

s

rcent of cases by

es may not sum t

hospice claims S

erminal diag

y one-third o

atory conditio

s, and other 

gnosis. At lea

psychoses, c

Long hospic

igestive dise

alth care spend

nd length

Diagnosis

of total c

22%

10

10

9

7

6

6

6

5

4

3

3

3

1

1

100

y diagnosis does

to figures cited in

Standard Analytic

nosis among

of cases. The

ons (18 perc

neurologica

ast one-quar

chronic airwa

ce stays wer

ease, and ca

ding and the M

h of stay,

s share

cases

%

s not sum to 100 

n the text below d

cal File from CMS

g Medicare 

e next most 

cent of case

al conditions 

rter of hospi

ay obstructio

re least com

ancer. 

Medicare progra

, by 

Percent 

leng

greater t

due to the exclu

due to rounding. 

S and the Medica

hospice pati

common dia

es) and Alzhe

 (17 percent

ce patients w

on, and debi

mon among

am, June 2012 

of cases with

th of stay 

han 180 days

10% 

19 

25 

8 

21 

24 

35 

26 

30 

29 

11 

5 

32 

11 

8 

20 

usion of patients 

are Beneficiary 

ients was 

agnoses wer

eimer’s dise

t of cases).

with Alzheim

ility had leng

g beneficiarie

 195

h

s 

with 

re 

ase, 

mer’s 

gths 

es 
196 Oth

Chart 

Note: Da

of

Source: M

• Long

perce

• Short

held s

perce

0

50

100

150

200

250

300

Length of stay (days)

her services

11-12. L

st

ata reflect hospic

f stay reflects the

edPAC analysis 

 hospice sta

entile grew fr

t stays in ho

steady at 17

entile has re

3

10th perce

200

ong hos

tays rem

ce length of stay 

e total number of 

of the denomina

ays have gro

rom 141 day

spice have c

7 or 18 days 

mained at 5 

3

entile 25th

0 2010

pice stay

main virtu

for Medicare de

days the decede

ator file and the M

own longer. F

ys in 2000 to

changed littl

from 2000 t

or 6 days s

6 5

h percentile

ys are ge

ually unc

cedents who use

ent was enrolled 

Medicare Benefic

For example

o 240 days in

e since 2000

to 2010. Hos

ince 2000. 

17 18

Median

etting lo

changed

ed hospice at the

 in the Medicare

ciary Database fr

e, hospice le

n 2010. 

0. The medi

spice length 

56

8

n 75th 

nger, wh

, 2000 an

e time of death o

 hospice benefit 

rom CMS. 

ength of stay

ian length of

of stay at th

6

77

percentile

hile shor

nd 2010

or before death. L

during his/her lif

y at the 90th 

f stay in hos

he 25th 

141

240

90th percen

rt 

Length 

fetime. 

pice 

0

ntile
Chart 

Beneficia

Diagnos

Cance

Neuro

Heart

Debili

COPD

Other

Site of s

Home

Nursin

Assist

Hospi

Hospice

For prof

Nonpro

Freesta

Home h

Hospita

Note: CO

in 

ho

 

Source: M

ho

• Hosp

• Bene

lengt

• Bene

have 

hosp

• For-p

• Frees

hosp

11-13. H

by

ary

sis 

er 

ological 

t/circulatory 

ity 

D

r

service 

e

ng facility 

ted living faci

ice facility or 

fit 

fit

anding 

health based 

al based 

OPD (chronic ob

2009 and used 

ospice benefit du

edPAC analysis 

ospice cost repor

pice average

eficiaries with

h of stay wh

eficiaries who

a longer av

ice facility or

profit hospice

standing hos

ital-based ho

A D

Hospice a

y benefic

lity

hospital 

bstructive pulmon

hospice that yea

uring his/her lifeti

of 100 percent h

rts, and Provider

e length of st

h neurologic

hile beneficia

o receive ho

erage length

r hospital. 

es have a lo

spices have 

ospices. 

Data Book: Hea

average 

ciary and

nary disease). Av

ar and reflects the

me. 

hospice claims S

r of Services file 

tay varies by

cal conditions

aries with ca

ospice servic

h of stay tha

nger averag

a longer ave

alth care spend

length o

d hospic

Average

 amon

(

verage length of 

e total number of

Standard Analytic

data from CMS.

y both benef

s, COPD, an

ncer have th

ces in assiste

n beneficiar

ge length of s

erage length

ding and the M

of stay am

ce charac

e length of sta

ng decedents

(in days) 

53

132

76

98

107

85

87

107

143 

14 

100

69 

87 

70 

62

stay is calculate

f days the deced

cal File data, Med

ficiary and pr

nd debility ha

he shortest s

ed living fac

ries who rece

stay than no

h of stay tha

Medicare progra

mong de

cteristics

ay 

s 

ed for Medicare b

dent was enrolled

dicare Beneficiar

rovider char

ave the long

stays on ave

ilities and nu

eive care at 

onprofit hosp

n home hea

am, June 2012 

ecedents

s, 2009

 

beneficiaries who

d in the Medicare

ry Database, Me

racteristics.

gest average

erage. 

ursing faciliti

home or in a

pices. 

alth–based o

 197

, 

o died 

e

dicare 

e

ies 

a 

or 
198 Oth

Chart 

 

All 

Freestand

Home hea

Hospital b

For profit 

Nonprofit 

Urban 

Rural 

Below cap

Above ca

Above ca

 cap ove

 

Note: M

M

fre

go

Source: M

Pr

• The a

• Marg

servic

perce

assoc

• Frees

base

indire

the a

• In 20

marg

frees

• Hosp

limit) 

her services

11-14. H

ding 

alth based 

based 

p

p 

p (including 

erpayments) 

argins for all pro

argins are calcu

eestanding/provi

overnment hospi

edPAC analysis 

rovider of Service

aggregate M

in estimates

ces and volu

entage point

ciated with f

standing hos

d) hospices,

ect costs are

llocation of o

09, for-profit

in for nonpro

tanding had

pices that ex

had a marg

Hospice a

Percent o

hospices

(2009) 

100% 

69 

16 

15 

54 

33 

70 

30 

87.5 

12.5 

12.5 

ovider categories 

lated based on M

der-based categ

ces are not brok

of Medicare hos

es data from CM

Medicare ma

s do not inclu

unteers (whi

ts, respective

fundraising. 

spices had h

, in part due 

e higher than

overhead fro

t hospice ma

ofit hospices

 a higher ma

ceeded the 

in of more th

aggregat

of 

s 

2003

6.6%

10.9

3.9

–14.0

15.7

1.1

7.4

0.1

 6.7

3.5

23.9

exclude overpay

Medicare-allowab

ories and owner

en out separatel

spice cost reports

MS. 

rgin was 7.1

ude nonreim

ch, if include

ely). Margin

higher margi

to difference

n those of fre

om the paren

argins were 

s was 3.4 pe

argin of 6.2 p

cap (Medica

han 18 perce

te Medic

2006

% 6.4%

9.7

3.8

–12.8

12.0

1.5

7.1

0.8

7 7.0

5 0.3

9 20.7

yments to above

ble, reimbursable

rship categories b

y. 

s, 100 percent ho

 percent in 2

mbursable co

ed, would re

ns also do no

ns than prov

es in their in

eestanding p

nt provider.

strongly pos

ercent. The s

percent (not

are’s aggreg

ent before th

are marg

2007

5.8%

8.7

2.3

–10.7

10.4

1.7

6.3

1.4

6.1

2.5

20.5

e-cap hospices, e

e costs. Percent 

because skilled n

ospice claims St

2009, up fro

osts associat

educe margin

ot include th

vider-based 

ndirect costs

providers an

sitive at 11.4

subset of no

t shown in ta

gate average

he return of 

gins, 200

2008 

5.1% 

8.0 

2.7 

 –12.2 

10.0 

0.2 

5.6 

1.3 

5.5 

1.0 

19.0 

except where spe

of hospices does

nursing facility–b

tandard Analytic 

om 5.1 perce

ted with bere

ns by at mos

e costs and 

(home healt

s. Provider-b

d are likely i

4 percent. Th

onprofit hosp

able). 

e per benefic

the cap ove

03–2009

2009 

7.1% 

10.0 

5.2 

–12.8 

11.4 

3.4 

7.6 

3.1 

7.6 

1.3 

18.3 

ecifically indicate

s not sum to 100

based hospices a

File, and Medica

ent in 2008.

eavement 

st 1.5 and 0.

revenues 

th- and hosp

ased hospic

inflated due 

he aggregate

pices that we

ciary paymen

rpayments.

ed. 

0 by 

and 

are 

.3 

pitalces’ 

to 

e

ere 

nt 
Chart 

Note: M

be

Source: M

• Medi

lengt

• Hosp

lowes

marg

• Marg

with t

quint

Hosp

overp

-15

-10

-5

0

5

10

15

20

Margin (in percent)

11-15. M

m

argins exclude o

eneficiary. Margi

edPAC analysis 

care’s per-d

hs of stay. 

pices with mo

st length-of-s

in for hospic

ins are som

the second h

ile exceeded

pices exceed

payments (C

-9.0

1

A D

Medicare 

more long

overpayments to 

ns are calculated

of Medicare hos

iem-based p

ore long-stay

stay quintile 

ces in the se

ewhat lower

highest quin

d Medicare’s

ding the cap 

Chart 11-14).

0

Perce

Data Book: Hea

margins

g stays, 2

hospices that ex

d based on Medi

spice cost reports

payment sys

y patients ge

have a mar

econd highes

r in the highe

tile (14.4 pe

s aggregate 

had a marg

.

3.5

2

ent of stays 

alth care spend

s are hig

2009 

xceed the cap on

care-allowable, r

s and 100 percen

stem for hos

enerally hav

rgin of –9.0 p

st length-of-s

est length-of

rcent) becau

payment ca

in of more th

8.6

3

greater than

ding and the M

her amo

n the average an

reimbursable cos

nt hospice claims

pice provide

ve higher ma

percent com

stay quintile

f-stay quintil

use some ho

ap and must 

han 18 perce

n 180 days (q

Medicare progra

ong hosp

nual Medicare p

sts. 

s Standard Analy

es an incenti

argins. Hosp

mpared with a

e. 

e (8.3 perce

ospices in th

repay the ov

ent before th

14.4

4

quintiles)

am, June 2012 

pices wit

ayment per 

ytic File from CM

ive for longe

ices in the 

a 14.4 perce

ent) compare

he highest 

verage. 

he return of 

8.3

5

 199

h 

MS. 

er 

ent 

ed 
200 Oth

Chart 

 

Percent o

exceeding

Average p

the cap pe

exceeding

(in thousa

Payments

as a perce

Medicare 

 

Note: Th

 *T

m

Source: M

Se

fro

• The p

limit, 

• Medi

spen

• Our e

refine

analy

excee

paym

have 

her services

11-16. H

ca

of hospices 

g the cap 

payments ove

er hospice 

g the cap 

ands) 

s over the cap

ent of overall 

hospice spen

he cap year is de

The estimates for

ethodology and 

edPAC analysis 

ervices file data f

om the CMS Offi

percent of ho

or “cap,” wa

care payme

ding in 2009

estimates of 

ements to ou

yses perform

eding the ca

ments over th

declined sin

ospices 

ap, selec

er 

p 

nding 

efined as the per

r 2008 and 2009 

data availability, 

of 100 percent h

from CMS, and C

ce of the Actuary

ospices exce

as 12.5 perce

nts over the 

9. 

hospices ex

ur estimation

med with the 

ap increased

he cap and t

nce 2006. 

that exc

cted yea

2002

2.6%

$470

0.6%

riod beginning No

each use a sligh

and are thus no

hospice claims S

CMS Providing D

y. 

eeding Medi

ent in 2009.

cap represe

xceeding the

n methodolo

revised met

d each year f

he average 

ceeded M

rs 

2004

% 5.8%

$749

% 1.7%

ovember 1 and e

htly different calc

t precisely comp

Standard Analytic

Data Quickly syst

icare’s aggre

ented 1.7 pe

e cap are no

gy in 2008 a

thodology, w

from 2002 to

amount of th

Medicare

2006

9.4%

$731

2.4%

ending October 3

culation approach

parable to earlier 

c File data, Medic

tem. Data on tota

egate avera

ercent of tota

ot entirely co

and 2009. O

we believe th

o 2009, while

he overpaym

e’s annua

2008* 

10.2% 

$571 

1.7% 

31 of the followin

h, reflecting chan

years. 

care hospice cos

al spending for e

ge per bene

al Medicare 

mparable ov

On the basis 

he percent o

e the percen

ment per abo

al payme

2009* 

12.5% 

$485 

1.7% 

g year. 

nges in the estim

st reports, Provid

each fiscal year a

eficiary paym

hospice 

ver time due

of additiona

of hospices 

nt of total 

ove-cap hos

ent 

mation 

der of 

are 

ment 

e to 

al 

spice 
Chart 

 

Diagnosis

All 

Cancer 

Neurologi

Heart/circ

Debility 

COPD 

Other 

Note: CO

ho

Source: M

• Abov

disch

• Betw

cond

had s

hosp

• For a

in som

patie

were 

11-17. L

an

s

cal conditions

culatory 

OPD (chronic ob

ospice length of s

edPAC analysis 

ve-cap hospi

harges than b

een 43 perc

itions, heart 

stays exceed

ices. 

all diagnoses

me cases, m

nts with hea

live dischar

A D

ength-of

nd below

s

bstructive pulmon

stay was beyond

of 100 percent h

ces have su

below-cap h

cent and 50 p

or circulator

ding 180 day

s, the live dis

more than tri

art or circulat

rges compar

Data Book: Hea

f-stay an

w-cap ho

Percent of ho

stays exce

Above-ca

hospices

42%

17

50

44

43

46

49

nary disease). Le

d 180 days. 

hospice claims S

ubstantially m

hospices for 

percent of a

ry conditions

ys compared

scharge rate

ple the rates

tory conditio

red with 14 p

alth care spend

nd live di

ospices,

ospice users 

eeding 180 da

ap Below-ca

s hospice

19%

 9

 30

 18

 23

 25

 23

ength-of-stay dat

Standard Analytic

more patient

all diagnose

bove-cap ho

s, chronic ob

d with 18 pe

es at above-c

s at below-ca

ns, 48 perce

percent at be

ding and the M

scharge

2009 

with

ays

ap 

es

ta reflect the perc

c File and denom

ts with very l

es. 

ospices’ pati

bstructive pu

rcent to 30 p

cap hospice

ap hospices

ent of discha

elow-cap ho

Medicare progra

e rates fo

Live di

percent o

Above-ca

hospices

44%

21 

35 

48 

49 

51 

57 

cent of hospice u

minator file from C

long stays a

ents with ne

ulmonary dis

percent at be

es were at le

s. For examp

arges at abo

spices. 

am, June 2012 

or abovescharges as a

of all discharg

ap Belows hosp

% 16

 10

 17

 14

 20

 20

 25

users in 2009 wh

CMS. 

nd more live

eurological 

sease, or de

elow-cap 

ast double a

ple, among 

ove-cap hosp

 201

-

a 

ges 

-cap 

pices 

6% 

0

7

4 

0

0

5

hose 

e

bility 

and, 

pices 
202 Oth

Chart 

Note: M

be

Source: M

• Hosp

other

• The h

comb

centr

overla

-2

0

2

4

6

8

10

12

14

16

Margin (in percent)

her services

11-18. M

sh

argins exclude o

eneficiary. Margi

edPAC analysis 

pices with a l

r hospices. 

higher profita

bination of fa

ralized locati

ap in supplie

-0

Margins a

hare of t

overpayments to 

ns are calculated

of Medicare hos

large share o

ability of hos

actors, such 

on (e.g., les

es, equipme

0.6

1

Perce

are highe

their pati

hospices that ex

d based on Medi

spice cost reports

of their patie

spices servin

as longer le

ss mileage co

ent, and serv

6.1

2

ent of provid

er among

ients in n

xceed the cap on

care-allowable, r

s and 100 percen

ents in nursin

ng many nur

engths of sta

osts and sta

vices provide

ders' patients

g hospic

nursing f

n the average an

reimbursable cos

nt hospice claims

ng facilities 

rsing facility 

ay, efficiencie

aff time for tr

ed by the ho

6.7

3

s in nursing 

ces with 

facilities

nual Medicare p

sts. 

s Standard Analy

have higher 

patients ma

es in treating

ravel), and s

spice and nu

facilities (qu

a greate

s, 2009 

ayment per 

ytic File from CM

r margins tha

ay be due to 

g patients in

avings from 

ursing facilit

13.8

4

uartiles)

r 

MS. 

an 

a 

 a 

an 

ty. 
Chart 

Note: Sp

ow

th

th

Ac

Source: 20

• Medi

year 

were 

4.5 p

• Spen

2011

lab se

• Hosp

49 pe

 

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Dollars (in billions)

11-19. M

20

pending is for se

wned or operated

e totals on top o

e Medicare Trus

ctuary for the Pre

012 annual repor

care spendin

between 20

only two inc

ercent in 20

nding increas

 because a 

ervices acco

pital-based la

ercent in 201

2.8 3

2.7

3

 2002 20

Indepen

Hospita

6. 5.5 

A D

Medicare 

002–201

ervices paid unde

d by hospitals. To

f each bar due to

stees. In data boo

esident’s Budget

rt of the Boards o

ng for clinica

02 and 2011

creases in la

09). 

sed by 10.1 

1.75 percen

ounted for 1.

abs’ share o

11.

3.0 3.3

3.0

3.3

003 2004

ndent and phy

al based

.0

6.6

Data Book: Hea

spendin

1 

er the clinical labo

otal spending ap

o rounding. The s

oks from prior ye

t request. 

of Trustees of the

al laboratory

1. This grow

ab payment r

percent in 2

t reduction i

.6 percent of

f total clinica

3.5

3.4

 2005 2

sician office

6.9

alth care spend

ng for cli

oratory fee sched

ppears on top of e

spending data ar

ears, we presente

e Medicare Trust

y services gr

wth was prima

rates during 

2009 and 3.1

n payment r

f total progra

al lab spendi

3.7 4.1

3.5

3.5

2006 2007

7.2

7.6

ding and the M

nical lab

dule. Hospital-ba

each bar. The se

re calendar year

ed fiscal year da

t Funds. 

rew by an av

arily driven b

 those years

1 percent in 2

rates offset i

am spending

ing increase

4.3

3.6

7 2008

7.9

Medicare progra

boratory 

ased services are

egments of each

r figures from the

ta prepared by th

verage of 5.5

by rising vol

s (1.1 percen

2010. Spend

increased vo

g in 2011. 

ed from 46 p

4.7 4.

4.0 4.

 2009 201

8.7 8.9

am, June 2012 

services

e furnished in lab

h bar may not sum

e 2012 annual rep

he CMS Office o

5 percent pe

ume, as the

nt in 2003 an

ding was flat

olume. Clini

ercent in 20

8 4.6

1 4.4

10 2011

9 8.9

 203

s, 

bs 

m to 

port of 

of the 

er 

re 

nd 

t in 

ical 

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204 Oth

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