A DATA BOOK 

Health Care Spending 

and the 

Medicare Program 

J UNE 2011

iii 

Introduction 

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

ways that MedPAC can better support them. It contains the type of information that MedPAC 

provides in publications like the March and June reports; it also combines data from other 

sources, such as CMS. The format is condensed into tables and figures with brief discussion. 

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. 

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, 2000–2009 ................................... 3

1-2 Per capita Medicare spending among FFS beneficiaries, by sector, 2000–2009 .................................... 4

1-3 Medicare made up over one-fifth of spending on personal health care in 2009 ...................................... 5

1-4 Medicare’s share of total spending varies by type of service, 2009 ........................................................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 

between 5.5 percent and 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, 2007 ...................... 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 2009 ........................... 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, 2007 .................................................................................................................. 21

2-2 Medicare enrollment and spending by age group, 2007 ....................................................................... 22

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

of Medicare spending, 2007 ................................................................................................................... 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, 2007 ................................................................................. 25

2-6 Characteristics of the Medicare population, by rural and urban residence, 2007 ................................. 26

 Web links ................................................................................................................................................. 27

3 Dual-eligible beneficiaries............................................................................................ 29 

3-1 Dual-eligible beneficiaries account for a disproportionate share of Medicare spending, 2007 ........... 31

3-2 Dual-eligible beneficiaries are more likely than non-dual eligibles to be disabled, 2007 ................... 32
vi 

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

poorer health status, 2007 ....................................................................................................................... 33

3-4 Demographic differences between dual-eligible beneficiaries and non-dual eligibles, 2007 .............. 34

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

and non-dual eligibles, 2007 .................................................................................................................. 35

3-6 Both Medicare and total spending are concentrated among dual-eligible beneficiaries, 2007 ............ 36

 

 Web links ...................................................................................................................................... 37

4 Quality of care in the Medicare program................................................................... 39 

4-1 Most in-hospital and 30-day postdischarge mortality rates improved from 2006 to 2009 .................. 41

4-2 Hospital inpatient patient safety indicators improved or were stable from 2006 to 2009 .................... 42

4-3 Most ambulatory care quality indicators improved or were stable from 2007 to 2009 ....................... 43

4-4 Risk-adjusted SNF quality measures show mixed results since 2000 .................................................. 44

4-5 Share of home health patients with positive outcomes has grown, but increases have leveled off ..... 45

4-6 Dialysis quality of care: Some measures show progress, others need improvement ........................... 46

4-7 Medicare Advantage quality measures were generally stable between 2009 and 2010 ...................... 47

 Web links ................................................................................................................................................. 49

5 Medicare beneficiary and other payer financial liability ......................................... 51 

5-1 Sources of supplemental coverage among noninstitutionalized Medicare beneficiaries, 2007 ........... 53

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

beneficiaries’ characteristics, 2007 ........................................................................................................ 54

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

by source of payment, 2007 ................................................................................................................... 55

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

beneficiaries, by source of payment, 2007 ............................................................................................ 56

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

by type of supplemental coverage, 2007 ............................................................................................... 57

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

by insurance and health status, 2007 ...................................................................................................... 58

Web links ...................................................................................................................................... 59

6 Acute inpatient services ............................................................................................... 61 

Short–term hospitals 

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

Medicare program, 2000–2009 .............................................................................................................. 63

6-2 Percent change in hospital employment, by occupation, 2007–2009 ................................................... 64

6-3 Growth in Medicare’s FFS payments for hospital inpatient and outpatient services, 1999–2009 ...... 65

6-4 Proportion of Medicare acute care hospital inpatient discharges by hospital group, 2009 .................. 66

6-5 Major diagnostic categories with highest volume, fiscal year 2009 ..................................................... 67

6-6 Cumulative change in total admissions and total outpatient visits, 1999–2009 ................................... 68
vii 

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

2004–2009 .............................................................................................................................................. 69

6-8 Trends in Medicare inpatient and non-Medicare inpatient length of stay, 1999–2009 ........................ 70

6-9 Source of inpatient hospital admissions, 2000–2009 ............................................................................ 71

6-10 Share of Medicare Part A beneficiaries with at least one hospitalization, 2000–2009 ........................ 72

6-11 Hospital occupancy rates, 1999–2009 ................................................................................................... 73

6-12 Medicare inpatient payments, by source and hospital group, 2009 ...................................................... 74

6-13 Medicare acute IPPS margin, 1994–2009 ............................................................................................. 75

6-14 Medicare acute IPPS margin, by urban and rural location, 1994–2009 ............................................... 76

6-15 Overall Medicare margin, 1997–2009 ................................................................................................... 77

6-16 Overall Medicare margin, by urban and rural location, 1997–2009 ..................................................... 78

6-17 Hospital total all-payer margin, 1994–2009 .......................................................................................... 79

6-18 Hospital total all-payer margin, by urban and rural location, 1994–2009 ............................................ 80

6-19 Hospital total all-payer margin, by teaching status, 1994–2009 ........................................................... 81

6-20 Medicare margins by teaching and disproportionate share status, 2009 .............................................. 82

6-21 Financial pressure leads to lower costs .................................................................................................. 83

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

payment-to-cost ratio, 1987–2009 ......................................................................................................... 84

6-23 Markup of charges over costs for Medicare services, 1998–2009 ........................................................ 85

6-24 Number of CAHs, 1999–2011 ............................................................................................................... 86

Specialty psychiatric facilities

6-25 Medicare payments to inpatient psychiatric facilities, 2001–2010 ....................................................... 87

6-26 Number of inpatient psychiatric facility cases has fallen under the PPS, 2002–2009 ........................ 88

6-27 Inpatient psychiatric facilities, 2003–2009 ............................................................................................ 89

6-28 One diagnosis accounted for almost three-quarters of IPF cases in 2009 ............................................ 90

6-29 IPF discharges by beneficiary characteristics, 2009 .............................................................................. 91

 Web links ................................................................................................................................................. 92

7 Ambulatory care .......................................................................................................... 93 

Physicians

7-1 Medicare spending per FFS beneficiary on physician fee-schedule services, 2000–2010 .................. 95

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

payment updates, 2000–2009 ................................................................................................................. 96

7-3 Most beneficiaries report that they can always or usually get timely care, 2010 ................................. 97

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

compared with privately insured individuals, 2007–2010 .................................................................... 98

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

more difficulty finding one in primary care, 2007–2010 ...................................................................... 99

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, 2010 ........................... 100

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, 2010 ........................................ 101

7-8 Continued growth in volume of physician services per beneficiary, 2000–2009 .............................. 102

7-9 Shifts in the volume of physician services, by type of service, 2004–2009 ....................................... 103

7-10 Changes in physicians’ professional liability insurance premiums, 2003–2010 ................................ 104
viii 

Hospital outpatient services 

7-11 Spending on all hospital outpatient services, 2000–2010 ................................................................... 105

7-12 Most hospitals provide outpatient services .......................................................................................... 106

7-13 Payments and volume of services under the Medicare hospital outpatient PPS, by type 

of service, 2009 ..................................................................................................................................... 107

7-14 Hospital outpatient services with the highest Medicare expenditures, 2009 ...................................... 108

7-15 Medicare coinsurance rates, by type of hospital outpatient service, 2009 .......................................... 109

7-16 Effects of hold-harmless and SCH transfer payments on hospitals’ outpatient 

revenue, 2007–2009 ............................................................................................................................. 110

7-17 Medicare hospital outpatient, inpatient, and overall Medicare margins, 2003–2009 ......................... 111

7-18 Number of observation hours has increased, 2006–2009 ................................................................... 112

Ambulatory surgical centers

7-19 Number of Medicare-certified ASCs increased by 41 percent, 2003–2010 ....................................... 113

Imaging services

7-20 Medicare spending for imaging services under the physician fee schedule, by type 

of service, 2004 and 2009 .................................................................................................................... 114

7-21 Radiologists received nearly half of physician fee-schedule payments for 

 imaging services, 2009 ...................................................................................................................... 115

 Web links .............................................................................................................................................. 116

8 Post-acute care ........................................................................................................... 119 

8-1 Number of most post-acute care providers grew or remained stable in 2010 .................................... 121

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

in FFS post-acute care expenditures .................................................................................................... 122

Skilled nursing facilities

8-3 Since 2005, the share of Medicare stays and payments going to freestanding SNFs 

and for-profit SNFs has increased ........................................................................................................ 123

8-4 Small declines in SNF days and admissions between 2008 and 2009 ............................................... 124

8-5 Case mix in freestanding SNFs shifted toward rehabilitation plus extensive services 

RUGs and away from other broad RUG categories ............................................................................ 125

8-6 Freestanding SNF Medicare margins have exceeded 10 percent for seven years ............................. 126

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

high Medicare margins ......................................................................................................................... 127

Home health agencies

8-8 Spending for home health care, 1994–2010 ........................................................................................ 128

8-9 Provision of home health care changed after the prospective payment system started ...................... 129

8-10 Trends in provision of home health care ............................................................................................. 130

8-11 Margins for freestanding home health agencies .................................................................................. 131

Inpatient rehabilitation facilities

8-12 Most common types of inpatient rehabilitation facility cases, 2010 ................................................... 132

8-13 Volume of IRF FFS patients remained stable in 2009, after declining from 2004 to 2007 ............... 133

8-14 Overall IRFs’ payments per case have risen faster than costs, post-PPS ........................................... 134

8-15 Inpatient rehabilitation facilities’ Medicare margin by type, 2001–2009 ........................................... 135 
ix 

Long-term care hospitals

8-16 Top MS–LTC–DRGs made up more than half of LTCH discharges in 2009 ................................... 136

8-17 LTCH spending per FFS beneficiary has increased under PPS .......................................................... 137

8-18 LTCHs’ per case payment rose more quickly than costs in 2009 ....................................................... 138

8-19 LTCHs’ Medicare margins by type of facility .................................................................................... 139

8-20 LTCHs in the top quartile of Medicare margins in 2009 had much lower costs ................................ 140

 Web links .............................................................................................................................................. 141

9 Medicare Advantage.................................................................................................. 143 

9-1 MA plans available to virtually all Medicare beneficiaries ............................................................ 145

9-2 Access to zero-premium plans with MA drug coverage, 2006–2011 ............................................. 146

9-3 Enrollment in MA plans, 1994–2011 .............................................................................................. 147

9-4 Changes in enrollment vary among major plan types ..................................................................... 148

9-5 MA and cost plan enrollment by state and type of plan, 2011 ........................................................ 149

9-6 MA plan benchmarks, bids, and Medicare program payments relative to FFS spending, 2011 ... 150

9-7 Enrollment in employer group MA plans, 2006–2011 ................................................................... 151

9-8 Number of special needs plans continues to decline from 2008 peak ............................................ 152

9-9 Number of SNPs decreased while SNP enrollment rose from 2010 to 2011 ................................. 153

 Web links .............................................................................................................................................. 154

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, 2009............................................................................................................. 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 ........................................................... 160

10-5 Characteristics of Medicare PDPs ....................................................................................................... 161

10-6 Characteristics of MA–PDs ................................................................................................................. 162

10-7 Average Part D premiums .................................................................................................................... 163

10-8 Number of PDPs qualifying as premium-free to LIS enrollees increased in 2011, even 

as overall number of PDPs declined .................................................................................................... 164

10-9 In 2011, most Part D enrollees are in plans that charge higher copayments for 

nonpreferred brand-name drugs ........................................................................................................... 165

10-10 In 2011, use of utilization management tools continues to increase for both PDPs 

and MA–PDs ........................................................................................................................................ 166

10-11 Characteristics of Part D enrollees, 2009 ............................................................................................. 167

10-12 Part D enrollment trends, 2006–2009 .................................................................................................. 168

10-13 Part D enrollment by region, 2009 ....................................................................................................... 169

10-14 The majority of Part D spending is incurred by fewer than half of all Part D enrollees, 2009 .......... 170

10-15 Characteristics of Part D enrollees, by spending levels, 2009 ............................................................ 171

10-16 Part D spending and utilization per enrollee, 2009.............................................................................. 172

10-17 Part D risk scores vary across regions, by plan type and by LIS status, 2009 .................................... 173
x 

10-18 Part D spending varies across regions even after controlling for prices and health status, 2009 ....... 175

10-19 Top 15 therapeutic classes of drugs under Part D, by spending and volume, 2009 .......................... 176

10-20 Generic dispensing rate for the top 15 therapeutic classes, by plan type, 2009 .................................. 177

10-21 Generic dispensing rate for the top 15 therapeutic classes, by LIS status, 2009 ................................ 178

10-22 Pharmacies participating in Part D, 2009 ............................................................................................ 179

10-23 Prescriptions dispensed, by pharmacy characteristics and urbanicity, 2009 ...................................... 180 

 Web links .............................................................................................................................................. 182

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, 2004 and 2009................................................................................. 186

11-3 Dialysis facilities’ capacity increased between 2000 and 2010 .......................................................... 187

11-4 Characteristics of dialysis patients, by type of facility, 2009 .............................................................. 188

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

11-6 Diabetics, 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, 2009............................................. 191

Hospice

11-8 Medicare hospice use and spending grew substantially from 2000 to 2009 ...................................... 192

11-9 Hospice use increased across beneficiary groups from 2000 to 2009 ................................................ 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, 2008 ........................................................................ 195

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

2000 and 2009 ...................................................................................................................................... 196

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

characteristics, 2008 ............................................................................................................................. 197

11-14 Hospice aggregate Medicare margins, 2002–2008 ............................................................................. 198

11-15 Medicare margins are higher among hospices with more long stays, 2008 ....................................... 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, 2008 ........................... 201

11-18 Hospice cap is unrelated to use of hospice services across states, 2008 ............................................. 202

Clinical laboratory

11-19 Medicare spending for clinical laboratory services, fiscal years 2000–2010 ..................................... 203

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

 
 

S E C T I O N 

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981 1986

spending

nding

Health care spe

ding has

financin

ing is the sum of

diture Accounts,

easing propo

c product (G

g has increa

to reach 20 

oughout muc

anaged care

omy. 

share of the

percent toda

 by 2019. 

out 49 perce

y 2019, thos

1991 1

All p

Med

ending and the 

 grown m

g makin

f all private and p

, 2011. 

ortion of nat

GDP) annual

sed from ab

percent of G

ch of the 199

e techniques

e economy fr

ay. Projectio

ent of total h

se percentag

996 2001

private spendi

dicare spendin

Ac

Medicare prog

more rap

g up nea

public spending. 

tional resour

lly since 198

bout 6 percen

GDP in 2019

90s due to s

s and higher 

rom less tha

ons suggest 

ealth care s

ges are proje

2006 2

ing

ng

ctual

gram, June 201

pidly tha

arly half 

Medicare spend

rces, accoun

82. 

nt in 1965 to

9. Health 

slower spend

enrollment 

an 1 percent 

that Medica

pending and

ected to be 5

2011 2016

Projected

1  7

n 

of 

ding is 

nting 

o

ding 

in 

are 

d

51 
8    Nation

Chart 

Note: G

Source: 20

• Over 

(GDP

• Nomi

2010,

year o

than G

avera

spend

• Medic

small

Prote

estim

largel

• Begin

expec

resou

by 20

insura

increa

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2%

3%

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6%

7%

8%

Share of GDP (percent)

nal health care a

1-6. T

sh

DP (gross dome

011 annual repor

time, Medica

P). From less

nal Medicare

, considerabl

over the sam

GDP, averag

age growth ra

ding is projec

care’s share 

er than the p

ection and Aff

mated that Me

ly due to the 

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

 than 1 perce

e spending g

ly faster than

me time frame

ging 5.5 perc

ate of 4.6 per

cted to contin

of GDP is pr

projection of M

fordable Care

edicare’s sha

permanent p

0, the aging o

the Medicare

d to Medicare

al factors suc

shields indiv

h care spend

%

1.9%

2

80 1990 2

D

B

A

spending

project M

GDP 

ese projections a

of Trustees of the

g has accoun

ent in 1970, i

rew on avera

n nominal gro

e. Future Me

ent per year 

rcent for the 

nue rising as 

rojected to re

Medicare’s s

e Act of 2010

are of GDP w

productivity a

of the baby-b

e drug benefit

e, growing fr

ch as innova

iduals from f

ding. 

2.3%

3.6%

2000 2010

Medicare

are based on the

e Medicare Trust

ted for an inc

it is projected

age 9.2 perce

owth in the ec

dicare spend

between 201

economy as 

a share of G

each 6.3 perc

share of GDP

0 (PPACA). U

would reach 1

adjustments f

boom genera

t are likely to

rom 3.6 perce

ation in medic

facing the ful

4.0%

5.2

2020 203

e spendi

e trustees’ interm

t Funds. 

creasing sha

d to reach ov

ent per year 

conomy, whi

ding is projec

10 and 2080

a whole. In o

GDP but at a 

cent in 2080.

P before enac

Under prior la

1.2 percent 

for most prov

tion, an expe

o increase the

ent of GDP in

cal technolog

l price of serv

%

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30 2040 2

ng to inc

mediate set of ass

are of gross d

ver 6 percent

over the per

ch averaged

cted to contin

0 compared w

other words,

slower pace

 This amoun

ctment of the

aw, in 2009 t

by 2080. Thi

viders enacte

ected increas

e proportion 

n 2010 to 5.8

gy and the wi

rvices) will als

5.9% 6.1%

2050 2060

crease a

sumptions. 

domestic pro

t of GDP in 2

riod from 198

d 5.7 percent 

nue growing f

with an annua

 Medicare 

e. 

nt is significan

e Patient 

the Trustees

s difference 

ed in PPACA

se in life 

of economic

8 percent of G

idespread us

so contribute

6.2% 6.3

2070 208

s a 

duct 

2080. 

80 to 

per 

faster 

al 

ntly 

is 

A. 

c

GDP 

se of 

e to 

%

80
Chart 

Note: PH

ex

Source: C

• Altho

differ

comp

rates

Medi

not a

the g

spen

• Differ

the p

since

privat

bene

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the s

-5%

0%

5%

10%

15%

20%

25%

30%

1

Per enrollee change (percent)

1-7. C

p

HI (private health

xpenditures inclu

MS, Office of the

ough rates of

r from year to

parison is se

. Also, priva

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). In m

ude both fee-for-s

e Actuary, Nation

f growth in p

o year, over 

ensitive to the

te insurers a

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

most years in this

service and priva

nal Health Expen

per capita sp

the long ter

e end points

and Medicar

pulation that

ent to which 

nefits and, in

re pronounc

stem for hosp

are has had g

rger purchas

surers have 

parison prob

80 198

Health care spe

ding per 

urance 

s period Medicar

ate plans. 

diture Accounts,

pending for M

rm they have

s of time one

re do not buy

t tends to be

these spend

n turn, chan

ced since 19

pital inpatien

greater succ

sing power. 

expanded a

blematic, as 

5 1990

ending and the 

enrollee

re and PHI do no

, 2011. 

Medicare and

e been quite

e uses for ca

y the same m

e more costl

ding trends w

ges in enrol

985, when M

nt services. S

cess at conta

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and cost-sha

Medicare’s 

0 1995

Average ann

1970-2009

1970-1993

1993-1997

1997-1999 

1999-2002 

2002-2009 

Medicare prog

e, Medica

ot cover the sam

d private ins

e similar. How

alculating av

mix of servic

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

9.0

11.0

7.3

-0.3 

6.4

7.5

gram, June 201

are and 

e services. Medi

surance ofte

wever, this 

verage growt

ces, and 

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

10.0

12.9

3.7

6.2

9.4

5.9

1  9

icare 

n 

th 

do 

es in 

ing 

that, 

70s, 

ned. 

over 

HI

od
10    Natio

Chart 

Note: C

ex

Source: 20

• Medi

(see 

• Medi

Medi

• The C

an av

interm

Forec

from 

upda

bene

0

200

400

600

800

1000

1200

1

Dollars (in billions)

onal health care

1-8. T

g

p

BO (Congression

xpenses) by cale

011 annual repor

care spendin

Chart 1-3; th

care spendin

care’s volun

Congression

verage annu

mediate proj

casts of futu

different ass

tes) and abo

ficiaries, am

980 1984

T

T

C

T

e and Medicare

rustees 

row at a

ercent a

nal Budget Office

endar year. 

rt of the Boards o

ng has grow

hese data in

ng increased

ntary outpatie

nal Budget O

ual rate of 5.5

ections for 2

re Medicare

sumptions a

out growth in

mong other fa

1988

Trustees - hig

Trustees - inte

CBO

Trustees - low

e spending

and CBO

n annua

nd 6 per

e). All data are n

of Trustees of the

wn nearly 13-

clude benef

d significant

ent prescript

Office project

5 percent be

2011 to 2020

e spending a

bout the eco

n the volume

actors. 

1992 199

gh

ermediate

w

O project

l average

rcent ove

ominal, gross pr

e Medicare Trust

-fold, from $

fit payments 

ly after 2006

tion drug ben

ts that mand

etween 2011

0 assume 5.

are inherently

onomy (whic

e and intens

96 2000

t Medica

e rate of

er the ne

rogram outlays (m

t Funds. CBO M

$37 billion in 

and adminis

6 with the int

nefit. 

datory spend

1 and 2020. 

9 percent av

y uncertain, 

ch affect prov

ity of service

2004 20

Actua

are spend

f between

ext 10 ye

mandatory plus a

arch 2011 basel

1980 to $50

strative expe

troduction of

ding for Med

The Medica

verage annu

and differen

vider payme

es delivered

008 2012

al Project

ding to 

n 5.5 

ars 

administrative 

ine. 

09 billion in 2

enses). 

f Part D, 

dicare will gro

are trustees’ 

ual growth. 

nces can ste

ent annual 

 to Medicare

2016

ted

2009 

ow at 

em 

e
Chart 

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th

m

sp

ye

in

 Source: 20

• The d

• In 20

were 

perce

presc

perce

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for th

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care 

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schedule

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hos

4

1-9. M

se

al spending 2

NF (skilled nursin

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pending on their 

ear, incurred bas

termediary lab, a

012 President’s B

distribution o

10, Medicar

by far the la

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cription drug

ent). 

ough inpatien

ose services

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plans has gr

aged care en

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e 

her 

pital

%

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Medicare 

ervices a

2000 = $227 b

ng facility), DME

on of spending fo

include spendin

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sis and do not inc

and other interme

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of Medicare 

re spent abo

argest spend

s reimburse

s provided u

nt hospital se

s was a sma

m 39 percent

rown from 1

nrollment is 

ged care

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SNF

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A Data Book: H

spendin

and has 

billion

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or 2009 differs sig

g financed by be

sharing requirem

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ediary. Totals ma

ffice of the Actua

spending am

out $514 billio

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under Part D

ervices still m

aller share o

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8 percent to

higher than 

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hospita

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1%

Health care spe

ng is con

shifted o

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gnificantly from e

eneficiary premiu

ments of Medicare

on program admin

ay not sum to 10

ary, 2011. 

mong service

on for benef

ry (27 percen

physician fe

D (12 percen

made up the

f total Medic

ent. Spendin

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it was a dec

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al

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hospita

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drugs

unde

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ncentrate

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ums but do not in

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nistration. “Othe

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es has chan

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sician fee 

chedule

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al

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scription 

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er Part D

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e

ending 2010 

tient drug benefit

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nclude spending 

ces. Values are re

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nged substan

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 by manage

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r fee-for-serv

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ciaries enrol

me period. C

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gram, June 201

rtain 

= $514 billio

t began in 2006, 

are gross outlay

by beneficiaries 

eported on a fisc

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ntially over t

ospital servi

ed care (22 

t), outpatient

vice settings

gory, spendin

han it was in

led in manag

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Inp

hos

2

Managed care

22%

1  11

on 

and 

ys, 

(or 

cal 

ier, 

ime. 

ices 

t

s (8 

ng 

n

ged 

dicare 

patient 

spital

27%

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health

4%

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3%
12    Natio

Chart 

Note: FF

re

Source: M

• Medi

bene

annu

contr

• Costl

inpat

those

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

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onal health care

1-10. F

sm

FS (fee-for-servic

evised 2007 Med

edPAC analysis 

care fee-forficiaries. In 2

al Medicare 

rast, the leas

y beneficiar

ient hospital

e who are in 

Most 

costly 1

%

%

%

%

%

%

%

%

%

%

%

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FS progr

mall gro

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icare Current Be

of Medicare Cur

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2007, the co

FFS spend

st costly half

ies tend to in

l services, th

the last yea

Least c

Second

Nex

Nex

Nex

%

Percent of 

e spending

ram spe

up of be

eneficiaries with a

eneficiary Survey

rrent Beneficiary 

S) spending

ostliest 5 per

ing and the 

f of beneficia

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hose who are

ar of life. 

costly half

d quartile

xt 15%

xt 5%

xt 4%

beneficiaries

nding is 

eneficiari

any group health

y Cost and Use fi

Survey, Cost an

g is concentr

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costliest qua

aries accoun

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e dually elig

highly c

ies, 2007

h enrollment durin

ile from CMS. 

nd Use files. 

rated among

eficiaries acc

artile accoun

nted for only 

multiple chro

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Percen

concentr

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ng the year. Spe

g a small num

counted for 

nted for 81 p

5 percent of

onic conditio

icare and M

14%

26%

17%

24%

14%

nt of program

rated in a

ending data reflec

mber of 

38 percent o

percent. By 

f FFS spend

ons, those u

Medicaid, and

5%

m spending

8

a

ct 

of 

ding. 

sing 

d

%

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Chart 

Estimate

High 

Intermedia

Low 

Note: H

tra

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th

Source: 20

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which

facilit

visits

worke

be ex

reven

abou

partic

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analy

proje

bene

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the in

assum

assum

1-11. M

in

ate 

I (Hospital Insura

ansfer), income f

Under the low-co

e projection peri

011 annual repor

Medicare pro

h covers ser

ties, and one

 and Medica

ers largely fi

xhausted if s

nues finance

t 25 percent

cular use bu

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

rvices provid

e for Supple

are’s new pre

inance HI sp

spending exc

e roughly 75 

t. (General re

t are made u

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

ded by hospi

mentary Me

escription dr

pending and 

ceeds payro

percent of S

evenues are

up of income

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 

tals and oth

dical Insuran

rug benefit. 

are held in t

oll tax revenu

SMI services

e federal tax 

e and other t

ral revenues

ums and gen

uld impose a

economy. 

008. In 2011

st fund will be

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

er providers

nce (SMI) se

Dedicated p

the HI trust f

ues and fund

s, and benef

x dollars that 

taxes on ind

s and benefi

neral revenu

a significant b

, Medicare t

e 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

Office of the Actu

for Hospital 

s such as ski

ervices, suc

payroll taxes 

fund. The H

d reserves. G

ficiary premi

 are not ded

dividuals and

iciary premiu

es required 

burden on M

trustees rep

d in 2024. Un

016. Under 

y. 

gram, June 201

nsolvent

umption

HI trust

s exhausted

16

24

er*

retirement tax 

increase through

ary. 

Insurance (H

illed nursing

h as physici

on current 

I trust fund c

General 

ums finance

dicated to a 

d corporation

ums. Some 

to finance 

Medicare 

ort that unde

nder high-co

low-cost 

1  13

t 

s 

hout 

HI), 

g

an 

can 

e

ns.) 

er 

ost 
14    Natio

Chart 

Note: G

as

be

wi

as

Pr

fe

Source: 20

• Unde

rapid

2040

• Comp

2010

the e

proje

for pr

reven

and o

0%

1%

2%

3%

4%

5%

6%

7%

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

011 annual repor

er an interme

ly, from abo

 and to abou

pared with th

 (PPACA), M

conomy—6.

ction is large

roductivity fo

nues to the M

other revenu

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 3.5 perce

ut 6.3 percen

he projection

Medicare’s e

.3 percent of

ely due to th

or most prov

Medicare pro

ue provisions

1986 199

e spending

faces se

(Hospital Insura

rs to a portion of 

dicare. State tran

Drug, Improvemen

r prescription dru

ct of 2010 on man

ccount. 

of Trustees of the

f assumption

ent of gross d

nt by 2080. 

ns before the

expenditures

f GDP in 208

he provisions

iders. The a

ogram due to

s. 

96 2006 2

Actual P

erious ch

nce). These proj

income taxes th

sfers (often calle

nt, and Moderniz

ug spending. The

nufacturers and i

e Medicare Trust

ns, trustees p

domestic pro

e Patient Pro

s are projecte

80 compare

s in PPACA 

actuaries also

o an expans

2016 2026

Projected

State t

hallenge

jections are base

hat higher income

ed the Part D “cla

zation Act of 200

e drug fee refers 

importers of bran

t Funds. 

project that 

oduct (GDP)

otection and

ed to be a s

d with 11.2 

that put in p

o project tha

sion of the H

2036 204

ransfers and 

Tax on ben

HI def

s with lo

ed on the trustee

e individuals pay

awback”) refer to

03 from the states

 to the fee impos

nd-name prescri

Medicare sp

) today to 5.

d Affordable 

ignificantly s

percent und

place perman

at PPACA w

Hospital Insu

46 2056

Total expe

General re

drug fee

nefits

ficit

ong-term

es’ intermediate s

y on Social Secur

o payments calle

s to Medicare for

sed in the Patien

ption drugs. The

pending will g

8 percent by

Care Act of 

smaller shar

er prior law.

nent adjustm

will increase 

rance payro

2066 2076

nditures

evenue transf

Premiums

Payroll taxe

m

set of 

rity 

d for 

r

nt 

se 

grow 

y

f

re of 

 This 

ments 

oll tax 

6

fers

es
Chart 

Note: SM

en

Source: 20

• Betwe

averag

plus co

annua

increas

• Growth

Medica

annua

plus co

sharing

(PPAC

betwee

provisi

payme

• Most M

benefit

Under 

cost-of

increas

• Twenty

new be

related

pays fo

$5

$1,0

$1,5

$2,0

$2,5

$3,0

Monthly amounts per person in 2009 dollars

1-13. A

ar

m

MI (Supplementary

nrolled in Part B an

011 annual report o

en 1970 and 20

ge rate of 1.7 pe

ost sharing grew

l average of 6.5

se in the avera

h over time in M

are trustees pro

lly (after adjust

ost sharing. Ho

g is lower than 

CA). SMI premiu

en 2009 and 20

ions affecting S

ents to Medicar

Medicare benef

t. The Decemb

current hold-ha

f-living increase

se limited as a 

y-five percent o

eneficiaries in M

d Part B premiu

or their Part B p

$0

500

000

500

000

500

000

1970 198

A

Average m

re projec

monthly S

y Medical Insurance

d (after 2006) Part

of the Boards of Tru

009, the averag

ercent. Over th

w by an annual

5 percent. Betw

ge Social Secu

Medicare premi

oject that betwe

ing for inflation)

wever, the grow

projected befo

ums and cost s

040 compared w

SMI—the perma

re Advantage p

ficiaries pay the

er 2011 cost-of

armless policies

e in a beneficia

result of the ho

of Medicare ben

Medicare who d

um, and Medica

premiums.) 

80 1990

A Data Book: H

monthly 

cted to g

Social Se

e). Average SMI be

t D. Beneficiary spe

ustees of the Medic

ge monthly Soc

e same period,

l average of 5.3

ween 2003 and 

urity benefit. 

ums and cost s

een 2009 and 2

), compared wit

wth rate of the v

re enactment o

sharing are proj

with 2.8 percen

anent productiv

lans. 

eir Part B premi

f-living adjustm

s, Medicare Pa

ry's Social Sec

old-harmless pro

neficiaries are n

did not pay a pr

are beneficiaries

2000 2010

Actual P

Health care spe

SMI prem

grow fast

ecurity b

enefit and average

ending on outpatien

care Trust Funds.

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iciaries

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A 

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ther categories t

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s living in the

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dicare manag

have private

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coverage an

beneficiaries

er than the pr

ection 9 reflec

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Medicaid

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ector

re

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co

Data Book: He

of supple

utionaliz

supplemental cov

hroughout 2007.

des only benefici

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rrent Beneficiary 

e community 

out 92 perce

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e-sector supp

ed retiree co

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ate in Medica

are prepaym

nd often add 

s who have m

roportion liste

cts 2011 data

upplemental 

overage

8.2%

ealth care spen

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ed Medic

verage category 

. “Other public se

aries not living in

B throughout the

Survey, Cost an

have covera

ent of benefic

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verage (abou

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are managed

ment plans. Th

to it. 

managed car

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a. Managed c

nding and the M

coverag

care ben

that applied for t

ector” includes fe

n institutions suc

eir enrollment in 

nd Use file, 2007

age that supp

ciaries have s

verage such 

ut 31 percen

erage, prima

d care. This c

hese types o

re enrollment

 9 (24 percen

care enrollm

M

2

Employe

sponsore

31.2%

Medicare progr

ge among

neficiarie

the most time in 

ederal and state 

ch as nursing hom

2007 or who ha

7. 

plements or r

supplementa

as medigap 

t). 

arily Medicaid

care includes

of arrangeme

t on this diag

nt), because 

ent grew sub

edigap

24.6%

er 

ed

%

ram, June 2011

g

es, 2007

2007. They coul

programs not inc

mes. It excludes 

d Medicare as a 

replaces the 

al coverage o

(about 25 

d. 

s Medicare 

ents generally

gram (about 2

 this chart re

bstantially in 

1 53

ld have 

cluded 

or 

y

23 

eflects 

the 
54 Medi

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All benefic

Age 

 Under 6

 65–69 

 70–74 

 75–79 

 80–84 

 85+ 

Income st

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 200% to

 Over 40

Eligibility 

 Aged 

 Disabled

 ESRD 

Residence

 Urban 

 Rural 

Sex 

 Male 

 Female 

Health sta

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 Poor 

Note: ES

tim

M

no

co

ou

ca

Source: M

• Benef

age 6

diseas

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perce

or ver

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perce

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are un

dwelli

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5-2. S

n

b

ciaries 

65 

atus 

poverty 

o 125% of pove

o 200% of pove

o 400% of pove

00% of poverty 

status 

d

e

atus 

nt/very good 

air 

SRD (end-stage 

me in 2007. They

edicare Advanta

ot included in oth

ouples. “Urban” i

utside MSAs. An

ategories becaus

edPAC analysis 

ficiaries most 

4, are higher 

se (ESRD), a

gap is most co

nt of poverty)

ry good health

caid coverage

nt of poverty)

of supplemen

nder age 65, h

ng, are male, 

ry and other pa

ources o

oninstitu

eneficiar

Number of

beneficiarie

(thousands

38,364 

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8,751 

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erty 3,502 

erty 7,829 

erty 11,462 

9,379 

32,546 

5,476 

291 

29,286 

9,052 

17,080 

21,285 

15,852 

19,107 

3,178 

renal disease). B

y could have had

age, cost, and he

her categories. In

ndicates benefic

alysis includes b

se we exclude be

of 2007 Medicar

likely to have

income (abov

nd report bett

ommon amon

, are eligible d

h. 

e is most comm

, are eligible d

tal coverage (

have income b

and report po

ayer financial li

of supple

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ries’ cha

f Employer

s sponsore

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31%

19

35

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34

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46

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30

33

30

35

30

24

Beneficiaries are

d coverage in oth

ealth care prepay

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ciaries living in m

beneficiaries livin

eneficiaries with m

re Current Benef

 employer-spo

ve 200 percen

ter than good

g those who a

due to age or 

mon among th

due to disabili

(Medicare cov

below 200 pe

oor health. 

iability

emental 

ed Medic

aracterist

red Medigap

e insurance

% 25%

5

25

27

27

32

33

13

21

26

26

31

28

5

27

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31

22

26

28

23

17

e assigned to the

her categories thr

yment plans. “Oth

was defined as $

etropolitan statis

g in the commun

missing values.

ficiary Survey, C

onsored supp

nt of poverty), 

health. 

are age 80 or 

ESRD, are ru

hose who are 

ty, and report

verage only) i

rcent of pove

coverag

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tics, 200

e Medicaid

12%

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7

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27

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11

14

6

15

26

e supplemental co

roughout 2007. M

her public sector

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stical areas (MSA

nity. Number of b

ost and Use file.

plemental cov

are eligible d

older, are mid

ural dwelling, a

 under age 65

t poor health. 

s most comm

rty, are eligibl

ge among

neficiarie

07 

Medicare 

managed 

care 

23% 

17 

23 

25 

26 

22 

23 

21 

27 

26 

24 

19 

24 

17 

13 

27 

9 

23 

23 

24 

22 

20 

overage where t

Medicare manag

r” includes federa

e living alone and

As). “Rural” indic

beneficiaries diffe

erage are tho

ue to age or e

ddle or high in

are female, an

5, are low inco

mon among be

le due to disa

g

es, by 

Other 

public Med

sector o

1% 8

1 1

1 

1 

1 

1 

1 

1 1

1 1

2 1

1 

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1 1

1 1

1 

1 

1 

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hey spent the m

ged care includes

al and state prog

d $12,550 for ma

ates beneficiarie

ers among boldfa

ose who are a

end-stage ren

ncome (above

nd report exce

ome (below 1

eneficiaries wh

bility, are rura

dicare 

nly 

8% 

9 

9 

6 

5 

5 

5 

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1 

3 

7 

4

6 

9 

1 

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2 

1 

6 

6 

9 

3 

ost 

s

rams 

arried 

es living 

ace 

bove 

nal 

e 125 

ellent 

25 

ho 

al 
Chart 

Note: FF

Pu

M

no

Source: M

• Amon

servic

public

avera

care c

The le

exclu

repre

• Privat

medig

• Bene

benef

• Public

health

5-3. T

n

by

FS (fee-for-servic

ublic supplement

edicare cost sha

ot living in institut

edPAC analysis 

ng fee-for-se

ces (defined 

c-sector sour

ages $13,001

costs for FFS

evel of Medic

des beneficia

sents all Med

te sources of

gap—paid 17

ficiaries paid

ficiary. 

c sources of 

h care costs,

Priva

supplem

17%

A 

otal spe

oninstitu

y source

ce). Private supp

ts include Medica

aring and noncov

tions such as nu

of Medicare Cur

rvice (FFS) b

as beneficia

rces, and all 

1. Medicare is

S beneficiarie

care spendin

aries in Medi

dicare benef

f supplement

7 percent of b

d 14 percent o

supplementa

 an average 

Beneficiarie

direct spend

14%

ate 

ments

%

Pu

suppl

6

P

Data Book: He

nding on

utionaliz

e of paym

plements include

aid, Department 

vered services bu

rsing homes. Nu

rrent Beneficiary 

beneficiaries 

ries’ direct sp

private-secto

s the largest 

es living in th

ng in this cha

icare Advant

iciaries. 

tal coverage—

beneficiaries

of their healt

al coverage—

of $721 per 

es' 

ding

ublic 

ements

6%

Per capita tot

ealth care spen

n health 

ed FFS M

ment, 200

 employer-spons

of Veterans Affa

ut not supplemen

umbers may not s

Survey, Cost an

living in the 

pending as w

or sources on

source of pa

he community

rt differs from

age and thos

—primarily e

s’ costs, an av

h care costs 

—primarily M

beneficiary.

al spending 

nding and the M

care ser

Medicare

07 

sored plans and 

airs, and other pu

ntal premiums. A

sum to 100 perce

nd Use file, 2007

community, 

well as expen

n all health c

ayment; it pa

y, an average

m the level in

se living in in

employer-spo

verage of $2

out of pocke

edicaid—pai

= $13,001

Medicare progr

rvices fo

e benefic

individually purc

ublic coverage. D

Analysis includes

ent due to round

7. 

the total cost

nditures by M

are goods an

ays 64 percen

e of $8,299 p

n Chart 2-1 be

nstitutions, w

onsored retire

2,182 per ben

et, an averag

id 6 percent o

Medicare

64%

ram, June 2011

r 

ciaries, 

chased coverage

Direct spending i

 only FFS benefi

ding. 

t of health ca

Medicare, oth

nd services) 

nt of the heal

per beneficia

ecause this c

hile Chart 2-

ee coverage 

neficiary. 

ge of $1,798 

of beneficiar

1 55

. 

s on 

iciaries 

are 

er 

lth 

ary. 

chart 

1 

and 

per 

ies’ 
56 Medi

Chart 

Note: FF

sp

Source: M

• Total

bene

with t

bene

• Amon

total s

as tot

bene

the h

spen

bene

10,0

20,0

30,0

40,0

50,0

60,0

70,0

Dollars

icare beneficiar

5-4. P

am

so

FS (fee-for-servic

pending is on Me

edPAC analysis 

 spending o

ficiaries livin

the highest t

ficiaries with

ng FFS bene

spending inc

tal spending

ficiaries but 

ighest total s

ding for all b

ficiaries with

33

0

000

000

000

000

000

000

000

< 1

Me

Su

Ou

ry and other pa

er capita

mong no

ource of

ce). Analysis inc

edicare cost shar

of Medicare Cur

n health car

ng in the com

total spendin

h the lowest 

eficiaries livi

creases, and

g increases. 

pays 75 per

spending. B

beneficiaries

h the highest

36 1

10 1

Groups of b

edicare

upplemental p

ut of pocket

ayer financial li

a total sp

oninstitu

f paymen

ludes FFS benef

ring and noncove

rrent Beneficiary 

re services v

mmunity. Pe

ng averages

total spendi

ng in the co

d beneficiari

For example

rcent of total

eneficiaries’

s but only 9 p

t total spend

1,844

0-25

beneficiaries

payers

iability

pending 

utionalize

nt, 2007

ficiaries not living

ered services. 

Survey, Cost an

varies drama

r capita spe

 $60,774. Pe

ng averages

mmunity, M

es’ out-of-po

e, Medicare 

l spending fo

’ out-of-pock

percent of to

ding. 

4,389

25-50

s ranked by t

on healt

ed FFS b

g in institutions s

nd Use file, 2007

atically amon

nding for the

er capita spe

s $336. 

edicare pay

ocket spend

pays 64 per

or the 10 pe

ket spending

otal spending

9,472

50-75

total spendin

th care s

beneficia

such as nursing h

7. 

ng fee-for-se

e 10 percent

ending for th

s a larger pe

ing is a sma

rcent of tota

rcent of ben

g covers 14 p

g for the 10 p

20,970

75-90

ng (percentil

services 

aries, by 

homes. Out-of-po

ervice (FFS) 

t of beneficia

he 10 percen

ercentage as

aller percenta

l spending fo

neficiaries wi

percent of to

percent of 

60,77

> 90

e ranges)

ocket 

aries 

nt of 

s

age 

or all 

ith 

otal 

74

0
Chart 

Note: FF

20

pr

pu

co

be

pa

Source: M

• The l

expe

healt

varies

those

supp

spen

• Medi

categ

spons

cover

Howe

pocke

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Dollars

5-5. V

am

by

FS (fee-for-servic

007. They could 

rograms not inclu

urchased covera

overage. Analysis

eneficiaries who 

ayer. Out-of-pock

edPAC analysis 

evel of total 

nditures by M

h care good

s by the type

e beneficiarie

lemental cov

ding, 94 per

care is the la

gory, but the

sored, medi

rage—public

ever, among

et spending 

7,493

3,266

1,856

0

0

0

0

0

0

0

0

0

0

0

Employe

sponsore

Me

A 

Variation 

mong no

y type of

ce). Beneficiaries

have had covera

uded in the other

ge. “Public supp

s includes only F

were not in both

ket spending is o

of Medicare Cur

spending (d

Medicare, ot

s and servic

e of supplem

es with no s

verage. Ben

rcent higher 

argest sourc

 second larg

gap, mediga

c and private

g those with 

is the secon

9,8

1,7 393

2,1

er

ed

Medi

edicare Pr

Data Book: He

in and c

oninstitu

f supple

s are assigned to

age in other cate

r categories. “Priv

lemental” include

FFS beneficiaries

 Part A and Part 

on Medicare cost

rrent Beneficiary 

defined as be

ther public-s

ces) among f

mental cover

upplementa

eficiaries wi

than those w

ce of paymen

gest source 

ap plus emp

e combined—

other public 

nd largest so

17

28

470

80

igap Me

em

rivate suppleme

ealth care spen

composit

utionalize

mental c

o the supplemen

gories throughou

vate supplement

es Medicaid, Dep

s not living in inst

B throughout the

t sharing and non

Survey, Cost an

eneficiaries’ 

sector source

fee-for-servi

rage they ha

l coverage t

th Medicaid 

with no supp

nt for benefi

of payment 

loyer, and M

—is the seco

and Medica

ource of pay

7,989

2,961

523

2,164

edigap &

mployer

ental Publ

nding and the M

tion of to

ed FFS b

coverage

ntal coverage cat

ut 2007. “Other p

tal” includes emp

partment of Vete

titutions such as

eir enrollment in 

ncovered service

nd Use file, 2007

 out-of-pock

es, and all p

ice beneficia

ave. Total sp

han for thos

coverage h

plemental co

ciaries in ea

differs. Amo

Medicaid, sup

ond largest s

are-only cove

yment. 

15,200

14

1,669

959

Medicaid

ic supplementa

Medicare progr

otal spen

beneficia

e, 2007 

tegory that applie

public sector” inc

ployer-sponsored

erans Affairs, and

 nursing homes.

2007 or had Me

es but not supple

7. 

ket spending

private-secto

aries living in

pending is m

se beneficiar

ave the high

overage. 

ach supplem

ong those wi

pplemental c

source of pa

erage, bene

6,088

1,035

2,060

No supplemen

coverage

al Out of p

ram, June 2011

nding 

aries, 

ed for the most ti

cludes federal an

d plans and indiv

d other public 

 It excludes 

edicare as a seco

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g as well as 

or sources on

n the commu

uch lower fo

ries who hav

hest level of 

mental insura

th employer

coverage 

ayment. 

eficiaries’ out

8,227

25

1,328

1,925

ntal Other pu

secto

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vidually 

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ms. 

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or 

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total 

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rt-of7

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Source: M

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Medic

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2,000

3,000

4,000

5,000

6,000

7,000

Dollars

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se

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iagram illustrat

nce and health

and report fair o

rvices. Those w

ge of $1,082 in

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ood, or excelle

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r incomes and a

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1,085 1,08

2,705

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who have Medic

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ements Medica

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beneficiaries

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mental insurance)

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premiums by b

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re informatio

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neficiaries’ 

am spending

effect 

use, and 

r 1 of the 

edicare 

1 59

on on 

on on 

on on 

g. 

S E C T I O N 

Acute inpatient services 

Short-term hospitals 

Specialty psychiatric facilities 

Chart 

 . 

Note: O

in

Source: M

• The n

conse

progr

• Overa

acute

0

10

20

30

40

50

60

70

80

90

Number of hospitals

6-1. A

p

penings and clos

clude voluntary a

edPAC analysis 

number of ho

ecutive year

ram and 17 t

all, the numb

e care hospit

44

4

69

2000 2

A 

Annual ch

articipat

sures exclude ho

and involuntary t

of the Provider o

ospital open

r. In 2009, 31

terminated. 

ber of acute 

tals (includin

8 49

63

3

2001 2002

Data Book: He

hanges i

ting in th

ospitals convertin

erminations. 

of Service file fro

nings exceed

1 acute care

care hospita

ng critical ac

73

34

46

2 2003

ealth care spen

n numbe

he Medic

ng to long-term c

om CMS. 

ded the num

e hospitals b

als increase

ccess hospita

85

65 63

2004 20

Calendar ye

nding and the M

er of acu

are prog

care hospitals an

mber of closu

began partici

ed from 2008

als) participa

57

32

28

005 2006

ear

Medicare progr

ute care h

gram, 200

d critical access 

res for the s

ipating in the

8 to 2009. In

ated in Medi

56

6

27

2007 2

Opene

ram, June 2011

hospitals

00–2009

hospitals. Closu

seventh 

e Medicare 

n 2009, 4,846

icare. 

62

31

19 1

2008 2009

ed Closed

1 63

s

ures 

6

17

9

d
64 Acute

Chart 

All hospita

Diagnostic

Computer

Managem

Pharmaci

Business 

Social wo

Radiology

Registere

Nuclear m

Support 

Office or a

LPN or LV

Note: LP

Source: M

• In ge

• From

perio

• The n

rapid

above

perce

• The n

2007

intere

• Licen

few o

from 

perio

(82,7

e inpatient serv

6-2. P

o

al occupation

c sonographe

r and math sc

ment 

st 

and finance 

ork 

y technician 

ed nurse 

medical techn

administrative

VN 

PN (licensed pra

edPAC analysis 

neral, chang

m May 2007 t

d the hospit

number of di

ly than any o

e average fo

ent). 

number of co

 to May 200

est in installi

nsed practica

occupations 

2007 to 200

d, the numb

780 registere

vices

ercent c

ccupatio

s 

er 

cience 

ician 

e

ctical nurse), LV

of Bureau of Lab

ges reported

to May 2009

al industry e

iagnostic so

other occupa

or other imag

omputer and

9, at 10.2 pe

ng electronic

al nurses (LP

to experienc

09, declining

ber of registe

ed nurses), s

change in

on, 2007–

T

 em

 (M

4

 1

N (licensed voca

bor Statistics, Oc

d here contin

9, hospital em

employed mo

nographers 

ation from 2

ging-related 

d math scien

ercent. Grow

c health reco

PNs) and lic

ce a decline 

by 5.2 perc

ered nurses e

suggesting a

n hospita

–2009 

Total U.S.

mployment

May 2007)

4,973,020 

27,450

50,060

168,070

52,720

87,870

94,550

120,050

,409,220

13,240

633,920

747,960

166,930

ational nurse). 

ccupational Emp

nue trends w

mployment i

ore than 5 m

employed b

007 to 2009

occupations

nce staff at h

wth of this oc

ord systems

censed vocat

in the numb

cent (8,540 L

employed by

a shift toward

al emplo

Total U

employ

(May 2

5,174,

30,

55,

182,

57,

95,

102,

127,

1,492,

13,

 646,

759,

158,

ployment Statistic

we observed 

ncreased 4.

million individ

by the hospit

9, at 11.1 per

s, such as ra

hospitals incr

ccupation m

s in hospitals

tional nurses

ber of individ

LPNs and LV

y hospitals i

d nurses with

oyment, b

U.S. 

yment 

2009)

,240

,490

,180

,870

,230

,250

,230

,820

,000

,970

,110

,580

,390

cs data set as of 

last year. 

1 percent. B

duals. 

tal industry in

rcent. Growt

adiology tec

reased rapid

ay be relate

s. 

s (LVNs) we

duals employ

VNs). During

ncreased 5.

h a higher le

by 

Percent chan

total employ

(2007–20

4.1%

11.1

10.2

8.8

8.6

8.4

8.1

6.5

5.9

5.5

1.9

1.6

–5.2

December 2010

By the end o

ncreased mo

th was also 

hnicians (6.5

dly from May

ed to the surg

ere among th

yed by hosp

g the same t

9 percent 

evel of trainin

nge in 

yment 

009) 

%

0. 

f this 

ore 

5

y

ge in 

he 

itals 

ime 

ng. 
Chart 

Note: FF

(P

by

gr

in

Source: C

• Aggre

outpa

incre

• 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

atient spend

ased about 

eze in inpati

ding growth 

 but reverted

ficiaries swit

e rapid paym

atient spend

s. In 1999, o

ding; in 2009

ding. 

atient spend

 in 1999, a 9

95 9

18 1

1999 20

Outpatie

Inpatien

A 

Growth in

npatient 

ce). Analysis inc

, rehabilitation, lo

PPS; and other o

g was slowed in 

aggregate totals.

e Actuary. 

care fee-for-s

ing was $36

2 percent, w

ent paymen

from 1999 t

d to relativel

tched from t

ment growth r

ding has incr

utpatient sp

9, outpatient

ding per FFS

93 percent in

96 105

8

21

000 2001

ent

t

Data Book: He

n Medica

and outp

ludes inpatient s

ong-term care, c

outpatient service

2006 by large in

.

service (FFS

6 billion in 20

while outpatie

t rates in the

to 2000. Spe

y slow grow

raditional FF

resumed in 2

reased as a 

ending acco

t spending g

S beneficiary

ncrease.

114 11

21 2

2002 20

ealth care spen

are’s FFS

patient s

ervices covered 

ancer, and childr

es. Payments inc

creases in the nu

S) inpatient s

009. From 20

ent spending

e Balanced B

ending increa

wth from 2005

FS Medicare

2008 for inpa

share of tota

ounted for al

grew to more

y was about

19 126

23

26

003 2004

Calendar y

nding and the M

S paymen

services,

by the acute inp

ren’s hospitals a

clude program ou

umber of Medica

spending wa

008 to 2009

g increased 

Budget Act o

ased substa

5 to 2007 be

e to the Med

atient and o

al hospital-b

most 16 per

e than 20 pe

$1,133 in 20

133 13

29 2

2005 20

year

Medicare progr

nts for h

 1999–20

patient prospectiv

nd units; outpatie

utlays and benef

are Advantage en

as $142 billio

, inpatient sp

about 10 pe

of 1997 redu

antially betwe

ecause a lar

icare Advan

utpatient se

based spend

rcent of all h

ercent of tota

009, up from

34 135

29 31

006 2007

ram, June 2011

ospital 

009 

ve payment syste

ent services cov

ficiary cost sharin

nrollees, who are

on and 

pending 

ercent. 

uced inpatie

een 2001 an

rge number o

ntage progra

rvices. 

ding in the la

ospital 

al hospital 

m approxima

139 1

33 3

2008 20

1 65

em 

ered 

ng. The 

e not 

nt 

nd 

of 

am. 

st 10 

tely 

42

36

009
66 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

more

prima

• Appro

(rural

depe

facilit

incre

• Abou

2009

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 

09, 3,370 ho

pective paym

e than 0.4 mi

arily due to a

oximately 15

l referral cen

ndent hospi

ties account 

ased approx

ut 88 percent

. Collectively

vices

roportio

ischarge

Numb

4,6

3,3

2,4

1,3

1,0

s) 9

1

3

t 1

s 1

s 1

1,9

8

5

2

7

2,3

1,2

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

illion dischar

a shift in serv

5 percent of 

nters, sole co

tals (MDHs)

for more tha

ximately 1 pe

t of rural hos

y, these four

on of Med

es by hos

Hospitals

ber Sh

660 

370 

402 

310 

092 

968 

124 

394 

195 

102 

153 

969 

824 

577 

269 

762 

339 

290 

m), CAH (critical a

aryland hospitals

re defined by a r

Data are limited 

bout CAHs. Num

st reports in 2009

iles and Medicar

vided 10.4 m

 (IPPS) and

rges. The nu

vices from th

all hospitals

ommunity ho

)) intended to

an 11 percen

ercent from 

spitals were 

r types of ho

dicare ac

spital gr

hare of total

100.0%

72.3

51.6

28.1

23.4

20.8

2.7

8.5

4.2

2.2

3.3

42.3

17.7

12.4

5.8

16.4

50.2

27.7

access hospital).

s are excluded. L

atio of interns an

to providers with

bers may not su

9. 

re cost report dat

million discha

 1,290 critica

umber of PP

he inpatient 

s are covered

ospitals (SC

o help rural f

nt of all disc

2008 to 200

CAHs, SCH

ospitals prov

cute care

roup, 200

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 

al access ho

PS discharge

to the outpa

d by three s

CHs), and sm

facilities tha

charges. The

09. 

Hs, MDHs, o

vide 86 perce

e hospita

09 

Medicare d

umber 

usands) 

10,781 

10,373 

8,896 

4,877 

4,020 

1,477 

386 

602 

216 

47 

226 

7,442 

1,637 

1,294 

1,572 

3,732 

5,070 

408 

es all hospitals c

as have populatio

eds of at least 0.

reports in the CM

to rounding. Sam

Medicare’s 

ospitals (CA

es declined f

atient setting

pecial paym

mall rural Me

t are not CA

e number of 

r rural referr

ent of all rura

al inpatie

discharges 

Share of t

100.

96.

82.

45.

37.

 13.

3.

5.

2.

0.

2.

69.

15.

12.

14.

34.

47.

3.

covered by Medic

ons of more than

.25. Other teachi

MS database. Se

mple of hospitals 

acute inpatie

Hs) provided

from 2008 

g. 

ment provisio

dicareAHs; these 

these hospit

ral centers in

al discharge

ent 

total 

.0% 

.2 

.5 

.2 

.3 

.7 

.6 

.6 

.0 

.4 

.1 

.0 

.2 

.0 

.6 

.6 

.0 

.8 

care’s 

n 1 

ing 

ee 

limited 

ent 

d

ons 

tals 

n

es. 
Chart 

MDC 

number 

 5 

 4 

 

 8 

 

 6 

 

 1 

 11 

 18 

 

 10 

 

 

 

 7 

 

 

 9 

 

 

Note: M

Source: M

• In fisc

disch

• Circu

perce

• 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 200

harges at hos

ulatory syste

ent of surgic

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

09, 10 major 

spitals paid 

m cases acc

al cases. 

em cases ac

system case

Data Book: He

gnostic c

ar 2009 

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 34 perc

nding and the M

es with h

are of all

charges

25%

14

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 

2 

3 

91 

or 92 percent

ve payment 

edical cases

edical discha

ical discharg

ram, June 2011

volume, 

Share

surg

discha

27

3

34

10

5

4

2

2

4

2

93

t of all 

system. 

s and almost

arges. 

ges. 

1 67

e of 

ical 

arges 

7% 

3

4

0

5 

4 

2

2 

4 

2 

3

t 30 
68 Acute

Chart 

Note: C

ou

Source: Am

• Hosp

servic

while

• There

hosp

• The c

points

• The c

from 

decre

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

e total admis

e were 641 m

itals in 2009

cumulative p

s from 2008

cumulative p

2008 to 200

ease in the la

0.0

2

5

1999 20

To

To

vices

Cumulativ

utpatien

e is the total per

t about 5,000 com

l Association, AH

nt service us

al hospital ou

sions grew n

million outpa

9. 

percent chan

 to 2009, or 

percent chan

09, or more t

ast 10 years

.3

4.5 .3

8.7

000 2001

otal admission

otal outpatient

ve chang

t visits, 

rcent increase fro

mmunity hospital

HA Hospital Stati

se grew muc

utpatient visi

nearly 10 pe

atient visits a

nge in total o

nearly 18 m

nge in inpatie

than 230,000

s. Inpatient a

6.5

7

12.3

13

2002 20

ns

t visits

ge in tota

1999–20

om 1999 through

ls. 

stics. 

ch more rap

its increased

ercent. 

and nearly 3

outpatient vis

million visits. 

ent admissio

0 admission

admission de

.5

8.4

3.7

15.4

003 2004

Fiscal yea

al admis

009 

h 2009. Data are 

pidly from 19

d about 30 p

36 million ad

sits increase

ons decreas

s. It was the

eclined only 

8.9 9

18.0

21

2005 20

ar

sions an

admissions (all 

999 to 2009 t

percent from

missions to 

ed by nearly 

ed by 0.7 pe

e largest sing

slightly from

.3 9.2

1.0 21.8

006 2007

nd total 

payers) to and 

than inpatien

 1999 to 200

community 

4 percentag

ercentage po

gle-year 

m 2006 to 20

10.5 9

26.0

29

2008 20

nt 

09, 

ge 

oint 

007. 

9.8

9.6

009
Chart 

Note: FF

ho

Source: M

• From

bene

relativ

• From

than 

• Toge

settin

-10

-5

0

5

10

15

20

25

Percent

6-7. C

an

20

FS (fee-for-servic

ospitals. 

edPAC analysis 

m 2004 to 200

ficiary declin

vely flat, but

m 2004 to 200

23 percent. 

ether these tw

ng. 

0.0

2004

Ou

FF

Inp

FF

A 

Cumulativ

nd inpat

004–200

ce). Data are for 

of MedPAR and

09, the num

ned 4.2 perc

t beginning i

09, 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

9 

short-term gene

d hospital outpati

ber of Medic

cent. From 2

n 2007, the 

ber of outpa

uggest a shif

8

0

5 20

ices per

y

arges per

y

ealth care spen

ge in Med

charges 

eral and surgical 

ent claims data f

care inpatien

004 to 2006

volume of d

atient service

ft in services

.5

.2

006

Calendar ye

nding and the M

dicare o

per FFS 

hospitals, includ

from CMS. 

nt discharge

6, inpatient v

discharges b

es per FFS b

s from the in

14.8

-1.1

2007

ear

Medicare progr

utpatien

benefici

ding critical acces

es per fee-for

volume per b

egan to dec

beneficiary in

npatient to th

18.2

-2.0

2008

ram, June 2011

t service

iary, 

ss and children’s

r-service (FF

beneficiary w

cline. 

ncreased mo

he outpatient

23.2

-4.2

2009

1 69

es 

s

FS) 

was 

ore 

t
70 Acute

Chart 

Note: Le

pr

Source: M

• Leng

inpat

• Leng

days 

• Leng

betwe

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 

th of stay fo

ients in 2009

th of stay fo

in 2009, dro

th of stay fo

een 1999 an

5.41 5.3

3.97 3.96

1999 200

vices

rends in

npatient 

calculated from d

ent system. Excl

of Medicare cos

r Medicare i

9. 

r Medicare i

opping at an 

r all non-Me

nd 2009. 

1 5.23

6 3.95

0 2001

 Medicar

length o

ischarges and p

udes critical acc

st report data from

npatients wa

npatients fe

average an

edicare inpat

5.20 5.1

3.95 3.9

2002 200

re inpatie

of stay, 19

atient days for m

ess hospitals.

m CMS. 

as nearly 1 d

ll nearly 12 p

nnual rate of 

tients remain

13 5.06

96 3.91

03 2004

Fiscal yea

ent and 

999–200

more than 3,000 h

day longer th

percent, from

1.2 percent 

ned nearly u

5.00 4.

3.91 3.

2005 20

ar

non-Med

09 

hospitals covered

han for nonm 5.41 days

t from 1999 t

nchanged a

.93 4.91

.90 3.91

006 2007

Medicare be

Non-Medicar

dicare 

d by the acute in

-Medicare 

 in 1999 to 4

to 2009. 

at 3.96 days 

4.89 4

3.95 3

2008 2

neficiaries

re beneficiarie

npatient 

4.78 

4.78

3.96

2009

es
Chart 

Note: “O

pr

Source: M

• Hosp

hospi

hospi

physic

• The s

from a

• The s

from a

• Desp

benef

perce

• On a 

184 p

In con

2000 

from a

2000 

0

10

20

30

40

50

60

70

80

90

100

2

Share of admissions (percent)

6-9. Sou

Other” includes c

rovider, transfer f

edPAC analysis 

itals report th

tal emergenc

talized patien

cian. Note tha

share of Medi

approximately

share of Medi

approximately

ite accounting

ficiaries admit

ent, a 25 perce

per beneficia

per 1,000 ben

ntrast, admiss

to 108 per 1,

a transfer from

to 21 per 1,0

50.1

39.8

5.3

4.8

0

0

0

0

0

0

0

0

0

0

0

2000 200

Emergen

A 

urce of in

linic referral, hea

from within the s

of MedPAR data

at most Medi

cy rooms or d

nts were adm

at not all eme

care beneficia

y 50 percent 

care beneficia

y 40 percent 

g for a relative

tted as transf

ent increase. 

ary basis, adm

eficiaries in 2

sions from dir

000 beneficia

m another ho

00 beneficiar

01 2002

ncy room

Data Book: He

npatient 

alth maintenance

ame hospital, co

a from CMS. 

care benefici

irectly from a 

itted through 

ergency room

aries admitted

to 58 percent

aries admitted

to 30 percent

ely smaller sh

fers from othe

missions throu

2000 to 205 p

rect physician

aries in 2009,

ospital increas

ries in 2009, a

2003

Physician re

ealth care spen

hospital 

e organization, tra

ourt/legal, and no

aries they ad

referring phy

the emergen

 admissions a

d to the hosp

t from 2000 to

d to the hosp

t from 2000 to

hare of all adm

er acute care 

ugh the emerg

er 1,000 bene

n referral decl

a 26.5 perce

sed from appr

a 20.3 percen

2004 2

Fiscal ye

eferral Ot

nding and the M

admissi

ansfer from skille

o information. 

dmit as inpatie

ysician. In 200

cy room and 

are emergenc

pital through th

o 2009, nearly

pital through a

o 2009, a 24 

missions, the

hospitals incr

gency room i

eficiaries in 2

ined from 147

ent decline. In

roximately 18

nt increase. 

2005 200

ear

ther Tran

Medicare progr

ions, 200

ed nursing facility

ents are admi

09, nearly 58 

30 percent th

cy situations.

he emergenc

y a 15 percen

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percent decre

 share of Med

reased from 4

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7 per 1,000 b

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8 per 1,000 be

06 2007

nsfer from oth

ram, June 2011

00–2009

y, transfer from o

itted through 

percent of 

hrough a 

cy room increa

nt increase. 

ysician declin

ease. 

dicare 

4.8 percent to

m approxima

percent incre

beneficiaries i

missions resu

eneficiaries in

5

3

6

6

2008

her hospital

1 71

other 

ased 

ned 

o 6 

ately 

ease. 

n 

ulting 

n

57.5

30.2

.3

.0

2009
72 Acute

Chart 

Note: An

as

Source: M

• The s

hosp

2009

cover

• Since

care 

to the

bene

3.8 p

20.0

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

24.5

25.0

Percent

e inpatient serv

6-10. S

o

nalysis excludes

s critical access h

edPAC analysis 

share of Med

italization in 

, approxima

red under Pa

e 2005, the d

may be in p

e outpatient 

ficiary declin

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23.4

0

5

0

5

0

5

0

5

0

5

0

2000

vices

hare of M

ne hosp

Medicare Advan

hospitals and ho

of MedPAR data

dicare benef

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tely 22 perc

art A. 

decline in the

art attributab

setting. In th

ned more ra

pectively. 

23.4 23

2001 200

Medicare

italizatio

ntage claims and

spitals located in

a from CMS. 

ficiaries with

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ent of Medic

e share of M

ble to the rap

he inpatient s

pidly than m

3.4

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02 2003

e Part A 

on, 2000–

d claims for non–

n Maryland. 

h Part A cove

by 1.5 percen

care benefic

Medicare Par

pid shift of s

setting, the 

medical cases

23.4

2

2004 2

Fiscal ye

benefici

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–inpatient prospe

erage who h

ntage points

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rt A benefici

surgical case

number of s

s from 2005

23.6 23.5

2005 2006

ear

aries wit

ective payment sy

had at least o

s from 2005 

t least one in

aries using i

es from the i

surgical case

5 to 2009, at 

23.0

6 2007

th at leas

ystem hospitals,

one inpatien

to 2009. In 

npatient stay

inpatient hos

npatient sett

es per 

9.3 percent

22.7

22.

2008 200

st 

such 

nt 

y

spital 

ting 

and 

1

09
Chart 

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av

st

in 

en

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perce

perce

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differ

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includ

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0

10

20

30

40

50

60

70

80

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PS (prospective 

vailable bed days

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nd of 2009. 

edPAC analysis 

e aggregate,

ent or 66 per

ent. Earlier in

upancy rates

 percent for 

rence. 

upancy rates

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space. 

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1999 200

A 

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payment system

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given day. Hospit

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, hospitals’ o

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n the decade

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urban hosp

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nt observatio

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occupan

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year from 20

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state overall

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67 68

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63 64

2002 200

ealth care spen

cy rates

pancy rate is me

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ital Association A

ates have be

04 to 2009. 

occupancy ra

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 facility occu

hich are often

8 68

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4 65

03 2004

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ays available are

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entire 1999–2009

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ates hovered

ospitals; in 20

rural hospita

upancy level

n placed in b

69 69

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2005 200

r

Medicare progr

2009 

inpatient days as

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ay not be staffed

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ls because t

beds counte

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5 65

06 2007

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R

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ancy rates st

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they do not 

ed as inpatie

69 68

50 49

66 65

2008 200

Urban PPS

Rural PPS

All hospitals

1 73

tal 

and 

t load 

s at the 

tood 

int 

ent 

8

9

5

09
74 Acute

Chart 

Hospital g

All hospi

Urban 

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Large ur

Other urb

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Sole com

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Voluntary

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ac

gr

in 

ho

10

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PP

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than $1

hospita

care. 

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additio

progra

hospita

payme

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the sub

hospita

increas

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outlier 

plus ou

annual

e inpatient serv

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g

group 

tals 

ban 

ban 

ferral 

mmunity 

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ral >50 beds 

y 

ary 

ment

aching 

aching 

hing 

ME (indirect medi

cute inpatient pro

raduate medical 

2009. Excludes 

ospital categories

00 percent due to

Payments receive

PS. A few sole c

edPAC analysis 

are inpatient pay

110 billion. Abou

als. This figure d

al payments—wh

nal payments to

ms—account fo

als (14.3 percen

ents. 

CH and MDH ca

bgroup of SCHs

al payments was

sed in 2009 as a

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payments uses 

utlier payments. 

l goal of 5.1 perc

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roup, 20

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82.8 

89.1 

81.9 

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91.5 

90.6 

81.6 

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66.3 

83.0 

87.4 

ical education), D

ospective payme

education payme

critical access h

s include facilitie

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ut $99 billion (90

does not reflect m

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IME

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0.0

DSH (disproporti

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ents. Simulated p

hospitals and the

s paid at either t

munity and Medic

tals are located i

mpact file data fro

to hospitals cove

0 percent) was p

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rect medical edu

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basing of cost-b

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nt payme

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DSH

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10.3

9.2

7.9

2.5

7.8

7.3

7.0

8.5

11.1

12.5

12.2

9.3

7.9

onate share). An

). Includes both o

payments reflect

ir special payme

he special nonfe

care-dependent h

n urban areas. 

om CMS. 

ered by the acut

paid to hospitals 

billion in paymen

ucation, disprop

e community hos

ments. This prop

ments does not 

s paid at either t

-specific rate, the

and 11.4 perce

based payment r

patient payment

ng outlier payme

outlier share ratio

ents, by s

ments

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Outlier

3.6%

3.9

1.2

4.2

3.5

2.0

0.6

1.1

1.1

2.0

3.6

2.9

4.3

5.3

3.4

2.8

nalysis includes a

operating and ca

t 2009 payment r

ents. Sole commu

ederal rate or the

hospitals beyond

te inpatient pros

located in urban

nts to critical acc

ortionate share,

spital (SCH) and

portion is higher

include wage in

the hospital-spe

e share of paym

nt for MDHs. Ad

rates to a more c

ts in 2009. The l

ents as a ratio of

o was 5.3 percen

source a

dditional rura

hospital*

1.0% 

0.3 

7.0 

0.1 

0.7 

0.0 

14.2 

5.9 

0.0 

0.0 

1.0 

0.5 

1.6 

0.1 

0.6 

1.9 

all hospitals cove

apital payments b

rules applied to a

unity hospital and

e federal rate. Ro

d what would hav

spective paymen

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cess hospitals (C

, and outlier pay

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ndex adjustment

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ments described 

dditional rural ho

current year. 

egislative mand

f outlier paymen

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l payme

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98,

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ered by Medicare

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CAHs) for inpati

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 percent) than fo

ts or CAHs’ cost

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as additional ru

ospital payments

ate for the level 

ts to base paym

2009, close to th

pital 

al 

ents 

ns) 

019 

622 

396 

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604 

173 

039 

420 

262 

501 

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418 

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191 

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m to 

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ent 

s 

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s

of 

ments 

he 
Chart 

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on

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• Medi

Medi

influe

data 

how o

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imple

over 

Medi

points

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inpat

that w

perfo

had p

-10

-5

0

5

10

15

20

Margin (percent)

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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

Medicare inp

ementation o

the next 10 

care payme

s from 2008

care inpatien

ient margins

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ormance betw

positive inpa

3.6

9.0

1994 1995

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

patient marg

of the Balanc

years as cos

nts. In 2009

. 

nt margins v

s that were 7

percent or lo

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atient Medica

14.7

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1

1996 1997 1

Data Book: He

acute in

m). A margin is ca

exclude critical a

nt PPS. 

st report data (Au

margin reflect

prospective

allocate ove

an we estima

cated (see C

gin reached a

ced Budget A

sts rose fast

, the margin

vary widely. 

7.9 percent o

ower. This ra

p and bottom

are margins 

15.9

13.7

12

1998 1999 20

ealth care spen

npatient P

alculated as reve

ccess hospitals. 

ugust 2010) from

ts payments

e payment sy

rhead costs 

ate Medicare

Chart 6-15).

a record high

Act of 1997,

ter than the 

n was –2.4 p

In 2009, one

or higher, an

ange amount

m quartiles in

in 2009. 

2.0

10.4

6.6

000 2001 200

Fiscal ye

nding and the M

PPS mar

enue minus costs

Medicare acute 

m CMS. 

s and costs f

ystem. The i

 across serv

e costs witho

h of 18.0 pe

 however, in

3 percent av

ercent, up m

e-quarter of 

nd another q

ts to a 26 pe

n 2009. Fort

6

2.4

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02 2003 2004

ar

Medicare progr

rgin, 199

s, divided by reve

inpatient margin

for services c

inpatient ma

vice lines. O

out the poten

ercent in 199

npatient mar

verage annu

more than 2 

hospitals ha

uarter had in

ercentage po

ty-two perce

-0.5

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4 2005 2006

ram, June 2011

94–2009

enue. Data are b

n includes service

covered by 

argin may be

nly by comb

ntial influenc

97. After 

rgins decline

ual increase 

percentage 

ad Medicare 

npatient ma

oint differenc

ent of hospita

-3.7

-4.7

-

2007 2008 2

1 75

based 

es 

e

bining 

ce of 

ed 

in 

rgins 

ce in 

als 

-2.4

2009
76 Acute

Chart 

Note: PP

on

co

Source: M

• Urba

hosp

marg

• The g

One f

contr

2001

marg

the m

respe

result

numb

from 

4

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-5

0

5

10

15

20

25

1

Margin (percent)

e inpatient serv

6-14. M

ru

PS (prospective 

n Medicare-allow

overed by the ac

edPAC analysis 

n hospitals h

itals, but this

ins are lowe

gap between

factor in this

rolling cost g

 to 2004, the

ins were slig

margins of ru

ectively. The

t of payment

ber of critica

the prospec

4.0

9.5

15

0.3

4.4

9

994 1995 19

vices

Medicare 

ural loca

payment system

wable costs and e

ute care inpatien

of Medicare cos

historically h

s difference 

er than those

n urban and 

s divergence

growth, at lea

e difference 

ghtly higher 

ural and urba

e narrowing b

t policies tar

l access hos

ctive paymen

5.3

18.8

16

9.7

11.3

8.

996 1997 199

acute in

ation, 199

m). A margin is ca

exclude critical a

nt PPS. 

st report data (Au

had much hig

narrowed ea

e for rural ho

rural hospita

e in this perio

ast partly in 

narrowed an

than those f

an hospitals 

between the

rgeted at rais

spitals, whic

nt system. 

6.8

14.6

13.

3

6.0

4.1

98 1999 200

npatient P

94–2009

alculated as reve

ccess hospitals. 

ugust 2010) from

gher Medica

arlier in this 

ospitals. 

als’ inpatien

od is that urb

response to 

nd from 200

for urban ho

narrowed fu

ese two grou

sing rural ho

h removed m

0

11.1

7.2

1 3.9

1.6

00 2001 2002

Fiscal yea

PPS mar

enue minus costs

Medicare acute 

m CMS. 

are inpatient 

decade and

t margins gr

ban hospital

 pressures f

04 to 2008 ru

spitals. In 20

urther, to –2.

ups of hospit

ospital paym

many rural h

2.6

-0.4 0.6

0.5

2 2003 2004

ar

rgin, by u

s, divided by reve

inpatient margin

margins tha

d today urban

rew between

s had greate

from manage

ural hospitals

009, the diffe

.2 percent an

tals from 200

ments and gro

hospitals with

-0.5

-2.2

0.2

-1.6

4 2005 2006

urban an

enue. Data are b

n includes service

an rural 

n hospital 

n 1994 and 2

er success in

ed care. Fro

s’ inpatient 

erence betw

nd –2.4 perc

01 to 2004 is

owth in the 

h low margin

-3.8 -4.9

-2.8 -3.7

2007 2008 2

Urb

Ru

nd 

based 

es 

2000. 

n

om 

ween 

cent, 

s the 

ns 

-2.4

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2009

ban

ral
Chart 

Note: A 

ex

in

ed

Source: M

• The o

outpa

servic

availa

• The o

–5.2 

• In 20

anoth

differ

points

perce

-10

-5

0

5

10

15

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 a

able only sin

overall Medi

percent. 

09, one-qua

her quarter h

rence in perf

s to 22 perc

ent of hospit

11.9

8.5

1997 1998

A 

Overall M

ated as revenue 

cess hospitals. O

ric and rehabilitat

d debts. Data on 

of Medicare cos

care margin

d nursing, ho

as direct gra

nce 1997, bu

care margin

arter of hosp

had margins

formance be

entage poin

als had posi

6.3

5

8 1999 20

Data Book: He

edicare 

minus costs, div

Overall Medicare

tion unit, skilled n

overall Medicare

st report data (Au

 incorporate

ome health c

aduate medic

ut it follows a

 in 1997 was

itals had ove

of –17.3 pe

etween the to

ts but narrow

itive overall 

.3 5.2

000 2001 2

ealth care spen

margin, 

vided by revenue

 margins cover t

nursing facility, a

e margins before

ugust 2010) from

es payments

care, and inp

cal educatio

a trend simila

s 11.9 perce

erall Medica

ercent or low

op and botto

wed to 21 pe

Medicare m

2.2

-1.2

2002 2003

Fiscal ye

nding and the M

1997–20

e. Data are based

the costs and pay

and home health 

e 1997 are unava

m CMS. 

s and costs f

patient psyc

on and bad d

ar to that for

ent. In fiscal 

are margins o

wer. Between

om quartile w

ercentage po

argins in 20

-3.0 -3.0

2004 200

ear

Medicare progr

009 

d on Medicare-al

yments of acute 

 services as wel

ailable. 

for acute inp

hiatric and r

debts. The o

r the inpatien

year 2009, 

of 4.2 perce

n 2000 and 2

widened from

oints in 2009

09. 

0

-4.6

-6

05 2006 20

ram, June 2011

llowable costs an

inpatient, outpat

l as graduate me

patient, 

rehabilitative

verall margi

nt margin. 

it was 

nt or higher,

2008, the 

m 17 percen

9. About 36 

6.0

-7.1

007 2008

1 77

nd 

tient, 

edical 

e

n is 

, and 

tage 

-5.2

2009
78 Acute

Chart 

Note: A 

ex

ou

gr

Source: M

• As w

hosp

have 

• The d

1997

12.6 

marg

Policy

Act o

rural 

-10

-5

0

5

10

15

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

12.6

9.4

6.2

1.7

1997 1998

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

7.3

6.3

-1.4

-2.2

1999 200

edicare 

1997–20

minus costs, div

Overall Medicare

d rehabilitation u

ad debts. Data o

st report data (Au

verall Medica

tals, but sinc

htly exceed t

dicare margi

e narrowed. 

6.2 percent

as –5.2 perc

Medicare Pr

hospitals he

ation to assi

3 6.0

2

2

-0.4

-2

00 2001 20

margin, 

09 

vided by revenue

 margins cover t

unit, skilled nursin

on overall Medica

ugust 2010) from

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

2.8

-0.9

2.3

-3.9

002 2003

Fiscal yea

by urban

e. Data are based

the costs and pay

ng facility, and h

are margins befo

m CMS. 

historically w

erall Medicar

ban hospital

urban and r

e overall mar

spitals. In 20

red with –4.

Drug, Improv

rove the rela

pitals was im

-3.0

-3.3 -3.1

-2.8

2004 2005

ar

n and ru

d on Medicare-al

yments of acute 

ome health serv

ore 1997 are una

were higher 

re margins fo

s. 

rural hospita

rgin for urba

009, the ove

9 percent fo

vement, and 

ative financia

mplemented 

-4.7

-6.

-4.5

-5.

2006 200

ral 

llowable costs an

hospital inpatien

ices as well as d

available. 

for urban 

or rural hosp

als grew betw

n hospitals 

erall Medicar

or rural hosp

Modernizati

al position of

after 2008.

0

-7.2

-

3 -6.3

-

07 2008 2

Urb

Rur

nd 

nt, 

direct 

pitals 

ween 

was 

re 

itals. 

ion 

f

-5.2

-4.9

009

ban

ral
Chart 

Note: A 

al

 *T

Source: M

• The t

paye

inpat

nonp

mark

corre

marg

reven

• The t

perce

level 

inpat

again

• In 20

much

prosp

while

10 pe

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

et resulted i

esponding de

in and overa

nue. 

total hospita

ent in the 19

in a decade

ient prospec

n to 4.3 perc

09, 68 perce

h less than th

pective paym

e another one

ercentage po

ins and a 21

4.6

5.8

1994 1995 1

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 

n significant

ecline in tota

all Medicare 

l margin pea

99–2002 pe

e. In 2008, th

ctive paymen

cent. 

ent of hospit

he Medicare

ment system

e-quarter ha

oints compa

1 percentage

5.9

6.4

4

1996 1997 19

Data Book: He

total all-p

minus costs, divid

. Analysis exclud

n includes investm

st report data (Au

all payers⎯

ship of all ho

ute, and non

investment r

t investment 

al margin. Ot

margin, are

aked in 1997

eriod. From 2

he total marg

nt system wa

tals had pos

e inpatient or

 hospitals ha

ad margins th

red with a 2

e point sprea

4.8

3.6 3.

998 1999 20

ealth care spen

payer ma

ded by revenue. T

es critical access

ment losses stem

ugust 2010) from

⎯Medicare, M

ospital reven

npatient serv

revenues. Th

losses for h

ther types of

e operating m

7 at 6.4 perc

2002 to 2007

gin declined 

as implemen

itive total ma

r overall Med

ad total mar

hat were –1

6 percentag

ad for overa

.9 3.7 3.7

00 2001 200

Fiscal yea

nding and the M

argin, 19

Total margin inclu

s hospitals. 

mming from the de

m CMS. 

Medicaid, oth

nues to all ho

vices. The to

he 2008 dec

hospitals, wh

f margins we

margins that 

cent, before d

7, total marg

to 1.8 perce

nted. In 2009

argins. Howe

dicare marg

rgins that we

.7 percent o

ge point spre

ll Medicare m

7

4.3 4.3

02 2003 2004

ar

Medicare progr

994–2009

udes all patient c

ecline of the U.S. 

her governm

ospital costs

otal margin a

cline of the U

hich resulted

e track, Med

 do not inclu

declining to 

gins increase

ent, its lowes

9, total marg

ever, the tot

in. In 2009, 

ere 8.0 perce

or lower, a sp

ead for Medic

margins. 

4.8

5.4

4 2005 2006

ram, June 2011

9

care services fund

stock market in 2

ment, and pri

s, including 

also includes

U.S. stock 

d in a 

dicare inpatie

ude investme

less than 4 

ed to the hig

st level since

gin increased

tal margin va

one-quarter

ent or higher

pread of roug

care inpatien

6.0

1.8*

6 2007 2008

1 79

ded by 

2008. 

ivate 

s

ent 

ent 

ghest 

e the 

d

aried 

r of 

r, 

ghly 

nt 

4.3

2009

*
80 Acute

Chart 

Note: A 

by

 *S

Source: M

• In 20

marg

rural 

fact t

assoc

perfo

• In 20

marg

by all

the U

in a c

inpat

inves

5

4

0

1

2

3

4

5

6

7

8

9

10

1

Margin (percent)

e inpatient serv

6-18. H

lo

margin is calcula

y all payers, plus

Significant drop in

edPAC analysis 

09, urban ho

ins were 4.3

hospitals ha

hat urban ho

ciated with u

ormance of th

08, both rura

ins in the las

l payers, plu

U.S. stock ma

correspondin

ient margin 

stment reven

5.5

6.8

7

4.5

5.7 5

994 1995 19

vices

Hospital t

ocation, 

ated as revenue 

s nonpatient reve

n total margin inc

of Medicare cos

ospitals had 

3 percent for

ave usually h

ospitals had 

urban hospit

he U.S. stoc

al and urban

st 15 years. 

us nonpatien

arket resulte

ng decline in

and overall 

nue. 

7.2

7.9

5.

5.8

6.2

4.

996 1997 19

total all-p

1994–20

minus costs, div

enue such as inve

cludes investmen

st report data (Au

higher total

r urban hosp

had higher to

higher total 

als’ relativel

ck market tha

n hospitals e

Hospitals’ to

t revenue su

ed in significa

n total margin

Medicare ma

.6

5.1 5.1

.7

3.4 3.7

98 1999 200

payer ma

09 

vided by revenue

estment revenue

nt losses resultin

ugust 2010) from

 (all payer) m

pitals and 3.8

otal margins

margins tha

y larger inve

at year. 

experienced 

otal margin i

uch as inves

ant investme

ns. Other typ

argin, are op

1

4.5

3.9

7 3.6 3.6

00 2001 2002

Fiscal yea

argin, by

e. Total margin in

es. Analysis exclu

ng from the U.S. 

m CMS. 

margins than

8 percent for

s in aggregat

an rural hosp

estment port

their lowest 

includes all 

stment reven

ent losses fo

pes of marg

perating mar

9

4.2

5.1

6

4.3

4.2

2 2003 2004

ar

y urban a

ncludes all patien

udes critical acce

stock market dec

n rural hosp

r rural hospi

te than urba

pitals in 200

tfolios and th

t level of tota

patient care 

nues. The 20

or hospitals, 

ins we track

rgins that do

5.7 5.9

4.7

5.3

4 2005 2006

and rural

nt care services f

ess hospitals. 

cline of 2008. 

itals. Total 

tals. Historic

n hospitals.

9 may be 

he improved

al (all payer) 

services fun

008 decline 

which resul

k, Medicare 

o not include

5.9

2.5*

6.0

1.8*

2007 2008

Rur

Urb

l

funded 

cally, 

 The 

nded 

of 

ted 

e

3.8

4.3

2009

ral

ban
Chart 

Note: M

ho

re

cr

 *S

Source: M

• The p

Medi

hosp

hosp

comp

• In 20

more

trend

• The d

hosp

track

not in

-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 2009

pared with ot

07, major te

e than two de

 was interru

decline of th

itals, which r

, Medicare in

nclude inves

5.4

6.8

4.8

6.1

3.4

4.0

1994 1995 1

A 

Hospital t

994–200

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

9, the total m

ther teaching

eaching hosp

ecades and 

pted by a st

e U.S. stock

resulted in a

npatient mar

tment reven

7.0 7.0

6.7 5 6.9

5

3.4

5.0

3

996 1997 19

Data Book: He

total all-p

9 

ed by a ratio of in

an 0 and less tha

patient care serv

cludes investmen

st report data (Au

by teaching 

all Medicare 

been lower th

margin for m

g hospitals a

pitals’ total (a

increased fo

eep decline 

k market in 2

a decline in h

rgin and ove

nue. 

5.3

4.6 4.

5.2

4.1 4.

3.4

1.6

2.

998 1999 20

ealth care spen

payer ma

nterns and reside

an 0.25. A margi

vices funded by a

nt losses resultin

ugust 2010) from

status is the

margins. Th

han those fo

ajor teachin

and nonteac

all payer) ma

or the fifth co

in their inve

2008 resulted

hospitals’ tot

erall Medicar

.6 4.9 4.8

.2 4.2 4.2

.4

1.3 1.4

00 2001 200

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. 

m CMS. 

e opposite of

he total marg

or other teac

g hospitals s

ching hospita

argins reach

onsecutive y

estment reve

d in significa

tal margins. 

re margin, a

8 5.1

4.6

2

4.9

5.0

4

2.5

3.0

02 2003 2004

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 2.4 

als at 4.9 pe

hed their hig

year. Howev

enues. 

ant investme

Other types

are operating

5.2 5.3

5.2

6.1

3.6

4.6

4 2005 2006

No

Ot

M

ram, June 2011

ng status

while other teach

s costs, divided b

nue. Analysis exc

cline of 2008. 

n for the 

or teaching 

nteaching 

percent 

ercent each.

hest level in

er, in 2008, 

ent losses fo

s of margins 

g margins an

6.0

2.9*

6.7

2.3*

5.2

-0.4*

6 2007 2008

onteaching

ther teaching

ajor teaching

1 81

s, 

ing 

by 

cludes 

n

this 

or 

we 

nd do 

4.9

4.9

2.4

2009
82 Acute

Chart 

Hospital g

All hospita

Major teac

Other teac

Nonteach

Both IME 

IME only 

DSH only

Neither IM

Note: IM

Source: M

• Majo

Their

from 

• Hosp

2009

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

r better finan

the indirect 

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 2009 Medicar

ospitals hav

ncial perform

medical edu

ceive neithe

are inpatient

major teachin

ts lower. 

margins

tus, 2009

are of

spitals

00%

9 

21 

69 

26 

5 

53 

16 

DSH (disproporti

re cost report da

ve the highes

mance is larg

ucation (IME

r IME nor DS

margins of 

ng hospitals a

s by teac

9

Share of

Medicare

inpatient

payments

100% 

25

34

42

52

6

31

10

onate share). 

ta from CMS. 

st Medicare 

ely due to th

E) and dispro

SH payment

these hospit

and overall 

ching and

f

e M

in

s m

–

inpatient an

he additiona

oportionate s

ts have the l

tals were ne

Medicare m

d dispro

Medicare 

npatient

margin 

–2.4% 

6.7

–3.0

–7.1

2.2

–9.1

–3.7

–18.1

d overall Me

al payments 

share (DSH)

lowest Medi

early 25 perc

argins were 

oportiona

Overal

Medicar

margin

–5.2%

–0.2

–5.3

–7.8

–2.4

–10.3

–5.5

–15.3

edicare marg

they receive

) adjustment

care margin

centage poin

more than 1

ate 

l 

re 

n

%

gins. 

e

ts. 

ns. In 

nts 

15 
Chart 

 

Number o

Financial

Non-Medi

 (private

Standardi

(as a shar

 Median 

 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

of for profit a

fit hospital 

fit hospital 

rowth in cost p

e, 2006–2009 

009 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, 2009 

uninsured) 

discharge 

onal median) 

and nonprofit 

per 

e margin 

cs (medians) 

es in 2009 

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

5

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%)

756

–3.8%

92

92

92

4.3%

4.7%

5,113

43%

12

1.33

mix, wage index,

ts on hospital co

2010. 

ms files from CM

o lower cost 

mix, and hig

nding and the M

to lower 

financial pres

Me

pre

3

–

8,1

1

, outliers, transfe

osts. The sample

MS. 

growth and 

gher Medica

Medicare progr

costs 

ssure, 2004–2

edium

ssure

390

2.7%

96

96

92

4.2%

–1.1%

183

42%

11

.45

er cases, interest

e includes all hos

 lower costs

aid charges a

ram, June 2011

2008 

Low pres

(non-Med

margin >

1,747

10.7

104

105

99

4.6

–10.2

7,292

43

10

1.45

t expense, and th

spitals that had 

s per dischar

are more like

1 83

ssure 

icare 

5%) 

7

7% 

4

5

9

6% 

2% 

2

3% 

0

5

he 

rge. 

ely to 
84 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 200

increa

losses

9

1

-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

09, the private p

ses. The slow 

s and economic

9.2 9.4

.20

1.24

987 1989

Change i

vices

Change in

ischarge

987−200

munity hospitals a

ns). Data for 200

atio. The private 

atio for 2009 wou

of Medicare Cos

can Hospital Ass

h in Medicare c

 by the rise an

007. 

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. (

6.9

3.0

1.31

1.30

1991 1993

in Medicare a

n Medica

e and pri

9 

and cover all hos

06–2009 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

2009 may refle

See Chart 6-17

-1.4

0.6

1.24

1.1

1995 199

Fis

acute inpatien

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

7.) 

6

2.6

8

1.15

1

97 1999 2

scal year

nt costs per di

pital inpa

yer paym

mputed values w

Medicaid manage

elf-pay patients. 

.41. 

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

5.0

6.6

1.17

1.22

2001 2003

ischarge

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 matches

lower than pay

ing from 2008 

5.1

4.2

1.29

1.32

2005 2007

Paymentsts 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

s the market ba

yment rate 

investment por

3.0

2

1.34

1.0

1.1

1.1

1.2

1.2

1.3

1.3

1.4

7 2009

-to-cost ratio

o, 

t one- 

, the 

ment 

ly to 

s

r 

t

ing 

ate 

y 0.8 

ket. 

nd 

he 

asket. 

rtfolio 

5

0

5

0

5

0

5

0

Payment-to-cost ratio
Chart 

Note: An

Source: Am

• The m

2009

• Since

hosp

patie

costs

struct

charg

outlie

an at

exces

• The m

2009

0

50

100

150

200

250

Percent

6-23. M

19

nalysis includes 

merican Hospita

markup of ch

. Charges n

e few patient

ital financial 

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

98 1

1998 19

A 

Markup of

998–200

all community ho

l Association Ann

harges over 

ow exceed c

ts pay full ch

performanc

ay pay full ch

ct hospitals’ a

ayments as a

and 2003 m

. Toward the

rb hospitals’ 

ses in charg

harges over 

ral hospitals

04

114

999 2000

Data Book: He

f charge

9 

ospitals. 

nual Survey of H

costs rose f

costs by mo

harges, rapid

ce. However

harges. More

attempts to 

a discount of

ay have res

e end of fisca

opportunity 

ges. 

costs is gen

s (168 perce

125

139

2001 200

ealth care spen

es over c

Hospitals. 

from about 9

re than a fac

d growth in c

, this growth

e rapid grow

maximize re

ff charges). 

ulted from s

al year 2003

to increase 

nerally highe

nt in 2009). 

9

157

2 2003 2

Fiscal y

nding and the M

costs for 

98 percent in

ctor of 3. 

charges may

h may signifi

wth in charge

evenue from 

The unusua

some hospita

3, Medicare 

their outlier 

er for urban h

167

176

2004 2005

year

Medicare progr

Medicar

n 1998 to 20

y have little i

cantly affect

es (relative to

private pay

ally large incr

als manipula

revised its o

payments th

hospitals (22

181 18

2006 20

ram, June 2011

re servic

07 percent in

impact on 

t uninsured 

o growth in 

ers (who oft

reases in 

ating Medica

outlier policy 

hrough 

24 percent in

85

193

007 2008

1 85

ces, 

n

ten 

are 

in 

n

207

2009
86 Acute

Chart 

Note: CA

Source: Th

• 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 CAHs

e inpatient serv

6-24. N

AH (critical acce

he Medicare Rur

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

1

0

0

0

0

0

0

0

0

1999 20

vices

umber o

ss hospital). 

ral Hospital Flexi

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

000 2001 2

of CAHs,

bility Program an

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. 

563

722

2002 2003

1999–20

nd 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

2004 2005

Calendar

011 

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

5

1,280 1,28

5 2006 200

r year

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

83 1,291 1,

07 2008 20

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

302 1,306 1

009 2010

sion 

ment. 

 in 

ad or 

ce 

ould 

est, 

mber 

1,324

2011
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 2.7 pe

tient psychia

cute care in

3.3

2001

A 

Medicare 

001–201

e Actuary. 

ychiatric faci

m spending 

rcent per ye

atric care furn

patient pros

3.5 3.5

2002 200

Data Book: He

paymen

0 

lity prospect

for beneficia

ear between 

nished in sc

pective paym

5

3.8

03 2004

ealth care spen

nts to inp

tive paymen

aries’ care in

2001 and 20

atter beds in

ment system

4.0

2005 2

Fiscal ye

nding and the M

patient ps

nt system sta

n inpatient p

010. 

n acute care

m is not inclu

4.1 4.0

2006 2007

ear

Medicare progr

sychiatr

arted Januar

sychiatric fa

e hospitals a

uded in this c

4.0

7 2008

ram, June 2011

ric faciliti

ry 1, 2005. 

acilities grew

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ercent of Med

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th their curre

of Medicare b

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al Medicare p

nd of greater

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ig problem” f

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and priv

or a new 

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edicare (age 6

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t difference betw

rveys, conducted

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nsured individ

reported pro

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vately ins

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mary care. 

ere looking fo

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ysician betwe

2009. 

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atients w

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et a new prim

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93 

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ting their pro

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kely to report

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ace within the sa

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 report 

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 percentage

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a specialist,

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Data Book: Hea

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 69

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ately insured

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am, June 2011

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 101

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ng 

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m

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 volume incr

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ests, and “ot

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units for 2009. 

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than others.

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e physician fee s

ficiaries. 

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Chart 

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m

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includ

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volum

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higher grow

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management

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ed by relative val

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42.2 percent 

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total volume

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me of ph

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of Medicare bene

aluation and 

al inpatients—

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procedures (

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e physician fee s

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 manageme

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1

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schedule. Volume

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5.1

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2009

ocedures Te

am, June 2011

s, by type

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ervices—

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al 

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physi

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and v

return

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-5

0

5

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15

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in

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essional liabi

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nsurance

four-quarter mov

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in physi

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ms, 2003

cent change. 

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3 percent of 

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total payme

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2009

lity 

nts under th

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s for insurer

investment 

owth slowed

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he 

rs 

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Chart 

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se

or

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avera

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includ

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20

25

30

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pending amounts

eparate fee sche

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ull year of the

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out 6 percent

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t in 2009. Ch

2.8 13.3

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001 2002

iciary cost sha

am payments

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g on all h

0

s covered by the

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). They do not in

re and benef

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ear from 200

em (PPS) for

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program and 

resented 92 p

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spending on 

t of total Med

er the outpa

hart 7-15 pro

15.3 17

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2003 20

aring

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clude payments 

ficiaries on h

ar year 2000

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r hospital ou

utpatient PPS

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percent of th

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ng; $7.9 billio

outpatient se

dicare spend

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ovides more 

7.7 20.4

8.3

8.5

004 2005

ding and the M

outpatien

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dical equipment)

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hospital outp

0 to 2010 inc

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utpatient serv

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2 percent. 

ing under the

n beneficiary

he $20.9 billio

the outpatien

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ing by the pr

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21.6 23

8.0 8

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Medicare progra

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patient servic

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igher than fo

oinsurance. 

3.0 24.7

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am, June 2011

ces, 

m and those paid

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ces (excludi

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mplemented 

hospital 

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patient PPS 

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27.6 29

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92 

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Year 

2002 

2004 

2006 

2008 

2009 

2010 

Note: In

re

Source: M

• The n

paym

numb

cost b

addit

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servic

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provid

mbulatory care

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4,210

3,882

3,651

3,607

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3,518

cludes services 

ehabilitation, child

edicare Provider

number of ho

ment system 

ber of hospit

basis. Since

ion, the perc

ng outpatien

ces has dec

ost all hospita

des outpatie

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als 

0

2

1

7

7

8

provided or arran

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r of Services files

ospitals that

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nt surgery ha

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als in 2010 p

ent surgery (

pitals pr

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services

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94

94

94

94

95

nged by short-te

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t furnish serv

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ng to critical

number of ou

itals providin

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htly. 

provide outp

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rovide ou

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rm hospitals. Exc

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vices under 

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 access hos

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patient servic

and emerge

utpatient

cent offering

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surgery

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86

86

87

89

90

cludes long-term

. 

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2006, largely

spital status, 

S hospitals 

nt services re

nd the perce

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ency service

t service

Emer

serv

93

92

91

91

89

89

m, Christian Scien

outpatient p

y due to gro

 which allow

has been m

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rgency 

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2

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1

9

9

nce, psychiatric, 

rospective 

owth in the 

ws payment o

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ast majority 

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on a 

n 

cent 
 Chart

Note: PP

in

im

dr

su

Source: M

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emer

ambu

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accou

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the g

perce

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19%

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management

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payments in 

ents in both y

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ective payme

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payments u

ansitional co

ence betwee

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itals at the e

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2006, CMS 

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Number

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3,143

2,241

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150

260

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ent system (P

basis of hosp

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al corridor pa

ayments they

payments. 

2005 include

all rural hosp

ible for holdimplemented

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ts to all other

ents for SCH

percent of tot

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2009 

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r from

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PPS) in 2000

pital costs. 

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that hospita

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Medicare 

Medicare 

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of Medicare cos

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nsider costs a

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er hold-harm

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2004

Data Book: Hea

hospital

margins

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hospitals. Overall

tation (not paid u

services, and gra

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vary. In 2009

margins of –2

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ractices, mar

Medicare pa

re beneficiar

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alth care spend

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vided by revenue

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m CMS. 

9, while the a

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ayments and

ries. Hospita

nts overall. 

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nity hospitals

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end to hold-h

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ents for hosp

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2006

ding and the M

ent, inpa

2009 

e. Data are based

ins cover the cos

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aggregate m

nt or lower, a

iffered widely

spital outpati

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pitals that sti

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sts and payment

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margin was –

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overhead to 

growth and e

After increasi

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tient margin

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ts of hospital inpa

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spital catego

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ng from 200

in Medicare

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them. 

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argin

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all 

atient, 

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 so 

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e’s 

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be 
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• Hosp

inpat

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April 

emer

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subst

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5

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25

30

35

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pitals use ob

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care began 

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tantially from

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2006

umber o

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observation 

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2007

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ent system claims

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n services w

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use hospital

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should be ho

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y paid) has 

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s were not r

hours. 

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payments for

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required to 

36

2009

09. 

or 

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r the 

icult 
Chart 

Medicare p

 

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of centers f

 

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year 

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payments (billio

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ters 

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all centers tha

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cility services. P

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ents include prog

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and beneficiary c

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4 of 

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S E C T I O N 

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varied

years

• Aggre

more

of da

• Exam

18.7 

quart

st-acute care

8-6. F

1

NF 20

10

10

13

13

1

ent* N/

NF (skilled nursin

Government-own

omparable. 

edPAC analysis 

ough aggrega

d over the p

s not shown)

egate Medic

e slowly than

ys classified

mining the di

percent or m

ter had marg

reestand

0 percen

003 2

0.9% 13

 

0.3 13

3.9 16

3.4 16

.3 3

/A N

ng facility), N/A (

ned providers ope

of freestanding 

ate Medicare

ast 7 years,

). 

care margins

n payments p

d into the hig

stribution of 

more. One-q

gins of 26.7 

ding SNF

nt for sev

004 20

3.8% 13

 

3.2 12

6.2 15

6.2 15

3.6 4

N/A N

(not applicable).

erate in a differen

SNF cost reports

e margins fo

they have e

s increased f

per day. The

ghest paying

2009 margi

uarter had M

percent or h

F Medica

ven year

005 20

3.1% 13

2.6 13

5.2 14

5.2 15

4.6 3

N/A N

nt context from o

s. 

or freestandi

exceeded 10

from 2008 to

e growth in p

 resource ut

ns, one-half

Medicare ma

higher. 

are marg

rs 

006 2

3.3% 14

3.1 14

4.3 15

5.8 17

3.5 4

N/A N

other providers, s

ing skilled nu

0 percent ev

o 2009 due t

payments ref

tilization gro

f of freestand

argins at or b

ins have

2007 2

4.7% 

4.6 

5.5 

7.3 

4.2

N/A

so their margins 

ursing facilit

very year sin

to costs per 

flected the in

oups. 

ding SNFs h

below 8.8 pe

e exceed

2008 2

16.6% 1

16.3 1

18.0 1

19.1 2

7.1 

N/A 

are not necessa

ies (SNFs) h

ce 2001 (ea

day growing

ncreased sh

had margins 

ercent and o

ded 

2009

18.1% 

18.0 

18.7 

20.3 

9.5 

N/A 

rily 

have 

arly 

g

hare 

of 

one-
Chart 

Character

Performa

Relative

Relative

Relative

Median 

Medicar

Performa

Relative

Median 

Medicar

Total m

Medicai

Note: SN

di

m

wa

(c

ho

re

wi

 *M

Source: M

• Frees

qualit

• In 20

that w

• In 20

lengt

in 20

• Relat

nonp

8-7. F

h

ristic 

ance in 2008 

e* community

e* rehospitaliz

e* cost per da

length of stay

re margin 

ance in 2009 

e* cost per da

length of stay

re margin 

argin 

id share of fac

NF (skilled nursin

stribution of cost

easure. Costs pe

ages. Quality me

congestive heart 

ospital discharge

ehospitalization ra

ith more than 25

Measures are rela

edPAC analysis 

standing skil

ty of care wh

08, compare

were 29 perc

09, relatively

hs of stay co

09 of 21.8 p

tively efficien

rofit than oth

A D

reestand

igh qual

y discharge ra

zation rate 

ay 

y

ay 

y

cility days 

ng facility). SNFs

t per day, in the t

er day were stan

easures were rat

failure, respirato

e. Increases in ra

ates for the five c

stays. 

ative to the natio

of quality measu

lled nursing 

hile maintain

ed with othe

cent higher a

y efficient SN

ompared wit

ercent comp

nt SNFs wer

her SNFs. 

Data Book: Hea

ding SNF

ity maint

S

ate 

s with relatively lo

top third for one 

ndardized for diffe

es of risk-adjuste

ry infection, urina

ates of discharge 

conditions indica

onal average. 

ures for 2005–20

facilities (SN

ning high ma

r SNFs, rela

and rehospit

NFs had cos

th other SNF

pared with a

re more likel

lth care spendi

Fs with re

tained h

SNFs with rela

costs and

quality (9 p

1.2

0.84

0.9

35 day

21.8%

0.89

35 day

21.8%

5.3%

58%

ow costs and go

quality measure,

erences in case 

ed community di

ary tract infection

to the communit

ate worsening qu

008 and Medicare

NFs) can hav

argins. 

atively efficie

talization rat

sts per day t

Fs. Relatively

 median ma

y to be locat

ding and the Me

relatively

igh Med

atively low

d good

percent)

9

4

0

ys

%

0

ys

%

%

%

od quality were t

, and not in the b

mix (using the n

scharge and reh

n, sepsis, and ele

ty indicate impro

ality. Quality me

e cost report dat

ve relatively

ent SNFs had

tes that were

that were 11

y efficient S

argin for othe

ted in a rura

edicare program

y low cos

icare ma

O

those in the lowe

bottom third for th

ursing compone

hospitalization for

ectrolyte imbalan

oved quality; incre

asures were calc

ta for 2005–2009

y low costs a

d community

e 16 percent

 percent low

NFs had Me

er SNFs of 1

al area and m

m, June 2011 

sts and 

argins 

Other SNFs 

1.0 

1.0 

1.0 

41 days 

17.4% 

1.0 

40 days 

18.3% 

3.9% 

62% 

est third of the 

he other quality 

nt relative weigh

r five conditions 

nce) within 100 d

eases in 

culated for all fac

9. 

and provide g

y discharge 

t lower. 

wer and shor

edicare marg

8.3 percent.

more likely to

 127

ts) and 

days of 

cilities 

good 

rates 

rter 

gins 

.

o be 
128 Pos

Chart 

Source: C

• Medi

1992

loose

difficu

signif

• Spen

syste

Office

• In Oc

time, 

integ

and c

• Home

year 

0

5

10

15

20

25

Dollars (in billions)

st-acute care

8-8. S

MS, Office of the

care home h

 to 1997. Du

ened just bef

ult. Provider

ficant factor 

nding began 

em (IPS) bas

e of Inspecto

ctober 2000,

eligibility for

rity standard

certification a

e health care

between 20

12.5

15.9

1994 1995 1

Spending

e Actuary, 2011. 

health care s

uring that pe

fore this per

s delivering 

in the increa

to fall after 1

sed on costs

or General. 

 the prospec

r the benefit 

ds continues

agencies. 

e has risen r

01 and 2009

17.3 18.0

13

1996 1997 19

g for hom

spending gre

eriod, the pay

iod, and enf

billing for fra

ase in expen

1997, concu

s with limits, 

ctive payme

broadened 

s at the regio

rapidly unde

9. 

3.9

9.0 9.2

998 1999 2000

me healt

ew at an ave

yment syste

orcing the p

audulent or u

nditures. 

urrent with th

tighter eligib

nt system (P

slightly. Enf

onal home he

er PPS. Spen

2

8.0

9.6

0 2001 2002

th care, 1

erage annua

m was cost 

rogram’s sta

uncovered s

he introductio

bility, and inc

PPS) replace

forcement of

ealth interm

nding has ris

10.1 10.8

12

2003 2004 20

1994–201

al rate of 20 

based. Eligi

andards bec

services also

on of the inte

creased scru

ed the IPS. A

f the Medica

ediaries and

sen by abou

2.6 13.0

15.

005 2006 200

10 

percent from

ibility had be

came more 

o were a 

erim payme

utiny from th

At the same

are program’

d state surve

ut 10 percent

4

16.9

18.3

07 2008 2009

m

een 

nt 

he 

s 

ey 

t a 

19.3

2010
Chart 

Number o

Visit type 

 Home h

 Skilled 

 Therap

 Medica

Visits per 

Note: Th

 

Source: Ho

• The t

chang

and b

• CMS

spen

in 20

user 

home

nursi

was i

8-9. P

p

of visits (in mi

(percent of to

health aide 

nursing 

py 

al social servic

home health 

he prospective p

ome health Stan

types and am

ged. In 1997

beneficiaries

 began to ph

ding for hom

00 (see Cha

had dropped

e health use

ng and thera

mplemented

A D

rovision

rospecti

llions) 

otal) 

ces 

patient 

ayment system b

dard Analytic Fil

mount of hom

7 home heal

s who used h

hase in the i

me health se

art 8-8). By 2

d to 33. The 

rs getting m

apy visits no

d, the numbe

Data Book: Hea

n of home

ve paym

1997

258

48%

41

10

1

73

began in Octobe

e; Health Care F

me health ca

th aide serv

home health

nterim paym

rvices and im

2001, total vi

increase in 

ore episode

ow accountin

er of users a

lth care spendi

e health 

ment syst

2001

74

25%

50

24

1

33

r 2000. 

Financing Review

are services 

vices were th

h care receiv

ment system 

mplemented

isits dropped

visits per us

s. The mix o

ng for over 8

and episodes

ding and the Me

care cha

tem start

2009

130

16%

55

28

1

39

w, Medicare and 

 that benefic

he most freq

ved an avera

in October 

d a prospect

d by 72 perc

ser between

of services c

80 percent of

s has risen r

edicare program

anged af

ted 

Pe

1997–20

–72%

 

–55 

Medicaid Statist

ciaries receiv

uently provid

age of 73 vis

1997 to stem

ive payment

cent, and ave

 2001 and 2

changed as w

f all services

rapidly (see 

m, June 2011 

fter the 

ercent change

001 2001–

% 7

2

tical Supplement

ve have 

ded visit typ

sits. 

m the rise in 

t system (PP

erage visits 

2009 reflects

well, with sk

s. Since PPS

Chart 8-10)

 129

e

–2009 

76% 

20 

t, 2002. 

e, 

PS) 

per 

s

killed 

S

. 
130 Pos

Chart 

Number o

Percent o

 used hom

Episodes 

Episodes 

Visits per 

Average p

Source: M

• Unde

numb

the h

• The n

bene

growt

• The n

incre

st-acute care

8-10. T

of users (in m

of beneficiarie

me health 

(in millions) 

per home he

home health 

payment per e

edPAC analysis 

er the prospe

ber of episod

ome health 

number of ho

ficiaries usin

th in episode

number of vi

ase is prima

rends in

illions) 

s who 

ealth patient

patient 

episode 

of the home hea

ective payme

des have rise

benefit. 

ome health e

ng home hea

es. 

isits per hom

arily due to a

 provisio

20

2

7

4

1

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alth Standard An

ent system, 

en significan

episodes inc

alth has also

me health pa

an increase i

on of hom

002

2.5

7.2%

4.1

1.6

31

29 $

alytic File. 

in effect sinc

ntly. In 2009

creased rapi

o increased s

atient increas

n the numbe

me healt

2005

3.0

8.1%

5.2

1.8

32

$2,470

ce 2000, the

, more than

idly from 200

since 2002 b

sed from 31 

er of home h

th care 

2009 

3.3 

9.4% 

 

6.6 

 

2.0 

39 

$2,879 

e number of 

3 million be

02 to 2009. 

but at a lowe

in 2002 to 3

health episod

Average a

percent ch

2002–20

3.9%

3.8

6.9

4.5

3.7

3.1

users and th

neficiaries u

The number

er rate than 

39 in 2009. T

des per patie

annual 

hange 

009 

%

he 

used 

r of 

the 

This 

ent. 
Chart 

All 

Geograph

Urban 

 Rural 

Type of co

 For pro

 Nonpro

Volume q

First 

 Second

 Third 

 Fourth 

 Fifth 

Source: M

• In 20

estim

servic

• Thes

2009

• HHAs

perce

perce

indus

marg

well i

• For-p

agen

• Agen

quint

quint

 

8-11. M

hy 

ontrol 

ofit 

ofit

uintile 

d

edPAC analysis 

09, about 78

mated margin

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e margins a

. HHAs are 

s that served

ent; those th

ent. The 200

stry has expe

in from 2001

n excess of 

profit agencie

cies had a w

ncies that se

ile in 2009 h

ile have a w

A D

Margins f

of 2008–2009 C

8 percent of 

ns indicate th

care benefic

re for freesta

also based i

d mostly urb

at served m

09 margin is 

erienced und

1 to 2008 wa

their costs u

es in 2009 h

weighted ave

rve more pa

have a weigh

weighted ave

Data Book: Hea

for freest

2008

17.0%

17.3

16.0

18.6

12.3

9.0

9.3

13.3

16.0

18.9

Cost Report files.

agencies ha

hat Medicare

ciaries for bo

anding HHA

in hospitals a

ban patients 

ostly rural p

consistent w

der the pros

as 17.5 perc

under prospe

had a weight

erage margin

atients have 

hted average

rage margin

lth care spendi

tanding h

ad positive m

e’s payment

oth rural and 

As, which com

and other fa

in 2009 had

atients had 

with the histo

pective paym

cent, indicati

ective paym

ted average 

n of 14.4 pe

higher marg

e margin of 8

n of 20.1 per

ding and the Me

home he

2009

17.7%

17.9

16.6

18.7

14.4

8.9

8.7

12.6

16.5

20.1

margins (not

ts are above

urban home

mposed abo

acilities. 

d a weighted

a weighted a

orically high 

ment system

ng that mos

ent. 

margin of 18

rcent. 

gins. The age

8.9 percent, 

rcent. 

edicare program

ealth age

t shown in ch

e the costs o

e health age

out 85 perce

 average ma

average ma

margins the

m. The weigh

st agencies h

8.7 percent,

encies in the

 while those

m, June 2011 

encies 

Percent 

agencie

2009

100%

83 

17 

84

11

20 

20 

20 

20 

20

hart). These

f providing 

encies (HHA

nt of all HHA

argin of 17.9

rgin of 16.6

e home healt

hted average

have been p

 and nonpro

e lowest volu

e in the highe

 131

of 

es 

e

As). 

As in 

9

th 

e

aid 

ofit 

ume 

est 
132 Pos

Chart 

Type of ca

Stroke 

Hip fractu

Major join

Debility 

Neurologi

Brain inju

Other orth

Cardiac c

Spinal cor

Other 

Note: O

pe

Source: M

Ju

• In 20

(IRFs

repre

• Majo

down

comm

st-acute care

8-12. M

fa

ase 

re 

nt replacemen

cal 

ry 

hopedic 

onditions 

rd injury 

ther includes con

ercent due to rou

edPAC analysis 

une of 2010). 

10, the mos

s) was stroke

esented fewe

r joint replac

n from 24 pe

mon IRF Me

Most com

acility ca

nt

nditions such as 

unding. 

of Inpatient Reh

t frequent di

e, represent

er than 17 pe

cement case

rcent of cas

dicare case 

mmon typ

ases, 201

amputations, ma

habilitation Facilit

iagnosis for 

ing close to 

ercent of cas

es represent

es in 2004, w

type. 

pes of in

10 

ajor multiple trau

ty–Patient Asses

Medicare pa

21 percent o

ses. 

ed just over 

when major 

patient r

S

uma, and pain sy

ssment Instrumen

atients in inp

of cases, up

11 percent 

joint replace

rehabilita

Share of case

20.5% 

14.4 

11.2 

9.9 

9.7 

7.3 

6.5 

5.0 

4.3 

11.3 

yndrome. Numbe

nt data from CMS

patient rehab

p from 2004,

of IRF admi

ement was t

ation 

es 

ers may not sum 

S (January throu

bilitation faci

 when stroke

ssions in 20

the most 

to 100 

ugh 

ilities 

e

010, 
Chart 

Number of

Unique pat

 FFS benef

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Medicare s

 (in billions

Average le

 (in days) 

Note: IR

Source: M

• Inpat

numb

servic

• IRF v

rule) 

• Medi

with t

plans

• In 20

by 1.

numb

bene

• IRF M

consi

paym

2009

8-13. V

af

IRF cases 

tients per 10,00

ficiaries 

per case 

spending 

) 

ength of stay 

RF (inpatient reha

edPAC analysis 

tient rehabilit

ber of unique

ce (FFS) en

volume decli

was renewe

care FFS sp

the 60 perce

s. 

09, volume 

5 percent. T

ber of unique

ficiaries with

Medicare pay

istent with in

ment per cas

 were held a

A D

Volume o

fter decl

2004 

455,000 

00 113.2 

$13,275 

$6.43 

12.7 

abilitation facility)

of MedPAR data

tation facility

e patients pe

rollment. 

ned after 20

ed. 

pending on I

ent rule and 

remained re

The increase

e beneficiari

h more than 

yments per 

ncreasing av

e declined b

at 2007 leve

Data Book: Hea

of IRF FFS

ining fro

2007

364,000

93.2

$16,143

$6.08

13.2

), FFS (fee-for-se

a from CMS. Tot

y (IRF) volum

er 10,000 be

004 when en

RFs decline

more Medic

elatively stab

e in the numb

es receiving

one IRF sta

case and av

verage case 

by half a perc

ls. 

lth care spendi

S patien

om 2004 

2008

356,000

91.5

$16,649

$5.96

13.3

ervice). Numbers

tal Medicare spen

me is measu

eneficiaries, 

nforcement o

d between 2

care benefici

ble, with the 

ber of cases

g IRF care an

ay in a year.

verage lengt

mix of IRF p

cent betwee

ding and the Me

ts remai

to 2007

 200

0 361,00

5 92

9 $16,56

6 $6.0

3 13

s of cases reflect

nding for IRF se

ured by the n

which contro

of the compli

2004 and 20

aries enrolle

number of c

s was due to 

nd an increa

th of stay ha

patients. How

en 2008 and 

edicare program

ined stab

 Ave

 annual 

 cha

09 2004–

00 –6

2.9 –5

68 5

07 –1

3.1 1

t Medicare FFS u

rvices from CMS

number of IR

ols for chang

iance thresh

008 as more 

ed in Medica

cases increa

 an increase

ase in the nu

ve increased

wever, the a

2009 becau

m, June 2011 

ble in 20

rage 

percent Per

ange cha

–2008 2008–

6.0% 

5.2 

5.8 -

1.9 

1.2 –

utilization only. 

S Office of the Ac

RF cases an

ges in fee-fo

hold (60 perc

IRFs compl

are Advantag

sing from 20

e in both the

umber of 

d since 2004

average FFS

use payment

 133

09, 

rcent 

ange 

–2009 

1.5% 

1.5 

-0.5 

1.8 

–1.5 

ctuary. 

d the 

orcent 

ied 

ge 

008 

4, 

S

ts in 
134 Pos

Chart 

Note: IR

of

Source: M

• Medi

the p

receiv

1982

• Since

faste

result

• Thes

marg

-10

0

10

20

30

40

50

Cumulative percent change

st-acute care

8-14. O

th

RF (inpatient reha

f 1982). Data are

edPAC analysis 

care costs a

rospective p

ved cost-bas

. 

e implement

r than costs

t of enforcem

e trends in M

ins, shown i

1999 20

Overall IR

han cost

abilitation facility)

e from consistent

of cost report da

and payment

payment sys

sed reimbur

ation of the 

, even when

ment of the c

Medicare pe

in Chart 8-15

000 2001

T

RFs’ paym

s, post-P

), PPS (prospect

 two-year cohort

ata from CMS. 

ts per case i

stem (PPS) i

sement und

PPS, overal

n costs per c

compliance t

er case paym

5. 

2002 2

TEFRA PP

ments pe

PPS 

tive payment sys

ts of IRFs. Costs 

increased at

n 2002 as in

er the Tax E

l Medicare p

case grew ra

threshold. 

ments and co

003 2004

PS

er case h

stem), TEFRA (T

 are not adjusted

t similar rate

npatient reha

Equity and F

payments pe

apidly betwee

osts are refle

2005 2

Paym

Cost 

have rise

Tax Equity and Fi

d for changes in 

es before imp

abilitation fac

Fiscal Respo

er case have

en 2004 and

ected in IRF

2006 2007

ment per case

per case

en faster

iscal Responsibi

case mix. 

plementation

cilities (IRFs

onsibility Act 

e increased 

d 2006 as a 

s’ Medicare 

7 2008

e

r

lity Act 

n of 

s) 

of 

2009
Chart 

All IRFs 

Hospital ba

Freestandi

Urban 

Rural 

Nonprofit 

For profit 

Note: TE

re

Source: M

• The a

rehab

just u

• From

reduc

whom

zero 

paym

• Frees

hosp

IRF P

8-15. In

ty

TEFRA

2001

1.5%

ased 1.5 

ng 1.5 

1.5 

1.1 

1.6 

1.2 

EFRA (Tax Equit

ehabilitation facili

edPAC analysis 

aggregate M

bilitation faci

under 2 perc

m 2003 to 200

ctions in pati

m to distribut

update to th

ment rates re

standing and

ital-based an

PPS in 2002

A D

npatient 

ype, 2001 

A

 2

% 1

1

1

1

ty and Fiscal Res

ty). 

of cost report da

Medicare ma

ility (IRF) pro

cent in 2001 

09, margins 

ient volume 

te fixed cost

he base rates

emaining at 2

d for-profit IR

nd nonprofit 

. 

Data Book: Hea

rehabilit

1–2009 

002 2

0.9% 1

6.1 1

8.5 2

1.3 1

5.9 1

6.5 1

8.7 2

sponsibility Act o

ata from CMS. 

rgin increase

ospective pa

to almost 18

declined bu

over this tim

s. The 2007

s for half of 2

2007 levels.

RFs had sub

IRFs, contin

lth care spendi

tation fac

2003 2

7.7% 1

4.7

22.9 2

8.2 1

2.5 1

4.5 1

23.9 1

of 1982), PPS (pr

ed rapidly du

ayment syste

8 percent in 

ut remained h

me period tha

7 to 2009 ma

2008 and fo

bstantially hig

nuing a trend

ding and the Me

cilities’ M

PPS 

2005 2

13.3% 

9.3

20.7 

13.5 

12.0 

10.2

19.8 

rospective paym

uring the firs

em (PPS). A

2003. 

high. This de

at resulted in

argin decrea

r all of 2009

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Aggregate m

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e margin

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 96

177 R

592 S

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573 S

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Note: M

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Source: M

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Medi

top 2

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supp

cases

st-acute care

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L

–

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ulmonary ede

epticemia or 

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kin ulcers wit

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Chronic obstru

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kin ulcers wit

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Renal failure w

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Complications 

op 20 MS–LT

otal 

S–LTC–DRG (M

omplication or co

ystem for these fa

edPAC analysis 

es in long-ter

care severity

0 MS–LTC–

most frequen

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s, were resp

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LTCH dis

on 

ystem diagnos

ema & respira

severe sepsis

h MCC 

fections & infl

th MCC 

CC/MCC 

ystem diagnos

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th CC 

with MCC 

/or debrideme

sculoskeletal s

& post-traum

& shock with M

ory system O

fections & infl

with MCC 

ory system dia

of treatment 

TC–DRGs 

Medicare severity

omorbidity), CC (c

acilities. Column

of MedPAR data

rm care hosp

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nt diagnosis

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piratory cond

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scharges

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pitals (LTCH

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ounted for mo

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ditions. 

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s in 2009

ator support 9

tilator suppor

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ator support <

with MCC

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s with MCC

with CC

MCC

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comorbidity), OR

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ore than half

n 2009 was r

the top 20 d

e up mo

9

96+ hours

rt 

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ed group), LTCH

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f of all cases

respiratory d

diagnoses, re

ore than h

Discharges

15,378 

9,438 

6,857 

4,690 

3,913 

3,576 

2,729 

2,687 

2,613 

2,103 

2,102 

1,984 

1,971 

1,953 

1,860 

1,810 

1,797 

1,783 

1,748 

1,747 

72,739 

131,446 

H (long-term care

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a relatively s

S–LTC–DRG

s. 

diagnosis wi

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th ventilator

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u

r 10,000 

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per 

eficiary 

per case 

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rm care hospital

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ent, much m

A D

TCH spe

nder PPS

 

2003 

110,396 1

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s) 28.8 

care hospital), FF

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nd 2009, Me

ore than the

Data Book: Hea

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2005

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FS (fee-for-servic

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edicare spen

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er FFS b

2007 200

9,202 130,8

36.3 37

126.5 $130

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26.9 26

ce), PPS (prospe

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wth in the nu

ding and the Me

beneficia

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869 131,446

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0.4 $139.3

200 $37,465

6.7 26.4

ective payment s

number of Medica

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umber of cas

edicare program

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4 8.8 

 

 

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5 16.6 

 

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ses. 

m, June 2011 

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1.5 

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in per FFS case

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 137

d

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0.9 

 

 

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s and 

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sy

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case 

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per c

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0

10

20

30

40

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ges to Medic

ment per cas

the Congres

ase climbed

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1999 200

TCHs’ pe

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from consistent 

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TE

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EFRA PP

payment

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m CMS. 

r the prospe

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tion of some 

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03 2004

PS

t rose mo

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m care hosp

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09. Cost per

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ore quic

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ecent regula

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r case

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kly than 

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d 2005. Cost

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ts, as regula

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ations, paym

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t per 

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ents 

ss 

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Chart 

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All 

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Rural 

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Nonprofit 

For profit 

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sy

a 

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Medi

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edPAC analysis 

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ent of all Me

ent, compare

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A D

TCHs’ M

Share of 

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96 

4 

70 

l 31 

16 

83 

care hospital), TE

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s increased 

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economies o

Data Book: Hea

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–0.1 5

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0.1 5

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prospective p

rapidly, from

n payments 

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H discharges

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f scale.

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5.2 9.2

4.5 2.6

5.6 8.4

4.2 10.6

1.9 6.9

6.3 10.0

ty and Fiscal Res

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argins are not re

payment sys

m 5.2 percen

per case lev

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ross LTCHs

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rcent for non

s). Rural LTC

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s by type

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% 11.9%

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10.1

11.3

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9.0

13.1

sponsibility Act o

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ported here. 

stem, long-te

nt in 2003 to

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ent. 

s. The aggre

all Medicare

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olume of pati

edicare program

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9.7% 4.

 

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4.9 –0.

 

9.3 4.

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of 1982), PPS (pr

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m, June 2011 

ity 

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0 3.8

7 –2.8

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8 4.4

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rospective paym

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nt in 2005. 

ever, LTCH 

are margin fo

s from LTCH

ccounted fo

was –3.7 

ders accoun

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 139

2009 

5.7% 

6.0 

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4.9 

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7.3 

ment 

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Hs) 

r 16 

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LTCHs 

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th

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re

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payments p

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e of low-marg

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much lo

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LTCHs were in t

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eports and MedPA

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ather than h

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9

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100 

100 

100 

ce organization), 

data do not inclu

al needs plans, co

plans (CCPs

which have co

oviders. Loca

al plans are re

hat may be lo

ning in 2006. 

s of 2011) re

e not two or m

ee to use any

n 2011—up f

The availabili

eficiaries in 2

r network req

Medicare be

is about the 

erating in thei

010 effort to r

e 2011 netwo

m, June 2011 

re 

Average

offering

coun

5

12

20

35

34

21

12

PPO (preferred 

de plans that ha

ost-based plans,

.) Local CCP

omprehensiv

al CCPs may 

equired by st

ooser than th

 Private fee-f

equired to ha

more CCPs, 

y Medicare 

from 67 perce

ity of Medica

2010 to 63 

quirements in

eneficiaries ha

same as in 2

r counties. T

reduce the 

ork requirem

 145

e plan 

s per 

nty 

5

2

0

5

4

1

2

ve 

Ps 

ve 

tatute 

he 

forve 

ent in 

are 

n

ave 

2006. 

This 

ments 
146 Med

Chart 

Note: M

fe

Source: M

• Acros

paym

can o

includ

cover

Medi

the M

Medi

2010

• Seve

MA–P

availa

the p

availa

• In mo

MA–P

obliga

0

10

20

30

40

50

60

70

80

90

100

Percent of beneficiaries

dicare Advanta

9-2. A

co

A (Medicare Adv

e-for-service). 

edPAC analysis 

ss all plan ty

ments other t

obtain a Med

des Part D d

rage or the c

care benefic

Medicare Par

care-covere

. 

enty-three pe

PD preferred

able. Howev

ast. Private 

able to 29 pe

ost cases, M

PD plans us

ation. 

48

60

66

706

HMO

2006

age 

Access to

overage,

vantage), HMO (

of bid and plan f

ypes, the ava

than the Med

dicare Advan

drug coverag

coverage of 

ciaries have 

rt B premium

d benefits in

ercent of ben

d provider or

ver, zero-pre

fee-for-serv

ercent of be

MA plan enro

e rebate dol

11

19

2

8

73

P

2007 200

o zero-pr

, 2006–2

health maintena

finder data from 

ailability of “z

dicare Part B

ntage–Presc

ge, for which

Medicare Pa

access to at

m) for the co

ncluded in th

neficiaries ha

rganizations

emium region

ice plans off

neficiaries in

ollees continu

llars to reduc

2

29

34

2830

PPO

08 2009

remium p

011 

nce organization

CMS. 

zero-premiu

B premium—

cription Drug

h the enrollee

art A and Pa

t least one M

mbined cove

he benefit pa

ave zero-pre

s (PPOs) with

nal PPOs ar

fering zero p

n 2011. 

ue paying th

ce or elimina

25

55

52

72

26

PFFS

2010 201

plans wit

n), PPO (preferre

m” plans—p

—increased i

g (MA–PD) p

e pays no pr

art B service

MA–PD plan

erage (and n

ackage), com

emium MA–P

hout premiu

re more avai

premiums an

heir Medicare

ate their enr

15

6 252

29

Regio

1

th MA dr

ed provider organ

plans with no

n 2011. Mor

plan, an MA 

remium for e

es. In 2011, 9

n with no pre

no premium 

mpared with 

PD HMOs a

ms are muc

ilable than th

nd Part D dru

e Part B pre

rollees’ Part 

7

5

29

32

37

onal PPO

rug 

nization), PFFS (

o premium 

re beneficiar

plan that 

either the dr

90 percent o

emium (beyo

for any non

85 percent 

vailable, wh

ch less widel

hey have be

ug coverage

emium, but s

B premium 

73

8688

94

85

Any MA plan

(private 

ries 

ug 

of 

ond 

-

in 

ile 

y 

een in 

e are 

ome 

5

90

n
Chart 

Note: M

Source: M

• Medi

time 

rapid

a low

stead

0

2

4

6

8

10

12

14

Beneficiaries (in millions) 

9-3. E

A (Medicare Adv

edicare manage

care enrollm

high at 11.7 

ly throughou

w of 4.6 millio

dily since 20

2.3

3.1

4

1994 1995 19

A D

nrollmen

vantage). 

ed care contract r

ment in privat

million enro

ut the 1990s

on enrollees 

03. 

.1

5.2

6.1

996 1997 1998

Data Book: Hea

nt in MA 

reports and mont

te health pla

ollees (25 pe

s, peaking at

in 2003. Me

6.4 6.3

5

8 1999 2000 2

lth care spendi

plans, 1

thly summary rep

ans paid on a

ercent of all M

t 6.4 million e

edicare Adva

5.5

4.9 4.6

001 2002 200

ding and the Me

994–201

ports, CMS. 

an at-risk ca

Medicare be

enrollees in 

antage enrol

6 4.7 4.9

03 2004 2005 2

edicare program

11 

apitated basi

eneficiaries).

1999, and th

llment has in

6.9

8.1

9.

2006 2007 20

m, June 2011 

is is at an al

. Enrollment 

hen declined

ncreased 

.4

10.5

11.0

08 2009 2010

 147

lrose 

d to 

11.7

0 2011
148 Med

Chart 

Plan type 

Local CCP

Regional 

PFFS 

Note: CC

he

Source: C

• Enrol

prefe

for-se

7 per

• While

past y

that m

perce

dicare Advanta

9-4. C

F

Ps 

PPOs 

CP (coordinated

ealth maintenanc

MS health plan m

llment in loc

erred provide

ervice (PFFS

rcent from Fe

e still the dom

year, and en

much of the 

ent decline in

age 

Changes 

February 

2008 

6,830 

257 

2,057 

care plan), PPO

ce organizations 

monthly summary

al coordinate

er organizatio

S) plans dec

ebruary 201

minant form 

nrollment in 

enrollment g

n PFFS enro

in enroll

Total

(in th

February

2009

7,625

377

2,353

O (preferred prov

and local PPOs.

y reports. 

ed care plan

ons (PPOs)

clined. Comb

0 to Februa

of enrollme

regional PP

growth in loc

ollment in th

lment va

 enrollees 

housands) 

Februa

 2010

8,534

760

1,657

ider organization

.

ns (CCPs) gr

over the pa

bined enrollm

ry 2011. 

nt, local CCP

Os grew by 

cal CCPs an

e same time

ary amon

ary Febr

0 20

4 9,9

0 1,1

7 5

n), PFFS (private

rew slower t

st year, whil

ment in the t

P enrollmen

49 percent f

nd regional P

e period. 

ng major

ruary P

011

993

132

588

e fee-for-service)

than enrollm

le enrollmen

hree types o

nt grew 17 pe

from a lower

PPOs came f

r plan typ

Percentage ch

2010–201

17% 

 49 

–65 

). Local CCPs inc

ment in region

nt in private f

of plans grew

ercent over t

r base. It is l

from the 65

pes 

hange 

1 

clude 

nal 

feew by 

the 

likely 
Chart 

State 

Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

Florida 

Georgia 

Hawaii 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachuse

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hamps

New Jersey 

New Mexico

New York 

North Caroli

North Dakot

Ohio 

Oklahoma 

Oregon 

Pennsylvani

Puerto Rico 

Rhode Islan

South Carol

South Dakot

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

Washington

West Virgini

Wisconsin 

Wyoming 

U.S. total 

Note: MA

se

Source: CM

• Medica

percent

Oregon

• The po

private 

9-5. M

p

M

etts 

shire 

o

na 

a 

a 

d 

ina 

ta 

, DC 

a 

A (Medicare Adva

ervice). Cost plans

MS enrollment an

are private plans a

t of beneficiaries 

n, with 69 percent

pularity of differe

fee-for-service (P

A D

MA and c

lan, 2011

Medicare eligibles

(in thousands) 

 844 

 66 

 872 

 532 

 4,744 

 622 

 568 

 149 

 3,339 

 1,237 

 207 

 229 

 1,842 

 1,007 

 517 

 433 

 761 

 686 

 265 

 786 

 1,061 

 1,654 

 786 

 497 

 1,003 

 170 

 279 

 354 

 219 

 1,329 

 313 

 2,991 

 1,489 

 109 

 1,899 

 602 

 618 

 2,277 

 660 

 183 

 774 

 137 

 1,056 

 3,001 

 283 

 112 

 1,144 

 969 

 78 

 380 

 911 

 80 

 47,123 

antage), HMO (he

s are not MA plan

d population data

attract more bene

in Alaska. The hi

t, 44 percent, 43 

nt types of plans 

PFFS) plans, whi

Data Book: Hea

ost plan

1

s 

HMO 

13% 

0 

35 

5 

34 

26 

15 

2 

24 

5 

14 

10 

5 

1 

5 

3 

3 

21 

7 

3 

15 

10 

15 

4 

14 

0 

5 

27 

0 

12 

18 

23 

10 

0 

14 

10 

22 

24 

60 

27 

2 

0 

20 

14 

16 

0 

2 

19 

2 

1 

14 

0 

17 

ealth maintenance

s; they submit cos

a, 2010–2011. 

eficiaries in some

ighest penetratio

percent, and 42 p

varies as well. Fo

le other states ha

lth care spendi

 enrollm

Distribution

Local PPO 

7% 

0 

2 

2 

0 

3 

2 

1 

1 

8 

9 

14 

2 

7 

5 

5 

4 

1 

6 

1 

2 

12 

4 

2 

4 

7 

2 

2 

1 

1 

7 

6 

3 

1 

8 

3 

19 

12 

8 

1 

5 

3 

4 

2 

13 

1 

4 

5 

1 

6 

8 

1 

5 

e organization), PP

st reports to CMS

e areas than in oth

ns of Medicare p

percent of benefi

or example, som

ave little or none 

ding and the Me

ment by s

 (in percent) of e

Regional PPO

1% 

0 

1 

2 

2 

0 

2 

0 

7 

4 

13 

0 

1 

7 

1 

1 

8 

1 

0 

0 

1 

1 

2 

2 

1 

1 

1 

2 

0 

0 

0 

1 

1 

0 

10 

0 

0 

0 

0 

6 

5 

1 

1 

2 

0 

2 

1 

0 

0 

10 

3 

0 

2 

PO (preferred pro

S rather than bids. 

hers. At the state

rivate plans are i

ciaries, respectiv

me states have alm

of their enrollmen

edicare program

state and

enrollees by plan

PFFS 

0% 

0 

1 

5 

0 

2 

0 

0 

0 

5 

0 

5 

0 

2 

1 

2 

1 

2 

1 

0 

0 

1 

0 

2 

3 

7 

3 

1 

5 

0 

1 

1 

4 

3 

1 

2 

0 

1 

0 

0 

4 

3 

1 

1 

5 

2 

5 

1 

0 

2 

2 

3 

1 

ovider organization

Totals may not s

e level, private pla

n Puerto Rico, M

vely, enrolled in p

most their entire p

nt in PFFS plans

m, June 2011 

d type of 

n type 

Cost To

0% 2

0 

0 4

0 1

0 3

4 3

0 1

0 

0 3

0 2

7 4

1 2

0 

0 1

2 1

1 1

1 1

0 2

0 1

3 

0 1

0 2

23 4

0 1

0 2

0 1

1 1

0 3

0 

0 1

0 2

0 3

0 1

4 

1 3

0 1

0 4

0 3

0 6

0 3

0 1

2 

0 2

1 2

1 3

0 

1 1

0 2

7 1

3 2

3 3

1 

1 2

n), PFFS (private 

um due to roundin

ans attract only 1

Minnesota, Hawaii

plans. 

plan enrollment in

. 

 149

otal 

21% 

1

40

15

37

34

19

4

32

22

43

29

9

17

13

11

17

24

13

8

18

23

44

10

22

15

12

31

6

13

26

31

18

9

34

15

42

38

69

35

16

9

25

20

35

5

14

26

10

23

30

6

26

fee-forng. 

i, and 

n
150 Med

Chart 

Benchma

Bids/FFS

Payments

 

Note: M

or

Source: M

• Since

to offe

separ

paym

• The b

bench

bench

count

• If a pl

Medic

bid is

perce

the re

prem

• We e

enroll

enroll

• Plans

bid an

104 p

servic

• We p

will de

FFS l

• The r

HMO

perce

PPOs

dicare Advanta

9-6. M

p

rks/FFS

s/FFS

A (Medicare Adv

rganization), PFF

edPAC analysis 

e 2006, plan 

er Part A and

rately). The b

ment for a priv

benchmark is

hmarks in ea

hmarks could

ties. Benchm

lan’s bid is a

care and enr

 below the be

ent of the diff

ebate to its e

iums. 

stimate that 

lment. The ra

lment from d

s’ enrollmentn average of 

percent of FF

ces for less t

roject that 20

ecline signific

levels to mee

ratio of paym

s and region

ent and 110 p

s will average

age 

MA plan b

ayments

All Plan

 113% 

100 

110 

vantage), FFS (fe

FS (private fee-fo

of plan bid data 

bids have pa

d Part B cove

bid includes p

vate plan on 

s an administ

ach county, w

d go. By desi

marks are upd

bove the ben

rollees have t

enchmark, th

erence betwe

nrollees in th

MA benchma

atio varies by

ifferent types

-weighted bid

97 percent o

FS spending. 

han FFS, wh

011 MA paym

cantly over th

et requiremen

ents relative 

al preferred 

percent of FF

e 114 percen

benchma

s relative

ns HMO

 113%

97

 109

ee-for-service), H

or-service). 

from CMS, Nove

artially determ

erage to Med

plan adminis

the relations

tratively dete

which include

ign, the floor 

dated yearly 

nchmark, the

to pay an add

he plan recei

een the plan

he form of su

arks average

y plan type, b

s of areas. 

ds average 1

of FFS spend

These numb

hile other plan

ments will be

he next few y

nts under the

to FFS spen

provider orga

FS, respectiv

nt. 

arks, bid

e to FFS 

Os Loca

% 1

10

1

HMO (health mai

ember 2010. 

mined the Me

dicare benefic

trative cost a

hip between 

ermined biddi

ed a floor—a 

rate exceed

by the nation

en the plan re

ditional prem

ves its bid, p

’s bid and its

pplemental b

e 113 percen

because diffe

00 percent o

ding, while bi

bers suggest

n types tend 

110 percent

years as ben

e Patient Pro

nding varies b

anization (PP

ely, while pa

s, and M

spendin

al PPOs

16%

09

14

intenance organ

edicare paym

ciaries (Part 

and profit. CM

its bid and it

ing target. Le

minimum am

ed fee-for-se

nal growth in 

eceives the b

mium that equ

plus a “rebate

s benchmark

benefits, lowe

nt of FFS spe

erent types of

of FFS spend

ids from othe

t that HMOs 

to charge m

t of FFS spen

nchmarks are

otection and A

by the type o

PO) payment

ayments to pr

Medicare 

ng, 2011 

Regional PP

 110%

104 

110 

ization), PPO (pr

ments they re

D coverage 

MS bases the

ts applicable

egislation in 1

mount below 

ervice (FFS) 

 FFS spendi

benchmark as

uals the diffe

e,” defined by

. The plan m

er cost sharin

ending when 

f plans tend 

ding. We esti

er plan types

can provide 

ore. 

nding. It is lik

e gradually re

Affordable Ca

of Medicare A

ts are estima

rivate fee-for

program

POs PFF

% 11

11

11

referred provider

eceive. Plans

is handled 

e Medicare 

 benchmark.

1997 establis

which no cou

spending in 

ng. 

s payment fro

rence. If a pl

y law as 75 

must then retu

ng, or lower 

weighted by 

to draw 

imate that HM

 average at l

the same 

kely this num

educed relativ

are Act of 20

Advantage pl

ated to be 10

r-service and

m

FS 

6% 

0 

4 

r

 bid 

shed 

unty 

many 

om 

lan’s 

urn 

MA 

MOs 

least 

mber 

ve to 

010. 

lan. 

09 

 local 
Chart 

Note: M

Source: C

• While

resid

cover

emplo

group

• In the

overa

enrol

• Unde

emplo

privat

• Our a

highe

efficie

perce

above

0.0

0.5

1.0

1.5

2.0

2.5

Enrollment (in millions)

9-7. E

A (Medicare Adv

MS enrollment d

e most Medi

ing in a give

rage is supp

oyer group p

ps formed by

e last five ye

all MA enroll

lees were in

er a requirem

oyer group p

te fee-for-se

analysis of M

er relative to 

ent than indi

ent of FFS, c

e). 

May-06

PFFS

CCP

A D

nrollmen

vantage), PFFS (

ata. 

care Advant

en area, som

plemented by

plans. Such 

y employers

ears, enrollm

ment grew b

n employer g

ment in the M

plans were r

ervice (PFFS

MA bid data s

FFS spend

ividual mark

compared w

Nov-0

Data Book: Hea

nt in emp

(private fee-for-s

tage (MA) pl

me MA plans 

y their forme

plans are us

s or unions ra

ment in emplo

by about 65 

group plans, 

Medicare Imp

required to h

S) plans. 

shows that e

ing than indi

et MA plans

ith 99 perce

07 Fe

lth care spendi

ployer gr

service), CCP (co

ans are ava

are availabl

er employer 

sually offere

ather than to

oyer group p

percent. As 

or about 18

provements 

have network

employer gro

ividual plans

s. Employer g

nt of FFS fo

eb-08

ding and the Me

roup MA

oordinated care p

ailable to any

le only to ret

or union. Th

ed through in

o individual b

plans has mo

of February

8 percent of a

for Patients

ks and after 

oup plans on

s, meaning t

group plans 

or individual p

Feb-09

edicare program

A plans, 2

plan). 

y Medicare b

tirees whose

hese plans a

nsurers and 

beneficiaries

ore than dou

y 2011, abou

all MA enrol

s and Provide

2010 could 

n average h

that group pl

 bid an aver

plans (not sh

Feb-10

m, June 2011 

2006–201

beneficiary 

e Medicare 

are called 

are markete

s. 

ubled, while 

ut 2.1 million

lees. 

ers Act of 20

no longer be

ave bids tha

lans appear 

rage of 108 

hown in cha

Feb-1

 151

11 

ed to 

n

008, 

e

at are 

less 

art 

11
152 Med

Chart 

Source: C

co

• The C

type 

provid

to ex

• In 20

decre

and p

• SNPs

requi

Impro

Afford

end o

0

100

200

300

400

500

600

700

800

900

Number of special needs plans

dicare Advanta

9-8. N

fr

MS special need

omprehensive re

Congress cr

in the Medic

de a commo

pand benefi

11, there are

ease from 20

plans with sm

s were origin

rements, by

ovements fo

dable Care A

of 2014. 

11

0

0

0

0

0

0

0

0

0

0

2004

age 

umber o

rom 2008

ds plans fact shee

ports, March 21,

eated specia

care Prescrip

on framewor

ciaries’ acce

e 455 SNPs

008 as CMS

mall enrollme

nally authoriz

y the Medica

r Patients an

Act of 2010. 

125

2005

of specia

8 peak 

et and data sum

 2007, April 2008

al needs pla

ption Drug, I

rk for the exi

ess to and ch

s. As is the c

S has made e

ent. 

zed for five y

re, Medicaid

nd Providers

Absent con

276

2006

al needs 

mary, February 1

8, April 2009, Ap

ans (SNPs) a

mprovemen

sting plans s

hoice among

ase with all 

efforts to red

years. SNP 

d, and SCHI

s Act of 2008

gressional a

476

2007

plans co

14, 2006, and CM

pril 2010, and Ap

as a new Me

nt, and Mode

serving spec

g MA plans.

MA plans, th

duce the num

authority wa

P Extension

8, and the P

action, SNP 

769

2008 2

ontinues

MS special need

pril 2011. 

edicare Adva

ernization Ac

cial needs b

his number m

mber of dupl

as extended

n Act of 2007

Patient Prote

authority wi

698

5

2009 20

s to decli

ds plans 

antage (MA)

ct of 2003 to

eneficiaries 

marks a stea

licative plans

, subject to n

7, the Medica

ction and 

ll expire at th

562

45

010 20

ne 

) plan 

o

and 

ady 

s

new 

are 

he 

55

11
Chart 

Note: SN

Source: C

• Altho

2010

• In 20

bene

institu

• Enrol

April 

• The a

serve

bene

institu

serve

0

100

200

300

400

500

600

Number of SNPs

9-9. N

ro

NP (special need

MS special need

ough the num

 to April 201

11, most SN

ficiaries with

utions (or re

llment in SN

2011. 

availability o

ed. In 2011, 

ficiaries (dow

utionalized b

e beneficiarie

335

74

153

April 20

Chronic or d

Institutional

Dual eligible

A D

umber o

ose from

ds plan). 

ds plans compreh

mber of spec

1, the numb

NPs (66 perc

h chronic con

side in the c

Ps has grow

f SNPs has 

76 percent o

wn from 79 

beneficiaries

es with chro

10 A

disabling con

l

e

Data Book: Hea

of SNPs d

m 2010 to

hensive reports, 

cial needs pl

ber of SNP e

cent) are for 

nditions, and

community b

wn from 0.8 

changed slig

of beneficiar

percent in 2

s (down from

nic condition

298

65

92

April 2011

dition

lth care spendi

decrease

o 2011 

April 2010 and 2

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nding for Par

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rt B drugs ad

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ng on Part B

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ale price to 1

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edicare spend

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facilities. 

ms data. 

dministered 

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B drugs incre

the Medicare

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ing declined

 at an avera

ent system, a

use of darbe

declined by 

e policy and 

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rovided in ho

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e payment r

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ospital outpa

nding and ho

ugs in 2009.

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ding and the Me

art B drug

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lities. MedPA

atient depart

ospital-based

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edicare program

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per year sinc

ng to the mo

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ments equa

d dialysis fa

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m, June 2011 

nistered 

ers 

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hed in hospital 

y suppliers 

cent per year

based on the

 move to the

nding has 

ce 2005. 

odest growth

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2009 due in

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of hospitals o

es that paym

led about $3

cilities billed

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in 

rugs 

r

e

e

h in 

n part 

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ments 

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urnished in hosp

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ates the list (

py) because

r coverage o

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ministered in 

nistered

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mpetition

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isource

epartments or dia

ce become avail

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er drugs mus

B drugs. 

physicians’ 

d in phys

by share

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 spending 

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lable. 

biologic approva

but spending

all Part B dr

eat cancer o

st be admini

offices or fu

sicians’ 

e of 

f Rank

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2

3

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 10

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of

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signed

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that is 

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million 

for extr

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8 millio

(4 perc

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enrolle

Medica

spendi

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spendi

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an acti

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w

cr

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etiree drug subsi

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MS Managemen

f Defense; Depar

atabase. 

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 up for Part D pl

ubsidy (RDS). (I

equal to or grea

e subsidy for 28

10 million benef

are dually eligib

ra help either be

e Program or be

on (17 percent of

cent) are in Med

enrollees in stan

ees (17 percent) 

are’s RDS numb

ng. 

Medicare benefi

ng. For example

Benefits progra

ve worker. CMS

imated 4.7 millio

Prim

throug

re

Primary

throug

TRICAR

active w

Medicare 

p

1

A D

n 2010, a

were enro

reditable

ubsidy), PDP (pr

idy), FEHB (Fede

ealth program fo

age means drug 

nt Information Inte

rtment of Veteran

CMS estimated t

lans or had pres

f an employer a

ater in value than

 percent of each

ficiaries (nearly 2

ble to receive Me

ecause they rece

ecause they app

f all Medicare be

icare Advantage

nd-alone PDPs n

are in MA–PDs 

bered 6.4 million

ciaries have cre

e, 6.2 million ben

am, TRICARE, th

S estimates that 

on beneficiaries 

LIS enroll

P

4

mary coverage 

h employers that

eceive RDS

14%

y coverage 

gh FEHB, 

RE, VA, or 

worker with 

as secondary 

payer

13%

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creditable cov

4%

Data Book: Hea

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

that 34 million o

scription drug co

grees to provide

n that of Part D (

h eligible individu

22 percent) rece

edicare and all M

eive benefits thro

lied directly to th

eneficiaries) are 

e–Prescription D

numbered 9.7 m

or other private

, or 14 percent. 

editable drug cov

neficiaries (13 p

he Department o

another 1.6 mill

(10 percent) hav

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

of the 46 million M

verage through 

e primary drug c

(called creditable

ual’s drug costs 

eive Part D’s low

Medicaid benefit

ough the Medica

he Social Securi

enrolled in stan

Drug plans (MA–

million, or 21 perc

 Medicare healt

Those groups o

verage, but that 

ercent) receive d

of Veterans Affa

ion individuals h

ve no creditable 

Non-LI

LIS e

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

Medicare benefi

employer-spons

coverage to its re

e coverage), Me

that fall within a

w-income subsid

ts offered in their

are Savings Pro

ty Administratio

nd-alone prescrip

–PDs). 

cent of all Medic

th plans. Individu

of beneficiaries d

coverage does 

drug coverage t

airs, or current em

have other sourc

e drug coverage.

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

iciaries (73 perc

sored plans und

etirees with an a

edicare provides

a specified range

y (LIS). Of these

r state. Another 

ogram or Supple

n. Among all LIS

ption drug plans

care beneficiarie

uals whose emp

directly affect Me

not affect Medic

through the Fede

mployers becau

ces of creditable

. 

Ps

P

3

m, June 2011 

neficiarie

r sources

n Drug [plan]), R

terans Affairs). 

Part D benefit. 

agement; Depart

able Coverage 

cent) were either

der Medicare’s re

average benefit v

s the employer w

e of spending.) 

e individuals, 6.4

3.5 million quali

mental Security

S beneficiaries, 

s (PDPs) and 2 m

es. Another 7.9 m

ployers receive 

edicare program

care program 

eral Employees 

use the individua

e coverage. 

PDPs

38%

159

es 

s of 

DS 

tment 

r

etiree 

value 

with a 

4

ified 

y

about 

million 

million 

m

al is still 
160 Pre

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Deductible

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Annual ou

Total cove

 out-of-p

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 coverag

Minimum 

 out-of-p

 Copay

 mul

 Copay

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(7

en

po

($

co

en

Source: C

• The M

defin

on co

a cov

2011

durin

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perce

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presc

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rate a

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actua

a pla

no de

perce

defin

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plan 

cover

escription drugs

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. 

$6,447.50) is for a

overage gap. Cos

nrollee pays nom

MS, Office of the

Medicare Pr

ed standard

overed drugs

verage gap u

, enrollees w

g the covera

dable Care A

ent for brand

llees with dr

cription or 5 

parameters o

as the annua

n certain lim

arial value as

n may use ti

eductible but

ent. Both def

ed standard

e a sponsorin

region, it ma

rage combin

s

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 D

 benefit stru

s until the en

until annual o

were respon

age gap. Bec

Act of 2010, 

d-name and 

ug spending

percent coin

of this define

al increase i

mits, sponsor

s the defined

iered copaym

t use cost-sh

fined standa

 benefit are 

ng organizat

ay also offer 

ned. 

ers of the

2

$25

2,2

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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.

rug, Improve

cture. In 201

nrollee reach

out-of-pocke

sible for pay

cause of cha

beginning in

97 percent f

g above $4,5

nsurance. 

ed standard 

n average to

ring organiza

d standard b

ments rathe

haring requir

ard benefit p

known as “b

tion offers on

a plan with 

e defined

2006 2

50.00 $2

250.00 2,5

600.00 4,0

00.00 5,7

850.00 3,2

2.00

5.00

ee pays the dedu

ug spending reac

paying 100 perce

e reduced cost s

es of supplemen

of supplemental 

.

ement, and 

11, it has a $

hes $2,840 i

et spending 

ying the full d

anges made

n 2011, enro

for generic d

550 would pa

benefit struc

otal drug exp

ations may o

benefit but a 

r than 25 pe

rements tha

lans and pla

basic benefit

ne plan with

enhanced b

d standar

2008 2

275.00 $2

510.00 2,7

050.00 4,3

726.25 6,1

216.25 3,4

2.25

5.60

uctible and then 

ches the initial co

ent of covered dr

sharing for the co

ntal coverage filin

coverage does n

Modernizati

$310 deduct

n total cover

reaches the

discounted p

e by the Pati

ollees face r

drugs filled in

ay the great

cture increa

penses of M

offer Part D p

different be

ercent coinsu

t are equiva

ans that are 

ts.” 

h basic bene

benefits—ba

rd benef

2009 

295.00 $3

700.00 2,8

350.00 4,5

153.75 6,4

453.75 3,6

2.40

6.00

25 percent of co

overage limit (IC

rug spending up 

overage gap. The

ng only brand-na

not count toward

on Act of 20

tible, 25 perc

red drug spe

e annual thre

price of cove

ent Protectio

reduced cost

n the covera

ter of $2.50 t

se over time

edicare ben

plans that ha

enefit structu

urance. Or a

alent to a rate

actuarially e

fits within a 

sic and supp

fit increa

2010 2

310.00 $31

830.00 2,84

550.00 4,55

440.00 6,44

610.00 3,60

2.50 

6.30 

overed drug spen

L). Before 2011, 

to the annual ou

e amount for 201

me drugs during

d this threshold. T

003 specified

cent coinsur

ending, and 

eshold. Befo

ered drugs fi

on and 

t sharing of 5

age gap. 

to $6.30 per

e at the sam

neficiaries. 

ave the sam

re. For exam

a plan may h

e higher tha

equivalent to

prescription

plemental 

ase 

2011 

10.00 

40.00 

50.00 

47.50 

07.50 

2.50 

6.30 

nding 

ut-of11 

g the 

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d a 

rance 

then 

re 

illed 

50 

r

e 

me 

mple, 

have 

n 25 

o the 

 drug 
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 Actuaria

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offerin

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the 34

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covera

same 

percen

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of all p

2010. 

• In 201

Howev

beginn

4). In a

covera

10-5. C

rganization 

*

enefit 

standard 

lly equivalent**

ed 

eductible 

d

standard† 

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

Includes “actuar

$310 in both 201

edPAC analysis 

D drew about 3

Plan sponsors

ngs is primarily

een basic and e

1, 77 percent 

4 PDP regions.

sors are offerin

age) for 2011 a

average value

nt) are in actua

er proportion o

plans with som

1, 85 percent 

ver, because o

ning in 2011, b

addition, many

age gap. 

A D

Character

Plans 

Number P

1,576 

1,268 

308 

172 

* 609 

795 

629 

374 

573 

ap 

 273 

me 

35 

1,268 

drug plan). The 

xcluded plans ha

mbers of plans fo

ially equivalent s

0 and 2011. 

of CMS landsca

30 percent fewe

s are offering 1

y the result of r

enhanced ben

of all PDPs ar

. Plans offered

ng a slightly sm

and a slightly l

e as the define

arially equivale

of PDPs includ

me gap coverag

of PDP enrolle

of the changes

beneficiaries no

y PDP enrollee

Data Book: Hea

ristics of

 2010

Enro

Feb

Num

ercent (in mill

100% 16.

80 14.

20 2.

11 1.

39 11.

50 3.

40 6.

24 2.

36 8.

17 1.

2 <0.

80 15.

PDPs and enroll

ve 1.6 million en

or organizations w

standard” and “ba

ape, premium, an

er stand-alone

1,109 PDPs in

egulations and

efit plans. 

re offered by sp

d by those natio

maller proportio

arger proportio

ed standard be

ent plans. 

de some benef

ge offer generi

ees are in plan

s made by the 

o longer face 1

es receive Part

lth care spendi

f Medica

ollees as of 

bruary 2010

ber 

ions) Percent

6 100%

0 84

7 16

6 9

4 68

7 22

5 39

1 12

1 49

0 6

1 0

7 94

lment described 

nrollees in 2011 a

with at least 1 PD

asic alternative” 

nd enrollment dat

e prescription d

2011 compare

d guidance iss

ponsoring orga

onal sponsors 

on of PDPs wit

on of benefits w

nefit but with a

fits in the cove

ics and brandns that offer no

Patient Protec

100 percent co

t D’s low-incom

ding and the Me

are PDPs

P

t Number

1,109

851

258

133

474

502

464

197

448

259

106

744

here exclude em

and had 1.1 millio

DP in each of the

benefits. 

ta. 

drug plans (PD

red with 1,576

ued by CMS to

anizations that

s account for 82

th enhanced b

with actuarially

alternative ben

rage gap for 2

-name drugs, c

o additional be

ction and Affor

oinsurance in t

me subsidy, wh

edicare program

s

2011

lans

r Percent (

100% 

77 

23 

12 

43 

45 

42 

18 

40 

23 

10 

67 

mployer-only plan

on in 2010. Sum

e 34 PDP regions

DPs) into the fie

in 2010. The r

o differentiate 

t have at least 

2 percent of al

benefits (basic 

y equivalent be

nefit designs. M

2011 than in 20

compared with

nefits in the co

rdable Care Ac

the coverage g

hich effectively

m, June 2011 

1 

Enrollees a

February 20

Number

in millions) Pe

17.0 1

13.9 

3.0 

1.3 

12.6 

3.0 

7.3 

2.1 

7.6 

2.2 

0.3 

14.4 

ns and plans offe

s may not add to

s. 

eld for 2011 th

reduction in pla

more clearly 

1 PDP in eac

ll PDP enrollm

plus suppleme

enefits—havin

Most enrollees 

010. Nearly a t

h about 1 in 10

overage gap. 

ct of 2010, 

gap (see Chart

y eliminates th

161

as of 

011 

ercent 

100% 

82 

18 

8 

74 

18 

43 

13 

45 

13 

2 

85 

ered in 

o totals 

han in 

an 

h of 

ment. 

ental 

ng the 

(74 

third 

0 in 

t 10-

e 
162 Pre

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 Local PP

 PFFS 

 Regional

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 Defined s

 Actuarial

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 Reduced

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 brand-n

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Note: M

pr

pl

m

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st

 **

Source: M

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private

perce

2011, 

region

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(comp

with 8

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PDs w

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mostly

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escription drugs

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

ans, plans offere

ay not add to tot

Benefits labeled a

andard” and “bas

$310 in both 201

edPAC analysis 

e are 15 percen

sors are offerin

e fee-for-servi

nt in 2010 (se

HMOs remain

nal preferred p

er share of MA

pare Chart 10-

9 percent of M

MA–PD plans 

with no deducti

PDs are more l

y for generics.

rics but no bra

coverage. Tho

s

Character

Plans 

Number Pe

1,834 10

 

1,038 5

452 2

304 1

40 

 

78 

105 

1,651 9

 

1,657 9

66 

111 

p 

532 2

me 

408 2

894 4

e Advantage–Pre

tion), PFFS (priva

ed in U.S. territor

tals due to round

actuarially equiva

sic alternative” b

10 and 2011. 

of CMS landsca

nt fewer Medic

ng 1,566 MA–

ce plans, mak

e Chart 9-1). A

n the dominan

provider organ

A–PDs than s

-6 with Chart 1

MA–PDs. In 20

have no dedu

ble attracted a

likely than PD

 In 2011, 51 p

nd-name drug

ose plans acco

ristics of

2010

En

Fe

Num

ercent (in mill

00% 7.

57 4.

5 0.

7 0.

2 0.4

4 0.

6 0.

0 6.

0 6.

4 0.

6 0.

9 2.

2 1.

9 2.

escription Drug [p

ate fee-for-servic

ries, 1876 cost pl

ing. 

alent to Part D’s 

benefits. 

ape, premium, an

care Advantag

–PDs compare

king up 9 perce

Although the n

nt kind of MA–P

izations remai

tand-alone pre

10-5). In 2011,

011, enhanced

ctible: 87 perc

about 91 perce

Ps to provide 

percent of MA–

g coverage and

ount for 54 per

f MA–PD

nrollees as of 

ebruary 2010

ber 

ions) Percent

0 100%

7 68

9 13

9 13

4 6

1 1

3 5

6 94

6 94

2 3

2 2

3 33

7 25

9 42

plan]), HMO (hea

ce). The MA–PD

lans, special nee

standard benefit

nd enrollment dat

ge–Prescriptio

ed with 1,834 t

ent of all (unw

number of loca

PD. The numb

ined stable be

escription drug

, 45 percent of

d MA–PDs attr

cent of MA–PD

ent of total MA–

some addition

–PDs included

d 22 percent w

rcent of MA–P

Ds 

Pla

t Number

1,566

936

445

146

39

51

121

1,394

1,358

123

85

457

350

759

alth maintenance

s and enrollmen

eds plans, demon

t include what CM

ta. 

on Drug plans 

the year before

weighted) offer

al HMOs also 

ber of drug pla

etween 2010 a

g plans (PDPs

f all PDPs had

racted 92 perc

D offerings in 20

–PD enrollmen

nal benefits in 

d some gap co

with some gen

PD enrollment.

2011 

ans

Percent (in

100% 

60

28

9

2

3

8

89

87

8

5

29

22

48

e organization), P

t described here

nstrations, and P

MS calls “actuari

(MA–PDs) in 

e. The largest

rings in 2011 c

declined betw

ans offered by

and 2011. 

s) offer enhanc

d enhanced be

cent of total M

011 and 90 pe

nt in 2011. 

the coverage 

overage—29 p

nerics and som

Enrollees as o

February 201

Number 

n millions) Pe

8.6 1

5.7 

1.7 

0.5 

0.7 

0.1 

0.6 

7.9 

7.8 

0.5 

0.2 

3.0 

1.6 

3.9 

PPO (preferred 

e exclude employ

Part B-only plans

ially equivalent 

2011 than in 2

t decrease wa

compared with

ween 2010 and

y both local an

ced benefits 

enefits compa

MA–PD enrollm

ercent in 2010.

 gap, although

percent with so

me brand-nam

of 

1 

ercent 

100% 

66 

20 

5 

8 

1 

7 

92 

91 

6 

3 

36 

19 

46 

yer-only 

s. Sums 

2010. 

s for 

h 17 

d

d 

red 

ment. 

. MA–

h

ome 

me 
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

en

an

 *R

of

be

av

op

Source: M

• On av

than 

• The a

in 20

• Medi

prem

the p

may a

in the

with P

• The p

rema

$14 p

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

nrollment describ

nd Part B-only pl

Reflects the portio

ffer Part D covera

enchmark and its

verage premiums

peration than MA

edPAC analysis 

verage, Part

$1 compare

average pres

10—a 3 per

care Advant

ium attributa

lan’s payme

also enhanc

ese ways, re

PDPs. 

portion of Me

ained flat (de

per month. 

A D

Average P

2010 

nrollment 

n millions) 

Av

20

w

13.0 

3.7 

16.6 

 

1.0 

7.0 

8.0 

 

 

14.0 

10.7 

24.7 

drug plan), MA–

ment described he

bed here exclude

ans. 

on of Medicare A

age. MA–PD pre

s bid for providing

s for enhanced M

A–PDs with basic

of CMS landsca

t D enrollees

ed with 2010

scription dru

cent increas

tage–Prescr

able to Part 

ent benchma

ce their Part 

esulting in mo

edicare Adva

ecrease of le

Data Book: Hea

Part D pr

erage monthly 

010 premium 

weighted by 

2010 

enrollment 

 

$34

50

37

26

13

14

33

25

30

–PD (Medicare A

ere exclude emp

e employer-only p

Advantage plans

emiums reflect re

g Part A and Par

MA–PD plans ref

c coverage. 

ape, plan report, 

s pay $30 pe

. 

ug plan (PDP

se. 

ription Drug p

D using reba

ark and its bi

D benefit wi

ore enhance

antage prem

ess than $1) 

lth care spendi

remiums

2011 

enrollment 

(in millions)

 

13.9 

3.0

17.0 

1.1 

7.6

8.7 

15.0 

10.6

25.6 

Advantage–Presc

loyer-only plans 

plans, plans offe

’ total monthly pr

ebate dollars (75 

rt B services) tha

lect a different m

and enrollment d

er month in 2

P) enrollee p

plans (MA–P

ate dollars—

id for providi

ith rebate do

ed offerings 

miums attribu

in 2011, with

ding and the Me

s

Average mo

 2011 prem

weighted 

 2011 

enrollme

 

$33

63

38

27

12

14

33

26

30

cription Drug [pla

and plans offere

red in U.S. territo

remium attributa

percent of the di

at were used to o

mix of sponsoring

data. 

2011, with p

pays $38 per

PDs) can low

—75 percent 

ing Part A a

ollars. Many 

and lower a

utable to pre

h the averag

edicare program

onthly 

mium 

by 

nt 

Doll

chan

–$0.

13.

1.

1.

–1.

–0.

–0.

0.

0.

an]), SNPs (spec

ed in U.S. territor

ories, 1876 cost 

ble to Part D ben

ifference betwee

offset Part D prem

g organizations a

premiums inc

r month, com

wer the part 

of the differ

nd Part B se

MA–PDs us

average prem

escription dru

ge MA–PD e

m, June 2011 

lar 

nge 

Perce

chan

weig

aver

prem

 

6 –

1 2

2 

 

6 

0 –

7 –

 

 

5 –

9 

2 

ial needs plans).

ries. The MA–PD

plans, demonstr

nefits for plans th

en a plan’s paym

mium costs. Low

and counties of 

creasing by 

mpared with 

of their mon

rence betwee

ervices. MA–

se rebate do

miums comp

ug benefits 

enrollee pay

163

entage 

ge in 

hted 

rage 

mium 

–2 % 

26

3

6

–8

–5

–1

4

1

. The 

Ds and 

rations, 

hat 

ent 

wer 

less 

$37 

nthly 

en 

–PDs 

ollars 

pared 

ing 
164 Pre

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

2010 t

• Hawai

• In 201

premiu

• Each r

escription drugs

10-8. N

en

of

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 standto 1,109 in 2011

i had the fewes

1, enrollees wh

um. In 2011, 33

region has at le

s

umber o

nrollees 

f PDPs d

)

H

A, RI, VT 

E, MD 

V

 MT, ND, 

D, WY 

A

drug plan), LIS (

n 2011 PDP land

-alone prescrip

1. The median 

st stand-alone P

ho receive Part 

32 PDPs qualifie

east four PDPs 

of PDPs q

increase

declined

Numbe

2010 2

43 

48 

50 

47 

45 

55 

44 

47 

47 

45 

49 

46 

46 

46 

44 

48 

46 

45 

49 

45 

45 

50 

46 

46 

46 

47 

48 

46 

46 

44 

48 

47 

41 

41 

1,576 1

(low-income sub

dscape file and L

tion drug plans

number of plan

PDPs with 28; t

D’s low-income

ed to be premiu

available to LIS

qualifyin

ed in 201

er of PDPs 

2011 Differe

30 –1

34 –1

33 –1

33 –1

33 –1

38 –1

32 –1

33 –1

34 –1

32 –1

32 –1

34 –1

35 –1

34 –1

32 –1

32 –1

35 –1

32 –1

34 –1

32 –1

32 –1

33 –1

33 –1

33 –1

33 –1

32 –1

31 –1

30 –1

31 –1

32 –1

35 –1

33 –1

28 –1

29 –1

,109 –46

sidy). 

LIS enrollment da

s (PDPs) decline

ns offered in eac

the Pennsylvan

e subsidy (LIS) 

um-free to thos

S enrollees at n

ng as pre

11, even 

Nu

ence 20

13 

14 

17 

14 

12 

17 

12 

14 

13 

13 

17 

12 

11 

12 

12 

16 

11 

13 

15 

13 

13 

17 

13 

13 

13 

15 

17 

16 

15 

12 

13 

14 

13 

12 

67 3

ata provided by C

ed by 30 perce

ch region is 33

nia–West Virgin

 have more opt

se enrollees, co

no premium. 

emium-fr

as overa

umber of PDPs t

premium for LIS

010 2011 

4 7 

13 12 

11 11 

6 6 

11 12 

11 12 

11 10 

8 11 

13 15 

8 14 

5 4 

9 11 

9 12 

5 8 

9 14 

10 10 

10 10 

13 5 

15 17 

10 14 

13 10 

11 12 

10 10 

9 12 

8 10 

8 8 

6 7 

8 9 

5 4 

9 8 

9 11 

7 5 

7 6 

6 5 

307 332 

CMS. 

ent around the c

compared with

nia region had t

tions for PDPs 

ompared with 30

ree to LIS

all numb

that have zero 

S enrollees 

Difference

3 

–1 

0 

0 

1 

1 

–1 

3 

2 

6 

–1 

2 

3 

3 

5 

0 

0 

–8 

2 

4 

–3 

1 

0 

3 

2 

0 

1 

1 

–1 

–1 

2 

–2 

–1 

–1 

25 

country, from 1

h 46 in 2010. 

he most with 38

in which they p

07 in 2010. 

S

ber 

,576 in 

8. 

pay no 
Chart 

Note: PD

en

ex

Source: M

su

• In 20

betwe

with t

in pla

(MA–

• For e

drugs

brand

media

gene

• Most 

all dr

or mo

and 3

speci

22

18

59

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20

10-9. In

ch

b

DP (prescription 

nrollment. All calc

xclude demonstra

edPAC-sponsore

ubmitted to CMS

11, 80 perce

een preferre

two generic 

ans with such

–PD) plan en

enrollees in P

s, the media

d. The media

an copay is 

ric drug. 

plans, exce

ugs, also us

ore. In 2011

33 percent a

ialty tiers. 

2% 19%

8%

11%

9%

69%

1% 1%

006 2007

A D

n 2011, m

harge hi

rand-nam

drug plan), MA–

culations exclude

ation programs, 

ed analysis by N

. 

ent of prescr

ed and nonp

and two bra

h distinction

nrollees are 

PDPs that di

n copay in 2

an copay for

$40 for a pr

ept those tha

se a specialty

, median cos

among MA–P

17%

10%

4%

1

79%

87%

3%

<1% <1%

2008 2009

PDP enrolle

Other 

Two ge

Gener

Gener

25% c

Data Book: Hea

most Part

gher cop

me drugs

–PD (Medicare A

e employer-only 

special needs pl

NORC/Georgetow

ription drug p

referred bra

nd-name tie

s. Over 90 p

in such plan

istinguish be

2011 is $42 f

r generic dru

referred bran

at use the de

y tier for dru

st sharing fo

PDs. Enrolle

9% 8%

% 3%

81%

80%

6%

11%

<1%

2010 2011

ees

tier structure

eneric and two b

ic, preferred bran

ic and brand-nam

oinsurance

lth care spendi

t D enrol

payment

s

Advantage–Presc

groups and plan

ans, and 1876 c

wn University/Soc

plan (PDP) e

nd-name dru

ers. In 2006, 

percent of M

ns in 2010, u

etween prefe

for a preferre

ugs is $7. Fo

nd, $80 for a

efined standa

gs that have

or a specialty

ees may not 

2%

24

%

73

%

2% 1%

1 20

brand-name tiers

nd, and nonprefe

me tiers

ding and the Me

llees are

ts for no

cription Drug [pla

ns offered in U.S

cost plans. Sums

cial and Scientifi

enrollees are

ugs; anothe

only 59 per

edicare Adv

up from 73 p

erred and no

ed brand an

or MA–PD en

a nonpreferre

ard benefit’s

e a negotiate

y tier drug is

appeal cost 

1% 1%

4%

8%

3%

87%

3% 5%

006 2007

M

erred brand-nam

edicare program

e in plans

npreferr

an]). Calculations

. territories. In ad

 may not add to 

ic Systems analy

e in plans th

r 11 percent

rcent of PDP

vantage–Pre

ercent in 20

onpreferred b

nd $78 for a 

nrollees, in 2

ed brand, an

s 25 percent 

ed price of $

s 30 percent 

t sharing for 

1% 1 9% 8%

85% 83%

% 1% 6% 2

2008 2009

MA-PD enrollees

me tiers

m, June 2011 

s that 

red 

s are weighted by

ddition, MA–PDs

totals due to rou

ysis of formularie

hat distinguis

t are in plans

P enrollees w

escription Dr

06. 

brand-name

nonpreferre

2011, the 

nd $6 for a 

coinsurance

$600 per mo

among PDP

drugs in 

% 8% 1% 7%

80% 77%

10% 14%

2% 1%

2010 2011

165

y

s

unding. 

es 

sh 

s

were 

rug 

e

d 

e for 

nth 

Ps 

%

%

1
166 Pre

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

28 pe

comm

then 

0%

5%

10%

15%

20%

25%

30%

35%

au

escription drugs

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

11, the aver

ation manag

ercent for the

mon utilizatio

step therapy

Prior

thorization

Ste

thera

2007 2008

s

n 2011, 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 32

e average M

on managem

y. 

ep

apy

Quantity

limits

8 2009 201

PDPs

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 stand2 percent of

Medicare Adv

ment tool is q

Any

utilization

management

10 2011

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

vantage–Pre

quantity limit

0%

5%

10%

15%

20%

25%

30%

35%

Pr

author

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

escription Dr

ts, followed b

rior

rization

Step

therapy

2007 2008

MA

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, 

rug plan enr

by prior auth

Quantity

limits u

ma

2009 2010

A-PDs

ols 

MA–PDs

s are weighted by

ddition, MA–PDs

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

rollee. The m

horization, a

Any

utilization

anagement

2011

s

y

s

emical 

e try 

ug 

es 

ciary 

n 

s of a 

es 

s. 

ess, 

ively, 

or 

gs 

of 

with 

most 

nd 
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

 *F

A 

sw

 **

co

th

ba

†P

be

 

Source: M

• In 200

them (

Prescr

• Comp

MA–P

compa

under 

• Patter

percen

• The av

while t

10-11. C

es* (in millions

of all Medicare 

icity 

on-Hispanic 

American, 

spanic 

s) 

y** 

itan 

itan 

sk score† 

elative to all Pa

DP (prescription 

ay not sum to 10

Figures for Medic

beneficiary is cla

witch plan types d

Urbanicity based

ore urban area of

an 50,000) popu

ased statistical a

Part D risk score

efore 2006. Risk 

edPAC analysis 

09, 28.7 million 

(18.7 million) w

ription Drug pla

ared with the o

D enrollees are

ared with PDP 

age 65 compa

ns of enrollmen

nt in metropolit

verage risk sco

the average ris

A D

Character

All 

Medicare

) 48.8 

100% 

45% 

55 

78 

10 

8 

3 

2 

21 

24 

18 

15 

22 

79 

12 

8 

1.049 

rt D 

drug plan), MA–

00 percent due to

care and Part D i

assified as LIS if 

during the year, 

d on the Office of

f 50,000 or more

ulation. Fewer tha

rea designation. 

es are calculated 

scores shown he

of Medicare Par

Medicare bene

were in stand-al

ans (MA–PDs).

overall Medicar

e less likely to 

enrollees; LIS 

ared with non-L

nt by urbanicity

an areas, 12 p

ore for PDP enr

sk score for MA

Data Book: Hea

ristics of

 Part D 

 

28.7 

59% 

41% 

59 

74 

11 

10 

3 

2 

23 

22 

18 

15 

22 

79 

12 

9 

1.101 

100% 

–PD (Medicare A

o rounding. 

nclude all benefi

that individual re

classification into

f Management a

e population, and

an 1 percent of M

by CMS using th

ere are not adjus

rt D denominator

eficiaries (59 p

lone prescriptio

. About 11 milli

re population, P

be disabled be

enrollees are m

LIS enrollees. 

y for Part D enr

ercent in micro

rollees is highe

A–PD enrollees

lth care spendi

f Part D e

 PDP

 

18.7

 38

 40%

 60

 76

 11

8

3

 2

 27

 20

 17

 14

 23

 74

 15

 11

 1.123

 102%

Advantage–Presc

iciaries with at le

eceived Part D’s 

o plan types is ba

nd Budget’s core

 a micropolitan a

Medicare benefic

he prescription d

sted for LIS or in

r and enrollment 

ercent) enrolle

on drug plans (

on enrollees re

Part D enrollee

eneficiaries und

more likely to b

rollees were sim

opolitan areas, 

er (1.123) than 

s is lower (1.06

ding and the Me

enrollees

Plan type 

 MA–PD

7 10.0 

8% 21%

 

 

% 43%

0 57 

 

 

6 72 

 10 

8 14 

3 3 

2 1 

 

 

7 16 

0 26 

7 20 

4 16 

3 21 

 

 

4 89 

5 7 

 4 

 

3 1.060 

% 96%

cription Drug [pla

east one month o

LIS at some poi

ased on a greate

e-based statistica

area contains an

ciaries were exclu

drug hierarchical 

stitutionalized st

files from CMS. 

ed in Part D at s

(PDPs), with 10

eceived Part D

s are more like

der age 65 and

be female, nonmilar to the ove

and the remai

the average fo

). 

edicare program

s, 2009 

S

D L

 

 10.9

% 2

 3

 6

5

 2

 1

 4

 1

 1

 1

 2

 7

 1

 1

 1.20

 109

an]), LIS (low-inco

of enrollment in th

int during the yea

er number of mo

al area. A metrop

 urban core of at

uded due to an u

condition catego

tatus (multipliers)

some point in t

0 million in Med

’s low-income 

ely to be female

d more likely to 

-White, and dis

erall Medicare 

ning 9 percent 

or all Part D en

m, June 2011 

Subsidy status

IS Non-L

9 17.8

2% 37

9% 42

61 58

59 84

0 6

4 7

5 2

2 1

42 12

4 26

3 21

1 17

0 24

77 80

3 11

0 8

01 1.041

9% 95%

ome subsidy). To

he respective pro

ar. For individual

nths of enrollme

politan area cont

t least 10,000 (bu

unidentifiable cor

ory model develo

). 

the year. Most 

dicare Advanta

subsidy (LIS).

e and non-Whi

be Hispanic 

sabled benefici

population with

in rural areas.

rollees (1.101)

167

LIS 

8 

7% 

2% 

8 

4 

6

7 

2 

 

2 

6 

 

7 

4 

0 

1 

8 

 

% 

otals 

ogram. 

ls who 

nt. 

tains a 

ut less 

reoped 

of 

age–

te. 

aries 

h 79 

 

), 
168 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

du

N

Source: M

• Betwe

per ye

same 

numbe

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 

Figures include a

eceived Part D’s 

uring the year, th

umbers may not 

edPAC analysis 

een 2006 and 2

ear, compared w

period, the num

er of non-LIS e

s

art D en

millions* 

n-Hispanic 

percent 

n-Hispanic 

drug plan), MA–

all beneficiaries w

LIS at some poin

hat individual was

sum to totals du

of Medicare Par

2009, Medicare

with growth rat

mber of enrolle

enrollees grew b

rollment

200

24.

17.

6.

10.

14.

17.

2.

2.

2.

5.

5.

8.

5.

–PD (Medicare A

with at least one m

nt during the yea

s classified into t

ue to rounding. 

rt D denominator

e Advantage–P

tes of less than

ees receiving th

by 10 percent i

t trends, 

06 

 

.5 

 

 

.7 

.8 

 

 

.2 

.3 

 

 

.2 

.6 

.2 

.5 

 

 

.6 

.0 

.3 

.6 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advantage–Presc

month of enrollm

r. If a beneficiary

he type of plan w

r and enrollment 

rescription Dru

n 5 percent per 

he low-income 

in 2007, 8 perc

2006–20

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 

cription Drug [pla

ment. A beneficia

y was enrolled in

with a greater nu

files from CMS. 

ug plan enrollm

year for presc

subsidy (LIS) r

cent in 2008, an

009 

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 

an]), LIS (low-inco

ry is classified as

n both a PDP and

mber of months 

ment grew by m

cription drug pla

remained relati

nd 6 percent in

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 

ome subsidy). 

s LIS if that indiv

d an MA–PD plan

of enrollment. 

more than 10 pe

ans. During the

vely flat, while 

n 2009. 

vidual 

n

ercent 

e

the 
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

• Among

D. Ben

subsid

Medic

percen

• A wide

Medic

is gen

• The sh

(Iowa,

(Alask

region

enrollm

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 

g Part D region

neficiaries were

dy (RDS) was o

are beneficiarie

nt or fewer ben

e variation was

are Advantage

erally consiste

hare of Part D e

 Minnesota, Mo

ka). In 26 of the

s (Region 20 (

ment. 

A D

art D en

P

Medica

Part D 

55% 

58

59

53

45

63

52

59

54

60

60

62

54

54

56

54

55

62

61

65

62

57

60

61

, 

66

62

59

61

56

57

57

69

66

39

59

39

69

drug plan), RDS

dy). Definition of

of Part D enrollm

ns, in 2009, bet

e more likely to

observed. For e

es enrolled in P

neficiaries enro

 seen in the sh

e–Prescription D

nt with enrollm

enrollees recei

ontana, North D

e 34 PDP regio

Mississippi) an

Data Book: Hea

rollment

Percent of 

are enrollment 

RDS 

13% 

18

19

22

19

13

11

16

16

11

13

12

25

25

18

15

19

12

9

6

13

15

8

7

9

8

13

12

13

11

11

10

4

25

14

4

25

S (retiree drug su

f regions based o

ment data from C

tween 39 perce

o enroll in Part 

example, in Re

Part D were 69

lled in employe

hares of Part D

Drug (MA–PD)

ent in Medicare

iving the low-in

Dakota, Nebra

ns, LIS enrolle

nd Region 34 (A

lth care spendi

t by regio

P

8

6

5

8

8

5

8

7

7

7

5

6

6

6

8

6

8

7

8

9

6

7

8

8

7

6

4

4

4

6

5

5

4

9

6

4

9

ubsidy), MA–PD (

on PDP regions u

CMS. 

ent and 69 perc

D in regions w

egion 32 (Califo

 percent and 6

er-sponsored p

enrollees who

) plans across P

e Advantage p

ncome subsidy 

ska, South Dak

ees account for 

Alaska)), LIS e

ding and the Me

on, 2009

Perce

Plan type 

PDP MA–

88% 1

69 3

57 4

81 1

85 1

53 4

80 2

75 2

79 2

79 2

54 4

67 3

63 3

65 3

83 1

66 3

87 1

71 2

83 1

90 1

67 3

71 2

80 2

85 1

74 2

63 3

49 5

43 5

47 5

60 4

59 4

52 4

48 5

97

65 3

43

97 5

(Medicare Advan

used in Part D. 

cent of all Med

where a low take

ornia) and Reg

66 percent, resp

plans that recei

o enrolled in pre

PDP regions. T

plans. 

(LIS) ranged f

kota, and Wyo

r 30 percent to 

enrollees accou

edicare program

nt of Part D enro

–PD 

2% 

31 

43 

9 

5 

47 

20 

25 

21 

21 

46 

33 

37 

35 

7 

34 

3 

29 

7 

0 

33 

29 

20 

5 

26

37 

51 

57 

53 

40 

41 

48 

52 

3 

35 

3 

57 

ntage–Prescriptio

dicare beneficia

e-up rate for th

ion 33 (Hawaii

pectively. In the

ved the RDS. 

escription drug

The pattern of M

from 27 percen

ming) to 61 pe

50 percent of e

unt for more tha

m, June 2011 

ollment

Subsidy statu

LIS Non

49% 5

42 5

46 5

35 6

41 5

33 6

38 6

43 5

45 5

44 5

34 6

47 5

34 6

36 6

41 5

33 6

38 6

35 6

45 5

54 4

49 5

45 5

38 6

29 7

27 7

39 6

29 7

31 6

28 7

31 6

28 7

39 6

29 7

61 3

38 6

27 3

61 7

on Drug [plan]), L

aries enrolled in

he retiree drug 

), the shares o

ese two region

g plans (PDPs)

MA–PD enrollm

t in Region 25 

ercent in Region

enrollment. In t

an half of Part 

169

s

n-LIS

51% 

58

54

65

59

67

62

57

55

56

66

53

66

64

59

67

62

65

55

46

51

55

62

71

73

61

71

69

72

69

72

61

71

39

62

39

73

LIS 

n Part 

f 

ns, 10 

and 

ment 

n 34 

two 

D 
170 Pre

Chart 

Note: N

Source: M

• Medi

perce

were 

$6,15

of tot

• The c

thres

spen

low-in

than 

accou

costli

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Percent

escription drugs

10-14. T

th

umbers may not 

edPAC analysis 

care Part D 

ent of Part D

responsible

53.75 under 

tal Part D sp

costliest 9 pe

hold under t

ding. Rough

ncome subs

Medicare Pa

unted for 38

iest quartile 

%

%

%

%

%

%

%

%

%

%

%

Percen

s

he majo

han half 

sum to 100 perc

of Medicare Par

spending is 

D enrollees h

e for 100 per

the defined 

ending. 

ercent of be

the defined s

hly three-qua

idy (see Cha

art A and Pa

 percent of a

accounted f

22%

48%

21%

5%

4%

nt of beneficia

rity of Pa

of all Pa

cent due to round

rt D prescription 

concentrate

had annual s

rcent of the c

standard be

neficiaries, t

standard ben

arters of ben

art 10-15). S

art B spendin

annual Medi

for 81 percen

aries

art D spe

rt D enro

ding. 

drug event data 

ed among a 

spending of $

cost of the d

enefit. These

those with dr

nefit, accoun

eficiaries wi

Spending on 

ng. In 2009, 

care fee-for

nt of Medica

25%

31%

16%

27%

Percent of sp

ending is

ollees, 20

from CMS. 

subset of be

$2,700 or m

drug until the

e beneficiarie

rug spendin

nted for 43 p

ith the highe

 prescription

the costlies

r-service (FF

are FFS spen

pending

s incurre

009 

eneficiaries. 

ore, at whic

eir spending 

es accounte

g above the

percent of to

est spending

n drugs is les

t 5 percent o

FS) spending

nding 

1%

≥ $10

$6,15

$2,70

$295

$0-$2

74%

Annual

prescr

ed by few

In 2009, 30

h point enro

reached 

ed for 74 per

 catastrophi

otal Part D 

 receive Par

ss concentra

of beneficiar

g and the 

0,000

53.75-$9,999

00-$6,153.74

-$2,699

295

 spending on

ription drugs

wer 

llees 

rcent 

c 

rt D’s 

ated 

ries 

n
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

with a

• Most 

presc

Presc

$2,70

highe

that m

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 

09, beneficia

le than bene

pared with 58

eficiaries with

ficiaries und

annual spen

beneficiarie

cription drug

cription Drug

00, on the ot

er annual sp

most LIS enr

A D

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

nding below $

es with spend

 plans (PDP

g plans (MA–

ther hand, a

ending (39 p

rollees are m

Data Book: Hea

ristics of

09 

<$

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

$2,700. 

ding greater

Ps) (81 perce

–PDs) (19 p

re more like

percent com

more costly o

lth care spendi

f Part D e

$2,700 

42%

58

74

11

10

5

21

24

19

15

22

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 $6,1

he low-incom

r than $6,153

ent) compare

ercent). Ben

ly to be in M

mpared with 1

on average a

ding and the Me

enrollees

Annual drug

$2,700–$6,1

38%

62

76

11

9

4

21

19

18

16

27

45

55

71

29

Medicare Advanta

of missing data. 

t D’s LIS at some

during the year, t

a and Part D den

more than $

w $2,700 (6

153.75 are m

me subsidy 

3.75 are enr

ed with Med

neficiaries w

MA–PDs com

19 percent). 

and are in P

edicare program

s, by spe

g spending 

153.75 

age–Prescription

Totals may not s

e point during the

that individual wa

nominator file from

2,700 were 

2 percent an

more likely to

(LIS) compa

rolled in stan

dicare Advan

with annual s

mpared with 

This finding

PDPs. 

m, June 2011 

ending 

>$6,153.75

39%

61 

72 

13 

10 

5 

44 

14 

13 

11 

19 

76 

24 

81 

19 

n Drug [plan]). A 

sum to 100 perce

e year. 

as classified in th

m CMS. 

more likely t

nd 61 percen

o be disabled

ared with tho

nd-alone 

ntage–

pending belo

those with 

g reflects the

171

small 

ent due 

he type 

to be 

nt 

d 

ose 

ow 

e fact 
172 Pre

Chart 

Total gro

Total num

(million

Average

Per enro

 Total s

 Out-of-

 Plan lia

 Low-inc

 Numbe

Note: PD

ap

on

de

st

 *N

 **

 †P

 

Source: M

• In 200

quarte

(PDPs

million

• The n

million

for ab

• Medic

enrolle

Advan

• The a

enrolle

types 

MA–P

• Avera

enrolle

comp

than n

avera

escription drugs

10-16. P

oss spending 

mber of presc

ns) 

 spending pe

ollee per mon

pending 

-pocket spend

ability† 

come cost sh

er of prescript

DP (prescription 

pplicable). Part D

n each record. Fo

enominator file w

atus. Numbers m

Number of prescr

Out-of-pocket (O

Plan liability inclu

edPAC analysis 

09, gross spen

ers ($54.6 billi

s). Part D enr

n) of the total.

number of pres

n) accounted f

bout 45 percen

care beneficia

ees have high

ntage–Prescri

average month

ees ($150), w

of plans ($36

PD enrollees (

age monthly s

ee ($163), wh

ared with 3.6 

non-LIS enroll

ging $140 pe

s

art D spe

(billions) 

criptions* 

r prescription

nth 

ding** 

haring subsidy

tions* 

drug plan), MA–

D prescription dru

or purposes of cl

was used. Estima

may not sum to to

riptions standard

OOP) spending in

udes plan payme

of Medicare Par

nding on drug

ion) accounte

rollees receivin

 

scriptions fille

for by PDP en

nt (598 million

aries enrolled i

her average m

iption Drug (M

hly plan liabilit

while average 

6 vs. $41). The

($21) compare

pending per e

hile the averag

for a non-LIS

lees ($8 vs. $

r month. 

ending a

Part D

$73.8

1,338

n $55

$228

39

136

y 52

4.1

–PD (Medicare A

ug event (PDE) r

lassifying the PD

ates are sensitive

otals due to roun

ized to a 30-day

ncludes all paym

ents for both cove

rt D PDE data an

gs for the Part

ed for by Medi

ng the low-inc

d by Part D e

nrollees. The 

n) of the total n

in Part D plan

monthly spend

MA–PD) plan e

ty for MA–PD 

monthly out-o

e average mo

ed with PDP e

enrollee for an

ge number of 

 enrollee. LIS

58). Part D’s 

and utiliz

D PD

$54

91

$6

$26

4

15

6

4

Advantage–Presc

records are class

DE records by LIS

e to the method u

nding. 

y supply. 

ents that count t

ered and noncov

nd denominator f

t D program to

care beneficia

come subsidy 

nrollees totale

38 percent of

number of pre

ns fill 4.1 presc

ding and more

enrollees. 

enrollees ($1

of-pocket (OO

onthly low-inco

enrollees ($68

n LIS enrollee 

prescriptions 

S enrollees hav

LIS pays for m

zation pe

Plan type 

DP MA–P

.6 $19.2

15 423

60 $45

60 $169

41 36

50 11

68 2

.4 3.7

cription Drug [pla

sified into plan ty

S status, monthly

used to classify P

toward the annua

vered drugs. 

file from CMS. 

otaled $73.8 b

aries enrolled 

y (LIS) accoun

ed 1.34 billion

f enrollees wh

escriptions fille

criptions at $2

e prescriptions

111) is conside

OP) spending i

ome cost shar

8). 

($339) is mo

filled per mon

ve much lowe

most of the co

er enrolle

PD 

2 $

3

5

9 $

6

1 

1 

7

an]), LIS (low-inco

ypes based on th

y LIS eligibility in

PDE records to e

al OOP spending

billion, with rou

 in prescriptio

nted for about 

n, with nearly 7

ho received the

ed. 

228 per month

s filled compa

erably lower t

is similar for e

ring subsidy is

re than doubl

nth by an LIS 

er OOP spend

ost sharing for

ee, 2009

LIS status

LIS No

$40.5 $3

598 7

$68 $

$339 $

8 

192 

140 N

5.0 

ome subsidy), N/

e contract identif

nformation in Par

each plan type an

g threshold. 

ughly threeon drug plans 

55 percent ($

70 percent (9

e LIS account

h on average.

ared with Med

than that of PD

enrollees in bo

s much lower 

e that of a no

enrollee is 5.

ding, on avera

r LIS enrollees

n-LIS 

33.2

740

$45

163

58

104

N/A

3.6

/A (not 

fication 

rt D’s 

nd LIS 

$40.5 

15 

ted 

 PDP 

icare 

DP 

oth 

for 

n-LIS 

0 

age, 

s, 
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

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 that

DP and an MA–P

onths of enrollm

edPAC analysis 

ntinued next p

A D

art D ris

nd by LIS

Perc

enrolle

PDPs

MA–P

T

E, 

ubsidy), PDP (pr

hierarchical cond

2006. Risk score

t the average ac

PD plan during th

ent. 

of Medicare enr

page) 

Data Book: Hea

k scores

S status

cent 

ed in 

s vs. 

PDs 

Perc

Pa

enro

receiv

88%

69 

57 

81 

85 

53 

80 

75 

79 

79 

54 

67 

63 

65 

83 

66 

87 

71 

83 

90 

67 

71 

80 

85 

74 

63 

49 

43 

47 

60 

59 

52 

48 

97 

65 

43 

97 

rescription drug p

dition category). 

es shown here a

ross Part D enro

he year, that indi

rollment files from

lth care spendi

s vary ac

, 2009 

cent of 

art D 

ollees 

ving LIS Pa

1

49% 0

42 1

46 1

35 1

41 1

33 1

38 1

43 1

45 1

44 1

34 1

47 1

34 1

36 1

41 1

33 0

38 0

35 1

45 0

54 1

49 1

45 1

38 0

29 0

27 0

39 0

29 0

31 0

28 0

31 0

28 0

39 0

29 0

61 0

38 1

27 0

61 1

plan), MA–PD (M

Part D risk score

re not adjusted f

ollees in each gro

vidual was class

m CMS. 

ding and the Me

cross reg

Aver

art D PD

Ave

.101 1.1

Average nor

0.983 0.9

.010 1.0

.033 1.0

.042 1.0

.035 1.0

.011 1.0

.004 0.9

.015 1.0

.026 1.0

.031 1.0

.054 1.0

.043 1.0

.001 1.0

.030 1.0

.020 1.0

0.958 0.9

0.989 0.9

.002 1.0

0.996 0.9

.006 0.9

.019 1.0

.031 1.0

0.993 0.9

0.962 0.9

0.913 0.9

0.929 0.9

0.919 0.9

0.961 0.9

0.951 0.9

0.919 0.9

0.913 0.9

0.955 0.9

0.935 0.9

0.929 0.9

.000 1.0

0.913 0.9

.054 1.0

Medicare Advanta

es are calculated

for LIS or instituti

oup equals 1.0. If

sified in the type 

edicare program

gions, by

rage risk score

DP MA–PD

rage absolute 

23 1.060 

rmalized risk sc

973 0.949 

010 1.004 

056 1.011 

042 0.987 

021 1.034 

020 1.016 

996 0.992 

013 0.997 

009 1.057 

020 1.031 

065 1.056 

031 1.065 

030 0.953 

041 1.008 

014 0.989 

966 0.939 

980 0.955 

008 0.973 

983 1.003 

990 1.012 

022 1.008 

027 1.030 

986 0.980 

952 0.945 

908 0.908 

921 0.946 

914 0.941 

929 1.009 

956 0.965 

910 0.939 

912 0.924 

967 0.956 

926 0.962 

911 0.931 

000 1.000 

908 0.908 

065 1.065 

age–Prescription

d by CMS using 

ionalized status 

f a beneficiary w

of plan with a gre

m, June 2011 

y plan ty

e (RxHCC) 

D LIS 

risk score 

 1.201

core (mean = 1

 0.963

 1.013

 1.019

 1.036

 1.034

 1.011

 1.005

 1.019

 1.008

 1.018

 1.060

 1.028

 1.026

 1.056

 1.018

 0.992

 0.987

 1.027

 0.972

 0.968

 0.992

 1.022

 0.988

 0.980

 0.950

 0.907

 0.945

 0.959

 0.958

 0.921

 0.929

 0.943

 0.905

 0.896

 1.000

 0.896

 1.060

n Drug [plan]), Rx

the RxHCC mod

(multipliers) and 

was enrolled in bo

eater number of 

173

pe 

Non-LIS 

1.041 

1.0) 

0.970 

0.998 

1.022 

1.052 

1.026 

1.022 

1.004 

0.998 

1.023 

1.025 

1.059 

1.030 

0.994 

1.017 

1.012 

0.950 

0.991 

0.993 

0.998 

1.004 

1.015 

1.018 

0.996 

0.973 

0.918 

0.942 

0.924 

0.977 

0.967 

0.930 

0.926 

0.960 

0.967 

0.902 

1.000 

0.902 

1.059 

xHCC 

del 

are 

oth a 
174 Pre

Chart 

• Unde

Adva

enrol

(RxH

status

adjus

mode

more

diagn

• In 20

25 an

range

natio

• The o

enrol

where

risk s

differ

4), M

• The o

is hig

contr

regio

33), w

escription drugs

10-17. P

an

er Part D, pa

antage–Pres

lees’ expect

CC) model d

s, and medic

stment mode

el may also p

e opportunitie

noses among

09, the norm

nd Region 3

ed from abou

nal average 

overall avera

lees (1.06) a

e most (57 p

scores for bo

rence exceed

ichigan (Reg

overall avera

gher than tha

rast, normaliz

ns, with the 

where a rela

s

art D ris

nd by LIS

ayments to s

cription Drug

ted costs us

developed b

cal diagnosi

el, the RxHC

produce high

es to make d

g other facto

malized aver

1) to 1.054 (

ut 8.7 perce

across regio

age risk scor

and is consis

percent) Par

oth PDP and

ding 0.05 (5

gion 13), an

age risk scor

at of non-LIS

zed risk sco

difference e

atively small 

k scores

S status

tand-alone p

g plans (MA

ing the pres

before 2006.

s to predict 

CC model do

her scores in

diagnoses in

ors in its sco

rage risk sco

(Region 11),

nt below the

ons. 

re for PDP e

stently so ac

rt D enrollees

d MA–PD en

percentage

d Arizona (R

re for enrolle

S enrollees (

ores for both 

exceeding 0.

share of enr

s vary ac

, 2009 (c

prescription 

A–PDs) are a

cription drug

 The RxHCC

Part D bene

oes not expla

n areas with

n those area

ore. 

ores for Part 

 meaning th

e national av

enrollees (1.

cross all regi

s are enrolle

rollees are s

e points) in o

Region 28).

ees receiving

1.041) and i

LIS and non

05 (5 percen

rollees recei

cross reg

continue

drug plans (

adjusted to a

g hierarchica

C model use

efit spending

ain all variati

h high service

s and the Rx

D enrollees

hat average e

verage to ab

123) is highe

ions, except

ed in MA–PD

similar in mo

only three reg

g the low-inc

is consistent

n-LIS enrolle

ntage points

ive the LIS (

gions, by

d) 

(PDPs) and 

account for d

al condition c

es age, gend

g. As is true f

ion in future 

e use becau

xHCC mode

s varied from

expected co

out 5.4 perc

er than that 

t in Arizona (

Ds. In contra

ost regions, w

gions: New J

come subsid

tly so across

ees are simi

s) only in Ha

29 percent).

y plan ty

Medicare 

differences in

category 

der, disability

for any riskpayments. T

use there are

el uses 

m 0.913 (Reg

osts per enro

cent above th

of MA–PD 

(Region 28)

ast, normaliz

with the 

Jersey (Reg

dy (LIS) (1.2

s all regions.

lar in most 

awaii (Region

.

pe 

n

y

The 

e

gion 

ollee 

he 

, 

zed 

gion 

01) 

. In 

n
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 

National ave

Note: PD

 *S

ar

 **A

di

hi

 

Source: Ac

 

• Averag

The na

averag

percen

• Adjusti

variatio

0.55 (1

spendi

10-18. P

co

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 

erage spending 

DP (prescription 

Spending include

re for beneficiarie

Adjusted spendi

sability, and LIS 

erarchical condit

cumen, LLC, ana

ge per capita dr

ational average 

ge per capita sp

nt (1.33) in Alask

ing per capita d

on across PDP 

1.33 minus 0.78

ing ranges from

A D

art D spe

ontrollin

P

en

, 

drug plan), LIS (

es payments for i

es residing in a c

ng controls for re

status), and ben

tion categories. 

alysis for MedPA

ug spending for

per capita spen

ending ranges f

ka (Region 34).

rug spending fo

regions: After th

8) to 0.37 (1.23 m

 86 percent (0.8

Data Book: Hea

ending v

ng for pri

Percent 

nrolled in 

PDPs 

P

88% 

69 

57 

81 

85 

53 

80 

75 

79 

79 

54 

67 

63 

65 

83 

66 

87 

71 

83 

90 

67 

71 

80 

85 

74 

63 

49 

43 

47 

60 

59 

52 

48 

97 

65 

43 

97 

(low-income sub

ngredient costs a

community setting

egional difference

neficiaries’ health

AC. 

r drugs under Pa

nding was $2,62

from 78 percent

 

or regional differ

he adjustment, t

minus 0.86). Re

86) in New Mex

lth care spendi

varies ac

ces and 

Percent of Part D

enrollees 

receiving LIS 

49% 

42

46

35

41

33

38

43

45

44

34

47

34

36

41

33

38

35

45

54

49

45

38

29

27

39

29

31

28

31

28

39

29

61

38

27

61 

sidy), N/A (not av

and dispensing f

g only. Per capit

es in prices, dem

h status as meas

art D varies wid

29 in 2009. Rela

t (0.78) in New 

rences in prices

the difference b

elative to the nat

ico (Region 26)

ding and the Me

cross reg

health s

D Relative av

vailable). 

fees. Figures (pe

ta based on full-y

mographic charac

sured by medical 

dely across pres

ative to the natio

Mexico (Region

s and beneficiari

between minimu

tional average, 

) to 123 percent

edicare program

gions eve

status, 20

verage Part D sp

Unadjusted 

1.02

1.04

1.22

1.24

1.11

1.04

1.00

1.11

1.10

1.06

0.98

1.07

1.02

1.01

1.07

0.95

0.97

1.01

0.94

1.03

1.08

1.01

1.03

0.94

0.83

0.78

0.84

0.78

0.80

0.88

0.89

0.93

0.93

1.33

1.00

0.78

1.33

$2,629

er capita spendin

year equivalent e

cteristics (such a

 diagnoses used

scription drug pl

onal average, th

n 26) and Arizon

ies’ health statu

um and maximu

the adjusted av

t (1.23) in Alask

m, June 2011 

en after 

009 

pending per capi

Adjuste

0.9

1.0

1.1

1.1

0.9

1.0

0.9

1.0

0.9

0.9

0.9

0.9

0.9

1.0

1.02

1.04

0.9

1.0

0.9

0.9

1.02

0.92

1.02

1.02

1.0

0.8

1.0

0.8

0.92

1.0

1.0

0.9

1.12

1.2

1.0

0.8

1.2

N/A

ng and index valu

enrollment. 

as age, gender, 

d for prescription 

an (PDP) region

he unadjusted re

na (Region 28) t

us reduces the 

m decreases fro

verage per capit

ka (Region 34). 

175

ta* 

ed**

7

1

5

8

9

8

8

5

9

6

1

7

6

0

2

4

6

1

0

3

2

2

2

2

0

6

0

9

2

1

5

8

2

3

0

6

3

A

ues) 

drug 

ns. 

egional 

to 133 

om 

ta 
176 Pre

Chart 

Top 15

Antihyperli

Antipsycho

Diabetic th

Antihyperte

Peptic ulce

Asthma/CO

Antidepres

Platelet ag

Analgesics

Cognitive d

(antidemen

Anticonvul

Antivirals 

Calcium & 

 metabolis

Analgesics

antipyretic,

Antibacteri

 Subtotal, t

 Total, all c

Note: CO

Th

 

Source: M

• In 20

The t

• More

class

• Eleve

Centr

domi

cardi

adren

accou

escription drugs

10-19. T

P

5 therapeutic

pidemics 

otics 

herapy 

ensive therapy

er therapy 

OPD therapy 

ssants 

ggregation inhi

s (narcotic) 

disorder therap

ntia) 

sant 

bone 

m regulators 

s (anti-inflamma

, non-narcotic) 

ial agents 

top 15 classes

classes 

OPD (chronic ob

herapeutic classi

edPAC analysis 

09, gross sp

top 15 therap

e than 1.3 bil

ses by volum

en therapeut

ral nervous s

nate the list 

ovascular ag

nergic blocke

unting for ne

s

op 15 th

art D, by

c classes by

Bill

agents 

agents 

bitors 

py 

atory/ 

s

bstructive pulmon

ification based o

of Medicare Par

pending on p

peutic classe

lion prescrip

me accountin

tic classes a

system agen

by spending

gents (antihy

ers, calcium

early 50 perc

erapeuti

y spendin

spending 

Dollars 

ions Percen

 

$6.5 8.7%

5.9 8.0

5.5 7.5

4.9 6.6

4.6 6.3

4.3 5.8

3.0 4.1

3.0 4.0

2.9 3.9

2.7 3.7

2.6 3.5

2.4 3.3

1.8 2.5

1.7 2.3

1.5 2.0

53.3 72.3

73.8 100.0

nary disease). Vo

n the First DataB

rt D prescription 

prescription d

es by spend

ptions were d

ng for about 

are among th

nts (antipsyc

g, accounting

yperlipidemi

 channel blo

cent of the p

c classe

ng and v

T

nt 

% Antihyp

agent

 Antihyp

 Beta ad

 Diabeti

Diuretic

 Antidep

 Peptic 

 Analge

 Calcium

Thyroid

 Antibac

 Asthma

Anticon

 Calcium

regul

 Analge

antipy

 

 Subtot

 

 Tota

olume is the num

Bank Enhanced T

drug event data 

drugs cover

ding account

dispensed in

73 percent o

he top 15 ba

chotics, antic

g for over on

cs, antihype

ockers, and d

prescriptions

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 

a/COPD thera

nvulsants 

m & bone meta

ators 

esics (anti-inflam

yretic, non-nar

tal, top 15 clas

al, all classes

mber of prescripti

Therapeutic Clas

from CMS. 

red by Part D

ted for about

n 2009, with 

of the total.

ased on both

convulsants

ne-fifth of the

ertensive the

diuretics) do

 in the top 1

gs unde

2009 

peutic classe

rapy 

ckers 

)

ckers 

apy agents 

abolism 

mmatory/ 

rcotic) 

sses 

ions standardize

ssification System

D plans total

t 72 percent

the top 15 t

h spending a

, and antide

e spending, 

erapy agents

ominate the 

5 therapeut

er 

es by volume

Prescriptio

Millions Pe

138.7 10

126.1 9

84.6 6

83.3 6

75.8 5

71.9 5

64.3 4

63.5 4

56.3 4

46.5 3

37.8 2

36.9 2

35.3 2

27.9 2

25.6 1

974.5 72

1,337.9 100

d to a 30-day su

m 1.0. 

ed $73.8 bil

t of the total.

therapeutic 

and volume. 

pressants) 

while 

s, beta 

list by volum

ic classes. 

e

ns 

ercent 

0.4% 

9.4 

6.3 

6.2 

5.7 

5.4 

4.8 

4.7 

4.2 

3.5 

2.8 

2.8 

2.6 

2.1 

1.9 

2.8 

0.0 

pply. 

lion. 

me, 
Chart 

By order o

Antihyper

Antipsych

Diabetic th

Antihypert

Peptic ulc

Asthma/C

Antidepre

Platelet ag

Analgesic

Cognitive 

(antideme

Anticonvu

Antivirals 

Calcium &

Analgesic

antipyre

Antibacter

All therap

Note: PD

pu

cla

de

re

 

Source: M

• In 200

perce

dispro

antico

incom

• Overa

follow

with 7

• The G

74 pe

thera

with t

• There

antihy

in the

LIS e

10-21

10-20. G

cl

of aggregate 

lipidemics 

hotics 

herapy 

tensive thera

cer therapy 

COPD therapy

ssants 

ggregation in

cs (narcotic) 

disorder ther

entia) 

ulsant 

& bone metab

cs (anti-inflam

etic, non-narc

rial agents 

peutic classes

DP (prescription 

ulmonary disease

assification is ba

efined as the pro

ecords are classif

edPAC analysis 

09, Part D en

ent of prescri

oportionately

onvulsants, a

me subsidy (L

all, analgesic

wed by antiba

70 percent ac

GDR for PDP

ercent for Me

peutic classe

the exception

e were large 

yperlipidemic

e GDRs reflec

nrollees are 

1). 

A D

Generic d

lasses, b

spending 

py agents 

y agents 

hibitors 

rapy 

bolism regulat

matory/ 

otic) 

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

ptions dispen

y high share o

and antivirals

LIS) beneficia

cs (narcotic) 

acterial agent

cross all ther

P enrollees av

edicare Advan

es, GDRs for

n of agents fo

differences i

cs and antivir

cts the fact th

less likely to

Data Book: Hea

dispensin

by plan t

PDP s

pres

tors 

–PD (Medicare A

alculated as a pe

DataBank Enha

ic prescriptions d

MA–PD records b

rt D prescription 

and-alone pr

nsed under P

of prescriptio

s. Most of the

aries, of who

have the hig

ts (88 percen

rapeutic class

verages 69 p

ntage–Presc

r PDP enrolle

or asthma/ch

n GDRs for P

rals, with a 1

hat most ben

take a gene

lth care spendi

ng rate fo

ype, 200

share of all 

scriptions 

64%

84

66

64

69

72

72

69

73

75

76

77

66

67

70

68

Advantage–Presc

ercent of all presc

nced Therapeuti

dispensed within 

based on the con

drug event data 

rescription dr

Part D. PDP e

ons for classe

e prescription

om more than

hest generic 

nt) and non-n

ses. 

percent acros

cription Drug 

ees were gen

ronic obstruc

PDPs and MA

3 percentage

neficiaries rec

ric medicatio

ding and the Me

or the to

09 

Gen

All 

61%

38

60

72

71

9

77

8

93

4

80

25

58

81

88

70

cription Drug [pla

criptions standar

ic Classification S

a therapeutic cla

ntract identificatio

from CMS. 

rug plans (PD

enrollees acc

es such as a

ns in these cl

n 80 percent 

dispensing r

narcotic anal

ss all therape

(MA–PD) pla

nerally lower 

ctive pulmon

A–PDs. The 

e point differe

ceiving the L

on in a given 

edicare program

op 15 the

neric dispens

PDPs 

56% 

37 

58 

70 

67 

10 

75 

7 

93 

3 

79 

22 

56 

79 

87 

69 

an]), COPD (chro

rdized to a 30-da

System 1.0. Gen

ass. Part D presc

on on each recor

DPs) accoun

counted for a

ntipsychotics

asses were t

are enrolled 

rate (GDR) (9

gesics (81 pe

eutic classes

an enrollees.

than for MA–

ary disease 

largest diffe

ence. Some 

LIS are in PD

therapeutic 

m, June 2011 

erapeutic

sing rate 

MA–PD

69%

39

66

76

79

7

81

9

94

4

83

35

64

85

89

74

onic obstructive 

ay supply. Therap

neric dispensing 

cription drug eve

rd. 

ted for 68 

a

s, 

taken by low

in PDPs. 

93 percent), 

ercent) comp

s, compared w

. Across the 

–PD enrollee

therapy. 

rences were

of the differe

Ps. On avera

class (see C

177

c

s 

%

peutic 

rate is 

ent 

wpared 

with 

15 

es 

 for 

ence 

age, 

Chart 
178 Pre

Chart 

By order o

Antihyper

Antipsych

Diabetic th

Antihypert

Peptic ulc

Asthma/C

Antidepre

Platelet ag

Analgesic

Cognitive 

(antideme

Anticonvu

Antivirals 

Calcium &

regulators

Analgesic

antipyre

Antibacter

All therap

Note: LI

pr

Th

di

re

us

 

Source: M

• In 20

of pre

spen

perce

• The g

thera

thera

bene

agen

• There

The l

GDR

the tw

escription drugs

10-21. G

cl

of aggregate 

lipidemics 

hotics 

herapy 

tensive thera

cer therapy 

COPD therapy

ssants 

ggregation in

cs (narcotic) 

disorder ther

entia) 

ulsant 

& bone metab

s

cs (anti-inflam

etic, non-narc

rial agents 

peutic classes

S (low-income s

rescriptions stand

herapeutic Class

spensed within a

ecords based on 

sed to classify PD

edPAC analysis 

09, Part D e

escriptions d

ding, the sha

ent, and in 3

generic disp

apeutic class

apeutic class

ficiaries in a

ts). 

e are large d

argest differ

s for this the

wo groups. 

s

Generic d

lasses, b

spending 

py agents 

y agents 

hibitors 

rapy 

bolism 

matory/ 

otic) 

s

ubsidy), COPD (

dardized to a 30-

sification system 

a therapeutic clas

monthly LIS elig

DE records as LI

of Medicare Par

enrollees rec

dispensed un

are of presc

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ensing rate 

ses, compare

ses, GDRs fo

all but one cla

differences in

rence is for a

erapeutic cla

dispensin

by LIS st

LIS sha

prescrip

3

8

4

3

5

5

5

4

5

5

64

6

34

4

4

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 lo

nder Part D.

riptions disp

e share was 

(GDR) for no

ed with 68 p

or non-LIS b

ass (asthma

n GDRs acro

antivirals (27

ass likely refl

ng rate fo

tatus, 20

are of 

ptions 

5%

3

8

6

1

8

3

3

9

1

4

7

4

9

5

5

tive pulmonary di

erapeutic classific

pensing rate is d

ription drug even

n in Part D’s den

drug event data 

ow-income s

 In 10 of 15 

pensed to LIS

greater than

on-LIS bene

ercent for LI

beneficiaries 

a/chronic obs

oss classes 

7 percentage

lects differen

or the to

09 

Gener

All 

61%

38

60

72

71

9

77

8

93

4

80

25

58

81

88

70

isease). Shares 

cation is based o

defined as the pro

nt (PDE) records 

ominator file. Es

and Part D deno

subsidy (LIS)

therapeutic 

S beneficiar

n 60 percent

eficiaries ave

IS beneficia

are higher t

structive pul

between LIS

e points). So

nces in the m

op 15 the

ric dispensing

LIS 

56% 

37 

53 

70 

66 

11 

74 

7 

92 

3 

78 

16 

53 

82 

86 

68 

are calculated a

on the First Data

oportion of gene

are classified as

stimates are sens

ominator file from

) accounted 

classes ran

ries was grea

t. 

erages 72 pe

ries. Across 

than those fo

monary dise

S and non-L

ome of the d

mix of drugs

erapeutic

g rate 

Non-LIS

63%

40

67

73

76

6

80

9

95

5

83

43

61

81

89

72

s a percent of al

Bank Enhanced 

ric prescriptions 

s LIS or non-LIS 

sitive to the meth

m CMS. 

for 45 perce

ked by 

ater than 45

ercent acros

the top 15 

or LIS 

ease therapy

LIS beneficia

ifference in 

 taken betwe

c

S

l 

hod 

ent 

ss all 

y

aries. 

the 

een 
Chart 

Totals 

Pharmacy

 Chain ph

 Indepen

 Franchis

 Governm

Alternate

 Other** 

Pharmacy

 Retail†

 Long-ter

 Mail ord

 Physicia

 Institutio

 MCO ph

 Clinic 

 Specialt

 Other††

Note: M

ot

Na

 *A

 **

be

 †R

 ††

m

N

an

 

Source: M

• In 200

enroll

indep

• Chain

indep

spend

• Retai

presc

but ab

accou

presc

• In 200

spend

10-22. P

y class 

harmacy 

dent pharmac

se pharmacy 

ment pharmac

e dispensing 

y type 

rm care 

er 

an’s office 

on 

harmacy 

y pharmacy 

CO (managed ca

ther data issues. 

ational Council fo

Alternate dispens

Number of presc

ecause of missin

Retail includes a

†Other type inclu

ilitary/U.S. Coas

umber of prescri

nd other data iss

edPAC analysis 

09, more tha

led in Part D

pendent phar

n pharmacies

pendent phar

ding. 

l pharmacies

criptions and 

bout 9 perce

unt for less th

criptions and 

09, specialty

ding, compar

A D

harmaci

cy 

cy 

site* 

are organization

Prescription size

or Prescription D

ing site includes 

criptions and spe

g and other data

ll community pha

udes the Indian H

st Guard pharmac

ptions and spend

ues. 

of Medicare Par

an 65,000 pha

. Most pharm

rmacies (32.6

s account for

rmacies acco

s account for

spending. Lo

nt of prescrip

han 1 percen

about 6 perc

 pharmacies

red with fewe

Data Book: Hea

es partic

Pharmacie

65,283

61.7%

32.6

1.2

1.0

3.4

N/A

91.4%

2.7

0.2

1.0

1.1

0.2

1.4

0.2

1.8

), N/A (not availa

e is standardized

Drug Programs cl

physician offices

ending for other c

a issues. 

armacies, grocer

Health Service, D

cies, compoundi

ding for other typ

rt D prescription 

armacies dis

macies (61.7 

6 percent). 

r about 60 pe

ount for abou

r more than 9

ong-term car

ptions and ne

nt of pharmac

cent of spend

 account for 

er than 1 perc

lth care spendi

cipating 

s 

%

%

able). Some phar

d to a 30-day sup

lassification. 

, emergency dep

class include inst

ry pharmacies, an

Department of Ve

ng pharmacies, a

pe include pharm

drug event data 

spensed pres

percent) are 

ercent of pres

t 34 percent 

90 percent of

re pharmacie

early 11 perc

cies but acco

ding. 

over 2 perce

cent of presc

ding and the Me

in Part D

Prescriptions

1,337.9 millio

61.2%

33.8

1.1

0.4

3.2

0.3

78.8%

9.2

7.3

<0.1

0.4

0.6

0.9

2.1

0.7

rmacies could no

pply. Pharmacy c

partments, urgent

titutions and pha

nd department s

eterans Affairs ho

and facilities spe

macies that could

from CMS. 

scription drug

 chain pharm

scriptions an

of prescriptio

f the pharmac

es account fo

cent of spend

ount for slight

ent of prescri

criptions and 

edicare program

D, 2009 

s Gro

on

ot be classified b

class and type ar

t care centers, an

armacies that cou

store pharmacies

ospitals, nuclear 

ecializing in intrav

d not be classified

gs to Medicar

macies, follow

d spending, 

ons and 37 p

cies and abo

or 2.7 percen

ding. Mail-ord

tly over 7 pe

ptions and n

spending in 

m, June 2011 

oss spending

$73.8 billion

58.6%

37.0

1.1

0.4

2.6

0.3

77.4%

10.6

6.2

<0.1

0.5

0.4

0.9

2.9

1.0

because of missin

re based on 200

nd rural health fac

uld not be classif

s. 

pharmacies, 

venous infusion.

d because of mis

re beneficiar

wed by 

while 

percent of 

out 80 percen

t of pharmac

der pharmaci

rcent of 

early 3 perce

previous yea

179

g

ng and 

9 

cilities. 

fied 

ssing 

ies 

nt of 

cies, 

ies 

ent of 

ars. 
180 Pre

Chart 

Number 

As perc

Prescript

 By pha

 By ben

 Pharma

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 Indepe

 Franch

 Govern

Alterna

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 Retail**

 Long-te

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 Specia

 Other†

 Pharma

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 Other†

Note: C

m

pr

cla

pr

 *A

fa

 **

 †O

Se

co

 

Source: M

(Chart con

escription drugs

10-23. P

ch

of pharmacie

cent of total 

tions dispens

armacy locatio

eficiary locati

acy class and 

pharmacy 

ndent pharma

ise pharmacy

nment pharma

ate dispensing

acy type and p

*

erm care 

der 

lty pharmacy 

acy type and b

*

erm care 

der 

lty pharmacy 

BSA (core-based

icropolitan area 

rescription drug e

ass and type are

rescriptions is sta

Alternate dispens

cilities. 

Retail includes a

Other type includ

ervice, Departme

ompounding pha

edPAC analysis 

ntinued next p

s

rescripti

haracter

es 

sed 

on 

ion 

pharmacy loc

acy 

y

acy 

g site* 

pharmacy loca

beneficiary loc

d statistical area)

contains an urba

event records co

e based on the 20

andardized to a 3

sing site includes

all community pha

des physicians’ o

ent of Veterans A

rmacies, and fac

of Medicare Par

page) 

ions disp

ristics an

cation 

ation 

cation 

). A metropolitan

an core of at leas

uld not be classi

009 National Cou

30-day supply. T

s physicians’ offic

armacies, grocer

offices, institution

Affairs hospitals, 

cilities specializin

rt D prescription 

pensed, 

nd urban

Metropolitan

52,978

81.2%

81.1%

78.1

63.6%

31.4

0.9

0.3

3.7

75.6%

10.3

9.0

2.6

2.6

77.8%

9.4

7.7

2.2

2.9

 area contains a

st 10,000 (but few

fied because the

uncil for Prescrip

otals may not su

ces, emergency d

ry pharmacies, a

s, managed care

nuclear pharmac

ng in intravenous

drug event data 

by pharm

nicity, 20

CBSA d

n Microp

 

7,1

11

1

12

57

38

2

0

0

92

6

<0

1

80

9

6

1

1

a core urban area

wer than 50,000)

e CBSA designat

ption Drug Progra

um to 100 percen

departments, urg

and department s

e organization ph

cies, military/U.S

s infusion. 

from CMS. 

macy 

09 

designation 

politan 

72

1.0%

1.1%

2.6

7.4%

8.9

2.3

0.6

0.8

2.1%

6.2

0.1

0

1.7

0.6%

9.4

6.3

1.9

1.8

a of 50,000 or mo

) population. Few

tion could not be

ams classificatio

nt due to roundin

gent care centers

store pharmacies

harmacies, clinic

S. Coast Guard p

Rural 

5,120

7.8%

7.5%

9.2

43.2%

53.6

1.8

0.7

0.7

95.9%

2.5

<0.1

0

1.6

85.0%

7.1

5.4

1.5

1.9

ore population, a

wer than 1 perce

e identified. Pharm

on. Number of 

ng. 

s, and rural healt

s. 

cs, the Indian Hea

pharmacies, 

and a 

nt of 

macy 

th 

alth 
Chart 

• In 20

metro

7.8 p

(see 

regar

• In me

dispe

perce

accou

still a

presc

• Retai

all ar

pharm

bene

hand

for by

perce

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presc

(2.5 p

as m

perce

• Most 

metro

comp

10-23. P

ch

09, of the ph

opolitan area

ercent (5,12

Chart 10-11

rdless of whe

etropolitan a

ensed under 

ent of the pre

unt for a larg

account for a

criptions disp

il pharmacie

eas, but the

macies acco

ficiaries (77

, in micropo

y retail pharm

ent (80.6 per

-term care p

criptions (10

percent). Th

uch; 9.4 per

ent and 7.1 p

mail-order p

opolitan area

pared with th

A D

rescripti

haracter

harmacies th

as, about 11

20) were in r

). Distributio

ether they w

reas, chain 

Part D, whi

escriptions d

ger share of 

a majority of 

pensed (53.6

es account fo

re are some

ount for 75.6

.8 percent) o

litan and rur

macies, but 

rcent and 85

pharmacies l

.3 percent) c

e prescriptio

rcent are fille

percent filled

pharmacies 

as fill more p

hose in micro

Data Book: Hea

ions disp

ristics an

hat participa

 percent (7,

ural areas. T

ons of prescr

were classifie

pharmacies 

le independe

dispensed. In

prescription

the prescrip

6 percent) a

or the larges

e differences

percent of p

obtain their p

ral areas mo

beneficiaries

5 percent) of

located in m

compared w

ons filled by 

ed by benefic

d by those in

are located 

prescriptions

opolitan and

lth care spendi

pensed, 

nd urban

ted in Part D

172) were in

This distribut

riptions disp

ed by pharm

account for 

ent pharmac

n micropolita

ns dispensed

ptions dispen

re accounte

st share of pr

s. For examp

prescriptions

prescriptions

ore than 90 p

s residing in

f their medic

etropolitan a

with micropol

beneficiaries

ciaries in me

n micropolita

in metropoli

s through ma

 rural areas 

ding and the Me

by pharm

nicity, 20

D, 81 percen

n micropolita

tion is simila

pensed follow

macy location

r about 64 pe

cies account

an areas, ind

d (38.9 perce

nsed (57.4 p

ed for by inde

rescriptions 

ple, in metro

s and roughl

s at retail ph

percent of pr

n those areas

cations at ret

areas accou

itan areas (6

s residing in

etropolitan a

an and rural 

tan areas, a

ail-order pha

(6.3 percen

edicare program

macy 

09 (cont

nt (52,978) w

an areas, an

ar to that of P

wed similar p

ns or benefic

ercent of all 

t for slightly 

dependent p

ent), but cha

percent). In r

ependent ph

dispensed u

politan area

ly the same 

harmacies. O

rescriptions 

s obtain few

tail pharmac

unt for a larg

6.2 percent) 

n different ar

areas compa

areas, respe

and beneficia

armacies (7.

nt and 5.4 pe

m, June 2011 

inued) 

were in 

d the remain

Part D enrol

patterns 

ciary location

prescription

more than 3

pharmacies 

ain pharmac

ural areas, m

harmacies. 

under Part D

s, retail 

share of 

On the other 

are account

wer than 90 

cies. 

er share of 

and rural ar

eas do not v

ared with 9.4

ectively. 

aries residin

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ercent). 

181

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most 

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reas 

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AC’s Reports 

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S E C T I O N 

Other services

Dialysis 

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Total num

Dialysis

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Percent o

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Affiliated

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Freestand

Rural 

Urban 

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• Betw

hosp

perce

perce

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all fre

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relativ

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fo

in

mber of: 

s facilities 

ialysis station

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of all facilities: 

ain 

d with any ch

d with largest

based 

ding 

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ompiled by MedP

een 2000 an

ital-based an

ent to 90 per

ent of all faci

national foreestanding fa

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number of fa

ty has increa

acility, which

A D

umber o

or-profit 

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ns 

ain 

t two chains 

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PAC from the CM

nd 2010, the

nd nonprofit 

rcent of all fa

ilities. 

profit chains

acilities. 

nd 2010, the

nt. 

acilities has i

ased slightly

h increased f

Data Book: Hea

of dialysi

and free

g 

2000

3,805

59,596

16

N/A

N/A

N/A

18%

82

25

75

78

22

des facilities des

MS facility survey

e number of 

facilities de

acilities, and

s own about 

e proportion 

increased 4 

, as evidenc

from 16 in 2

alth care spend

is faciliti

estanding

2005

4,542

78,889

17

24%

76

60

% 14

86

25

75

78

22

signated as eithe

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freestanding

creased. Fre

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60 percent 

of facilities l

percent per 

ced by the m

000 to 18 in 

ding and the M

es is gro

g dialysi

2010

5,413

95,489

18

% 20%

80

61

10

90

24

76

82

18

er nonprofit or go

s Compare file.

g and for-pro

eestanding f

cilities incre

of all facilitie

ocated in ru

r year since 2

mean numbe

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Medicare progra

owing an

is provid

Aver

perc

2000–20

4%

5 

1 

% N/A 

N/A 

N/A 

–2 

5 

4 

4 

4 

2 

overnment. 

ofit facilities 

facilities incr

ased from 7

es and abou

ral areas ha

2000. The a

r of hemodia

am, June 2011

nd share

ders is 

rage annual 

cent change

10 2005–2

% 4%

4

0.3

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5

4

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4

3

4

5

−1

increased, w

reased from 

78 percent to

t 70 percent

as remained 

average size

alysis station

 185

 of 

2010 

%

while 

82 

o 82 

t of 

 of a 

ns 
186 Oth

Chart 

Source: Co

• Betw

incre

servic

2 per

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of ex

MedP

servic

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spen

in 20

rate s

• Desp

(hold

2007

used 

the vo

drugs

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 2004 an

ased by abo

ces increase

rcent per yea

standing dia

penditures in

PAC’s June 

ces at freest

decline in sp

ding for com

05, CMS im

services but 

pite the decre

ing price con

 and 2008, t

to treat ane

olume of ES

s as well as 

0

2

3

4

5

6

7

8

9

0

Drug

Com

Medicare 

urnished

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PAC from the 20

nd 2009, exp

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ar. 

lysis facilitie

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2010 Data B

tanding dialy

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mposite rate 

plemented p

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nstant) incre

the volume o

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changes in C

$4.

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200

gs

mposite rate se

spendin

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acilities, 

004 and 2009 ins

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t per year. D

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dialysis drug

services is d

policies that 

e rate for dia

drug paymen

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CMS’s paym

4

2

04

ervices

69%

31%

ng for ou

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2004 an

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During this ti

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of expenditu

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s increased b

s and the in

due to statut

increased M

lysis drugs.

nt rate, the t

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42%

58%

utpatient 

g and hos

nd 2009 

ent files from CM

e rate servic

me, expend

nditures for 

neficiaries a

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crease in th

tory and regu

Medicare’s p

total volume 

d 2009 with 

ating agents 

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58%

42%

dialysis

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enditures fo

t to $8.3 billi

e proportion

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nts, declined

he appropria

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2009

s services

ased 

ysis drugs 

omposite rate

gs decrease

ed for 87 per

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class of drug

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n

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1,50

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3,00

3,50

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4,50

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5,50

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Dialysis facilities

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ally, and the

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80.0

100.0

120.0

140.0

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188 Oth

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p

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atients 

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dney transpl

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ent are White

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renal disease). T

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nited States Rena

ase (ESRD)

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ts increased

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ulation

Percent

of total

in 2008

100%

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 56

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equal sum of the 

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renal failure.

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fastest g

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and 

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4% 

2 

1 

5 

4 

6 

4 

4 

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4 

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5 

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11-7. A

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chains. This 

payment pe

ment was low

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ss providers

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acility, 20

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cost reports and 

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Compared 

drug payme

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wage index a

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in 2011. 

alth care spend

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009 

of Medicare p

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100%

83

17

69

31

payments and c

the 2009 institut

in for compo

igher margin

rences in the

with their co

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nd differenc

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upcoming y

ncluded in th

ding and the M

by type o

payments

acilities

costs for compos

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osite rate ser

ns for facilitie

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ment was hi

urban and ru

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monitor the a

years. Some

he new endMedicare progra

of freesta

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ite rate services 

file from CMS. 

rvices and in

es affiliated w

e rate cost pe

the compos

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ural facilities

lume of drug

adequacy of 

e rural facilitie

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am, June 2011

anding 

ggregate marg

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and injectable d

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with the larg

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gin 

rugs. 

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gest 

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re

Source: M

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betwe

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subst

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lengt

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enrol

her services

11-8. M

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payments (in

ength of stay 

decedents (in

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decedents (in

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eflects the total n

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nalytic File from C

number of M

een 2000 an

average leng

tantially ove

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 Medicare p

lment and lo

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ubstanti

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n billions) 

n days) 

n days) 

stay is calculate

umber of days th

of the denominato

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Medicare ben

nd 2009, sug

gth of stay a

r the decade

ngth of stay 

mained unch

ayments to 

onger length

hospice

ally from

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3,000 1,05

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ed for decedents 

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m 2000 to

2008

55,000 1,0

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who received ho

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re Beneficiary Da

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pice users w

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ospice care at the

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atabase, and the 1

pice service

hospice care

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om 2000 to 2

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Average annu

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2000–2008 

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18.4 

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2009 due to 

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or before death a

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ice claims Standa

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pice use grew

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re Advantage). 

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edents using h

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42.0%

40.9

46.0

37.5

43.4

26.0 

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48.0 

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are Beneficiary D

ups from 20

ice use amo

nt in 2009 (d

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Average annu

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point change

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2.2 

2.2 

1.6 

2.3 

2.1 

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1.8 

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2.3 

1.6 

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2.5 

1.5 

2.1 

1.9 

Database from C

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male, Medica

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y groups

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1.9

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194 Oth

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20

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Number of providers

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11-10. N

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2010

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9

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urinary disea

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estive disea

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of cases with

th of stay 

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10% 

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24 

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24 

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29 

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50

100

150

200

250

Length of stay (days)

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ata reflect hospic

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t stays in ho

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ong hos

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ity have the 

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me. 

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ased hospices an

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2008 

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2008 

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s Standard Analy

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 199

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er 

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limit, 

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s over the cap

ent of overall 

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Due to a change 

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ervices file data f

om the CMS Offi

percent of ho

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mates of hos

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s of additiona

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ospices 

ap, selec

2002 

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er 

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efined as the per

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8. 

pices excee

ayed in the c

al analyses p

ing the cap 

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cted yea

2004

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riod beginning No

ty, the 2008 estim

omparable to earl

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y. 

eeding Medi

ent in 2008.

cap represe

eding the cap

chart becaus

performed w

increased ea

since 2006.

ceeded M

rs 

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ovember 1 and e

mates are based

lier years. 

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ented 1.7 pe

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se a new me

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ach year fro

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ending October 3

d on a different m

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may not be co

ethodology w

methodolog

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2007 

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omparable t

was used in 2

gy, we believ

2008, while t

al payme

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g year. 

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st reports, Provid

each fiscal year a

eficiary paym

hospice 

o estimates 

2008. On the

ve the perce

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een 44 perc

itions, heart 

s exceeding 

all diagnoses

me cases m

nts with hea

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ength-of

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bstructive pulmon

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or circulator

180 days co

s, the live dis

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43

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ubstantially m

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ospice users 

eeding 180 da

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 9

 30

 18

 23

 24

 22

ength-of-stay dat

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ns, 52 perce

percent at be

ding and the M

scharge

2008 

with

ays

ap 

es

ta reflect the perc

c File and denom

ts with very l

es. 

ospices’ pati

c obstructive 

t to 30 perce

cap hospice

ap hospices.

ent of discha

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e rates fo

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percent o

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hospices

44%

24 

37 

52 

49 

52 

55 

cent of hospice u

minator file from C

long stays a

ents with ne

 pulmonary 

ent at below

es were at le

 For exampl

arges at abo

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am, June 2011

or abovescharges as a

of all discharg

ap Belows hosp

% 16

 10

 18

 16

 21

 20

 22

users in 2008 wh

CMS. 

nd more live

eurological 

disease had

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le, among 

ove-cap hosp

 201

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a 

ges 

-cap 

pices 

6% 

0

8

6 

0

2

hose 

e

d

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and 

pices 
202 Oth

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use rates 

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Utah 

Florida 

Iowa 

Delaware

Colorado 

Oregon 

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Texas 

Michigan 

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An

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small

demo

the c

her services

11-18. H

ac

ates with high

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nalytic File data, 

f the 10 stat

l percentage

onstrates tha

ap. 

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of the denomina

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tes with the h

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at high rates

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ates, 200

 

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ce cost reports fr

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s of hospice 

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08 

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using 

hospice 

 58% 

54 

53 

50 

48 

48 

48 

46 

45 

45 

icare Beneficiary

rom CMS and CM

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among Medi

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achieved wi

f hospic

nt of: 

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th

percent hospice

ata Quickly syste

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thout hospic

ce service

ospices 

ceeding 

he cap 

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10 

0 

0 

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0 

0 

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3 

e claims Standard

em. 

ents have a 

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d

very 

ng 
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ow

th

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year 

one i

2007

11.2 

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servic

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0

1

2

3

4

5

6

7

8

9

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11-19. M

fis

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e totals on top o

MS, Office of the

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 due to a dro

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e Actuary. 

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re spent $8.1

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06 but fell to 

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ent and physi

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4.9

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6. This grow

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2.9 3.2

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alth care spend

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oratory fee sched

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