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Why did Medicare spending growth slow down over the past decade, and what can we do to reverse this trend?

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Buntin and colleagues pose this question. (2022). The authors used data from the 2007-2018 Medicare Master Beneficiary Summary File and then ran a regression adjustment to control for patient demographics (i.e., age, sex), number of chronic conditions (none, 1-3, ≥4), and whether the individual had Part A or Parts A and B coverage.

This approach led to the following:

Between 2008 to 2011 and 2012 to 2015, the adjusted annual Medicare Parts A and B per-beneficiary spending growth rate declined from 3.3% to −0.1%. While the average annual Medicare spending growth rate increased relative to the preceding period, it remained lower than that of the baseline period, which was 1.7% per year. This slowdown extended across all sectors within Parts A and B, except for physician-administered drugs offered under Part B. The difference in per-beneficiary spending between 2007 and 2011 and 2012 and 2015 and 2016, and 63% between 2017 and 2018, was attributed to changes in payment rates, including sequestration measures, and beneficiary characteristics.

The authors conclude that payment rates are close to inflation (21% over the same period), with physician reimbursement being…



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