Measuring Growth in the Volume and Intensity of Medicare Physician Services: 1985-1989

摘要

Using 1985-1989 Medicare Part B annual data, growth in spending was decomposedinto those shares due to growth in beneficiaries, Medicare allowed prices, and volume and intensity (V/I). This decomposition is presented by type of service, specialty, and type of geographic area. The study represents a methodological innovation in the measurement of price and volume and intensity growth. For all services, the average annual growth in Medicare expenditures between 1985 and 1989 was 12.1 percent. Only 10 percent (1.1 percentage points) was due to increases in enrollees. An additional 30 percent (3.5 percentage points) of expenditure growth was due to increases in Medicare's prices. The remaining 60 percent (7.1 percentage points) of the growth was due to increases in the V/I of services. The Fisher's Ideal Index used to adjust for prices was compared to earlier studies. Differences in both the rate of increase in V/I and its relative importance in explaining expenditure growth varies dramatically across source categories, even though across all services V/I growth is reasonably steady over time. The range of growth rates is somewhat smaller across specialties. The relative contribution of V/I in explaining growth is not uniform across specialties, type of service, or geographic areas. This suggests that the present National Medicare Volume Performance Standard policy that only includes separate targets for surgical and nonsurgical services may constrain fees for many services whose V/I growth is well below average and not a major cause of inflation. Any disaggregated approach to MVPS will have this problem if applied uniformly to groups of services with fundamentally different rates of growth.