Medicare spending growth signals shift from inpatient care

Over the past 20 years, the factors driving Medicare fee-for-service spending growth have changed, say the authors of a new study published on-line at the journal Health Affairs. Where once intensive inpatient hospital services, primarily for heart disease, caused costs to skyrocket, now Medicare spending growth is linked to chronic conditions typically treated in outpatient settings. The healthcare system will have to address these changes by shifting its focus from acute, episodic care to evidence-based preventive care, care coordination, and patient self-management services, say the study authors.

The researchers identified Medicare's 10 most expensive disease categories in 2006: heart conditions, trauma-related disorders, cancer, mental disorders, osteoarthritis and other nontraumatic joint disorders, hypertension, diabetes mellitus, chronic obstructive pulmonary disease, kidney disease, and hyperlipidemia. These 10 conditions were responsible for roughly half of the inflation-adjusted increase in Medicare spending from 1987 to 2006.

From 1987 to 1997, heart disease was the No. 1 problem, accounting for almost 14 percent of Medicare spending increases. Heart conditions plummeted to 10th place from 1997 to 2006, accounting for 0.25 percent of Medicare spending growth. However, while the pace of spending for heart conditions contracted, spending for diabetes, arthritis, hyperlipidemia, kidney disease, hypertension, and mental disorders rose significantly, accounting for more than a third of Medicare spending growth. Spending growth for diabetes and hypertension was particularly fast, say researchers.

Hand in hand with this increase in spending growth related to chronic conditions is a trend toward reduced spending for in-hospital care. "Although inpatient care spending remains the largest category of spending by location, spending for inpatient care fell as a percentage of total spending. Physician office visits rose to 21 percent of overall spending and more than tripled as a percentage of top-ten condition spending," say researchers.

To learn more about Medicare spending growth patterns:
- read the Health Affairs study

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