Volume Growth in Medicare. An Investigation of Ten Physicians' Services


By: Melinda Beeuwkes Buntin, Steven Zuckerman, Robert Berenson, Anant Patel, Teryl Nuckols RAND Health / Urban Institute

This work was sponsored by the Assistant Secretary for Planning and Evaluation under Task Order HHSP23320070004T, Contract number 100-03-0019, for which Dr. Laurie Feinberg served as project officer. Views expressed are those of the authors and do not represent official positions of the Department of Health and Human Services, RAND Health, the Urban Institute, their trustees, or sponsors.


Medicare?s Sustainable Growth Rates (SGR) is a target rate of growth in spending for physician services. In this paper, the underlying causes of growth in ten medical services that saw significant increases in utilization and associated spending among Medicare beneficiaries between 2000 and 2006. A combination of qualitative and quantitative methods was used to select the ten services for analysis. Data from the Physician/ Supplier Procedure Summary files for 200 and 2006 were used to examine which services were increasing rapidly in utilization and for which Medicare made significant expenditures. The researchers also interviewed expert physicians for their opinions of the reasons for growth in the selected services. The services selected for analysis were cardiac defibrillator implantation, cardiac stress testing for coronary artery disease, CT and MRI scans of the brain, CT and MRI scans of the lumbar spine, diagnosis and medication therapy for macular degeneration, electrodiagnosis testing for nerve problems, Mohs surgery for skin cancer, polysomnography for sleep apnea, procedures for benign prostatic hyperplasia, and spinal injection procedures for back pain.

The analysis showed clinical factors, service diffusion, and financial factors all drove the growth to varying degrees across the ten services. Clinical factors were a major factor for two of the services including new technologies and new scientific evidence stimulated the growth in two services. Patient demand was a major factor for one service and contributed to the growth in five additional services. Financial factors, including payment levels and coverage, were a major factor for four of the services. A change in the size of the eligible Medicare population was not a major factor. Overall, uptake by providers was the single most important factor, being major driver of growth for seven services.

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