Short-Term Fixes to the Sustainable Growth Rate Process . 2.1.1 Per Beneficiary Spending

10/30/2006

On a per beneficiary basis, SGR spending increased from $1,371 in 1996 to $2,376 in 2004 – a total of 73 percent (61 percent of spending if drugs and lab tests are excluded) (Table 1).  It is clear that growth in spending varies by type of service from one year to the next, as changes in price (as measured by the update), impact most types of services under Medicare uniformly.  In recent years, growth in per beneficiary spending for E&M services has lagged behind growth for non-E&M services.  Between 2000 and 2004, average annual growth in spending per capita on E&M services was about 5.3 percent.  By contrast, expenditures on non-E&M services grew at an average annual rate of about 10.3 percent.  The fastest growing portion of spending (from among those groups of services listed) was for chemotherapy and other drugs.  Drug spending increased at an average annual rate of about 19.6 percent (versus an average rate of 8.2 percent for all services during the same time period).

Table 1. Medicare Spending per Enrollee, by Type of Service, 1996-2004
 

1996

1997

1998

1999

2000

2001

2002

2003

2004

Spending  per Medical Enrollee (Part B, FFS)

Total

1371

1240

1493

1577

1737

1932

2004

2158

2376

E&M

550

560

656

698

770

840

855

889

946

Non-E&M

821

680

837

879

968

1092

1149

1269

1429

     Procedures-Major

157

136

149

147

150

155

148

150

157

     Procedures-Minor

262

250

271

286

314

352

359

376

438

     Imaging

151

115

177

188

210

245

254

297

341

     Chemotherapy and Other Drugs

52

68

77

97

121

151

186

225

247

     Lab Tests

89

84

92

96

105

114

124

131

143

     Other

110

27

72

65

67

75

78

90

103

Source: NORC examination of PSPSMFs.
 

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