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Paper analyzes Medicare growth rate decrease

Ambulatory Surgery Reimbursement Update, August 22, 2006

The rate of "excess" growth in Medicare spending per beneficiary (i.e., growth beyond the combined effect of economic growth and the changing age composition of beneficiaries) slowed considerably in recent years, according to a working paper released by the Congressional Budget Office (CBO).

The annual rate of excess growth fell from 5.5% between 1975-1983 to 0.9% between 1992-2003. The working paper attributes the slowdown to changes in provider payment policies (e.g., the implementation of a prospective payment system for short-stay hospitals and the imposition of mechanisms to control aggregate Medicare physician spending).

Increases in managed care enrollment and changes in Medicare cost sharing do not account for the slowdown in spending, according to the paper.

To read the CBO working paper, click here.

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