Traditional Medicare Spending on Inpatient Episodes as Hospitalizations Decline

OBJECTIVE: To describe Medicare inpatient episode spending trends between 2009 and 2017 as inpatient use declined among traditional Medicare beneficiaries. METHODS: Inpatient episodes included claims for all traditional Medicare inpatient, outpatient, and Part D services provided during the 30 days prehospitalization, the inpatient stay, and the 90 subsequent days. We describe the mean number of episodes per 1000 beneficiaries, mean episode-related spending per beneficiary, and mean spending per episode for all beneficiaries and for specific populations and types of episodes. Spending measures are reported with and without adjustment for payment rate increases over the study period. RESULTS: The number of inpatient-initiated episodes per 1000 beneficiaries declined by 18.2% between 2009 and 2017 from 326 to 267. After adjusting for payment rate increases, Medicare spending per beneficiary on episode-related care declined by 8.9%, although spending per episode increased by 11.4% over this period. Between 2009 and 2017, all subgroups defined by age, sex, race, or Medicaid status experienced declines in inpatient use accompanied by decreased overall episode-related spending per beneficiary and increased spending per episode. Larger declines in the number of episodes per 1000 beneficiaries were seen among episodes that began with a planned admission (28.8%) or involved no use of post–acute care services (23.9%). When comparing admissions according to medical diagnosis, the largest decline occurred for episodes initiated by a hospitalization for a cardiac or circulatory condition (31.8%). CONCLUSION: Medicare inpatient episodes per beneficiary decreased, but spending decreases due to declining volume were offset by increased spending per episode.