This analysis identifies general trends and top performers within each segment of Medicare Part A (hospital care) to provide a better understanding of how Medicare has changed in recent years. A steady rise in health care costs appears to be favoring large organizations and driving a shift from billing procedures as inpatient to outpatient services.

What is Medicare?

Medicare is a federal health insurance program that covers people who are 65 or older, younger people with certain disabilities, and people who have End-Stage Renal Disease (ESRD). It exists primarily to provide medical benefits to people of retired age who would otherwise have difficulty in paying for healthcare.

What are the components of Medicare today?

The four parts that Medicare is split into are:

• Part A – Hospital Insurance: Covers most hospital, skilled nursing facility, home health, and some outpatient care.
• Part B – Medical Insurance: Covers most outpatient care.
• Part C – Medicare Advantage: Medicare Part A & B services provided by third party companies.
• Part D – Drug Insurance: Provided by third party companies that have government contracts.

This analysis provides a general overview of Medicare Part A and points out some important trends in the market over the last six years.

Medicare Part A organizations and definitions?

• Medicare Part A (Hospital Care) data is categorized into five different organization types. These are:
• Inpatient (INP) – For patients that have been formally admitted by a doctor (usually results in an overnight stay)
• Outpatient (OUT)* – For patients who have not been admitted as inpatient by a doctor
• Home Health Aide (HHA) – For patients who need help with their daily activities around their house
• Skilled Nursing Facilities (SNF) -For patients that need inpatient nursing care but do not need to be admitted to a hospital
• Hospice – Care for terminally ill patients
• National Provider Identifier (NPI)-an identification number for covered healthcare providers; the services the health care providers handle determines what type of organization they are.
• Patient Count- number of patients a provider saw
• Total Payment Amount- the total amount Medicare paid to an NPI for the services it provided  
• Total Charge Amount- the total amount a provider charged Medicare for the services it provided

*Although most outpatient services fall under Part B, there is a Part A component which is included in our data set. This part A component is the result of inpatient facilities billing under outpatient care.

How has Medicare spending changed over the last 6 years?

This analysis focuses exclusively on Part A data spanning from 2010 to 2015. Patient count and total payment amount are examined for each organization by National Provider Identifier (NPI) number. These measures are further studied across the five different segments of Medicare Part A with the aim of determining the key trends in the market.

Medicare Part A Overview:

• Part A spend and patient count follow similar trends to inflation and general population growth
• Since 2010 HHA and SNF trends have been nearly flat.
• Since 2010 OUT and Hospice care have experienced significant growth
• INP has experienced slow but steady decline

In 2015, we observed the following patient counts and total payment amounts across the 5 organization types.

Inpatient Highlights:

• The number of patients and total payment amount have fallen slowly but consistently since 2010
• INP spend is down nearly $4 billion compared to 2010.
• INP saw approximately 900k fewer patients in 2015 than in 2010.
• Medium market concentration (top 10% of Inpatient organizations have a 53% market share).

Top 10 Inpatient Organizations (2015):

Outpatient Highlights:

• This part A component is the result of inpatient facilities billing under outpatient care.
• Fastest growing segment of Part A in terms of patient count and payment amount.
• Although the majority of the organizations in outpatient have one NPI, there are some such as the Dialysis Clinic Inc. that have many more. This appears to vary by specialty.
• High  market concentration (top 10% of Outpatient organizations have a 78% market share).

Top 10 Outpatient Organizations (2015):

Skilled Nursing Facility (SNF) Highlights:

• Even though the annual number of patients decreased, the annual growth in payment amount increased for SNF between 2010 and 2015
• Low market concentration (top 10% of Skilled Nursing Facility organizations have a 34% market share).

Top 10 Skilled Nursing Facility Organizations (2015):

Hospice Highlights:

• Smallest of the organization types in terms of patients and payments but experienced the second highest percent annual growth.
• 3 of Vitas Healthcare Corporation’s regional organizations are in the top 10 for hospices.
• Although some of the top Hospice organizations contain more than one NPI, the vast majority have only 1.
• Medium market concentration (top 10% of Hospice organizations have a 54% market share).

Top 10 Hospice Organizations (2015):

Home Health Aide (HHA) Highlights:

• HHA saw the greatest annual decrease between 2010 and 2015 compared to all the organization types
• Medium market concentration (top 10% of Home Health Aide organizations have a 53% market share)

Top 10 Home Health Aide Organizations (2015):

Industry Trends

Between 2010 and 2015, we observed the following increases of NPI numbers, patients and total payment amounts in Medicare Part A.

The number of patients and the total amount paid has grown in recent years for Part A as a whole. Over the 2010-2015 span, the number of patients has increased overall by about 5.5% and the total amount paid has increased overall by about 6%.

As a reference, the US population has grown by about 4.5% and inflation has gone up 9% in the same six year span.

A closer look at Part A data reveals that the majority of the growth can be attributed to the outpatient segment. The charts below illustrate the percent change (from 2010 to 2015) in the number of patients (left) and the corresponding percent change in payment amount (right) for each organizational type.

The summary table that follows details the trends in percentages and absolute terms for INP and OUT further illustrating the impact these two categories have on Part A in terms of dollars and patients.

Conclusion

To provide a better understanding of how Medicare Part A (hospital care) has changed between 2010 and 2015, this analysis focuses on the general trends and top performers within each organization type. It’s clear that OUT and INP facilities have had the greatest number of patients and the highest payment totals. Consequently, any shifts in the trends in these two organization types have a proportionally larger impact on Part A as a whole.

The consistent increases in Part A spend can most closely be traced to the growth of the outpatient segment. Outpatient growth ($15 B) has far exceeded the decline ($4 B) in inpatient care. The trends in the other segments, though not flat, are proportionally smaller and have a lesser effect on the total spend in part A. It’s interesting to note that, on average, the payments per patient is significantly higher for INP (~$15,000) than it is for OUT (~$1,600). While this is not representative across specific procedures, inpatient spending is roughly 9 times more than outpatient spending. With the cost of medical expenses steadily increasing, the general shift from inpatient spending to outpatient spending is likely to continue.

A key focus of this analysis is the impact that the top performing NPIs have in each Medicare part A segment. Having observed these top performers it is not surprising to see nearly half of the payments were made a small percentage of the NPIs in each category . Of equal importance is the observation that top performers (on average) grew more than their smaller counterparts within each organization type. This is indicative of an industry-wide trend in which large organizations are driving the majority of the growth in Medicare Part A.