Trends in Postacute Care Spending Growth During the Medicare Spending Slowdown

Over the past decade, traditional Medicare’s per-beneficiary spending grew at historically low levels. To understand this phenomenon, it is important to examine trends in postacute care, which experienced exceptionally high spending growth in prior decades. Describe per-beneficiary spending trends between 2007 and 2015 for postacute care services among traditional Medicare beneficiaries age 65 and older. Trend analysis of individual-level Medicare administrative data to generate per-beneficiary spending and utilization estimates for postacute care, including skilled nursing facilities, home health, and inpatient rehabilitation facilities. Per-beneficiary postacute care spending increased from $1,248 to $1,424 from 2007 to 2015. This modest increase reflects dramatic changes in annual spending and utilization growth rates, including a reversal from positive to negative spending growth rates for the skilled nursing facility and home health sectors. For example, the average annual spending growth rate for skilled nursing facility services declined from 7.4 percent over the 2008–11 period to –2.8 percent over the 2012–15 period. Among beneficiaries with inpatient use, growth rates for postacute care spending and utilization slowed, but more moderately than observed among all beneficiaries. Reductions in hospital use, as well as reduced payment rates, contributed to declines in postacute spending.