Dec. 10-14: Overall Healthcare Spending Increases Continue to Slow

Spending increases in nearly all payer categories declined in 2017, most notably in private health insurance.

Dec. 6—Federal actuaries identified slower-than-projected nationwide healthcare spending growth in 2017, driven in part by reduced use of outpatient services.

The latest overall spending numbers were released shortly before next week’s meeting of the Physician-Focused Payment Model Technical Advisory Committee (PTAC), which will discuss new payment models to help reduce Medicare spending and improve quality.

Healthcare spending increased by 3.9 percent in 2017, according to the latest National Health Expenditures (NHE) tally by the Centers for Medicare & Medicaid Services (CMS). The rate of increase has been declining since peaking at 5 percent in 2015. Actuaries estimated earlier this year that 2017 health spending had increased by 4.6 percent. 

The NHE rate was slightly lower than the 4.2 percent increase in the gross domestic product (in nominal GDP) in 2017.

Total NHE reached $3.5 trillion, or $10,739 per person, in 2017. However, as a share of the economy, healthcare spending declined to 17.9 percent from 18 percent in 2016.

The slower spending growth was mainly due to a slowdown in the use and intensity of hospital care, physician and clinician services, and retail prescription drugs, according to CMS. Together, those three categories comprise 63 percent of all healthcare spending, Anne Martin, an economist with the Office of the Actuary at CMS, said in a call with reporters.

In hospital care, the spending deceleration was focused in outpatient care, while inpatient care stayed flat.

Overall, hospital spending—one-third of all healthcare spending—increased by 4.6 percent in 2017, compared with 5.6 percent in 2016.

CMS officials declined to identify specific factors that resulted in the lower growth in hospital spending, but they did note that enrollments in high-deductible health plans continued to increase in 2017 and such plans have been found to reduce healthcare consumption. Additionally, enrollment increases in Medicaid and individual health insurance, as triggered by provisions of the Affordable Care Act, slowed after sharp increases in 2014 through 2016. Martin said the uninsured rate changed little between 2016 and 2017.

Despite the slowdown in utilization, CMS noted that prices increased in 2017 at somewhat higher rates than they did in 2016.

Payer Increases

Spending increases by nearly all healthcare payers declined in 2017,  notably in private health insurance. Commercial payers increased spending by 6.2 percent in 2016 but only 4.2 percent in 2017.

Out-of-pocket healthcare spending increases also dropped sharply—from 4.4 percent in 2016 to 2.6 percent in 2017. That slowdown was particularly pronounced for nursing care, prescription drugs, “other nondurables,” and “other professional services.” However, CMS did not have data on what was driving the slowdown, Martin said.

Growth in household spending on health care also slowed in 2017. It increased by 3.8 percent following growth of 4.8 percent in 2016.  The slowdown was mainly driven by slower growth in out-of-pocket spending, CMS officials said.

Medicare spending increases were almost identical in each of the two years—4.3 percent in 2016 and 4.2 percent in 2017.

“Lower growth in fee-for-service Medicare spending was almost entirely offset by faster spending for Medicare private health plans,” Martin said. Medicare Advantage spending increased by 10 percent in 2017, compared to 8.1 percent in 2016.

Although hospitals had slower spending growth within Medicare, faster growth in Medicare spending on health care came in physician and clinical services and “other professional services.”

Federal Medicaid spending increased by just 0.8 percent, but state and local spending on the program increased by 6.4 percent as the federal share of the cost of coverage for newly eligible populations under the ACA declined from 100 percent to 95 percent.

Monday, Dec. 10

Workgroup meetings of the National Quality Forum Measure Applications Partnership to review 39 measures CMS is considering for quality reporting and payment programs (through Dec. 12). Learn more.

Launch of CMS’s revised pre-claim review demonstration for Medicare fee-for-service home health services. Learn more.

National Comprehensive Cancer Network’s Patient Advocacy Summit, Washington, D.C. Learn more.

2018 Washington Innovation in Longevity Summit, Washington, D.C. (through Dec. 11). Learn more.

America’s Health Insurance Plans (AHIP) Consumer Experience & Digital Health Forum, Nashville (through Dec. 13). Learn more.

Tuesday, Dec. 11

HFMA webinar titled “Using Advanced Planning and Costing to Drive Accountability and Strategy at Children’s Health.” Learn more.

Webinar by CMS titled “SEP-1 Early Management Bundle, Severe Sepsis/Septic Shock: v5.5a Measure Updates and v5.0b through v5.2b Analysis Results.” Learn more.

Webinar by the Joint Commission as part of the “Joint Commission Pioneers in Quality eCQM Expert to Expert Webinar Series” Learn more.

Webinar by the Healthy People Law and Health Policy Project titled “Using Law and Policy as Tools to Support Healthy Aging in Healthy Communities.” Learn more.

CMS provider call titled “SNF PPS: New Patient Driven Payment Model.” Learn more.

Wednesday, Dec. 12

HFMA webinar titled “2019 Final Rule Changes to Outpatient Prospective Payment System and Ambulatory Surgery Centers.” Learn more.

Webinar by CMS titled “Question and Answer Discussion: CY 2018 Voluntary Reporting of the Hybrid Hospital-Wide Readmission Measure.” Learn more.

Webinar by the American Hospital Association (AHA) titled “Staying Power: Why Your Employees Leave & How to Keep Them Longer.” Learn more.

Hearing by the Energy and Commerce Committee’s Oversight and Investigations Subcommittee titled “Examining the Availability of SAFE Kits at Hospitals in the United States.” Learn more.

Thursday, Dec. 13

Webinar by CMS titled “Updates to Public Reporting in Fiscal Year 2019: Hospice Comprehensive Assessment Measure and Data Correction Deadlines.” Learn more.

Webinar by AHA titled “Improving the Quality and Cost of Diabetes Care.” Learn more.

Webinar by AHIP titled “Home Infusion: trends, costs and major challenges.” Learn more.

Free webinar titled “East Tennessee State University Responds to the Opioid Epidemic Through Interprofessional Education, Community Engagement, Research, and Clinical Care.” Learn more.

Webinar by the Agency for Healthcare Research and Quality on “Gynecology-Enhanced Recovery Program Recruitment.” Learn more.

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Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare