Measuring growth in the volume and intensity of Medicare physician services

Congress adopted a policy of Volume Performance Standards that will adjust Medicare fees downward (or upward) in direct relation to the amount that spending exceeds (or falls below) a preset target. Using data from the 1985 through 1989 Medicare Part B Annual Data (BMAD), we show there are wide differences in the rate of growth in volume and intensity across types of services, specialties, and geographic areas. This suggests the current policy that bases adjustments on two national standards for surgical and nonsurgical services could lead to inequitable fee rewards and penalties. A greater number of targets based on more homogeneous service categories could reduce these inequities.