Issue Brief

No. 815

Medicare Physician Payments and Spending
October 9, 2006


Laura A. Dummit


The Medicare program’s physician payment method is intended to control spending while ensuring beneficiary access to physician services, but there are signs that it may not be working. The physician’s role in the health care delivery system as the primary source of information and treatment options, together with growing demand for services and the imperfect state of knowledge about appropriate service use, challenge Medicare’s ability to achieve these two goals. This issue brief describes the history of physician spending and the contribution of escalating service use and intensity of services to the rise in Medicare outlays, setting the stage for further discussion about the use of the Medicare payment system to control spending and ensure access.

Related Materials

This issue brief is the first of two related papers on physician spending and Medicare’s sustainable growth rate methodology. The companion paper, Issue Brief No. 818, was published on November 11, 2006.

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