Volume 52 | Number 2 | April 2017

Abstract List

Sam Krinsky M.A., Andrew M. Ryan Ph.D., M.A., Tod Mijanovich Ph.D., Jan Blustein M.D.,Ph.D.


To measure variation in payment rates under Medicare's Inpatient Prospective Payment System () and identify the main payment adjustments that drive variation.

Data Sources/Study Setting

Medicare cost reports for all Medicare‐certified hospitals, 1987–2013, and Dartmouth Atlas geographic files.

Study Design

We measure the Medicare payment rate as a hospital's total acute inpatient Medicare Part A payment, divided by the standard payment for its geographic area. We assess variation using several measures, both within local markets and nationally. We perform a factor decomposition to identify the share of variation attributable to specific adjustments. We also describe the characteristics of hospitals receiving different payment rates and evaluate changes in the magnitude of the main adjustments over time.

Data Collection/Extraction Methods

Data downloaded from the Centers for Medicare and Medicaid Services, the National Bureau of Economic Research, and the Dartmouth Atlas.

Principal Findings

In 2013, Medicare paid for acute inpatient discharges at a rate 31 percent above the base. For the top 10 percent of discharges, the mean rate was double the base. Variations were driven by adjustments for medical education and care to low‐income populations. The magnitude of variation has increased over time.


Adjustments are a large and growing share of Medicare hospital payments, and they create significant variation in payment rates.