Capstone Launches Medicare Physician Rate and Expenditure Tool

Capstone Launches Medicare Physician Rate and Expenditure Tool

December 4, 2023

By Hunter Hammond, Co-head of Capstone’s Healthcare Practice

Medicare is the single largest payer for healthcare services in the United States, and roughly 15% of the US population is enrolled in the program. In 2021, it processed more than 1.1 billion claims and made more than $424 billion in payments.

Medicare’s prominence in the healthcare sector is why, when on November 2, 2023, the Centers for Medicare and Medicaid Services (CMS) released its Medicare Physician Fee Schedule (MPFS) final rule, our inboxes were inundated with questions from clients. This happens every year, as CMS updates reimbursement rates prospectively for thousands of services and products across various settings of care annually. Investors in companies that directly serve Medicare beneficiaries and provide services upstream care deeply about where rates have been and where they are going.

For too long, we believe firms like ours that help investors underwrite policy risk and opportunity have hidden the ball. The government provides Medicare rate data, but it is not easily digestible or actionable. As such, today, we are releasing the beta version of our Medicare Reimbursement Trends tool under our Capstone Data Insights brand.

The tool provides more than 10,000 physician services, the associated payment rate after accounting for the MPFS conversion factor and relative value units, and various payment policy indicators needed for payment adjustment. Rate data runs from 2013 to 2024 and accounts for the most recent change in the CY2024 Physician Fee Schedule final rule issued November 2, 2023. The tool also provides aggregate Medicare fee-for-service expenditures on the services from 2017 to 2022, the latest data available. While the tool does not include spending by Medicare Advantage plans (yet), the spending data will allow users to see which service codes account for the greatest expenditures within Medicare Part B.

Capstone clients will be able to search by provider type to find the top service codes billed within a specialty by aggregate expenditure. The tool provides the section (e.g., evaluation and management), sub-section, and short descriptions for all codes with rate and spending data. Finally, the tool provides both the annual percent change as well as the CAGR for both spending and rates over the period with available data for selected codes.

We believe this tool will enable investors to see code-specific rate and expenditure trends over time to make better-informed investments in the healthcare sector. We hope this tool helps shift the diligence question from “Where have rates been and where are they going?” to “Why have rates changed, and why are they likely to change (or remain stable) going forward?” Capstone is well equipped to assist in better understanding the “why.” We hope the tool helps answer the “where.” As we launch this product, we truly want feedback from clients that use it. Please email us at to help us tailor the tool to your needs. We plan to add more data across other prospective payment systems, improve existing MPFS data visualization, and expand our analysis to other areas within the Medicare system, including drugs and products and Medicare Advantage plans. To do that, receiving input from our clients will be vital.

Hunter Hammond

Hunter Hammond, Co-head of Capstone’s Healthcare Practice

Read more from Capstone’s Healthcare team:
The Emerging Resurgence of Labor Unions in a Post-Pandemic World
Beyond the Buzzword: Value-Based Healthcare’s Shortcomings
The Mounting Shifting Sands in Healthcare Policy

Read Hunter’s bio here.

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