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    A high tide of Medicare-age patients are closer to the metaphorical beach for healthcare providers than ever, with no signs of ebbing soon.

    Talk of dealing with a “silver tsunami” as the Baby Boomer generation ages and shifts from commercially insured to Medicare beneficiaries has been around for more than a decade — similar phrases and metaphors for the sizable cohort of aging Americans have grown in popularity dating back to the 1980s.1

    As Tim Ruse, MBA, FACHE, CMPE, vice president, client business services, abeo, noted in his session at the 2021 Medical Practice Excellence: Pathways Conference, there are significant macroeconomic and microeconomic impacts of this demographic change, especially for medical group practices and their revenue cycle management.

    “A lot of times we look at payer mix as a point in time, or maybe compared to a prior year, but there’s a lot of value in looking at how that evolves over time,” Ruse said, especially as healthcare leaders attempt to look ahead to future years.

    Medicare enrollment has grown each year (see Figure 1), but 2020 definitely changed the trajectory of that growth: “COVID has been quite the outlier” in tracking payer mix data for one practice he works with, Ruse noted (see Table 1).

    From the time Ruse started working with the practice, the share of Medicare in the payer mix jumped from less than 27% in 2011 to 35.3% in 2019. The COVID-19 pandemic proved an outlier for this growing payer mix shift, as Medicare dropped to 34.8% in 2020, with almost corresponding increases in Medicaid and self-pay last year.

    “With the reduction in elective procedures happening in March 2020, we really saw a drastic difference in the case mix and specialty for several months — things like GI, endoscopy, those cases really fell off in late March and April,” Ruse said. Other cases in urology and anesthesia saw “pretty deep cuts” to volumes until things began to recover in summer 2020, Ruse added.

    But what Ruse noted wasn’t so much the sustained growth year over year — about 1% on average — but rather the steep increase in the growth of newly enrolled beneficiaries (as seen in the 2018 data point in Figure 1). Despite the practice featured in Table 1 having grown by almost 40% during the time period shown and doing far more cases in 2019 than 2020, the payer mix shift from various buckets to Medicare “has impacted their strategic planning,” Ruse added.

    Tracking the Baby Boomer birth curve

    A longer view of the historic and projected growth in Medicare beneficiaries (Figure 2) shows the relative spikes currently happening between 2010 and 2030, when the entire Baby Boomer generation will be Medicare eligible.

    While these newly enrolled Medicare beneficiaries will have the effect of lowering the average age of all Medicare beneficiaries, the bigger concern for healthcare revenue cycle leaders will be that it is the beginning of the peak for the Baby Boomer generation’s slate of 65-year-olds: 1957 was the top year for births for the generation, and birth counts for 1958 through 1961 mark a plateau for the birth rate (see Table 2).

    Care needs and utilization may not expand significantly until many of these patients age into their 70s or 80s (see Figure 3); the plateau of patients born 1956 to 1961 are likely to produce the largest annual increases in Medicare beneficiaries practices have seen in decades.

    Typical Medicare beneficiaries, enrolling at age 65, make up almost half the share of all beneficiaries but only 37.7% of the share of Medicare spending. Ruse noted that older Medicare beneficiaries, on account of higher utilization and higher-acuity care needs, begin to have a larger share of the total Medicare spend compared to their age cohort’s share of total beneficiaries.

    This demographic shift may not play out similarly across the country, though. Areas with significant growth in commercially insured patients likely will not see payer mix shifts as pronounced.

    “Some areas are growing considerably with new industry coming in,” Ruse said, pointing to the example of his hometown of Dallas, which has brought in a lot of new industry in recent years, lowering the average age of the population. “If you’re in a growing economy, you may still have a relatively high commercial mix to offset this growth [in Medicare].”

    Practice leaders may need to keep an eye on how the pandemic has influenced migration for their areas. A recent study pointed to fewer interstate moves across the country from April 2020 to February 2021, finding that many households are leaving larger cities where organizations with remote jobs have their headquarters, opting instead for lower-density areas nearby with lower cost of living.7

    Even before the pandemic’s effects, Ruse noted that surgical case volume from 2016 to 2019 for a national book of business saw nearly a 2% increase in government pay as commercial and self-pay dropped (see Table 3).

    Absent the peculiarity of 2020 data and the shutdown of many procedures during the pandemic, the question for practice leaders is not whether the trend will continue, but rather these:

    1. How quickly will the payer mix shift occur in your market(s)?
    2. How will it affect your bottom line?

    COVID-19 and estimating local payer mix shift impacts

    Looking at payer mix throughout most of 2020 (see Table 4), Ruse saw decreases in Medicare as part of the payer mix in March and April 2020 before starting to rebound in May 2020 — in conjunction with limits on elective surgeries — before a gradual increase in case volume in summer.

    The practice, Ruse noted, did not truly recover in terms of elective surgeries until the first quarter of 2021 as vaccinations began and the pent-up demand for procedures was met with patients ready to return after the winter resurgence of COVID-19 infections.

    Another likely reason for the drastic drop-off in Medicare at certain points in 2020 were lower volumes in areas such as low-acuity gastroenterology cases that patients deferred or delayed — cases which typically have a higher Medicare mix, Ruse noted.

    As fewer patients are hesitant to engage in in-person care again with further vaccinations and lower COVID-19 case counts nationwide, the latter half of 2021 may be similar to the first half, with Medicare patients who avoided coming into clinics and ambulatory surgical centers (ASCs) feeling more confident and once again showing up to receive care that might have otherwise been delivered in 2020 if not for the pandemic.

    For practices to estimate the impact of the historic trend and the projected shifts in payer mix, Ruse suggests collecting case volume and payer mix for a given year and assessing it relative to the following year (see Table 5).

    If cases or encounter volumes were held constant year over year and paired with the new payer mix percentages, it offers an apples-to-apples comparison of the payer mix shift from a commercial category to Medicare or other government payer category, Ruse said. Applying the Year 2 payer mix to Year 1 case/encounter volumes then offers the ability to estimate revenues based on level contracted rates for each scenario and calculation of net difference in realized income.

    This is especially important to consider if your practice is growing and topline revenue has been increasing, as the shifts in payer mix could be overlooked amid those positive results, Ruse added. But the issue, once the plateau hits, will be unavoidable.

    “It’s not just an impact that we’ll face for the next five years [as] it plateaus,” Ruse said. “It will be something that we face for decades, so planning is important.”

    Strategies to prepare

    Ruse offered these strategies for practice leaders:

    • Invigorate your managed care contracting strategy. This should include creating an inventory of your contract matrix to identify contracts that may be eligible for updated negotiations. If you have multiple contracts available for updating, make sure to evaluate the practice’s ability to successfully handle contract negotiations internally or determine if there’s a need for contracting help. Ruse also recommends negotiating annual rate “escalators” in contracts, especially multiyear contracts that would need to keep up with increases in the Consumer Price Index.
    • Maximize revenue cycle performance. As revenue cycle functions become increasingly technologically driven (from coding through claim follow-up), Ruse cautioned about the growing number and complexity of reimbursement rules across payers. “A lot of dollars can be leaked from a practice by not doing this well,” Ruse said, who urged practice leaders to evaluate patient responsibility collection efforts, conduct internal audits and seek ways to automate and streamline revenue cycle workflows. “There’s more and more technology for patient engagement,” Ruse added, to help in these areas, including tools that help estimate a patient’s propensity to pay or target collection strategies.
    • Quality program performance. Quality performance is “becoming a bigger part of our lives” as healthcare leaders, Ruse said. As potential penalties from the Centers for Medicare & Medicaid Services (CMS) grow in the coming years and the growing share of Medicare pay, the impact from quality program performance will only grow. “We want to make sure that we’re performing well and minimizing any loss from a lack of quality reporting,” Ruse said.
    • Evaluate and optimize the staffing model. Ensure that your doctors are focusing on high-quality care delivery and doing fewer administrative tasks by shifting an appropriate level of work to advanced practice providers (APPs). Strategic use of APPs can help handle a higher caseload while increasing expenses at a lower rate than hiring a new physician in an increasingly tight recruiting market. Even specialties that traditionally have been physician-only (such as anesthesia) are realizing “that growing with a physician-only model is not as easy as it might once have been,” Ruse said.

    How will you change?

    Reviewing and projecting payer mix changes for the coming years gives practice leaders the opportunity to update strategic decisions for the future. As more medical groups emerge from the pandemic and turn their eyes toward expansion opportunities, understanding the case mix, payer mix, staffing requirements and other expenses required as part of expansion need to be considered in line with local payer mix at a new facility or for a service line expansion, Ruse said.

    “It’s oftentimes the case that they can grow the top line” of revenue, Ruse cautioned, “but shrink the bottom line” as RVUs are compensated at a lower rate. “If your practice knew that payer mixes would have 5% or more Medicare in five years, how would this impact strategic decisions for the future? … How would you act now?”

    Ruse concluded that this is not an insurmountable problem, but instead one that — with forethought and planning — can yield success when acknowledging the hurdles ahead.


    1. Barusch AS. “The Aging Tsunami: Time for a New Metaphor?” Journal of Gerontological Social Work, 56:3, 181-184, DOI:10.1080/01634372.2013.787348.
    2. Kaiser Family Foundation. “Annual Growth Rate of Medicare Beneficiaries, 2011-2020.” 2019.
    3. abeo. Organizational payer mix heat map by year 2011 to 2020. Client data used with permission.
    4. CMS. 2020 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Available from:
    5. National Vital Statistics System. “Birth Data.” National Center for Health Statistics, CDC. Available from:
    6. MedPAC. A Data Book: Health care spending and the Medicare program. July 2020. Available from:
    7. Haslag PH, Weagley D. “From L.A. to Boise: How Migration Has Changed During the COVID-19 Pandemic.” SSRN. March 26, 2021. Available from:
    8. Courtesy Tim Ruse and abeo.
    9. abeo. Organizational payer mix heat map, January 2020 to September 2020. Client data used with permission.

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