Medicare spending for varies extensively among hospital referral regions and among hospitals. Spending has two components: volume and price. Variations in per-capita spending can be attributed to variation in average price (reimbursements per day in a facility, or per physician visit) as well as the volume of care (the number of patient days in a facility, or physician visits).

The Medical Care Cost Equation table shows the variation in per-decedent spending for inpatient hospitalizations, physician visits, skilled nursing facility stays, home health agency visits, or hospice admissions, and evaluates the contributions of variation in price and volume in determining Medicare reimbursements. The equation gives the per-decedent rates for reimbursements, volume and price, and gives the ratio to the U.S. average for each component. After creating the table, you can choose to obtain the ratios to a different benchmark, such as a state average, an HRR average, or another hospital.