Preventable Spending Among High-Cost Medicare Patients

By December 12, 2017Commentary

A lot of health spending is concentrated among a few patients; therefore it makes sense to think that there may be avoidable costs among all that spending.  A study in the Annals of Internal Medicine probes how much preventable spending exists in the high-cost Medicare patient population.   (Annals Article)   The researchers used data from 2011 and 2012 to identify the top 10% Medicare fee-for-service patients in terms of total spending.  They then examined various categories of care to identify services that might have been avoidable.  The focus was preventable inpatient hospitalizations an avoidable ER visits, and spending in the 30 days following such utilization.  There were a total of over 6 million beneficiaries in the study sample, so over 600,000 by definition were in the high-cost group.  The beneficiaries were also grouped into categories according to health use and status; for example, 18% were non-elderly disabled, 8.6% were the frail elderly, 28% were in the major complex chronic condition group, 18% were in the minor complex chronic condition group, 18% were in the simple chronic group and only 9.7% were relatively healthy.  Out of the top 10% in spenders, 46% were frail elderly, 14% were non-elderly disabled, and 11% were major complex chronic conditions.

Across all spending for the 6 million-plus beneficiaries, 4.8% of spending was identified as avoidable.  Significant but not huge.  However, 74% of this avoidable spending was in the group with the top 10% of Medicare spending.  And by subpopulation in that top ten percent, the frail elderly accounted for 44% of avoidable spending or $6593 per person per year on average; the non-elderly disabled group for 15% or an average $3421; and the major complex chronic group for 11% or $3327 per year.  As you would expect, most of the avoidable spending was in the inpatient setting and in skilled nursing facilities.  For the high-cost frail elderly these categories accounted for almost $5000 of the average annual avoidable costs.  By diagnosis, heart failure, pneumonia, urinary infections and diabetes complications represented much of the avoidable spending in the frail elderly.  Since across both the high-cost and all beneficiary Medicare populations the frail elderly sub-group accounts for half of avoidable care, this is an obvious population to focus on, and many at-risk providers and plans do so.  An obvious interesting comparison would be to avoidable spending among the Medicare Advantage population, where presumably more attention is being paid to these issues.

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