Pertsistent High-cost Medicare Patients

By January 18, 2019 Commentary

A small number of patients account for a very large percentage of all health spending, and that is true in subpopulations as well, including Medicare.  A study in Health Affairs looks at factors related to persistently high-cost Medicare patients.   (HA Article)   It is not hard to identify the high-spending patients in the past year or even in the current one; what is difficult is figuring out which patients will have high costs year after year, because they are the ones worth devoting significant management attention to.  In any year, about 10% of Medicare patients represent half of all spending in the program.  The authors looked at patients who were high-cost over a three-year period, from 2012 to 2014.  They used the top 10% in spending as their definition of high-cost.  Over 5.5 million patients were continuously enrolled in Medicare over the study period.  Of these, 2.8% were high-cost in all three years and another 7.2% were high cost in one or two years.  So already we have learned that at least for fee-for-service Medicare, only about 3% of patients remained in the top 10% of spenders for even three years.  And on the flip side, of the 90% of patients who were not defined as high-cost in 2012, almost all, 88.8% (of the 90%) stayed out of that bracket for all three years.

Now it gets interesting–what were the characteristics of the persistent high-cost patients?  They were younger, more likely to be African-American or Hispanic and more likely to be dual-eligibles.  They were more likely to have end-stage renal disease, which is very expensive to treat.  They also had slightly more chronic conditions.  Other than kidney disease, other conditions linked to persistent high-cost were congestive heart failure and diabetes, but these patients were less likely to have had a heart attack.  So not a lot of really useful information to distinguish patients likely to become and stay high-cost.  In terms of spending patterns, persistently high-cost patients had more cost in every category, about twice as much for inpatient care compared to even transient high-cost patients and 26 times more than the non-high-cost ones.  They also had significantly more spending on drugs.  While they had substantially more spending on ambulatory care sensitive conditions, I am dubious that much of that spending could have been prevented.  The implications for effectively managing spending in a Medicare population are unclear.  By the time people get to Medicare, much of their health status is baked in.  Obviously if you can stop people from developing conditions, you can limit ultimate spending, but once they have a serious disease, there is a limit to how much benefit will occur from intensive management.

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