Persistently High-Cost Patients

By July 24, 2019 Commentary

Sounds simple; just identify people with high health spending, target care management efforts at them, and health costs will fall.  Hasn’t really worked out that well.  Part of the problem is that often times high-spending is just episodic, so by the time you identify the patient with large costs, they have dropped back to the mean.  A new brief from the Kaiser Family Foundation attempts to identify those patients who have persistently high-spending.   (KFF Brief)  The authors used information from a large commercial health plan for 2015 to 2017.  In general, we know that about 5% of patients account for over 50% of all health spending.  The researchers identified the people who were in the top 5% of spending for each of the three years in the study.  This group was 1.3% of all patients, representing 20% of spending, an average of $88,000 in 2017.   By comparison, the average annual spending for all members was $5870.

As you might expect, much of this spending is for inpatient hospital care, which averages $1,220 annually across all people, but is $15,970 for those with persistently high spending and $24,270 for those who were defined as high-spending just in 2017.  That last group is more likely to include people with an acute episode of some sort.  On the other hand, those with persistent high spending had much more outpatient cost, averaging $38,000 in 2017, compared to those with high spending just in 2017, at $26,000.  The persistent group had an average of 137 outpatient service claims in the year.  They also had far greater prescription drug costs–averaging over $34,000 in 2017 versus $5110 for the 2017 only high-spenders.  In fact, 39% of the persistent group’s total spending was for medications.  So what are some of the characteristics of the persistent high-cost group?  As you would expect, they are older and they have much greater odds of having a chronic disease which is treated by very expensive drugs.  In particular, they are far more likely to have HIV, cystic fibrosis, or multiple sclerosis and quite a bit more likely to have colitis and rheumatoid arthritis.  Cancers increasingly have become chronic diseases, with treatment lasting for several years, and they also are found frequently among persistent high-spending patients.

So what do I take from this.  Once again, blame the drug companies for their pricing, especially of biologics.  Sooner or later that pricing will have to change.  The fact that drugs account for so much of this spending limits the ability to do much about overall spending for these patients, since a lot of the outpatient claims are going to relate to the drug treatment process.  But given the average cost of these patients, identifying and managing the care of them is worth the effort–there will be a payback.  And it does seem possible to identify many of the persistently high cost patients through the diseases they have.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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