High-Cost Patients Widely Distributed Across Hospitals, Markets

May 03, 2017 - A recent American Journal of Managed Care study attempting to understand why some patients incur higher healthcare costs than others found that high-cost patients were evenly spread across providers and healthcare markets.

Using a 20 percent sample of Medicare fee-for-service claims data from 2011 to 2012, Harvard University researchers found that hospital and market did not indicate high-cost patient concentration.

However, the analysis revealed that hospitals that were either academic teaching or for-profit organizations in urban settings and served greater proportions of low-income patients tended to have slightly more high-cost patients.

“High-cost beneficiaries are only modestly concentrated in specific hospitals and healthcare markets; as such, efforts to efficiently manage costs and care among the high-cost cohort should remain broad,” wrote researchers. “However, the providers and communities where these patients disproportionately receive their care are meaningfully different, suggesting that additional research on the mechanisms underlying these differences might benefit policy efforts to improve care for these high-cost beneficiaries.”

A handful of patients contributed the most to higher healthcare costs and utilization, researchers reported. Approximately 55 percent of Medicare spending between 2011 and 2012 stemmed from just 10 percent of beneficiaries.

The average healthcare costs for the high-cost cohort was also about 10-fold greater than the low-cost beneficiary group.

The high-cost patient group identified in the study also had the following characteristics compared to the low-cost cohort:

• 9.84 percent identified as black compared to just 7.2 percent in the low-cost group

• 22.5 percent were likely to qualify for Medicaid coverage versus 12.7 percent in the other group

• Greater rates of chronic diseases, as mental health conditions, congestive heart failure, renal failure, chronic obstructive pulmonary disease, and vascular disease

Many healthcare stakeholders, including CMS, have focused their healthcare cost reduction efforts on targeting high-cost and high-utilization patients. Harvard researchers aimed to contribute to stakeholder attempts by trying to identify if provider practice patterns or location influenced healthcare costs.

“This is important information as it could help us to understand why some patients are higher-cost compared with others and help us begin to develop interventions to reduce costs for these patients,” stated the study.

Based on the results, researchers suggested tailoring cost reduction initiatives to either modify provider behavior or implement more programs in specific areas.

But the Medicare claims data analysis showed provider practice patterns did not necessarily influence healthcare costs. High-cost patients represented a larger share of Medicare claims at all hospitals studied.

Hospitals incurring the greatest healthcare costs reported that 69 percent of their inpatient Medicare claims came from high-cost Medicare beneficiaries. The remaining 90 percent of hospitals had 51 percent of their claims stem from high-cost beneficiaries.

Even hospitals in the lowest decile of high-cost patient concentration still had almost one-third of their Medicare claims come from the most expensive beneficiaries.

Although hospital characteristics did modestly relate to high-cost patient concentration. Hospitals with the most claims from expensive patients were more likely to be for-profit and teaching institutions. The organizations also received disproportionate share payments and had smaller nurse-to-patient ratios.

High- and low-concentration hospitals also scored relatively the same on quality care measures, except hospitals with more high-cost patients tended to have greater 30-day readmission rates and lower 30-day mortality rates.

Similarly, researchers also found that healthcare market characteristics did not strongly relate to expensive patient concentration. The study revealed the following market findings:

• Out of the 30 Hospital Referral Regions (HRRs) studied, only 10 percent were considered areas with the largest high-cost patient concentrations

• 13 percent of beneficiaries in the high-cost HRRs incurred the greatest healthcare costs versus 7 percent in low-spending HRRs

• High-cost HRRs represented only 9.7 percent of total Medicare costs

• The median annual per-beneficiary total standardized cost in the HRRs with the greatest spending was $14,193 per year compared to $11,077 in other markets

However, researchers discovered that the 30 HRRs with the largest high-cost patient concentration rate contained more individuals who were black (18.5 percent compared to 10.1 percent in low-concentration HRRs), lived in poverty (19.1 percent versus 15.5 percent), and resided in urban areas (82.2 percent compared to 71.3 percent).

The high-concentration regions also had less long-term hospital beds and more specialists despite an equal supply of all provider types.

Additionally, researchers reported that high-concentration HRRs showed greater costs. Medicare end-of-life spending was $76,446 in these regions compared to $65,538 in other markets.

The regions also faced larger healthcare utilization rates. High-concentration HRRs ranked 1.39 on the Dartmouth Hospital Care Intensity Index, whereas other markets averaged a score of 0.94.

With only a modest association between hospital and market type to high-cost patient concentration, researchers suggested a more generalized approach to healthcare cost reduction initiatives. But further research should be performed in hospitals and areas with slightly more high-cost patients.