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HSR Study: Focus on High-Cost Medicare Beneficiaries

Following the Money: Factors Associated with the Cost of Treating High-Cost Medicare Beneficiaries. Health Services Research; February 9, 2011

Access to the full online article is currently available for free on the Center for Studying Health System Change website.

Key excerpts:

Conclusions. Health reform policies currently envisioned to improve care and lower costs may have small effects on high-cost patients who consume most resources. Instead, developing interventions tailored to improve care and lowering cost for specific types of complex and costly patients may hold greater potential for ‘‘bending the cost curve.’’

This research uses patient-level data and a much richer set of explanatory factors than previous studies to examine key patient, physician, practice, and market characteristics associated with costs of high-cost Medicare beneficiaries, defined as the top 25 percent of beneficiaries arrayed by expected Medicare costs… we estimate determinants of Medicare expenditures (costs) at the beneficiary level….After exclusions, the analysis sample comprised approximately 1.6 million beneficiaries.

The 2006 average standardized medical cost for predicted high-cost beneficiaries was nearly U.S.$48,000, compared with about U.S.$7,000 for predicted low-cost patients (Table 3).

…a key finding from this work is that key conclusions from prior small area analyses (e.g., Fisher et al. 2003; Center for the Evaluative Clinical Services 2007) that much of the variation in cost of treating Medicare beneficiaries is driven by supply-induced demand (e.g., ‘‘supply-sensitive care’’) cannot be supported when one comprehensively controls for health status and conducts analysis at the beneficiary level.

…our results suggest that local health care costs are largely driven by disease burdens that go well beyond that which can be accounted for by demographic characteristics.

The results also have implications for ACOs, as envisioned in the PPACA. Beneficiaries are to be attributed, ex post, to ACOs rather than prospectively assigned to ACOs. If care is not consistently concentrated within a narrow number of providers, especially among high-cost beneficiaries,ACO success in improving care and lowering cost may be limited.

Our Medicare fee-difference and care fragmentation results suggest that payment reforms may contribute to controlling costs. Correcting the considerable
variation in the profitability of different types of services under the current RBRVS system, adoption of more ‘‘value-based’’ pricing of services, or constructing provider payment incentives tied to the cost and quality of care provided are all likely to be more effective strategies than current uniform payment updates.

Meaningful efforts to reduce Medicare costs will require policies that specifically address the needs of high-cost beneficiaries. Several of our findings suggest that certain policies currently being considered may be more successful in lowering the costs of low-cost rather than high-cost beneficiaries. Consequently, the task of reducing Medicare costs in the aggregate may prove difficult unless reforms can improve health care quality or eliminate unnecessary services for very sick, complex patients….After all, this is where the money is.

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4 Comments

  1. Aparna M K on February 15, 2011 at 7:33 pm

    HSR Study: Focus on High-Cost Medicare Beneficiaries | e-CareManagement Blog http://dlvr.it/GhWKl



  2. John A. Hartford Fnd on February 15, 2011 at 7:35 pm

    Kuraitis of e-CareManagment reports on CHSC study: focus on ill high cost Medicare benes for savings- http://tinyurl.com/4du52bn



  3. Netspective Health on February 15, 2011 at 8:02 pm

    HSR Study: Focus on High-Cost Medicare Beneficiaries http://goo.gl/fb/2hNMa #HIT #HealthIT



  4. Sloan Solutions on February 16, 2011 at 4:51 am

    #ACO Positive impact on costs for high users? HSR Study: Focus on High-Cost Medicare Beneficiaries |e-CareManagement: http://bit.ly/feZIPv