Original researchCharacteristics and spending patterns of high cost, non-elderly adults in Massachusetts
Introduction
In Massachusetts, despite great efforts to control high costs,1 state health care spending continues to grow. Massachusetts has historically had the highest state per capita spending in the nation 2, with health care expenditures totaling over $54 billion in 2014, nearly a 5% increase from the year before.3 The state's commercial market and Medicare total spending increased by nearly 3% each while spending for Medicaid in the state grew by 19%, partly due to rising enrollment.3 Further, growing health care spending extracts ever larger opportunity costs; as health care spending continues to increase, available funds for other government agencies and services decreases. In every year since 2001, health care has constituted the largest proportion of the Massachusetts state budget, and has made up over 50% of the state's budget since fiscal year 2012.4, 5 From 2001–2010, Massachusetts state health care spending increased by 59%, while spending on education, infrastructure, and housing decreased by 15%.6
High health care spending is no longer an issue just for the government, taxpayers, and health insurers— patients’ health care costs are increasingly starting to fall to health systems and individual providers through alternative payment models such as Accountable Care Organizations (ACOs), bundled payment initiatives, and federal pay-for-performance programs.7 In Massachusetts, commercial payers are also expanding their use of alternative payment models with health care providers in the state.3, 8, 9 Total health spending in Massachusetts is expected to continue to increase, with projections of up to $123 billion spent on health care by 2020 if policy interventions fail to take hold and bend the cost curve.10 As such, both policymakers and clinical leaders have incentives to control spending and increase value for the patients they serve.11
One potentially promising strategy for controlling costs is to target the small proportion of individuals that account for the majority of health care spending.12 Prior research has shown that 5% of the U.S. population accounts for nearly 50% of health care spending in any given year.13 Much of this previous work has focused on understanding high and variable spending in the Medicare population14, 15; these high cost patients often have high health care needs due to advanced age and multiple chronic conditions.16 However, we know far less about high cost patients in the non-elderly, non-Medicare population. In the state of Massachusetts, this is particularly important given that the vast majority of the 6 million residents are covered through either Medicaid (24%) or commercial insurance (53%) while only 13% are covered by Medicare.17 Further, given the priority the state has made to control costs – and given that Massachusetts has previously served as a model for the broader nation on health care reform, understanding the major drivers of spending for high cost and high need patients in the non-Medicare population is critically important. Yet, we have very little recent empirical data on this population.
Given the importance of better understanding the characteristics of expensive non-Medicare patients and their drivers of spending, we sought to answer three questions. First, who are the costliest non-elderly patients in Massachusetts and how do their characteristics vary by major type of insurance (Medicaid, Medicaid managed care, and commercial market plans)? Second, what are the differences in health care spending by service between high cost patients and non-high cost patients across these payer groups? And finally, what proportion of spending in high cost and non-high cost patients is potentially preventable and how does this vary by insurance type?
Section snippets
Data
We obtained claims data from the Massachusetts All-Payer Claims Database (APCD) for the year 2012. The APCD contains all public and private insurance claims from all non-federal Massachusetts providers for inpatient, outpatient, post-acute care, physician services, tests, imaging, and drugs. Due to the state's successful implementation of health reform, nearly the entire population has some form of coverage, so the APCD is nearly a universal account of all health care delivered in the state
Patient characteristics
We identified 3,712,045 patients between the ages of 18–64 years in Massachusetts in 2012 who met our inclusion criteria, of which 8.5% had Medicaid fee-for-service, an additional 11.1% had Medicaid managed care, and 80.3% had private insurance (Table 1). High cost patients accounted for 65% of total spending in our sample. They were more likely to be older (median age 48 vs 40, p<0.001), female (60.2% vs. 51.2%, p<0.001), and had multiple chronic conditions (4.4 vs. 1.3, p<0.001) compared to
Discussion
Using a cross-sectional analysis of the Massachusetts All-Payer Claims Database, we found that a small proportion of patients account for over 60% spending by non-elderly adults in Massachusetts. Nearly 1 in 5 Medicaid-insured patients is likely to by high cost (spending in the top decile of all patients’ spending among all non-elderly adults), which is a higher proportion than in Medicaid managed care (MCO) or other private insurance plans. High cost Medicaid patients are also much more likely
Conclusion
A small proportion of patients account for a high proportion of total spending in Massachusetts non-elderly adults. The burden of chronic disease differs significantly across major payers, with Medicaid patients being far more medically complex and at higher risk for high costs than MCO and privately insured patients. Medicaid patients are also much more likely to incur preventable spending. Strategies and interventions should focus on targeting high-risk Medicaid populations, especially those
Source of funding
Blue Cross Blue Shield of Massachusetts Foundation.
Conflict of interest
Author has no conflicts to declare.
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