According to AHRQ, 1% of Patients Account for 22.7% of Spending

Among hospitals and medical groups seeking to lower healthcare costs and improve quality, the most costly patients have become a common target for intervention. New data show (unsurprisingly) that the patients they’re looking for are the ones with the most complex arrays of chronic conditions.

Nationally, the costliest 1% of patients accounted for 22.7% of total expenses and the top 5% were responsible for half of spending. And patients with at least four chronic conditions are the most expensive of these costliest patients, according to a breakdown by the Agency for Healthcare Research and Quality.

The average cost of care for the top 5% of patients with four or more conditions was $78,198 in 2012. That was the highest amount across the top 5% in any category, which AHRQ divided by health (measured by number of chronic diseases), age, race, sex, insurance status and income.

The elderly ranked second with an average expense for the top 5% of $63,798. Patients with three chronic conditions followed with $60,976 in spending, on average.

That the sickest patients are the costliest may be obvious, but health economists stressed the data are nonetheless important to understanding U.S. healthcare delivery and underscore the need for public policy and private initiatives to support population health, a term used to describe prevention and health improvement efforts across an entire community.

“I think this is the most fundamentally important data in healthcare,” said Stephen Zuckerman, a health economist and senior fellow with the Urban Institute. “This drives so much of what’s going on in the healthcare system.”

The data, however, offer limited indications of what drives health spending in categories outside of the number of chronic conditions and age, Zuckerman said.

The costliest 5% of the uninsured were less expensive than the most-expensive patients in every category except those with no chronic condition. That may be because the young (who are likely healthier) are typically the most likely to be uninsured or it could be because the uninsured avoid seeking care or cannot pay medical bills, said Jonathan Skinner, a health economist with Dartmouth College.

“What this tells me is that the patients that account for the most money are the people who are older, closer to death, with multiple chronic conditions, and therefore the people who are most likely to be treated for many different things,” Skinner said. Those outside that category, when they are sick, are grappling with an isolated issue such as an accident, a complicated birth or heart attack, he said.

Insurers and providers can do more to focus their efforts on the highest cost patients, said Dr. Dave Chokshi, an assistant professor of population health at New York University. The data “underscore the need to refine payment structures and care models around population health management, particularly for patients with multiple chronic conditions.” He said payers should adopt care-management payments similar to those being adopted by the CMS next year.

Some systems have started to target intervention toward the costliest patients. Frequently, these patients visit multiple doctors and juggle numerous medications to manage more than one chronic disease. Increasingly, interventions reach beyond medicine to address basic needs—food, housing, transportation—that can strongly influence health and access to care.

But hospitals and medical groups can do more, Chokshi said. “On the provider side, we must do better in identifying evidence-based models of care coordination and rapidly scaling up effective models.”

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