Transcript Slide 1

DataBrief:
Medicare’s Highest
Spenders
Did you know…
In 2006, Medicare spent almost 90
times more per capita on seniors in
the top quintile as compared to the
lowest quintile?
DataBrief Series October 2011 No. 24
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Medicare’s Highest Spending Seniors
•
Medicare spending has grown significantly over time. Certain beneficiary groups have contributed
more to this spending growth than others.1
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In 2006, Medicare spent $198 billion on beneficiaries age 65 and older.2 However, this spending
is distributed unequally among Medicare beneficiaries, with the highest spenders spending much
more than the lowest spenders.
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For Medicare beneficiaries age 65 and older, per capita Medicare spending in 2006 was
$7,163; per capita Medicare spending on the lowest quintile (20%) was $331 per capita and
on the highest quintile (20%) was $29,604.2
•
The highest quintile of older Medicare beneficiaries accounted for 74% of total Medicare
spending ($147 billion) in 2006.2
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77% of seniors in the highest spending quintile had at least 3 chronic conditions; about a quarter
of all seniors in the highest spending quintile had a functional impairment in addition to at least 3
chronic conditions.2
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The presence of a functional impairment is linked to higher Medicare spending. Among those in
the highest quintile, Medicare spent 33% more on those with chronic conditions and functional
impairment than on those with chronic conditions only.
1 Agency
for Healthcare Quality and Research. The High Concentration of U.S. Medical Expenditures. June 2006. Accessed on September 30, 2011 at:
http://www.ahrq.gov/research/ria19/expendria.pdf.
2Avalere Health, LLC. Analysis of the 2006 Medicare Current Beneficiary Survey, Cost and Use file. Excludes beneficiaries who died during 2006.
DataBrief (2011) ● No. 24
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Medicare Spends Significantly More on Seniors with Chronic Conditions
and Functional Impairment than on Others in the Top Quintile
Per Capita Medicare Spending for Selected Groups of Beneficiaries Age 65 and Over1
Group of
Beneficiaries
Overall Per Capita
Medicare
Spending
Per Capita Spending for
Beneficiaries with Chronic
Conditions Only
Per Capita Spending for
Beneficiaries with Chronic
Conditions and Functional
Impairment
Lowest 5% of
spenders
$62
$60
$78
Lowest 20% of
spenders
$331
$338
$366
Highest 20% of
spenders
$29,604
$26,879
$35,688
Highest 5% of
spenders
$59,646
$59,714
$59,746
1 This
analysis excludes beneficiaries who died during 2006. N = 24,754,479 beneficiaries with any spending, 4,950,896 beneficiaries per quintile, and 1,237,724 beneficiaries
per 5% group.
DataBrief (2011) ● No. 24
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About the data:
This analysis is based on the 2006 Medicare Current
Beneficiary Survey (MCBS) Cost and Use file, an annual,
longitudinal survey of a representative sample of all
Medicare enrollees. The MCBS collects information on
functional limitations, health services utilization, and
health spending.
Individuals who indicated that they had ever been
diagnosed with any of the following conditions, were
considered to have chronic conditions: arthritis,
Alzheimer’s Disease, broken hip, cancer (excluding skin),
congestive heart failure, depression, diabetes,
hypertension, mental illnesses (excluding depression),
myocardial infarction and other heart conditions,
osteoporosis, Parkinson’s Disease, pulmonary diseases
such as emphysema, asthma and Chronic Obstructive
Pulmonary Disease, and stroke.
In this analysis, individuals who indicated that they
received help or standby assistance with one or more
Activities of Daily Living (ADLs) and/or three or more
Instrumental Activities of Daily Living (IADLs) were
considered to have functional impairment.
This analysis is limited to individuals age 65 or older who
were enrolled in the fee-for-service, or traditional,
Medicare program. It excludes beneficiaries who had no
health spending in 2006 or were enrolled in a managed
care plan at any time during the year. These analyses
also exclude Medicare beneficiaries who died during
2006.
Analytics powered by Avalere Health LLC
A Clear Policy Connection
A small portion of Medicare beneficiaries account for a very large share of
Medicare spending. The prevalence of multiple chronic conditions is higher
among people in Medicare’s highest spending quintile. In addition, many high
spenders have functional impairments that add to their health needs.
Policymakers recognize that providing effective interventions for this relatively
small group of high-cost beneficiaries could significantly reduce Medicare
spending, as demonstrated by initiatives included in the Affordable Care Act
(ACA). Indeed, innovative local health care delivery models targeting high-cost,
high-utilization individuals have shown success in lowering utilization and costs.
In Camden, New Jersey, a team of clinicians targeting the city’s highest-cost
beneficiaries achieved a 40% reduction in costly hospital and emergency room
visits. To reduce these visits, the team provided a 24-hour hotline, personal
health coaches, and health education while using information technology to
track patients.1
The Center for Medicare and Medicaid Innovation (CMMI), established by the
ACA, has the authority to fund innovative delivery reform models. As the
center evaluates various models to target the high-cost, high-utilization
beneficiaries, it could benefit from understanding and incorporating the best
practices gleaned from successful smaller-scale programs.
1
Gawande, A. The Hot Spotters. The New Yorker. January 24, 2011.
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