Transcript Slide 1

DataBrief:
Medicare Spending by
Quintile
Did you know…
In 2006, one-third of Medicare
beneficiaries in the top quintile of
spending had both chronic
conditions and functional
impairment?
DataBrief Series October 2011 No. 23
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Medicare Spending By Quintile
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In 2006, Medicare spent $198 billion on health services for seniors in the fee-for-service, or
the traditional Medicare program. This was 80% of total fee-for-service Medicare spending
in 2006.1
Medicare pays for health care services, such as physician visits, inpatient and outpatient
visits, prescription medicines, rehabilitative services such as skilled nursing facility stays and
home health care services, and hospice care.
Spending on health care services varies greatly among Medicare beneficiaries. The highestspending quintile, or top 20% of seniors, accounted for 74% of the total Medicare spending
on beneficiaries age 65 and older.1
Seniors with chronic conditions and functional impairment are among the most expensive
Medicare beneficiaries. Thirty-two percent of Medicare beneficiaries in the highestspending quintile had both chronic conditions and functional impairment. In comparison,
only 6% of beneficiaries in the lowest-spending quintile had both functional impairment and
chronic conditions.1
Of all the beneficiaries with both chronic conditions and functional impairment, 44% were in
the top spending quintile while only 8% of them were in the lowest spending quintile. In
comparison, of beneficiaries with only chronic conditions, 15% were in the top quintile and
18% were in the lowest quintile.1
1 Avalere
Health, LLC. Analysis of the 2006 Medicare Current Beneficiary Survey, Cost and Use file. Excludes beneficiaries who died during 2006.
DataBrief (2011) ● No. 23
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Over 30% of Medicare’s Top Spenders Have
Both Chronic Conditions and Functional Impairment
Distribution of Beneficiaries within Each Medicare Spending Quintile,1 by
Chronic Conditions and Functional Impairment2
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
6%
8%
10%
14%
32%
81%
86%
87%
83%
66%
13%
6%
Bottom 20%
Second 20%
Third 20%
1%
3%
3%
Fourth 20%
Top 20%
Chronic Conditions and Functional Impairment
Chronic Conditions only
No Chronic Conditions or Functional Impairment
1N
= 24.8 million beneficiaries age 65 and older with any spending. Excludes beneficiaries who died during 2006. Each quintile represents 5.0 million
beneficiaries. Total Medicare spending for beneficiaries aged 65 and older = $198 billion.
2 Functional impairments are defined as 1+ Activity of Daily Living (ADL) and/or 3+ Instrumental Activity of Daily Living (IADL).
DataBrief (2011) ● No. 23
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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
Activities of Daily Living (ADLs), Instrumental Activities of
Daily Living (IADLs), 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
ADLs and/or three or more 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.
A Clear Policy Connection
Seniors with both chronic conditions and functional impairment are among the
most vulnerable and expensive Medicare beneficiaries. In addition to their
health care needs, these individuals often also require long-term services and
supports (LTSS) to assist in every day activities. LTSS is primarily paid for by
Medicaid, out-of-pocket payments, long-term care insurance (LTCi), or is
provided by family caregivers. The fragmentation of the health care and LTSS
systems can be a barrier to care coordination for seniors with chronic
conditions and functional impairment. This in turn can lead to gaps in coverage
and poorly managed care which could contribute to high Medicare
expenditures.
To improve care delivery and reduce unnecessary health service use and
spending, policymakers should target this very vulnerable and high-cost
population. One example of such an initiative is the Independence at Home
demonstration project included in the Affordable Care Act. Independence at
Home aims to deliver in-home medical and social services to Medicare
beneficiaries with both multiple chronic conditions and functional impairment.
The goal is to use a team-based care approach to reduce unnecessary
hospitalizations and improve quality of care. This demonstration is scheduled
to begin in January 2012 and run for three years.1 Providers should consider
participating in this innovative demonstration, and developing other ways to
meet the complex medical and social needs of this population.
1Centers
Analytics powered by Avalere Health LLC
for Medicare and Medicaid Services. Independence at Home Demonstration
Fact Sheet. 2011. Accessed on August 24, 2011 at:
https://www.cms.gov/DemoProjectsEvalRpts/downloads/IAH_FactSheet.pdf.
DataBrief (2011) ● No. 23
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