Senior doctor talking with patient and tablet in office

Despite the recent passage of the Affordable Care Act, healthcare costs continue to skyrocket.

Many factors contribute to this cost increase, including:

  1. Pharmaceuticals
  2. Medical inflation
  3. Specific diseases and conditions like heart disease and cancer

However, the most expensive healthcare cost is actually quite shocking. It is a small group of individuals known as “high-cost claimants.”

According to a study released by the American Health Policy Institute (AHPI), high-cost claimants comprise just 1.2 percent of all members. However, this tiny group accounts for 31 percent of the total healthcare spending making them the number one cost driver for 43 percent of large employers.

A high-cost claimant is defined as someone who costs the public or private sectors at least $50,000 or more every year. However, in it’s survey of 26 large employers, AHPI discovered that the average high-cost claimant costs $122,382 annually. That is nearly 29 times that of the average person.

AHPI took a look at government programs, like Medicare and Medicaid, and made a similar discovery. Between 2009 and 2011, about one percent of Medicaid beneficiaries accounted for 25 percent of costs, while the costliest five percent of beneficiaries accounted for 48 percent of costs.

“The number of patients with preventable chronic diseases resulting from poor life styles, high stress, and bad food habits is continuing to grow,” said Jay Reddy, president and CEO of VitreosHealth, a predictive and prescriptive analytics company. “Caring for these individuals has a direct impact on costs for healthcare organizations, from administrative fees, pharmacy prices, and other healthcare expenditures that cause costs to rise overall.

“But, for many healthcare organizations, there is no way to identify these individuals before they become a high-cost claimant. It is only after hospitalization or other high-cost medical intervention that the issue becomes evident. The current fee-for-service model does not focus on preventive care or proactive care management. It focuses only on sick care, meaning there is no motivation or accountability to keep these populations healthy.”

Unfortunately, according to the AHPI study, if these trends continue healthcare costs in the United States will “hit the wall” at some point between 2025 and 2030. For example, the average premium and deductible for 53 percent of private sector employees is expected to consume 9.5 percent or more of the family’s income by 2025. That ratio is considered “unaffordable” according to the Affordable Care Act.

“It’s not too late to slow and even reverse these rising costs,” said Reddy. “The solution is to focus beyond simply managing the care of these high-cost claimants and proactively identifying individuals who are at risk and address their needs before hospitalization or other high cost intervention.

“We have worked closely with our partners to understand their unique populations in order to create the risk stratifications necessary to design proactive care management programs to intervene and stop the progressions of chronic disease conditions into more complex, high-cost conditions.”

AHPI discovered that 53 percent of the healthcare costs for high-cost claimants are for chronic conditions and 47 percent are for acute conditions.

“The models we have developed are always unique to the population in order to aid in predicting gaps in care for the chronic conditions, so patients may stay healthy,” said Reddy.

“Working across the ‘dark’ data found across an organization’s systems as well as all available lab, pharma, and socio-economic data, we provide patient specific insights to drive care management programs to drive better outcomes. Identifying these patients in advance and making sure they are kept healthy becomes a primary objective in our work.”

To learn more about healthcare organizations that have discovered how to identify those most at risk of becoming high-cost claimants, click here.

 

This Shocking Healthcare Expense Costs the Industry Billions, But it Can Be Prevented

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