By Susan J. Blumenthal, MD, MPA and Nina S. Russell
As Emerson once said, "The first wealth is health." While health expenditures in the United States are more than double the average spent by other industrialized nations and account for 18 percent of the U.S. GDP, America ranks only 24th out of 30 among these countries on length of life expectancy. With medical costs ever-rising in America (although increasing at a slower rate than in the past), actions are urgently need to address the needs of a subgroup of the U.S. population that is driving a large proportion of those costs: the sickest patients.
Expenditure data reveals that a small percentage of the U.S. population--the "sickest patients"--is disproportionately responsible for America's high medical costs. In 2012, the top 5 percent of patients, ranked by their health care expenses, accounted for 50 percent of total health care expenditures in the United States. The relatively healthy bottom 50 percent of the population accounted for just 2.7 percent of total medical costs. This pattern holds true in both the Medicaid and Medicare programs as well. As the chart below demonstrates, Medicaid bills reflect this skewed distribution in health care costs, with 5 percent of enrollees accounting for 48 percent of program expenditures.
There are several ways to analyze this small percentage of patients who have the highest medical costs: 1) zooming in on the geographic "hotspots"-- locations in the U.S. that have the highest medical expenditures, 2) examining the characteristics of those patients--"the frequent fliers"--who frequent the emergency room as a source of their care, or 3) focus on the "super-utilizer" patients who incur high costs overall.
In more detail, "hot spotters" are those patients who live in specific geographic areas--on the scale of city blocks and buildings--with particularly high health care spending per capita. The term "frequent flier" denotes people with low income and poor health who rely on emergency room care to meet their health care needs. The Emergency Treatment and Labor Act, passed by Congress in 1986, provide individuals with the right to emergency medical care regardless of their ability to pay.
"Super-utilizers" are those people whose complex physical, behavioral, and social needs are not well met through the current fragmented health care system. As a result, these individuals often bounce from emergency department to emergency department, from inpatient admission to readmission or institutionalization.
What's wrong with the sickest patients?
The best predictor of a patient being high-cost to the health care system is the presence of a chronic illness, such as diabetes, lung disease, or congestive heart failure. High-cost patients are twice as likely as the rest of the population to have a chronic condition, and four times as likely to have two or more chronic illnesses. In 2012, the top five most costly medical conditions in terms of health care expenditures were heart disease, trauma-related disorders, cancer, mental disorders, and COPD/asthma.
A lower percentage of health care expenditures associated with care for trauma-related disorders and COPD/asthma was paid out of pocket by these high-cost patients relative to the overall population. For beneficiaries with six or more chronic conditions, average Medicare spending was over three times greater and these patients were more likely to have heart failure, chronic kidney disease, COPD, atrial fibrillation, and stroke.
An especially crucial area for focus is the health of seniors, which can vary widely across geographic regions of America. In many areas of the country, their health is getting worse. Studies suggest that baby boomers are in poorer health than previous generations but are also living longer. Many are dealing with diseases such as diabetes, asthma, hypertension, high cholesterol, heart disease, and Alzheimer's. More than half of all Medicare beneficiaries have been diagnosed with high blood pressure; 27 percent have diabetes. Two-thirds of traditional fee-for-service Medicare recipients older than age 65 have multiple chronic medical conditions. More than 4 million beneficiaries, or about 15 percent, have at least six chronic conditions. Since 2008, the number of counties in the U.S. where three-quarters of senior Medicare beneficiaries have multiple chronic conditions has risen by 20 percent. Diagnoses of kidney disease, depression and high cholesterol have seen double-digit increases during that time period. The average elderly patient with five or more chronic conditions sees 13 doctors and fills 50 prescriptions in a year. Those sickest seniors account for more than 41 percent of the $324 billion spent on the traditional fee-for-service Medicare program annually. In fiscal year 2014, net federal Medicare outlays were $511.7 billion.
In 2010, 10,000 seniors (a very small number) were responsible for $1 billion in Medicare spending on medical treatments, hospital stays and doctor visits. All but 500 of those people had at least six chronic conditions. Three quarters of these most expensive cases involved Alzheimer's disease, which experts say is the costliest and most difficult chronic condition to treat, because patients often require long-term care, there are few therapies available, and because presence of the disease greatly complicates the treatment of other medical illnesses.
Furthermore, a small percentage of challenging cases, often at the end of life, make up the majority of Medicare spending on hospital care. As many as 25 percent of Medicare recipients spend more than the total value of their assets on out-of-pocket health care expenses during the last five years of their lives. On the last six months of life alone, Medicare spends approximately 28 percent of its budget, or about $170 billion.
Ethical challenges in patient care
The Patient Protection and Affordable Care Act of 2010 (ACA) includes an important provision that prohibits insurers from denying coverage to patients with pre-existing conditions. This prohibition, however, may lead some insurers, hospitals, and providers to engage in unethical practices regarding the "sickest patients." For example, it has been reported that some insurers are placing high-cost medications for chronic conditions into the highest-priced tiers of drugs they cover, forcing patients to potentially pay thousands more dollars in co-payments out-of-pocket for essential medications to treat their illnesses. For example, a recent study published in the New England Journal of Medicine in 2015 found that some plans offered through the health insurance marketplaces may be pricing HIV drugs out of reach for some patients in an effort to get around the health law's mandate prohibiting discrimination based on a person's pre-existing condition.
Identifying the sickest patients
Frequent fliers, hot spotters, super-utilizers: no matter what term is used, the hallmark of these sickest patients is high hospital admission and readmission rates. Furthermore, the people with the highest medical costs--those individuals who cycle in and out of the hospital--are often the people receiving poorer care. In 2010, for several of the most frequently treated medical conditions in U.S. hospitals, one in five cases resulted in a readmission within 30 days: congestive heart failure (24.7 percent), schizophrenia (22.3 percent), and acute and unspecified renal failure (21.7 percent). Preventable readmissions are a huge drain on the U.S. budget, costing Medicare $15 billion annually.
However, accurately identifying patients who could most benefit from active, coordinated disease management can be problematic since many of the same chronic conditions associated with higher medical expenditures are also present (especially in the case of the elderly) among groups with lower medical expenditures. Thus, interventions based solely on the presence of a chronic condition are bound to include a significant number of people who will not incur high costs, at least in the short term. However, an emphasis on coordinated care in the community would be of benefit to all patients and is an important component of the ACA.
More effectively addressing the needs of the sickest patients
Hospitals in the U.S. have reduced deaths, hospitalizations, and costs among people over the age of 65 over the past several decades. From 1999 to 2013, Medicare beneficiaries became 45 percent less likely to die during a hospitalization, 24 percent less likely to die within a month of being admitted, and 22 percent less likely to die within the year. Deaths among the group fell 16 percent, meaning 300,000 lives were saved during this 14-year period. Yet, there is more progress to be made.
Improve coordination in health and social services
Focusing intervention efforts on the sickest patients presents challenges. Costs concentrate in catastrophic medical episodes and end of life care, which means that associated expenditures are difficult to predict and address. Half of all hospital inpatients in the United States enter through the emergency room, and present with medical conditions that are receiving more intensive, expensive diagnostic and treatment interventions than ever before.
Complex issues associated with the sickest patients--high readmission rates, high burden of chronic disease, and high costs (especially during end-of-life care)--stem largely from a lack of adequate coordination of health and social services. As a result, solutions to addressing the needs of the sickest patients must be comprehensive and multi-faceted, drawing on innovation in areas from systems design to scientific research.
Improve systems design and promote innovation
The Center for Medicare and Medicaid Innovation within the U.S. Department of Health and Human Services was established as a component of the Patient Protection and Affordable Care Act of 2010 (ACA) to test innovative payment and service delivery models to reduce health expenditures while preserving and enhancing the quality of care for Medicare, Medicaid, and Children's Health Insurance Program (CHIP) beneficiaries. In the area of systems design, the ACAprovides a pathway for reducing costs of care and improving quality of services for the sickest patients through mechanisms such as the establishment of Accountable Care Organizations (ACO's), assessing penalties for hospital readmission (which incentivizes hospitals to coordinate care with community providers to reduce costly patient readmissions), and the use of a value-based payment modifier under the physician fee schedule. Currently, 17 percent of the Medicare population is enrolled in ACOs. ACOs are local, provider-led entities comprised of a wide range of collaborating providers. ACOs monitor care across multiple patient care settings (e.g., physician practices, clinics and hospitals) and are accountable to health care payers (e.g., Medicaid, Medicare or private insurers) for the overall cost and quality of care for a defined population. Other innovations in systems design include patient-centered medical homes, and community health worker programs, each of which seeks to align incentives to keep patients cared for in the community rather than the hospital.
The patient-centered medical home as defined by the Agency for Healthcare Research and Quality (AHRQ), is a model for primary health care delivery with five key characteristics: comprehensive, patient-centered, coordinated, accessible, high-quality care. An example of a successful project supported by CMS' Center for Innovation is the Independence at Home Demonstration, which saved over $25.9 million in the first performance year. The project tests the effectiveness of delivering comprehensive primary care services at home for individuals with multiple chronic conditions.
Community health workers (CHWs) serve as a liaison between health and social services and the community to facilitate patient's access to services and improve the quality and cultural competence of the interventions that are delivered. CMS"s Innovation Center has funded multiple demonstration projects across the U.S. involving CHW's providing health education and linking patients to social services in their communities.
Private health insurers have an important role to play in improving systems design. More than 30 percent of the 55 million Medicare beneficiaries and well over half of the 66 million Medicaid beneficiaries are now in private health plans run by insurance companies that are coordinating care as well as addressing cost issues.
Applying Information Technology to Advance Health
Some stakeholders are using information technology to reduce medical costs associated with the sickest patients. New health technologies may help providers avoid costly penalties for hospital readmissions enacted by Medicare in the ACA. For example, Medicare currently spends $15 billion annually on preventable readmissions. In recent years, innovative health technologies are emerging helping providers to identify those patients who will cost the most and help facilitate earlier intervention. New methods are helping providers rate the severity of a patient's medical condition to predict who is at the highest risk for hospitalization. Patients' electronic health records can help doctors determine whether the patient should be admitted to the ICU immediately, calculating which patients have the highest risk of imminent death. A few integrated health care systems, including the U.S. Department of Veterans Affairs (VA) and Kaiser Permanente Northern California, have already tapped into the potential of electronic health records to generate reliable estimates of the risk of mortality within 30 days for patients when they are admitted to the hospital. These predictive algorithms based on a real-time analysis of patient data, laboratory results, co-existing conditions, and vital signs, calculates whether a patient has a 3 percent or an 80 percent chance of dying within the next month. This information is then used for real-time decision support in triage situations to intervene as well as customizing disease management approaches.
Another insurance company is running algorithms on large amounts of health data to identify patients who are sick or frail enough to be on the verge of hospitalization. Data used in this algorithm includes: billing claims, lab results, medications, height, weight, family history, and the patient's geographic location. The analysis identifies those patients at highest risk, assigning each high scorer patient to a staff member who works at no charge to the client to assemble health information tailored to the patient's needs including making medical appointments, resolving medication issues, and helping arrange transportation to doctor's offices. The company has identified 18,000 patients for this type of extra attention. This innovative use of big data has facilitated a 40-50 percent reduction in hospital readmission rates for people with congestive heart failure in their study population.
Remote patient monitoring merges wireless technology and medical care focusing on serious, chronic conditions like heart disease and diabetes. Some hospitals and clinics are installing routers in patient homes to collect continuous data on weight, blood pressure, glucose, and blood oxygen levels. Physicians can then make quick adjustments to care without having to bring their patients into the office for an expensive medical visit. These integrated systems also allow health care providers to detect issues before they have serious health consequences. Innovative software applications that connect patients to their friends, family and health care professionals to share real-time medical information are providing new models for disease management in communities, improving patient safety and the quality of care.
Telemedicine in critical care offers opportunities to improve quality and safety by using cameras and computers to connect health care teams following patients in the hospital with off-site tele-ICU staff using advanced software and continuous remote monitoring technology. The terms "tele-ICU," "virtual ICU," "remote ICU," and "eICU" all refer to the same care concept, in which a centralized or remotely based critical care team is networked with the bedside ICU team and patient via state-of-the-art audiovisual communication and computer systems. The tele-ICU team can provide surveillance and support for a large number of ICU patients in disparate geographical locations for multiple hospitals. This can lead to more proactive care, fewer complications, and timely decisions regarding care, which is especially relevant for the sickest patients. Patients at risk for sepsis, for instance, are identified through an algorithm in their electronic health record and placed in a virtual sepsis unit for monitoring. This e-ICU program saved $25 million annually in this program by reducing the ICU length of stay.
Telehealth can also make care more easily accessible to rural patients without long travel times helping to improve outcomes. A study published in 2013 in Cancer Epidemiology, Biomarkers & Prevention found that older cancer survivors in rural areas were 66 percent more likely to forgo medical care than their urban counterparts, due to high travel costs and lack of social support.
Ariadne Labs, a joint center for health systems innovation at Brigham and Women's Hospital and the Harvard School of Public Health, is evaluating best practices for addressing the needs of the sickest patients for wide-scale health care implementation. A successful example of their work has been in collaboration with the World Health Organization (WHO) to reduce medical errors. Its Safe Surgery Program is designed as a three-stage, nineteen-item checklist for surgical teams to reduce the most dangerous medical errors that can occur in operating rooms. The checklist was implemented in 4,000 hospitals in eight cities around the world involving more than 8,000 patients. On average, medical complications were reduced by 35 percent and deaths were reduced by 47 percent.
Learn from mistakes
Moving forward, it is important to learn from mistakes. For example, the principle of cost sharing is based on the logic that having patients bear a greater portion of the expenses for their care will lead them to self-ration obtaining health services. That is, if a patient is responsible for some of the costs of their treatment, he or she will get tests and treatment when necessary, and refrain from treatment when it is not necessary. But this has been shown not to occur. Instead, higher cost sharing can hurt sicker patients because they may delay or avoid the care they need. A 2012 study demonstrated that higher cost sharing reduces spending on physician visits and drugs, but can increase hospital spending. Studies revealed that when Medicare beneficiaries face higher rates of cost sharing, hospitalizations go up, not down, especially for those with chronic illnesses. This means that a reassessment of cost-sharing practices is needed. And it is a reason why the ACA includes many preventive interventions and medical screenings with no cost sharing or deductible to patients so that diseases can be detected earlier when treatment can be most effective.
Put prevention first
Benjamin Franklin once said "an ounce of prevention is worth a pound of cure," yet his words have not been successfully integrated into medical practice. 70 percent of deaths in America annually are linked to preventable conditions, including heart disease, stroke, chronic lung disease, diabetes, and some forms of cancer. Consider this: the U.S spends 75 percent of its $2.9 trillion annual health care budget on treating disease but only 3-5 percent on prevention. Healthy lifestyle changes have the potential to decrease the chronic disease burden in the U.S. by as much as 80 percent. Moving forward, promoting a culture of health will be vital to preventing some of the disabling conditions that afflict the sickest patients in the U.S. health care system.
The high costs of health care in the United States challenge all stakeholders to focus special interventions on a subgroup of the population that is driving those expenditures: the sickest patients. The sickest patients are becoming easier to identify as a result of their chronic disease burden, age, and the high costs they incur. However, their needs are not yet being adequately met in communities and by the health care system. All sectors of society must mobilize and work together to design and implement a new health ecosystem to more effectively identify and manage the "sickest patients," intervene early, and prevent disease and its complications in the first place. Increased coordination is urgently required in America's health system for the sickest patients, building innovations in systems design, strengthening connections to services in the community, and emphasizing the power of prevention, to better serve those most in need. These are the cornerstones for a more sustainable, effective, and efficient health care system in the 21st century.
Rear Admiral Susan Blumenthal, M.D., M.P.A. (ret.) is the Public Health Editor of The Huffington Post. She is a Senior Fellow in Health Policy at New America and a Clinical Professor at Tufts and Georgetown University Schools of Medicine. She is also Senior Policy and Medical Advisor at amfAR, The Foundation for AIDS Research. Dr. Blumenthal served for more than 20 years in senior health leadership positions in the federal government in the Administrations of four U.S. presidents including as Assistant Surgeon General of the United States, the first Deputy Assistant Secretary of Women's Health, and as Senior Global Health Advisor in the U.S. Department of Health and Human Services. She also served as a White House advisor on health. She provided pioneering leadership in applying information technology to health, establishing one of the first health websites in the government (womenshealth.gov) and the "Missiles to Mammogram" Initiative that transferred CIA, DOD and NASA imaging technology to improve the early detection of breast and other cancers. Prior to these positions, Dr. Blumenthal was Chief of the Behavioral Medicine and Basic Prevention Research Branch, Head of the Suicide Research Unit, and Chair of the Health and Behavior Coordinating Committee at the National Institutes of Health. She has chaired many national and global commissions and conferences and is the author of many scientific publications. Admiral Blumenthal has received numerous awards including honorary doctorates and has been decorated with the highest medals of the U.S. Public Health Service for her pioneering leadership and significant contributions to advancing health in the United States and worldwide. Named by the New York Times, the National Library of Medicine and the Medical Herald as one of the most influential women in medicine, Dr. Blumenthal was named the Health Leader of the Year by the Commissioned Officers Association and as a Rock Star of Science by the Geoffrey Beene Foundation. She is the recipient of the Dr. Rosalind Franklin Centennial Life in Discovery Award.
Nina Russell graduated from Yale University in 2015 with a B.A. in Ethics, Politics, and Economics. She was a Health Policy Intern at New America in Washington, D.C.