Contribution of Preventable Acute Care Spending to Total Spending for High-Cost Medicare Patients

Karen E. Joynt, MD, MPH; Atul A. Gawande, MD, MPH; E. John Orav, PhD; Ashish K. Jha, MD, MPH

ABSTRACT

Importance  A small proportion of patients account for the majority of US health care spending, and understanding patterns of spending among this cohort is critical to reducing health care costs. The degree to which preventable acute care services account for spending among these patients is largely unknown.

Objective  To quantify preventable acute care services among high-cost Medicare patients.

Design, Setting, and Participants  We summed standardized costs for each inpatient and outpatient service contained in standard 5% Medicare files from 2009 and 2010 across the year for each patient in our sample, and defined those in the top decile of spending in 2010 as high-cost patients and those in the top decile in both 2009 and 2010 as persistently high-cost patients. We used standard algorithms to identify potentially preventable emergency department (ED) visits and acute care inpatient hospitalizations. A total of 1 114 469 Medicare fee-for-service beneficiaries aged 65 years or older were included.

Main Outcomes and Measures  Proportion of acute care hospital and ED costs deemed preventable among high-cost patients.

Results  The 10% of Medicare patients in the high-cost group were older, more often male, more often black, and had more comorbid illnesses than non–high-cost patients. In 2010, 32.9% (95% CI, 32.9%-32.9%) of total ED costs were incurred by high-cost patients. Based on validated algorithms, 41.0% (95% CI, 40.9%-41.0%) of these costs among high-cost patients were potentially preventable compared with 42.6% (95% CI, 42.6%-42.6%) among non–high-cost patients. High-cost patients accounted for 79.0% (95% CI, 79.0%-79.0%) of inpatient costs, 9.6% (95% CI, 9.6%-9.6%) of which were due to preventable hospitalizations; 16.8% (95% CI, 16.8%-16.8%) of costs within the non–high-cost group were due to preventable hospitalizations. Comparable proportions of ED spending (43.3%; 95% CI, 43.3%-43.3%) and inpatient spending (13.5%; 95% CI, 13.5%-13.5%) were preventable among persistently high-cost patients. Regions with high primary care physician supply had higher preventable spending for high-cost patients.

Conclusions and Relevance  Among a sample of patients in the top decile of Medicare spending in 2010, only a small percentage of costs appeared to be related to preventable ED visits and hospitalizations. The ability to lower costs for these patients through better outpatient care may be limited.