Understanding and Addressing Hot Spots Critical to Bending the Medicaid Cost Curve

Concentration of Costs
The top 5 percent of Medicaid beneficiaries account for more than half of Medicaid spending. In contrast, the bottom half of Medicaid spending accounts for 5 percent of the costs.
The top 10 percent account for 68 percent of spending

Costs persist over time with many remaining in highest spending levels

Costs Related to Chronic Disease

Chronic disease accounts for 84 percent of what is spent on health care in the United States
Expenses for people with one chronic condition were twice as great as for those with no chronic condition, and spending for people with five or more chronic conditions was about 14 times higher.

State Example:

Savings Across All Patient Cost Groups (Low to High)

Comparison of Uncoordinated Care vs. Coordinated Care Patients by Cost Groups (Percentage and Amount of Total Costs)
$123 M $130 M
Coordinated Care Patients
58%

Uncoordinated Care Patients $97 M $87 M $74 M

58% 69% 57% 59% 42% 42% 31% 43%
$10,000$19,999 $20,000$29,999

Total Dollar Amount

$82 M $61 M
47%

90%

$19 M
3%
97%
$500$999

53%

41%
$50,000- $100,000 $99,999

10%
$1,000$4,999 $5,000$9,999 $30,000$49,999

Approx 35% of red bar costs are avoidable

Total Cost Groups (Annual Medical and Drug Costs)

S Southeastern Consultants, Inc. EC Copyright 2012

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We Know What Works

Stabilize health of individual to avoid hospitalizations and emergency department visits (Indiana WellPoints Right Choice program)

Integrate mental and physical health services (Massachusetts' Child Psychiatry Access Project) Address costs in long-term care beneficiaries with programs that prevent or delay long-term care, integrate long-term and regular care, and provide low-cost community based options (GRACE) Manage transitions between care providers and physicians

(Care Transition Model)

Tools Needed
Risk stratification and predictive modeling to target patients for whom intervention holds promise Best practices collaboration between states Develop technology to identify hot spots Timely feedback to providers to facilitate delivery system reforms

Policy Implications
Policy environment that supports innovation and lowering costs rather than cost-shifting

Facilitate collaboration of public-private partnerships, and at the state and federal levels

Celebrate and share best practices; encourage replication

Support health information technology infrastructure