In 2020, 672,727 or 1% Medicaid Beneficiaries consumed $174 billion of healthcare services. The top 1% Medicaid super-utilizers accounted for 25% of the 2020 Medicaid budget, averaging $260,000 annually per person. each of healthcare expenditures [per person?]. The majority of super-utilizers remain in the top 1% of healthcare expenditures unless targeted interventions are provided. Solving the Super-Utilizer crisis is the most effective and efficient way to create a sustainable and equitable healthcare model for all Americans.
U.S. healthcare cost inflation continues to outpace long-term economic and GDP growth. U.S. Healthcare expenditures per capita is twice the average of other wealthy nations. This unsustainable trajectory is increasingly crowding out national, state, and local government- investments in other services such as housing, education and infrastructure. Unlike healthcare expenditures for super-utilizers, investments in housing, education an infrastructure provides sustained benefit and economic opportunity to all citizens not just a small percentage.
Despite the exorbitant cost of U.S. healthcare, twice that of the closest industrialized OECD nations, we experience the lowest level of life expectancy, overall health outcomes and the highest levels of chronic disease burden. Americans are getting poor value for the price we are charged and pay for healthcare. As purchaser, consumer, and the funding source for healthcare, whether through taxes and insurance premiums, Americans are getting a terrible deal.
The Congressional Budget Office reported 2020 government sponsored healthcare insurance represented 36% of the federal budget (Medicare = 20%, Medicaid = 16%), and 28.7% of state budgets. Healthcare in combination with social security, unemployment and other mandatory commitments comprise 62% of the federal budget.
No consensus definition for healthcare super-utilizers (SU) currently exists, which has led to disputes on the lasting impact this population has on healthcare costs, allowing providers of high-cost services such as emergency departments (ED) and hospitals to contend there is no solution. We believe the CMS definition — “patients who accumulate large numbers of ED visits and hospital admissions which might have been prevented by relatively inexpensive early intervention and primary care” — is the most applicable. Persistent super-utilizer’s (PSU) are unique in that they are not only medically complex, suffering from multiple chronic diseases, but also are faced with the challenges of poverty such as food and housing insecurity, lack of transportation, mental health and substance abuse.
Top 1% super-utilizer Medicaid beneficiary facts
The combination of CMS’s SU definition and Center for Medicaid and Chip Services’ (CMCS’) findings (see chart above) regarding SU Medicaid Beneficiaries is counter to the widely held actuarial belief that super-utilizers revert to the mean of individual healthcare expenditures. A Denver Health study of super-utilizers found that 70% of this population are continuous (persistent) super-utilizers, while only 24.4% reverted to the mean and exited the SU category.
The healthcare costs associated with chronic disease and other medically classified co-morbidities is the norm for quantifying the PSU crisis. External factors referred to as social determinants of health (SDoH) have been shown to have a far greater influence on the health and wellbeing of this population and by extension healthcare costs. Social determinants such as neighborhood/zip code, housing, food, education, employment, and transportation account for almost 80.0% of health outcomes.
Measuring what matters
Dr. Jeffery Brenner’s founding of the Camden Coalition proved groundbreaking and has proven instrumental in proving that comprehensive care delivery and social support for the SU population can radically reduce healthcare costs and improve quality of life for individual patients. The Camden Coalition wasn’t focused on cost of care reduction but improving the quality of care and well-being for this population. However, their work proved that the two concepts are inseparable. Dr. Brenner’s analysis revealed that over a six-year period, just 900 people in two residential buildings accounted for 4,000 hospital visits and $200 million in healthcare costs. His analysis also revealed that 1,000 individuals or 1% of the population of Camden, New Jersey accounted for 30% of all the area’s hospital costs. Prior to receiving care from the Camden Coalition, the original cohort of 36 SU patients served were averaging 62 ED and hospital admissions monthly, costing $1.2 million monthly. The Camden Coalition was able to reduce ED and hospital admissions by 40% and monthly costs by 58%,
The highly fragmented inefficient care received by PSUs is merely a symptom of the perverse financial incentives that negatively affect all Americans accessing healthcare. The Centers for Disease Control and Prevention report that 90% of the $4.1 trillion of U.S. healthcare costs are attributable to chronic disease and mental illness. PSUs are individuals with more severe instances of these same conditions and circumstances. Effectively tackling the PSU health and cost crisis is a roadmap for the structural transformation of U.S. healthcare. Doing so will deliver an immediate reduction in total healthcare costs, and highlight the specific changes needed for an equitable and sustainable U.S. healthcare system.
The design and implementation of effective patient-centric whole person care models must begin with alternative reimbursement models. Reliance on fee-for-service reimbursement is the most significant impediment to the design and implementation of effective solutions that improve the health status and wellbeing of PSUs and the reduction of healthcare costs. Value-based reimbursement models that reward innovation and demonstrable outcomes have already been proven successful at lowering total healthcare costs for the 1%.
These value-based models’ success will quickly pressure incumbent healthcare organizations, particularly hospitals, to react by adopting value-based models throughout their service offerings, including hospital owned provider groups. Incentives that reward doing the right thing will transform the healthcare status quo more quickly than incremental changes to existing reimbursement models.
The long-held assumptions that little can be done to improve the health status while decreasing total healthcare costs for the ultra-high utilization population is incorrect. It is true that the status quo provider centric volume-based reimbursement paradigm isn’t up to the task. The daily experience of these medically and socially complex individuals can’t be resolved with the fragmented high-cost low-quality care they currently receive. The implementation of patient-centric, value-based, wrap-around services that empower provider organizations to care for the whole person is essential to lowering healthcare costs and improving the lives of this population. Furthermore, solving the s super-utilizer crisis will inevitably lead to a sustainable and equitable healthcare model for all Americans.
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