In 2020, 672,727 or 1% of Medicaid beneficiaries used $174 billion in health care services. The top 1% of Medicaid superusers account for 25% of the 2020 Medicaid budget, an average of $260,000 per year per person. each of the health care costs [per person?]. The majority of overutilizers remain in the top 1% of health care spenders unless targeted interventions are provided. Resolving the Super-Utilizer Crisis is the most effective and efficient way to create a sustainable and equitable health care model for all Americans.
Health care costs in the US inflation continues to outpace long-term economic and GDP growth. US health care spending per capita is twice the average for other rich nations. This unsustainable trajectory is increasingly displacing national, state, and local government investment in other services such as housing, education, and infrastructure. Unlike spending on health care for the over-utilized, investments in housing, education and infrastructure provide sustainable benefits and economic opportunities for all citizens, not just a small percentage.
Despite excessive health care costs in the US, twice that of the nearest industrialized OECD countries, we experience the lowest levels of life expectancy, overall health outcomes, and the highest levels of chronic disease burden. Americans get low value for the price we are charged and pay for health care. As the purchaser, consumer, and source of health care financing, whether through taxes and insurance premiums, Americans are getting a terrible deal.
The Congressional Budget Office reported that in 2020, government-sponsored health insurance accounted for 36% of the federal budget (Medicare = 20%, Medicaid = 16%) and 28.7% of state budgets. Health care combined with Social Security, unemployment and other mandatory commitments make up 62% of the federal budget.
There is currently no consensus definition of healthcare overusers (SU), which has led to controversy over the lasting impact of this population on healthcare costs, allowing providers of high-cost services such as emergency departments (EDs) and hospitals to argue that there is no solution . We believe the CMS definition — “patients who accumulate a large number of emergency room visits and hospitalizations that may have been prevented by relatively inexpensive early intervention and primary care”—is most applicable. Persistent Super Users (PSUs) are unique in that they are not only medically complex, suffer from multiple chronic conditions, but also face the challenges of poverty such as food and housing insecurity, lack of transportation, mental health and substance abuse.
Top 1% Superutilization Medicaid Beneficiary Facts
The combination of CMS’ definition of SU and the Center for Medicaid and Chip Services (CMCS) findings (see chart above) regarding SU Medicaid beneficiaries contradicts the widely held actuarial belief that super-utilizers regress to the mean value of individual health care costs. Denver Health study of super-utilizers found that 70% of this population were continuous (permanent) super-utilizers, while only 24.4% regressed to the mean and exited the SU category.
Health care costs associated with chronic diseases and other medically classified comorbidities are the norm for quantifying the PSU crisis. External factors, referred to as social determinants of health (SDoH), have been shown to have a much greater impact on the health and well-being of this population and, by extension, on health care costs. Social determinants such as neighborhood/zip code, housing, food, education, employment, and transportation accounted for almost 80.0% of health outcomes.
Measuring what matters
Dr. Jeffrey Brenner’s founding of the Camden Coalition has been groundbreaking and has proven instrumental in proving that comprehensive care and social support for the SU population can radically reduce health care costs and improve the quality of life for individual patients. The Camden Coalition was not focused on reducing the cost of care, but on improving the quality of care and the well-being of 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 apartment buildings caused 4,000 hospital visits and $200 million in health care costs. His analysis also revealed that 1,000 people, or 1% of the population of Camden, New Jersey, accounted for 30% of all hospital spending in the area. Before receiving care from the Camden Coalition, the initial group of 36 SU patients served had an average of 62 emergencies and hospital admissions per month, costing $1.2 million per month. The Camden Coalition was able to reduce emergency care and hospital admissions by 40% and monthly costs by 58%,
The highly fragmented inefficient care provided by PSUs is simply a symptom of the perverse financial incentives that negatively affect all Americans who have access to health care. The Centers for Disease Control and Prevention report that 90% of the $4.1 trillion in US health care costs are due to chronic diseases and mental illnesses. PSUs are individuals with more severe cases of these same conditions and circumstances. Effectively addressing the health care and PSU pricing crisis is a road map for the structural transformation of US health care. This will lead to immediate reductions in overall health care costs and highlight the concrete changes needed for an equitable and sustainable US health care system.
Designing and implementing effective, patient-centered models of comprehensive care must begin with alternative reimbursement models. Reliance on fee-for-service reimbursement is the most significant barrier to designing and implementing effective solutions that improve the health status and well-being of PSUs and reduce healthcare costs. Value-based reimbursement models that reward innovation and demonstrable results have already proven successful in reducing overall healthcare costs by 1%.
The success of these value-based models will quickly pressure incumbent healthcare organizations, especially hospitals, to respond by adopting value-based models in their service offerings, including hospital-owned provider groups. Incentives that reward doing the right thing will transform the health care status quo faster than incremental changes to existing reimbursement models.
Longstanding assumptions that little can be done to improve health status while reducing overall health care costs for the ultra-high utilization population are incorrect. It is true that the status quo, provider-centric reimbursement paradigm is not up to the task. The daily experiences of these medically and socially complex individuals cannot be resolved with the fragmented, expensive and low-quality care they currently receive. Implementing patient-centered, value-based, comprehensive services that enable provider organizations to care for the whole person is essential to reducing health care costs and improving the lives of this population. Furthermore, resolving the overuse crisis will inevitably lead to a sustainable and equitable health care model for all Americans.
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