Concentration of Potentially Preventable Spending Among High-Cost Medicare Subpopulations: An Observational Study

Abstract

Background: Little is known about whether potentially preventable spending is concentrated among a subset of high-cost Medicare beneficiaries.

Objective: To determine the proportion of total spending that is potentially preventable across distinct subpopulations of high-cost Medicare beneficiaries.

Design: Beneficiaries in the highest 10% of total standardized individual spending were defined as "high-cost" patients, using a 20% sample of Medicare fee-for-service claims from 2012. The following 6 subpopulations were defined using a claims-based algorithm: nonelderly disabled, frail elderly, major complex chronic, minor complex chronic, simple chronic, and relatively healthy. Potentially preventable spending was calculated by summing costs for avoidable emergency department visits using the Billings algorithm plus inpatient and associated 30-day postacute costs for ambulatory care-sensitive conditions (ACSCs). The amount and proportion of potentially preventable spending were then compared across the high-cost subpopulations and by individual ACSCs.

Setting: Medicare.

Participants: 6 112 450 Medicare beneficiaries.

Measurements: Proportion of spending deemed potentially preventable.

Results: In 2012, 4.8% of Medicare spending was potentially preventable, of which 73.8% was incurred by high-cost patients. Despite making up only 4% of the Medicare population, high-cost frail elderly persons accounted for 43.9% of total potentially preventable spending ($6593 per person). High-cost nonelderly disabled persons accounted for 14.8% of potentially preventable spending ($3421 per person) and the major complex chronic group for 11.2% ($3327 per person). Frail elderly persons accounted for most spending related to admissions for urinary tract infections, dehydration, heart failure, and bacterial pneumonia.

Limitation: Potential misclassification in the identification of preventable spending and lack of detailed clinical data in administrative claims.

Conclusion: Potentially preventable spending varied across Medicare subpopulations, with the majority concentrated among frail elderly persons.

Primary funding source: The Commonwealth Fund.