More than disease management needed to control costs, JAMA study says

The U.S. will have to do more to prevent chronic illness than simply managing it better in order to save significantly on costs for Medicare's most expensive patients, a new study suggests.

Heart attacks, strokes, cancer, damaged spines and worn hips were the major reasons for the roughly $64 billion Medicare spent in 2010 on the costliest 10% of elderly patients not enrolled in managed care according to new research in the Journal of the American Medical Association.

Meanwhile, preventable trips to the emergency room or hospital—acute care considered avoidable with better care coordination for patients at home—accounted for about 10% of spending for the costliest patients, they wrote.

The costliest 10% of patients accounted for 70% of Medicare spending analyzed by Harvard University researchers Dr. Karen Joynt, Dr. Atul Gawande, E. John Orav and Dr. Ashish Jha.

The results suggest that hospitals and policymakers must look beyond disease management to population health and hospital efficiency to slow U.S. health spending, said Joynt, an instructor in health policy in Harvard's School of Public Health and a cardiologist with the Department of Veterans Affairs and Brigham and Women's Hospital in Boston.

“These findings suggest that strategies focused on enhanced outpatient management of chronic disease, while critically important, may not be focused on the biggest and most expensive problems plaguing Medicare's high-cost patients,” the paper said.

Reducing those big, expensive problems may be possible, but probably won't happen quickly, they wrote. Heart attacks and joint disease may be preventable, but that “would likely require a long time horizon and substantial investments in population wellness.”

The results raise questions about the potential for success among hospitals and medical groups in new accountable care organization contracts with Medicare, in which ACOs strive to reduce costs in exchange for a share of the savings. Bonuses are awarded annually, and some ACOs also face potential losses based on spending growth. Many ACOs have discussed or adopted strategies to try and keep complex, chronically ill patients out of the hospital with more aggressive efforts to coordinate primary care. Medicare has entered into roughly 250 of these contracts during the last 18 months but has not yet released results from those that have completed the first year.

“There's clearly money there,” said Jha, a Harvard professor in health policy and management, of the efforts to use care coordination and disease management to prevent unnecessary hospitalizations among patients with diabetes, congestive heart failure and chronic obstructive pulmonary disease. “It's not where all the money is.” Hospitals serious about saving money will need to do more to reduce hospital costs.

Hospitals may need to be more efficient since disease management may deliver relatively smaller savings, the authors wrote. “Our findings suggest that a complementary approach to saving money on acute care services for high-cost patients may be to additionally focus on reducing per-episode costs for high-cost disease entities though clinical innovation and care delivery redesign.”

The study looked at patients who visited the emergency department, but were not admitted to the hospital, because Medicare combines the costs. Emergency departments are increasingly a source of hospital admissions and patients who end up in the hospital after an emergency room visit accounted for nearly all the growth in hospital stays between 2003 and 2009, a recent RAND Health study found.

The research examined the emergency room and hospital costs for patients with Medicare costs that ranked in the top 10%. This small group accounted for nearly three-quarters (73%) of the $91.7 billion in Medicare acute-care costs during 2010. The sample did not include anyone younger than 65 and also excluded those with Medicare managed care. Researchers also excluded anyone who died during the year.

Spending on avoidable care varied by region, the researchers wrote, with more preventable spending in regions with more doctors.

High-cost patients accounted for one-third of Medicare spending on emergency room visits in 2010, and of those, researchers deemed 41% were preventable. Emergency room spending did not include patients who were admitted to the hospital from the ER. High-cost patients also accounted for roughly 70% of inpatient costs, and 9.6% of those costs were preventable.

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