At-Risk Payment Model

Several reliable sources have identified the high cost of frequent utilizer care:

  • DHHS/AHRQ (2010 data): $87,500 annual expenditures for top 1% of population (1)
  • MSHF (2016 data): $79,860 annual expenditures on patients with 5 or more ED visits (2)
  • Bellevue Hospital NY (2006 data): $84,040 annual hospital expenditure on high-utilization patients (3)
  • California Health Foundation (2004 data) (4):
    • $58,000 annual expenditure on Medicaid patients with 5 or more ED visits
    • $74,000 annual expenditure on Medi-Cal patients with 5 or more ED visits
  • California Department of Health Care Services (2014 data): average annual spending for frequent utilizers is $75,000 (5)
  • Denver Health System (2011 data): $133,522 annual expenditures on high-utilization patients (6)

These sources are a bit dated (two of these sources are over a decade old), and several of these sources only evaluated hospital expenditures – payer expenses are likely much higher when considering current cost expenses and when additional factors such as EMS and transportation expenses are included.   While community expenses vary, the data above is geographically broad-based, and most entities I have interacted with have found this range of annual high utilizer expenses to be accurate.

With healthcare reimbursement increasingly trending towards “pay-for-performance” models, high-resource utilization management programs can be a valuable tool for payer entities looking for immediate performance improvement programs.  Every one of the programs referenced above demonstrated significant savings within first year of program implementation, with most demonstrating reduction rates between 40-60% (2, 3, 7-11), it is reasonable to assume these models of care can produce dramatic cost reductions vs the status quo.  In fact, most of these programs have demonstrated significant cost reductions within months of program implementation!

High utilization programs are resource intensive, particularly during the initial 3-6 months of program enrollment.  In many instances client behaviors have been ingrained over years, and even with intense staff assistance these behaviors may take months to change, even longer.  Still, community-based high utilization programs often demonstrate a ROI ranging between 3:1 to 5:1 ROI during the first year of program implementation, and higher ROIs as clients remained enrolled.  In most cases consistent patterns of resource use change are noted mid-way through the first year of program enrollment, and can then be maintained with persistent but less intense staff effort.  It is not uncommon for enrolled clients to show an ROI in the range of 10:1 or above after their first year of program enrollment.

Community high utilization program are extremely well suited for performance-based models of reimbursement.  Ultimately this is the rare “win-win” for all involved – the ability to provide better care that the status quo, do so in a cost-effective manner, and with performance-based guarantees.