Potentially Preventable Spending Among High-Cost Medicare Patients: Implications for Healthcare Delivery

Background: High-cost patients account for a disproportionate share of healthcare spending. The proportion and distribution of potentially preventable spending among subgroups of high-cost patients are largely unknown.

Objective: To examine the distribution of potentially preventable spending among high-cost Medicare patients overall and potentially preventable spending associated with each high-cost category.

Design: A cross-sectional study. We merged Medicare claims and social determinants of health data to group patients into high-cost categories and quantify potentially preventable spending.

Patients: A total of 556,053 Medicare fee-for-service and dual-eligible beneficiaries with at least one healthcare encounter in the New York metropolitan area in 2014.

Main Measures: High-cost patients were mapped into 10 non-mutually exclusive categories. The primary outcome was episodic spending associated with preventable ED visits, preventable hospitalizations, and unplanned 30-day readmissions.

Key Results: Overall, potentially preventable spending accounted for 10.4% of overall spending in 2014. Preventable spending accounted for 13.3% of total spending among high-cost patients and 4.9% among non-high-cost patients (P < 0.001). Among high-cost patients, 44.0% experienced at least one potentially preventable encounter compared with 11.4% of non-high-cost patients (P < 0.001), and high-cost patients accounted for 71.5% of total preventable spending. High-cost patients had on average $11,502 in potentially preventable spending-more than 20 times more than non-high-cost patients ($510). High-cost patients in the seriously ill, frail, or serious mental illness categories accounted for the highest proportion of potentially preventable spending overall, while end-stage renal disease, serious illness, and opioid use disorder were associated with the highest preventable spending per patient.

Conclusion: Potentially preventable spending was concentrated among high-cost patients who were seriously ill, frail, or had a serious mental illness. Interventions targeting these subgroups may be helpful for reducing preventable utilization.