Reducing Costs for Chronic Health Conditions

There is a close link between having persistently high spending and being diagnosed with certain chronic health conditions-such as HIV, multiple sclerosis, cystic fibrosis, rheumatoid arthritis, diabetes with complications, and a number of cancers, according to a new Kaiser Family Foundation (KFF) analysis.

“It’s no surprise there’s a correlation between chronic health conditions and high health spending,” says Peter Dunn of Activate Healthcare, provider of primary medical care services to employers and unions headquartered in Indianapolis. “As a provider of onsite health clinics for employers, we know that close and long-term relationships between patients and providers can have a dramatic impact on health outcomes and lower costs. But that’s only part of the solution. The healthcare industry, with help from the private sector, needs to continue to find ways to inspire individuals to take an active role in their health so they can better manage and prevent costly chronic conditions. Patient activation and convenient and accessible primary care are central to achieving a healthier population, and if done properly, savings will follow.”

KFF also found that in 2017 among people with three consecutive years of coverage from a large employer, 1.3% of enrollees accounted for 19.5% of overall health spending. Those in the top 5% of spending in each of the three years from 2015 to 2017-had average health spending of $87,870 in 2017. That compared to average per person spending of $5,870 among all large group enrollees during that period, according to the study.

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In addition, spending on retail prescription drugs accounted for almost 40% of spending for those with persistently high spending in 2017, more than twice the percentage for enrollees overall.  People with persistently high spending averaged over $34,100 in spending on retail prescription drugs (not including rebates) in 2017, compared to $1,290 for enrollees overall, the analysis finds.

Addressing these recent healthcare spending trends, according to Jody Pigg, vice president at Quorum Health Resources, a healthcare professional services consulting company Brentwood, Tennessee, employee healthcare benefit programs continue to focus on the following:

• Incentivizing the employee base through reduced out of pocket costs for routine primary care services and generic pharmaceutical options.

• Providing case management support services to ensure timely compliance with chronic disease health issues.

• Direct contracting for discounts on healthcare services provided in local markets.

• Discounting premiums for wellness program participation.

• Aggressive stop loss insurance programs for the higher utilization and related costs per covered life.

“In the absence of programs as noted above at the employer level, individual plans in the general market/healthcare exchanges tend to move more ‘first dollar’ expenditures to the insured via increased annual deductibles and coinsurance requirements, creating disincentives for timely preventative screenings and routine primary care, while creating gaps in ‘first dollar payment ability’ and ‘dollars set aside to make those payments when needed’-moving the needle higher for bad debt recognition at the provider level,” Pigg says.

“In summary, better clinical outcomes at the most efficient cost levels are still a function of timely medical screenings, discounted at the local service level, with treatment protocols monitored by good case management discipline-with pricing a function of large-scale volume discounts created through large covered life pools,” he says.