Special Report

The payer landscape is rapidly changing. The movement to deliver more services into the home is a top strategy. Payers agree that chronic disease is what is driving up the cost in healthcare.

Payer Trends

  • Developing care management in the home for higher acuity patients.
  • Combining telehealth with other technologies to deliver 24/7 care in the home.
  • Partnering with home-based primary care physician groups to drive greater care management into the home.
  • Aligning partnerships based on value such as reducing the cost of care, delivering the best outcomes, understanding their quality measures, and providing real-time data.

In this article, we take a look at data reflecting the costliest medical conditions by payers. This becomes an important strategy as payers begin to move more value-based care contracting into the home care space and look to treating higher acuity patients in the home.

Most Expensive Conditions Treated in U.S. Hospitals, 2017

Table 1 presents the top 20 most expensive conditions treated in U.S. hospitals across all payers in 2017. Payers include Medicare, Medicaid, private insurance, and self-pay/no charge.

The conditions are ranked by aggregate hospital costs. Both the dollar amount and percentage of total aggregate costs associated with the condition are shown. The number and percentage of all hospital stays for each condition also are presented.

Table 1. The 20 most expensive conditions treated in U.S. hospitals, all payers, 2017
Rank Clinical condition grouped by default CCSR category Aggregate hospital costs, $, millions Aggregate hospital costs, % Number of hospital stays, thousands Hospital stays, %
1 Septicemia 38,239 8.8 2,086 5.8
2 Osteoarthritis 19,907 4.6 1,249 3.5
3 Liveborn 15,972 3.7 3,693 10.3
4 Acute myocardial infarction 14,342 3.3 662 1.8
5 Heart failure 13,583 3.1 1,091 3.0
6 Spondylopathies/spondyloarthropathy (including infective) 12,305 2.8 532 1.5
7 Respiratory failure; insufficiency; arrest 9,179 2.1 534 1.5
8 Coronary atherosclerosis and other heart disease 8,711 2.0 374 1.0
9 Cerebral infarction 7,402 1.7 525 1.5
10 Diabetes mellitus with complication 7,271 1.7 658 1.8
11 Chronic obstructive pulmonary disease and bronchiectasis 7,013 1.6 761 2.1
12 Cardiac dysrhythmias 6,971 1.6 613 1.7
13 Pneumonia (except that caused by tuberculosis) 6,452 1.5 637 1.8
14 Fracture of the neck of the femur (hip), initial encounter 5,628 1.3 323 0.9
15 Complication of other surgical or medical care, injury, initial encounter 5,608 1.3 325 0.9
16 Nonrheumatic and unspecified valve disorders 5,434 1.3 124 0.3
17 Acute and unspecified renal failure 5,140 1.2 542 1.5
18 Biliary tract disease 4,550 1.0 357 1.0
19 Complication of cardiovascular device, implant or graft, initial encounter 4,455 1.0 170 0.5
20 Fracture of the lower limb (except hip), initial encounter 4,368 1.0 226 0.6
Total for top 20 conditions 202,529 46.6 15,484 43.3
Total for all stays 434,186 100.0 35,798 100.0
Abbreviations: CCSR, Clinical Classifications Software Refined; ICD-10-CM, International Classification of Diseases, Tenth Revision, Clinical Modification
Notes: Diagnosis groups are defined using the CCSR for ICD-10-CM Diagnoses. Conditions were identified using the CCSR default category assignment(s) for the principal diagnosis code of the hospital stay. The CCSR includes multiple category assignments for some diagnosis codes. The default CCSR category assignments facilitate analyses requiring a mutually exclusive diagnosis categorization scheme by selecting a single CCSR category for each hospital encounter based on clinical coding guidelines, clinical input on the etiology and pathology of diseases, coding input on the use of and ordering of ICD-10-CM codes on a billing record, and standards set by other Federal agencies.
Source: AHRQ

Five Conditions Were Among the 20 Most Expensive Conditions for All Four Expected Payer Groups

There were some commonalities across payers in the conditions that generated high aggregate hospital costs. For all four expected payer groups, septicemia was among the top three most expensive conditions.

The following five conditions were among the 20 most expensive conditions for all four expected payer groups, ordered by aggregate cost among all payers:

  • Septicemia
  • Acute myocardial infarction
  • Heart failure
  • Respiratory failure; insufficiency; arrest
  • Diabetes mellitus with complications

The 20 most expensive conditions accounted for slightly less than half (46.6 percent) of aggregate hospital costs in 2017.

  • Septicemia was the most expensive condition treated, amounting to $38.2 billion, or 8.8 percent of aggregate costs for all hospital stays in 2017.
  • Osteoarthritis ($19.9 billion, or 4.6 percent),
  • Liveborn (newborn) infants ($16.0 billion, or 3.7 percent),
  • Acute myocardial infarction ($14.3 billion, or 3.3 percent), and
  • Heart failure ($13.6 billion, or 3.1 percent).

Strategy Insight: Financial and Clinical Alignment for Providers Delivering Care in the Home

Is your organization aligning clinical services with the most expensive hospital stays to be managed in the home? How is your organization demonstrating your value to reduce the cost of care, deliver good outcomes, and provide real-time data exchange?

Strategic Insight: Your Value Proposition for Payers

  1. How can your organization reduce the length of stay?
  2. How is your organization preventing readmissions?
  3. How is your organization reducing the cost of care?
  4. Does your organization have the right technology platform to manage high-risk, high-cost patients?
  5. How is your organization helping payers with their HEDIS measures?
  6. How is your organization promoting self-management in the home?
  7. Are there other providers delivering care in the home to strategically align with to decrease ED visits and readmissions?
  8. How is your organization providing payers real-time data about their patients in the home?
  9. Does your organization have a strategic plan to deliver higher acuity care in the home?

Delivering healthcare in the home is a booming market. Payers will look to home-based care as a potentially less expensive option than hospital stays. Be the solution for increased access, reduced costs, and improved care quality.

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