PARSIPPANY, N.J. — Lowering health costs will require a greater understanding of differences between two distinct groups of patients, according to a new study, which also noted a growing availability of specialty drugs for complex and chronic conditions outside the hospital.
The IMS Institute for Healthcare Informatics, part of IMS Health, said Tuesday that policy-makers, payers and healthcare industry players looking to reduce the growth in healthcare costs would have to understand the "substantial" differences in spending and utilization between patients younger than 65 years old with private insurance and those ages 65 years and older with Medicare.
"As states look to define their essential health benefits packages, a deeper understanding of actual utilization patterns, especially for the small number of patients driving the lion's share of costs, is critical," institute executive director Murray Aitken said. "Further, effective benefits packages will need to fully consider services used by the three high-cost member segments — those with cancer, chronic conditions and those with autoimmune or other specialty diseases."
The study, titled "Healthcare Spending Among Privately Insured Individuals Under Age 65," found that those in the younger group would remain the dominant part of the payment system despite expected changes in the healthcare landscape brought about by the Affordable Care Act. Meanwhile, differences in variables, such as care setting and treatment use result in a different distribution of costs across inpatient, outpatient and pharmacy services. Among those in the younger segment, outpatient and inpatient services represented 59% and 20% of total spending, respectively, compared with 39% and 43% for those older than 65 years old.
Pharmacy spending represented 21% of overall health spending, with health plan members with chronic conditions filing 78% of all prescriptions and specialty drugs accounting for 17% of retail pharmacy spending. Overall, the report found, spending on specialty drugs accounted for 6% of all spending by health plan members, while pharmacy spending represented 33% of the total for members with autoimmune and other specialty conditions. The report noted that this reflected a growing availability of drugs for specialty conditions that could be administered outside the hospital.
The report also indicated that those in the younger group who were among the top 1% in annual spending were "vastly" disproportionate users of healthcare resources, spending an average of nearly $100,000 annually per member on health services, compared with the $3,837 per member spent by the overall plan population. Among members of this group, 77% were diagnosed with at least one chronic condition, while 16% had at least one cancer. The top 20% of members with the greatest need for healthcare services were responsible for more than 80% of total healthcare spending.