Editor’s Note: This is the third and final part of a series examining strategies for treating high-utilizers of health care services. Previous installments explored hospital and community efforts to identify and treat their sickest, costliest patients.

In June, the Medicare Payment Advisory Commission released its biennial snapshot of program spending. Among the highlights: Medicare spending has jumped by 14 times since 1980, from $37 billion to $522 billion in 2010 and, together, public spending on health care accounted for 45 percent of U.S. health care spending in 2010.

Within the context of the overall economy, the growth of federal health care costs is even more pronounced; MedPAC estimates that if current trends continue, Medicare alone would grow from 3.6 percent of the entire U.S. gross domestic product in 2010 to a staggering 6 percent by 2040.

More immediately, the so-called "fiscal cliff" hits on Jan. 1, 2013 — less than two months from now. That's when hospitals, doctors and other health care providers face a 2 percent reduction in payments from the Centers for Medicare & Medicaid Services if Congress and the president fail to find an alternative resolution to the terms of the 2011 Budget Control Act, and sequestration takes effect.

The pressure to get a handle on health care costs has never been greater.

Meanwhile, the same cost imbalance that bedevils hospitals and other providers — in which a sliver of patients account for the lion's share of overall spending — is readily apparent in Medicare and Medicaid. The costliest 1 percent of Medicare patients account for 14 percent of spending, while the costliest 5 percent account for 38 percent. In Medicaid, the problem is even more pronounced: According to the Deloitte Center for Health Solutions, 1 percent of Medicaid enrollees account for a quarter of all spending.

CMS, hospitals, states and others have been experimenting quietly for the last several years to improve outcomes and reduce costs for their most expensive patients. From Medicare's shared savings program to managed care initiatives in several state Medicaid programs, movement is afoot to apply the principles that many cutting-edge providers have used with their sickest, most expensive patients. They include intensive care coordination, one-on-one attention from a disease manager or social worker, and attempts to address the social and mental needs of patients.

Many of these efforts focus directly on a critical population — the dual eligibles who are enrolled in both Medicare and Medicaid, and who often suffer from the combination of social and health problems common to high utilizers of care. Still other initiatives are advocating improved care coordination at the end of life — where a significant proportion of Medicare dollars are spent — to better adhere to patient preferences and to reduce costs.

And at least one state is tackling the dual challenges of reduced payment and coordinating care for the costliest, sickest patients in one fell swoop.

Oregon, which has sliced Medicaid funding by 26 percent since 2010, recently reorganized its entire Medicaid program, creating provider-led, coordinated care organizations that will receive global payments for defined populations.

The new CCOs include Portland-based Health Share of Oregon, an 11-provider entity that includes former Medicaid managed care organization CareOregon, an early proponent of identifying and better treating high utilizers of care with intensive community outreach. CareOregon Care Support Manager Rebecca Ramsay, R.N., says one of Health Share's key mandates is expanding those efforts, known as "hot-spotting," to all Medicaid and dual eligibles served by Health Share providers.

The question Health Share will have to answer in coming years is whether these efforts — along with other mandates such as improving transitional care and mental health care — are enough to manage both the risk of global payments and sharply reduced state funding. For now, the new initiatives are being supported by a three-year, $17.3 million grant from the Center for Medicare & Medicaid Innovation, allowing the hot-spot initiative to expand from six outreach workers to an additional 34 positions.

"It's starting to scale," Ramsay says. "We had to do an awful lot of data modeling and looking at the literature to come up with a reasonable, fairly evidence-based projection of cost savings."

'Extreme uncoordinated care'

In a report released earlier this year, the Partnership to Fight Chronic Disease estimated that 10 to 30 percent of Medicaid patients experience what it terms "extreme uncoordinated care," using multiple providers and pharmacies, visiting emergency departments for primary care and receiving duplicative services from providers. And high utilizers of Medicaid services often persist over time — the group found that three-fifths of patients in the top 10 percent of utilization remained at the top of the spending curve for the next two years. Kenneth
Thorpe, the partnership's executive director, believes more focused care for high utilizers and incentives that support care coordination can reverse those trends.

"We need to do two things," Thorpe says. "You've got to focus on where the growth in spending is happening, and pull in good, evidence-based prevention programs. And you've got to go where the money is."

As states confront their own Medicaid spending patterns, many are arriving at similar conclusions. In Indiana, Medicaid patients are enrolled automatically in the state's Right Choices Program when the state "determines the member is overusing or abusing services, or has a history of doing so." The patients then are assigned to a single medical provider, pharmacy and hospital, and must receive a referral from their primary care provider to receive additional specialty services.

Providers that specialize in coordinating care also are stepping in to fill the void. Starting with a contract with a single hospital in Jackson, Miss., Medical Mall Health Services began working in 2010 to reduce readmissions for patients with histories of high utilization who were either Medicare or Medicaid patients or uninsured. The program creates transitional care teams, led by advanced practice nurses, to identify patient needs and develop a post-discharge care plan that includes regular phone calls and home visits. The firm since has expanded to work with providers in Maryland and the District of Columbia as a licensed Medicare and Medicaid provider.

"We come in and we do a consultative service," says Timothy McNeill, chief operating officer for Medical Mall Health Services. "We start with complicated cases, and we identify the social, environmental and mental health issues that [affect] the patient. Our patients have poor compliance rates and other factors in their life. We work with that challenge."

Dealing with dual eligibles

As of 2010, 9 million Americans were eligible for coverage from both Medicare and Medicaid, accounting for 15 percent of all Medicaid enrollees and 17 percent of those on Medicare. According to MedPAC, these dual eligibles account for 29 percent of all Medicare spending. Within that population, the top 20 percent account for 66 percent of Medicare spending for all dual eligibles.

CMS has taken notice: In 2011, the agency announced federal funding for 15 states to better coordinate care for dual eligibles, with grants of up to $1 million apiece. The recently concluded Physician Group Practice Demonstration, a CMS pilot from 2005 to 2010, took aim at care coordination for the general population of Medicare beneficiaries, offering bonus payments to providers for hitting quality benchmarks and containing health care costs.

A Dartmouth Atlas Project study, recently published in the Journal of the American Medical Association, analyzed the program's impact on dual eligibles in particular, finding that participating pro-viders achieved savings of $532 per dually eligible beneficiary, or nearly five times more savings than for the general Medicare population participating in the demonstration. The demonstration often is considered a model for CMS' shared savings program.

"The study shows promise for health care delivery system reforms," says Carrie Colla, a co-author of the survey and assistant professor at the Dartmouth Institute for Health Policy and Clinical Practice. "Participants [in the demonstration] improved quality metrics and modestly reduced spending. This model rewards providers for paying special attention to high utilizers."

Making a difference

The University of Michigan Health System in Ann Arbor clocked the biggest gains in the demonstration, saving an estimated $2,400 per patient. Starting in 2009 with monthly meetings of ED physicians, nurses and social workers, the program created customized care plans to manage patients with the highest utilization patterns.

The health system started with a careful analysis of the population, learning that many suffered from a mix of major psychiatric conditions, substance abuse, medical problems, lack of social support and limited financial resources.

"The uniform clinical picture for dual [eligibles] under 65 is substantial impairments in two or three areas, but there's no set pattern," says Brent Williams, M.D., associate professor of internal medicine at the University of Michigan Health System and one of the clinical leaders of the program.

From there, physicians devised detailed medical management plans for patients to follow in both the inpatient and outpatient setting. Patients were assigned a care manager who shepherded patients through their primary care visits and hospital admissions.

In three years, the program, while serving a core group of only 18 patients, generated a net savings of $1 million in combined reductions in ED visits and hospital admissions, which both dropped by 40 to 50 percent for the enrolled patients.

"This type of data gives us courage [knowing] that we're making a difference," Williams says.

Coordinating care at the end of life

While most of the national efforts to reduce costs for high utilizers is focused on improving long-term outcomes for patients and reducing the sting of chronic disease, end-of-life care is attracting more attention as an area in which care coordination both can improve the patient experience and reduce costs.

According to a 2011 report from the Dartmouth Institute for Health Policy and Clinical Practice, a quarter of all Medicare spending is devoted to beneficiaries in the last year of life.

The report, which advocates that providers pay greater attention to physician preferences as a tool for both improving end-of-life care and reducing spending, found mixed progress from 2003 to 2007. During that time, Medicare beneficiaries with severe chronic conditions spent fewer days in the hospital near the end of life, and spent less time in an intensive care unit. In other ways, though, the aggressiveness of the care they received increased, with more provider visits and a higher number of patients who saw 10 or more physicians in the last six months of life.

Study co-author David Goodman, M.D., director of Dartmouth's Center for Health Policy Research, notes that within the end-of-life care patient population, the pattern of small numbers of patients generating much of the cost also is present. And the solutions for patients near the end of life aren't necessarily different from those of other patients, he says: more care coordination and patient engagement.

"The solution to improve care and chronic illness is the same for patients who are having moderate difficulty [and] patients who are having more complicated problems and a higher chance they're going to die in the next year," Goodman says. "Which is, we basically lack adequate information and patient preference in care decisions. At every point, there are decisions that have to be made across several different [dimensions] of care."

A recent American Hospital Association report, which advocates for advanced illness management for patients throughout their disease progression, also found signs of encouragement: According to the report, Medicare patients who are engaged in advanced illness management spend 13.5 days in hospital care in the last year of life, 10 fewer days than the national average.

'More people, less money'

Despite encouraging results from pilot programs, the Partnership to Fight Chronic Disease's Thorpe notes, most Medicare and Medicaid payments are still doled out through traditional, fee-for-service arrangements that don't incent care coordination and other strategies for organizing care for high utilizers. In practice, Thorpe says, that means that providers "continue to segment the management of patients" into specific services instead of care coordination teams.

By paying for transitional care, coaching and medication therapy management for patients at the high end of the cost curve, Thorpe estimates that Medicare could save "roughly $400 billion to $500 billion in potentially preventable spending."

Another reform Thorpe champions: developing a payment code for care coordination, which the American Medical Association embraced earlier this year. "We need to move from pilot mode to implementation," he says.

At the same time, many early adopters of high-utilizer care strategies are expanding their work beyond their original targets — a promising sign that cost-containment efforts can scale up to larger populations. The University of Michigan Health System's care management program for dual eligibles now serves as the blueprint for the system's Pioneer Accountable Care Organization, part of CMS' shared savings program. Ultimately, the techniques crafted for the dual eligible population will be used for all patients in the system.

"The financial model is really built for the ACO," UMHS' Williams says. "We're a cost center. We don't bill. It wasn't until the ACO juggernaut came on board that this became a viable model from the top down."

Other providers see better engagement of high utilizers as a fundamental survival skill in coming years. Steve Sampier, director of community services for Memorial Healthcare System in South Florida, helps operate a disease management program that identifies both high utilizers of EDs and at-risk residents through door-to-door visits by social workers. The hospital, which operates a Medicaid provider service network through the state of Florida for 20,000 patients, estimates it saved upward of $7.7 million in 2011-12 by better coordinating care for high utilizers and identifying uninsured patients for enrollment in Medicaid, helping to reduce its uncompensated care burden as well.

However, Sampier acknowledges that the current fiscal climate — in a state where it's unclear yet whether or how the state government will implement the Medicaid expansion provisions of the Affordable Care Act — will make provider-based efforts to care for high utilizers ever more challenging.

"You're going to have to take care of more people with less money," he says.

But as the system embraces population health as its mandate going forward, Sampier says efforts to improve care for high utilizers — and especially Medicaid enrollees and the uninsured — are absolutely essential. "We're not to the point where we can [manage] population health for 800,000 lives," he says. "We're trying first with Medicaid and the uninsured. Those are people we can work with and learn with."

'A One-Bedroom Apartment With 11 Refills'

At least one national initiative is taking aim at the link between health care utilization and housing status: the 100,000 Homes Campaign, which is engaged in 154 cities nationwide to identify homeless patients and find them housing. The most effective medicine, Jake Maguire, the group's communications director, says, is sometimes "a one-bedroom apartment with 11 refills."

"Homeless people fill our ERs," Maguire says. "It's a very expensive way to deliver care, and an expensive way to substitute for what really is a housing problem. It's much cheaper to pay for someone's housing and basic supportive services."

In each community where 100,000 Homes is active, workers canvass the local homeless population for key warning signs — including individuals older than 60 and those with high rates of emergency department use and inpatient admissions in the last year. From there, the cities can create a "vulnerability index" to assess their condition and link at-risk residents with housing solutions. "Housing itself we really see as a health care intervention," Maguire says. "When folks get into housing, their health improves dramatically."

In Los Angeles alone, a two-year effort to provide housing and services to 50 people living in the city's Skid Row area saved Los Angeles County an estimated $238,700 in ED and psychiatric costs for that population from 2010 to 2012.

"If hospitals can get its highest-cost users into housing, you're talking about something that really impacts the bottom line for that hospital," Maguire says.

— Haydn Bush


Help Wanted: Must Be Nurturing and Strict

Nearly every program for high utilizers includes a worker dedicated to building relationships with patients and following up on their care on a weekly or monthly basis. By generating trust with patients, advocates say, these workers can positively impact long-term behavior. But leaders warn that finding employees who fit the profile is easier said than done. "The skill set for being a complex care manager is kind of unique," says Brent Williams, M.D., associate professor of internal medicine at the University of Michigan Health System and a key player in the system's care management program for high utilizers. He describes the ideal manager as a nurturing, supportive listener who also can "lay down pretty strict behavioral boundaries." "We have to hire in for this skill set," Williams says. "I don't think you can take any generic nurse" to serve as a care manager. For diverse populations, providers also recommend making sure the care manager is fluent in appropriate languages.

House Calls Make a Comeback

As providers focus more closely on the social determinants of care, many disease managers are making regular visits to their patients' homes, where they can get the best sense of the day-to-day challenges that impact health compliance. Timothy McNeill, chief operating officer for Medical Mall Health Services, a care coordination provider active in Maryland, Mississippi and the District of Columbia, says visits to patients' homes are a critical component of their overall care management plan. "The health worker gives us eyes in the home to see what the issues are," McNeill says. "There could be duplicate medications, or maybe the power's off."

Know Your Community

Years before Memorial Healthcare System in South Florida began intensive efforts to identify and treat high-cost patients, community services director Steve Sampier and other Memorial leaders were engaged in low-key efforts to gain trust, from hosting health fairs to attending public meetings. By building relationships with local activists on issues that weren't always health care-related, Sampier says, the system had natural allies when it launched its door-to-door campaign to identify residents for its disease management and medical home programs. "We made the investment to get out in the streets and to get to know the community leaders," Sampier says. "We stuck health care in there along the way, but really we'd listen to their priorities."