Population Health for High-Cost Claimants

This video provides an in-depth exploration of high-cost claimants within population health, challenging the common understanding of the "5/50 rule" in healthcare spending. Dr. Eric Bricker begins by establishing the familiar statistic that approximately 5% of individuals on a health plan account for 50% of the total healthcare expenditure, typically those with claims exceeding $100,000 annually. However, he immediately emphasizes that this 5% is a highly heterogeneous population, not a monolithic group, and understanding these differences is crucial for effective intervention.

The presentation then delves into a critical distinction: roughly half of these high-cost claimants (2.5% of the total population) are "carryovers" from the previous year, meaning they had existing conditions or significant claims that continued into the new year. The other half (another 2.5% of the total population) are "brand spanking new," appearing as high-cost claimants "out of nowhere." This latter group alone accounts for 25% of the overall healthcare spend, a figure comparable to an organization's entire pharmacy spend, highlighting a significant, often overlooked, area for cost management.

Dr. Bricker introduces a 2x2 matrix to further categorize these high-cost claimants based on two dimensions: whether their underlying disease was "known" or "unknown" prior to the high-cost event, and whether their high costs are "prolonged" (lasting more than a year) or "episodic" (lasting less than a year). He provides specific clinical examples for each of the four categories. For instance, "known prolonged" includes type 2 diabetics progressing to end-stage renal disease or individuals with metastatic cancer. "Unknown prolonged" might involve undiagnosed type 2 diabetics suffering a debilitating stroke or a healthy pregnant woman having a very premature delivery with lifelong consequences for the child. The core message revolves around identifying and strategically targeting the "unknown" categories, as these individuals lack established relationships with the healthcare system, presenting a unique opportunity for proactive intervention.

Key Takeaways:

• The 5/50 Rule is Deceptive: While 5% of claimants drive 50% of healthcare costs, this group is not homogenous. Effective population health strategies require a deeper understanding of the distinct subgroups within these high-cost claimants.
• Two-Halves of High-Cost Claimants: Approximately half of high-cost claimants are "carryovers" from the previous year with ongoing conditions, while the other half are "new" claimants who develop high costs unexpectedly.
• Significant Opportunity in "New" Claimants: The "new" high-cost claimants, representing 2.5% of the total population, account for 25% of overall healthcare spend. This financial impact is equivalent to an organization's entire pharmacy spend, suggesting it warrants comparable attention and resources.
• The Known/Unknown and Prolonged/Episodic Matrix: High-cost claimants can be categorized into four types: Known & Prolonged, Known & Episodic, Unknown & Prolonged, and Unknown & Episodic. This framework helps in understanding the nature of their conditions and potential for intervention.
• Examples of Known & Prolonged Costs: These include conditions like type 2 diabetes progressing to end-stage renal disease requiring dialysis, multiple sclerosis patients on high-cost medications, or individuals dealing with metastatic cancer. These are typically ongoing and predictable.
• Examples of Known & Episodic Costs: This category includes individuals with pre-existing conditions who experience acute, short-term high-cost events, such as a type 2 diabetic having a small heart attack requiring a brief hospitalization and stents, or an MS patient experiencing a flare that doesn't necessitate long-term high-cost medication.
• Examples of Unknown & Prolonged Costs: This group includes individuals whose first major health event reveals an underlying, previously undiagnosed condition leading to long-term high costs, such as an unknown type 2 diabetic suffering a stroke with prolonged rehabilitation, or a healthy individual experiencing severe trauma or a very premature birth with lifelong consequences.
• Examples of Unknown & Episodic Costs: This category involves individuals with no prior known disease who experience an acute, high-cost event that resolves without prolonged sequelae, such as an undiagnosed type 2 diabetic having a small heart attack with a good outcome, a successful joint replacement surgery, or a sports injury.
• Intervention Challenges for "Known" Claimants: Individuals in the "known" categories (both prolonged and episodic) typically have established relationships with healthcare providers and the system. This makes it difficult for external population health programs (e.g., nurse counselors, telephonic programs) to intervene effectively or unseat existing relationships.
• Prime Opportunity for "Unknown" Claimants: The "unknown" categories (both prolonged and episodic), which collectively represent 50% of the high-cost 5% (or 25% of total spend), offer a significant opportunity for intervention. These individuals lack prior established relationships, making them more receptive to targeted programs and support.
• Strategic Resource Allocation: Organizations should consider allocating as much time, attention, and resources to identifying and intervening with these "new" or "unknown" high-cost claimants as they do to managing their pharmacy spend, given the comparable financial impact.

Key Concepts:

• 5/50 Rule: The observation that 5% of a population (e.g., health plan claimants) accounts for 50% of the total healthcare expenditure.
• High-Cost Claimants: Individuals whose healthcare claims exceed a certain threshold (e.g., $100,000) within a specific period, significantly contributing to overall healthcare costs.
• Population Health: An approach to health that aims to improve the health outcomes of a group of individuals, including the distribution of such outcomes within the group, often by addressing determinants of health and managing healthcare costs.
• Known vs. Unknown Disease: Refers to whether a patient's underlying medical condition was previously diagnosed and managed by the healthcare system before they became a high-cost claimant.
• Prolonged vs. Episodic Costs: Describes the duration of high healthcare expenditures, with "prolonged" indicating costs lasting for more than a year and "episodic" indicating costs lasting for less than a year.