May 31, 2012 PFCD Hill Briefing, Washington, DC

Understanding and Addressing Hot Spots Critical Approaches For Bending the Medicaid Cost Curve
Mary Kay Owens, R.Ph., C.Ph. Executive Director, Institute for Healthcare Innovation Strategies Associate Professor, University of Florida College of Pharmacy National Alliance for Integrated Medication Management (AIMM) Exec. Board

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Identifying the Targets: Hot Spots include Patients with Uncoordinated Care, Lack of Appropriate Medication Use, and Unmet Treatment Goals for Chronic Conditions

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State Medicaid Chronic Disease Treatment

Uncoordinated Care
10-30% of pop. & account for 30-50% costs

Low Drug Adherence rates

40-65% for major chronic drug classes

Lack of Treatment for Chronic Conditions

Hundreds of thousands with no drug treatment yet incurred $ hundreds of millions in medical costs for conditions (cholesterol, hypertension, MH)

Clinical Goals Unmet

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50-80% of patients are not at clinical goals

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Goals of Intelligent Claims Analysis Model

Use clinically and statistically validated algorithms to identify subset of patients that exhibit utilization patterns consistent with uncoordinated and inappropriate care Hot Spot Patients.
Algorithms based on common indicators such as:
uncoordinated care from multiple prescribers/pharmacies, accessing the ER for primary care, avoidable ER and hospitalization visits, duplicative medical and drug services from various providers random drug changes within therapeutic classes by different prescribers, drug switching inconsistent drug usage, treatment gaps and non-adherence lack of appropriate treatments/services based on guidelines

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State Medicaid Examples and Strategies

Identify Uncoordinated Care and Create Solutions to Improve Quality and Reduce Unnecessary Costs

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Average Contribution of Cost Components for Uncoordinated Care vs. Coordinated Care Patients
$189 $1,039 $1,669 $4,907

$16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0

$5,295

$46 $714 $1,340

$222 $287 $506

Lab Out Pt/Hm Hlth ER Pharmacy Practioner Hospital

$2,001

Uncoordinated Care Patients $15,100

Coordinated Care Patients $3,116

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State Example: Utilization and Cost Summary for Uncoordinated Care Medicaid Patients
Uncoordinated Care Utilization and Cost Percentages

46% 10%
Percent Patients

45% 32%

$1.8B
36%
Approx 35% of red bar costs are avoidable

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Percent Percent Prescription Prescriptions Costs

Percent Medical Costs

Percent All Costs (drug + medical)

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State Example: Pre-Medicare Duals Population

(Ages 55-64 pop. group) Uncoordinated Care Utilization and Cost Percentages

71% 28%
Percent Patients

70%

52%

44%
Approx 35% of red bar costs are avoidable

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Percent Percent Prescription Prescriptions Costs

Percent Medical Costs

Percent All Costs (drug + medical)

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State Example:

Savings Across All Patient Cost Groups (Low to High)

Comparison of Uncoordinated Care vs. Coordinated Care Patients by Cost Groups (Percentage and Amount of Total Costs)
$123 M $130 M Uncoordinated Care Patients $97 M $87 M 90%
69% 57% 59% 42% 42% 31% 10%
$1,000$4,999 $5,000$9,999 $10,000$19,999 $20,000$29,999 $30,000$49,999 $50,000- $100,000 $99,999

Total Dollar Amount

Coordinated Care Patients

58%

$82 M $74 M
58%

$61 M

47%

$19 M 3%
97%
$500$999

53%

43%

41%

Approx 35% of red bar costs are avoidable

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Total Cost Groups (Annual Medical and Drug Costs)

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SEC Published Study: Institute of Medicine *

National Cost Savings Estimates

Public Programs (Medicaid and Medicare)

Avg. of $133.5 billion per year

Private Programs
Avg. of $106.6 billion per year

Total Public and Private

Avg. of $240.1 billion per year

*Web Link: The Healthcare Imperative: Lowering Costs and Improving Outcomes.
The Institute of Medicine. 2010. Washington, DC: The National Academies Press. Owens, MK. Chapter 3: Inefficiently Delivered Services, Costs of Uncoordinated Care, pgs 131-138. http://books.nap.edu/openbook.php?record_id=12750&page=131

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Creating the Path to Success: Utility of New Analytical Approach to Identify and Address Hot Spots For Achieving Savings

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What are the solutions?

1. Conduct baseline and periodic analysis of claims data to identify the Hot Spots - subset of patients to target that have high risk and uncoordinated care. 2. Conduct geographical mapping of these patients to target specific areas and providers. 3. Focus intensive efforts in utilization management and coordination on the targeted patients and providers. 4. Create hybrid FFS payment models with incentive for savings and improved outcomes. 5. Implement comprehensive medication management in targeted patients to achieve appropriate use & I H adherence to medications. (AIMM Model)
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Contact Information

Mary Kay Owens, R.Ph., C.Ph.

Executive Director, Institute for Healthcare Innovation Strategies National Alliance for Integrated Medication Management (AIMM) Board 3019 N. Shannon Lakes Dr., Suite 202 Tallahassee, Florida 32309 (850) 668-8524

mowens@ihis-health.org
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www.ihis-health.org
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