Spending Differences Among High-Cost Medicare Patients with and without Cancer

Abstract

Medicare spending is highly concentrated, with the top decile of Medicare patients accounting for more than half of total Medicare expenditures. Understanding the drivers of spending for high cost patients is critical for implementing effective strategies for reducing costs among this group. Cancer is common, particularly among older patients and treatment is frequently expensive. However, little is known about the drivers of spending among patients with a cancer diagnosis in the high cost cohort. We studied a random 20% sample of the 2014 Medicare beneficiaries age 65 and older who were enrolled in the fee-for-service (FFS) program. We defined those in the top decile of spending in 2014 as high-cost patients and the remaining patients as non-high-cost patients. To identify patients with a cancer diagnosis, we grouped ICD-9 codes into solid cancer types (breast, central nervous system, gastrointestinal, genitourinary, gynecologic, head and neck, lymphoma, sarcoma). We calculated mean annual standardized costs overall as well as stratified by different categories of spending (inpatient, outpatient, physician, Part D, skilled nursing facility, home health, and hospice) for all beneficiaries and those specifically with cancer and not with cancer. Those with solid cancers represent 11.6% of all Medicare beneficiaries in our sample and account for 13.5% of total standardized costs. Among high-cost patients in the top decile of Medicare spending, 23.6% of patients had a solid cancer diagnosis and accounted for 25.2% of all costs in the high-cost group. High-cost cancer patients had a mean of $67,323 total annual standardized costs compared to $61,147 per beneficiary per year among high-cost non-cancer patients. The cohort of high cost patients with cancer had a higher proportion of total spending attributable outpatient (22.1% vs. 17.4%) and physician spending (31.0% vs. 17.4%) compared to high-cost, non-cancer patients. Mean per beneficiary inpatient spending was similar among high-cost patients with cancer compared to high-cost patients without cancer ($14,457 vs. $14,921) while outpatient spending was higher ($14,856 vs. $10,653). Overall physician spending was higher in the high-cost cancer group ($20,881 vs. $10,472). SNF, home health, hospice and Part D spending was lower among the high-cost patients with cancer compared to those without care. Among elderly Medicare patients, the distribution of spending for high costs patients differs by cancer status, with a relatively greater fraction of care going to outpatient and physician costs among cancer patients. Understanding the similarities and differences among high cost patients with and without cancer can yield to better targeting of reducing spending among high cost Medicare beneficiaries with cancer.