Harvard’s study of high-cost Medicare patients offers insights into how medical laboratories can help improve early diagnosis, optimize therapies, and monitor chronic disease

Clinical laboratories and anatomic pathology groups supporting Medicare patients understand that a small portion of high-cost patients make up the majority of Medicare spending. Between extended treatment, comorbidities, and the complex nature of disease therapies, chronic illnesses have a major impact on healthcare costs—both in terms of spending and labor reductions.

Thus, a recent Harvard Medical School study published in Health Affairs which attempts to identify the contributing causes of spending on high-cost Medicare patients will be of interest to medical lab managers and stakeholders who can develop innovative diagnostic testing services that help physicians diagnose these diseases earlier and more accurately. They then could guide physicians to select the most appropriate therapies and help physicians monitor disease conditions.

High-Cost Patients Eligible for Both Medicare and Medicaid

According to Jose Figueroa, MD, co-author of the Harvard study, “28.1% of patients who were high cost in 2012 remained persistently high cost over the subsequent two years. On average, persistently high-cost patients were younger, more likely to be members of racial/ethnic minority groups, eligible for Medicare based on having end-stage renal disease, and dually eligible for Medicaid, compared to transiently and never high-cost patients.”

Figueroa is Instructor of Medicine at Harvard Medical School and Associate Physician in the Department of Medicine at Brigham and Women’s Hospital.

Studying a 20% sample of Medicare fee-for-service beneficiaries in a period from 2012 to 2014, Figueroa and researchers from the Harvard T. H. Chan School of Public Health and Harvard Medical School identified nine chronic conditions most prevalent in patients identified as persistently high cost.

Out of a sample of 5,507,218 patients, the top conditions found to contribute to persistent high costs included:

Other conditions noted at percentages ranging from 2.1% to 8.9% include:

Might these findings represent an opportunity to medical laboratories, anatomic pathologists, and other members of the diagnostics industry? As early detection is key to minimizing the cost of treatment and care, the ability to accurately and rapidly detect these chronic diseases would be a major boon to clinical labs and the physicians and healthcare facilities they support. Laboratories also could find opportunities guiding therapy decisions and monitoring the progress of treatments.

While improved testing for these chronic conditions could reduce costs and improve quality of care, they also represent significant revenue opportunities with one of the largest payers in the nation.

Impact of Chronic Disease on Medicare’s Battle to Reduce Cost

“Medicare patients in the top 10% of spending each year accounted for almost 20% of Medicare’s overall spending during the three-year period covered by the study,” notes Fierce Healthcare.


“We found that 28.1% of Medicare beneficiaries who were high cost in a designated index year remained persistently high cost for all three years,” states Jose Figueroa, MD (above), Instructor of Medicine at Harvard Medical School and co-author of the Harvard study. “Despite being slightly less than 3% of the Medicare population, these persistently high-cost patients accounted for nearly 20% of total Medicare spending across the three–year period we studied.” (Photo copyright: Brazosport Independent School District.)

Across the period, mean yearly spending for never-high-cost patients was only $5,206 per person. The mean yearly spending per person for persistently high-cost patients averaged $69,793—an increase of more than 1,240%!

Figueroa told Fierce Healthcare he believes policy changes are key to reducing costs for patients with chronic health conditions. He cites inadequate housing, reduced access to healthy foods, reduced mobility, and ease of transportation to and from care providers as potential reasons for the racial and ethnic disparities highlighted in his findings.

The Harvard study notes that few of the expenses incurred by persistently high-cost patients are preventable through alternate treatment. For most, outpatient care and drug spending make up a large part of those expenses. And, as the study points out, younger patients with chronic diseases stay persistently high cost for longer periods.

Clinical laboratories that help develop and implement diagnostics aimed at early detection could help reduce long-term spending as well—particularly in relation to patients with multiple chronic conditions.

Opportunities for Clinical Labs Covered at 2019 Executive War College

The opportunity for medical labs to help with early detection and effective treatment of Medicare patients with one or more chronic conditions was a major topic at this year’s Executive War College on Laboratory and Pathology Management that took place in New Orleans last week.

Philip Chen, Chief Strategy Officer at Sonic Healthcare USA, in Austin, Texas, gave one such presentation. Chen outlined value-based contracting strategies Sonic uses to share savings with its healthcare provider clients. It’s a data-driven approach to population health management that allows clinicians to intervene as needed with patients to improve their health and to control healthcare costs. See the live EWC e-briefing, “Sonic Healthcare Uses Test Data to Create Shared Savings Opportunities for Clinical Laboratory and Providers,” May 2, 2019, to learn more about Sonic’s strategy.

There also were presentations on how clinical laboratories can help physicians and health plans identify undiagnosed patients. For physicians, this means more revenue as risk adjustment payments are increased for these newly-diagnosed patients. For health insurers, the ability of labs to identify undiagnosed patients means that the insurers can close care gaps and improve the patient outcomes produced by their health plans.

As drug costs are a major source of Medicare expenses in persistently high-cost patients, helping physicians target therapies with innovative diagnostics could further lower costs by ensuring the ideal medication is used alongside inpatient or outpatient services.

And, by offering diagnostics monitoring services, clinical labs could help providers better manage complex treatments of those with multiple chronic conditions and ensure treatments bring the intended results.

—Jon Stone

Related Information:

Study Identifies Persistently High-Cost Medicare Patient Trends

Chronic Conditions a Major Driver of Healthcare Spending

Characteristics and Spending Patterns of Persistently High-Cost Medicare Patients

Medicare Chronic Disease Management Vital to Cut Healthcare Costs

Health and Economic Costs of Chronic Diseases

Sonic Healthcare Uses Test Data to Create Shared Savings Opportunities for Clinical Laboratory and Providers