Medicare Beneficiaries with the Highest Costs Spend Mostly on Outpatient Care and Medications


It’s been well documented that just 10 percent of Medicare beneficiaries account for over half the program’s spending in any given year. But how many of these patients continue to incur high costs over time? According to a Commonwealth Fund–supported study in the new issue of Health Affairs, 28 percent of beneficiaries with high costs in 2012 also had high costs over the next two years. Representing slightly less than 3 percent of the overall Medicare population, they accounted for nearly 20 percent of Medicare spending for the three years studied.

According to researchers José F. Figueroa, M.D., Xiner Zhou, and Ashish K. Jha, M.D., the bulk of spending by those with persistently high costs was for outpatient care and medications. These two areas, the experts say, are where interventions can have the biggest impact on overall Medicare spending.

Other Commonwealth Fund-supported research in the new Health Affairs:

  • Joshua M. Liao, M.D., Ezekiel J. Emanuel, M.D., and colleagues examine whether Medicare’s Comprehensive Care for Joint Replacement (CJR) program, a mandatory bundled-payment initiative involving nearly 800 U.S. hospitals, should be expanded. In the program’s first year, nearly 50 percent of the hospitals kept joint-replacement costs below target while maintaining quality.

    According to the authors, Medicare could achieve similar results if CJR were expanded to other hospitals. They caution, however, that hospitals in smaller markets may be unable to take on the financial risks associated with fixed payments.


  • Amber Willink, Nicholas Reed, Au.D., and Frank Lin, M.D., warn that the Over-the-Counter Hearing Aid Act of 2017, may have unintended consequences. Although the law is likely to lower prices for hearing aids, it doesn’t cover hearing care services, and fewer people with hearing loss will get the help they need from health professionals to properly use and maintain their devices.

    The researchers found that among older Medicare beneficiaries who use hearing aids, those with lower incomes who are also enrolled in Medicaid have 41 percent lower odds of using hearing care services than those with higher incomes, and they are twice as likely to report trouble hearing with their aids. Adding coverage for hearing services to Medicare would remove a barrier to obtaining hearing aids.
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