Service Utilization, Functional Impairment, and Chronic Conditions

1. Service Utilization, Functional Impairment, and Chronic Conditions DataBrief Series ● October 2011 ● No. 25 In 2006, seniors with multiple chronic conditions and functional impairment were nearly twice as likely to have an inpatient hospital stay as those with chronic conditions alone?

2. Service Utilization for Beneficiaries with Chronic Conditions and Functional Impairment • In 2006, 25.7 million Medicare beneficiaries age 65 or older had one or more chronic conditions, which contributed to their higher spending.1 That year, Medicare spent over three and a half times more per capita on beneficiaries with chronic conditions than on beneficiaries without chronic conditions.2 • Nearly 14% of beneficiaries age 65 and older with chronic conditions also had functional impairment,2 meaning they received help with one or more daily activities such as bathing, eating, and meal preparation. • Beneficiaries with both chronic conditions and functional impairment were more likely to use inpatient hospital services in 2006 than their peers with chronic conditions alone,suggesting that the presence of disabilities is more closely linked to higher utilization than the presence of chronic conditions alone.2 • 39% of beneficiaries with one or more chronic conditions and functional impairment had at least one inpatient hospital stay, compared to 15% of beneficiaries with one or more chronic conditions alone. • This trend remains among beneficiaries with five or more chronic conditions; 43% of beneficiaries with five or more chronic conditions and functional impairment had an inpatient hospital stay, compared to 27% of beneficiaries with five or more chronic conditions alone. 1 The SCAN Foundation. DataBrief No. 22: Medicare Spending by Functional Impairment and Number of Chronic Conditions. 2011. Accessed on September 26, 2011 at: http://www.thescanfoundation.org/foundation-publications/databrief-no-22-medicare-spending-functional-impairment-and-chronic-conditio. 2 Avalere Health, LLC. Analysis of the 2006 Medicare Current Beneficiary Survey, Cost and Use file. Excludes beneficiaries who died during 2006. DataBrief (2011) ● No. 25

3. Seniors with Chronic Conditions and Functional Impairment Have Higher Service Utilization Than Seniors With Only Chronic Conditions Percent of Medicare Beneficiaries with 5 or More Chronic Conditions Who Have at least One Claim for Selected Services by Presence of Chronic Conditions and Functional Impairment, 20061 1 N = 1,534,814 beneficiaries age 65 or older with 5 or more chronic conditions and functional impairment. N = 4,282,654 beneficiaries age 65 or older with 5 or more chronic conditions and no functional impairment. Excludes beneficiaries who died during 2006. Claims are the bills submitted by physicians, hospitals, skilled nursing facilities, home health agencies, hospice agencies, and pharmacies/DME suppliers for beneficiaries. DataBrief (2011) ● No. 25

4. A Clear Policy Connection Seniors with chronic conditions and functional impairment use more health services, such as inpatient, emergency department, skilled nursing, and home health, and have higher per capita expenditures than their peers with chronic conditions only.1 To receive needed care, seniors with chronic conditions and functional impairment must navigate both the medical care and long-term services and supports (LTSS) systems. Due to the fragmentation between the two systems, coordinating care for seniors with functional impairment and chronic conditions can be uniquely challenging. The lack of coordination can result in poorly managed care, which could put patients at risk of having their conditions worsen, or of being re-hospitalized after a hospital stay. The high utilization of inpatient hospital and other services by seniors with chronic conditions and functional impairment suggests that transitions and care coordination are poorly managed. Policymakers are aware of the need to coordinate care for individuals with chronic conditions and to reduce costly avoidable hospitalizations. The Affordable Care Act authorizes several initiatives to improve care coordination through medical homes and accountable care organizations (ACOs), with an emphasis on improving care transitions in each model of care. ACOs will provide financial incentives to networks of providers to improve outcomes and reduce costs by better integrating and coordinating care. Improving care quality will be key to this effort, as providers must meet quality measure requirements in order to share in savings. In order to create savings and improve health care quality and efficiency for this high-cost population, providers forming ACOs should improve the management of care across the continuum by incorporating LTSS for seniors with functional impairment and multiple chronic conditions. • This analysis is based on the 2006 Medicare Current Beneficiary Survey (MCBS) Cost and Use file, an annual, longitudinal survey of a representative sample of all Medicare enrollees. The MCBS collects information on Activities of Daily Living (ADLs), Instrumental Activities of Daily Living (IADLs), health services utilization, and health spending. • In this analysis, individuals who indicated that they had ever been diagnosed with any of the following conditions, were considered to have chronic conditions: arthritis, Alzheimer’s Disease, broken hip, cancer (excluding skin), congestive heart failure, depression, diabetes, hypertension, mental illnesses (excluding depression), myocardial infarction and other heart conditions, osteoporosis, Parkinson’s Disease, pulmonary diseases such as emphysema, asthma and Chronic Obstructive Pulmonary Disease, and stroke. • Individuals who indicated that they received help or standby assistance with one or more ADLs and/or three or more IADLs were considered to have functional impairment. • This analysis is limited to individuals age 65 or older who are enrolled in the fee-for-service, or traditional, Medicare program. It excludes beneficiaries who had any Medicare Advantage spending and those who died during the year. 1 Avalere Health, LLC. Analysis of the 2006 Medicare Current Beneficiary Survey, Cost and Use file. Excludes beneficiaries who died during 2006. DataBrief (2011) ● No. 25