Health Spending for Commercial Plans Is Predominantly Concentrated In Small Population of High-Intensity Consumers

Authors 

Michael Ciarametaro, MBA; Michael Kleinrock, MA; Allen Campbell; Lisabeth Buelt, MPH; and Robert W. Dubois, MD, PhD 

Publication 

Journal of Managed Care and Specialty Pharmacy, November 2, 2021 
 

As the United States seeks to rein in rising health care spending, most policy efforts are narrowly focused on prescription drug spending, as opposed to expenditures across the entire spectrum of health care. This approach assumes that spending on prescription drugs is different than spending on other health care services. But little is known about how prescription drug spending is concentrated within the patient population or how patient utilization of prescription drugs compares with other segments of health care (e.g., hospital care, office visits, etc.).  

A new study by researchers from the National Pharmaceutical Council (NPC) and the IQVIA Institute for Human Data Science analyzes 2018 claims data for a large commercially insured population to determine how prescription drug spending is distributed across health care consumers and how broader prescription drug spending and utilization patterns compare with other health care services (inpatient, ambulatory, office, etc.).  

Key Findings  

Spending on prescription drugs mirrors spending on other health care services, with a small subset of the sickest patients driving the majority of spending. 

• The top 5% of health care consumers accounted for more than 55% of all commercial health care expenditures.  
• Nearly 85% of all inpatient expenditures occurred within the top 5% of health care consumers. Prescription drug and ambulatory care expenditures followed a similar pattern, with 63.7% and 50.8% of total spending occurring in the top 5% of consumers, respectively. 
• Drug spending was the largest contributor to overall health spending in the sampled population of commercially insured enrollees at 28.5%, followed by ambulatory spending at 26.4% and inpatient spending at 19.1%. However, when taking drug rebates into account for a more accurate reflection of spending, ambulatory services were the largest overall contributor to health spending at 27.3%, followed by drug spending at 26.1%, and inpatient spending at 19.7%. 

High spending concentration in a small subset of patients across all settings of care is reflective of a health system in which the sickest patients consume the greatest number of resources. As a result, policies that aim to arbitrarily reduce high spending via utilization incentives (e.g., health plans with high cost-sharing) or pricing restrictions (e.g., caps on specialty drug prices) lack requisite nuance and may inadvertently limit patient access to needed, high-value treatments. 

Consistent spending patterns within and across health care segments indicate that curbing rising spending will require a systemwide approach, rather than focusing only on one segment of the system. In addition, a deeper examination of the value of the care being delivered to the subset of high-intensity patients may foster better care delivery and more efficacious interventions that will reduce health spending.