Healthcare Spending Among Privately Insured Individuals Under Age 65

Transcription

1 Healthcare Spending Among Privately Insured Individuals Under Age 65 February 2012

2 Healthcare Spending Among Privately Insured Individuals Under Age 65 February 2012

3 Introduction Healthcare spending and utilization patterns among the privately insured population are not widely understood, or widely available. With limited access to private sector data, health services researchers have relied on the analyses of publicly available data (predominately Medicare) to advance public policy recommendations. 1 To effectively advance healthcare reform, IMS believes a deeper understanding of the privately insured population is critical to successfully address cost growth trends, and ensure appropriate planning for this evolving population. Using comprehensive, proprietary data consisting of more than 10 million privately insured members under age 65, we were able to examine the distinctions between IMS aggregated healthcare use and spending patterns and those commonly cited among health services researchers, including the Agency for Healthcare Research and Quality (AHRQ) and Centers for Medicare and Medicaid Services (CMS). In this report, we highlight the differences, examine healthcare spending patterns among the privately insured under age 65 by considering spending on outpatient, inpatient and pharmacy, and discuss the potential implications. Murray L. Aitken Executive Director IMS Institute for Healthcare Informatics IMS Institute for Healthcare Informatics 11 Waterview Boulevard Parsippany, NJ USA [email protected] Analysis and support from IMS Payer Solutions gratefully acknowledged in the development of this report IMS Health Incorporated and its affiliates. All reproduction rights, quotations, broadcasting, publications reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without express written consent of IMS Health and the IMS Institute for Healthcare Informatics. FIND OUT MORE If you want to receive more reports from the IMS Institute, or be on our mailing list, please click here.

4 Contents Executive Summary... 1 Total Healthcare Spending All Payers - Privately Insured Outpatient Spending Privately Insured Inpatient Spending Privately Insured Pharmacy Spending Privately Insured Top 1% Member Spending Cohort Profiles Total Healthcare Spending - Spending Profile - RA and MS Spending Profiles Potential Implications End Notes Notes on Sources Appendix About the IMS Institute APPROACH AND METHODOLOGY The LifeLink Health Plan Claims Database, which comprises 6.7 billion medical and pharmacy claims, 79 health plans, and 79.4 million members from 2001 to the present, was used to conduct this study. A more detailed description can be found in the Appendix. These analyses were derived from an analytic subset of the database, covering the time period from January 1, 2009 through December 31, 2010 for only privately insured health plan members under age 65 with continuous enrollment and medical and pharmacy benefit coverage. Cost and use patterns in the overall study population, including 17 chronic conditions, 12 cancers, and 10 auto-immune and other specialty conditions were studied. Costs reported reflect the plan allowed amount (i.e., plan paid amount plus member contribution) for a given service. Members were identified by condition based on Year 1 experience, and their cost and utilization is reported based on Year 2 experience. A more detailed description of conditions studied can be found in the Appendix. Findings in this report may differ from prior analyses of US and Medicare spending due to inherent differences in the health status and age distribution of the privately insured and differences in analytic methods, such as requiring continuous member enrollment and medical and pharmacy benefit coverage during the study time period. Unless otherwise noted in this study, all reference to the privately insured population throughout this report refer to the IMS study population.

5 Executive summary In 2010, 184 million Americans were enrolled in a private health insurance plan and collectively were responsible for $822 billion in healthcare expenditures. By 2020, enrollment is expected to be 198 million and expenditures will reach $1.4 trillion. This commercially insured segment of the healthcare system and in particular the under 65 year segment will remain the dominant part of the payment system even as the impact of implementation of the Affordable Care Act transforms the healthcare landscape. A deep understanding of the characteristics, dynamics and drivers of utilization and cost within the commercially insured under 65 segment is particularly important as we stand on the threshold of substantial increases in spending and dependence by enrollees in such programs. TOTAL HEALTHCARE SPENDING LEVELS For the total sample of more than 10.6 million privately insured health plan members analyzed in this report, average healthcare spending in 2010 was $3,840, or $320 per member per month. However the 5% highest cost members accounted for 50.6% of the total cost, and over 25% of the total cost was for just 1% of the members. Conversely, just 3% of total cost was incurred by the 50% of members with the least annual spending. This reinforces the importance of understanding the profile, behavior and interventions that can be optimally applied to the relatively small number of members who have a substantial impact on overall healthcare costs. Overall spending levels of the privately insured under 65 population are mostly focused on outpatient and pharmacy services, representing 59% and 21% of total spending, respectively. Inpatient services represent the remaining 20% of spending. This distribution of costs differs significantly from that reported by the Medical Expenditure Panel Survey (MEPS) for all payers and for the Medicare 65 and over population. In particular, Medicare 65 and over population spending on inpatient services represents 43% of total spending, while outpatient and pharmacy services represent 39% and 18%, respectively. The differences in spending distribution between the privately insured under 65 population and the Medicare 65 and over population are substantial and highlight the need for correspondingly differentiated analysis, understanding, and actions aimed at bending the overall US healthcare cost curve. Among health plan members, spending is highly disproportionate to prevalence rates. Over one-third of members have one or more chronic conditions and account for over two-thirds of total spending for all members. Members with cancer amount to only 1.5% of all health plan members and account for almost 8% of total spending. Other members with auto-immune or other specialty conditions represent 1.7% of all members, and consume 7% of total spending. OUTPATIENT SPENDING Outpatient services represent the largest share of total spending, averaging $2,251 per member per year, or $188 per member per month. Professional and facility visits account for 74% of overall spending, with emergency room visits a further 10%. Outpatient medical drug therapy, including office, facility and home-based injections and infusions, were 5% of all outpatient spending, or $9 per member per month on average. However, outpatient drug therapy for oncology, auto-immune and other specialty condition populations studied were significantly higher, and amount to 19% and 18%, respectively. continued on next page... 1

6 Executive summary INPATIENT SPENDING Spending per inpatient admission was $14,248 on average, and accounts for 20% of overall spending per member. Facility costs account for 84% of the total inpatient spending, with the balance being professional costs. Members with chronic conditions had 63% of all hospital admissions, and averaged $15,566 per admit. These costs include average 4.5 days of stay, and 219 professional visits per 1,000 members. Oncology patients had the highest average cost per admission, at $20,074 but admissions only totaled 2.8 admissions per 1,000 members compared to 29.3 admissions per 1,000 members for chronic conditions. PHARMACY SPENDING Average pharmacy spending including outpatient drug claims for both specialty and non-specialty medicines amounts to 21% of total healthcare spending for the privately insured under age 65 population. For every 1,000 members, 11,950 prescriptions were filled in 2010, of which 78% were for those members with chronic illnesses. Members with oncology and those with auto-immune or other specialty conditions filled only 4% and 5% of the total number of prescriptions. Specialty drugs represent about 1% of the total of pharmacy prescriptions but 17% of total pharmacy spending. Relative to total healthcare spending including inpatient costs, outpatient medical costs and non-specialty pharmacy costs specialty drug therapy and outpatient medical drug therapy are particularly high for members with auto-immune or other specialty conditions and represent 33% of their total healthcare spending. By comparison, these drugs represent 17% of spending for oncology patients, and just 6% for those members with chronic conditions. TOP 1% SPENDING COHORT Consistent with patterns across the healthcare system, privately insured under 65 health plan members who are among the top 1% in annual spending are vastly disproportionate users of healthcare resources. They average almost $100,000 in annual spending per member. Within the top 1% cohort, our analysis shows that 77% of the members had at least one chronic condition, 16% had one or more cancers, and 13% suffered from auto-immune or other specialty conditions (some members had more than one of these condition groupings). The oncology patients had the highest average spending, of $118,000 per year....continued from previous page The distribution of spending among the 1% cohort is similar to that of the Medicare 65 and over population, with 45% of spending being for inpatient services, 45% for outpatient services, and 10% for pharmacy benefits. Average spending for the top 1% of members with specific chronic conditions is between five- and tenfold the average spending for all members with the same conditions. For example, members with diabetes average $11,858 in annual spending, while those suffering from diabetes who are in the top 1% cohort average $102,465 in annual spending. Similarly, those with chronic renal failure on average spend $33,801 per year, but those within the top 1% cohort spend over $150,000 annually. Efforts to address healthcare spending levels and ensure optimal care for patients require detailed understanding from timely and robust information. This analysis is intended to focus attention on the patient segments, care settings, and treatment options that can best bring improved health outcomes at lowest cost to those in need. Understanding the privately insured under 65 populations and addressing their health needs efficiently will bring significant benefits to the entire healthcare system. 2

7 Total Healthcare Spending All Payers HIGHLIGHTS Private insurance will remain the largest segment (57%) of the covered population through Insurance exchanges are projected to include 12.5% of the privately insured by Private insurance expenditures will remain the largest share of insurance spending (41%) through

8 TOTAL HEALTHCARE SPENDING ALL PAYERS Enrollment in private insurance will reach 197.8Mn by 2020 Insurance Enrollment in the US(Mn) Mn individuals, 63% of insured population Mn individuals, 58% of insured population Mn individuals, 57% of insured population In 2010, 63.4%, million, of insured individuals in the US were enrolled in private health insurance, while 16.1%, 46.8 million, and 18.5%, 53.7 million, of insured individuals were enrolled in Medicare and Medicaid, respectively. By 2016, private insurance enrollment is projected to increase by 6%, from million to 195 million people. Health insurance exchange plans will represent 18.8 million people, 9.6%, of all private enrollment. By 2020, private health insurance enrollees are projected to remain the largest proportion of the overall insured population, at 57.3%, with Medicare and Medicaid accounting for 18.1%, 62.3 million, and 24.2%, 83.5 million individuals, respectively Uninsured Exchanges Other Private Employer CHIP Medicaid Medicare Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group 4 Dec 2010 Chart notes Medicare volume includes individuals under age 65. Medicare enrollees who purchase supplemental private insurance are represented in both Medicare and private insurance categories. 11 4

9 TOTAL HEALTHCARE SPENDING ALL PAYERS Spending on private insurance will exceed $1.4 trillion in 2020 Healthcare Expenditures in the US($Bn) $822Bn, 44.5% of insurance expenditures , $1,141Bn, 42.6% of insurance expenditures , $1,402Bn, 41.1% of insurance expenditures Private health insurance spending in 2010 was $822.3Bn, or 44.5% of total insurance expenditures. Medicare and Medicaid expenditures were 28.4%, $525Bn, and 21.7%, $400.7Bn, respectively. By 2016, private health insurance expenditures are projected to exceed $1 trillion, increasing by 38.8%, to $1,141Bn. In 2020, private health insurance expenditures will reach nearly $1.5 trillion and represent 41.1%, the largest proportion of insurance spending for healthcare in the US. Medicare and Medicaid will represent 27.7%, $922Bn, and 26.7%, $908.1Bn, respectively, of total healthcare spending on insurance Exchanges Other Private Employer CHIP Medicaid Medicare Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group 4, Dec 2010 Chart notes Medicare volume includes individuals under age 65. Medicare enrollees who purchase supplemental private insurance are represented in both Medicare and private insurance categories. 11 5

10 Total Healthcare Spending Privately Insured HIGHLIGHTS Healthcare spending was highly concentrated, with 1% of the population driving over 25% of all spending. Spending among the privately insured under age 65 population was outpatient driven, in contrast to Medicare. Treatment pattern differences across conditions were noteworthy, in that they were: Outpatient driven among members with chronic conditions or cancers. Pharmacy driven for members with auto-immune or other specialty conditions. Members with chronic conditions, cancers or conditions treated with specialty medicines represented a disproportionate share of spending. 6

11 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Spending was highly concentrated Distribution of Spending in the Privately Insured 96.9% 85.4% 80.7% 74.3% 65.2% 50.6% 25.6% 3.1% A sample of more than 10 million privately insured health plan members, from the IMS LifeLink database, showed that over 25% of all spending was for just 1% of the total number of health plan members. More than 50% of the total spending was for only 5% of all health plan members. Slightly more than 3% of expenditures went to treat the bottom 50% of all members, who had average annual spending of less than $874 per member. Spending distribution nearly mirrored the overall US population, where AHRQ also reports that 3% of spending was driven by the bottom 50%, while 22% of spending was driven by the top 1%. 3 Top 1% Top 5% Top 10% Top 15% Top 20% Top 25% Top 50% Bottom 50% (>=$44,957) (>=$14,947) (>=$8,582) (>=$5,773) (>=$4,169) (>=$3,130) (>=$874) (<$874) PERCENT OF HEALTH PLAN MEMBERS, RANKED BY HEALTHCARE SPENDING ($) Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes Spending distribution reflects spending for all health plan members, including members with no service use and no spending in the analysis year. 7

12 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Spending increased with age in the under 65 population Average Annual Spending Per Member By Age and Gender ($) $3,893 $6,297 $5,601 Health plan members between the ages of 45 and 64 expended, on average, $5,900 annually on healthcare services, or nearly twice that of their counterparts between the ages of 20 and 44, and four times that of members in the youngest age group - 0 to 9 years of age. Average annual spending for women less than 65 years of age was higher, at $4,278 per year, versus $3,373 for men under 65, predominately due to higher rates of healthcare utilization overall. This was especially true for women aged 20 to 44. $1,308 $1,580 $1,784 $1,779 $2,188 F M F M F M F M Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes Estimates of annual spending are averages based on spending of all health plan members, including members with no service use and no spending in the analysis year. 8

13 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Spending continued to increase in the Medicare population Annual Program Payments Per Member ($) $14,527 $10,953 $6,550 As with privately insured under age 65 individuals, spending for Medicare enrollees increased with age, with average annual spending per enrollee higher than for the IMS privately insured population. On average, Medicare spending was $10,109 per member across the age 65 and older age groups. For low-cost Medicare members, the prevalence of minor age-related illnesses, such as cataracts was higher. High-cost Medicare beneficiaries had higher prevalence of chronic conditions, including hypertension, chest pain and coronary artery disease years years 85 years or over Source: Centers for Medicare & Medicaid Services, Office of Information Services, 2010 Chart notes Graph represents data from See Appendix for the definition of Medicare program payments. 9

14 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Spending increases differed as males and females aged Average Annual Spending Per Member ($) F M F M F M F M Pharmacy $172 $242 $331 $415 $670 $454 $1,400 $1,267 Outpatient $941 $1,117 $1,166 $1,086 $2,311 $1,345 $3,725 $3,003 Inpatient $195 $221 $287 $278 $912 $389 $1,173 $1,330 Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Males, from birth to age nine, had higher annual healthcare spending, on average, at $1,580, than females, at $1,308. The average annual per member spending for females, ages 20 to 44 was $3,893, 78% higher than same-aged males at $2,188. This difference might, in part, be due to maternity and other reproductive healthcare services. Higher per member spending by gender, in the study population, reflected increased utilization of services. 7 Similarly, the Centers for Disease Control and Prevention (CDC) and National Institutes of Health (NIH) also reported higher use of health services among females than males in the US population. 8 Chart notes See Appendix: Cost and Use by Age and Gender for detailed age-gender spending profiles. 10

15 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Spending was outpatient driven, in contrast to Medicare Distribution of Spending by Payer Type 21% 22% 18% 39% 47% 59% Among the IMS privately insured study population, the proportion of spending for inpatient and pharmacy services was about the same, at 20.4% and 20.9%, respectively. The proportion of Medicare age 65+ spending on inpatient care was 43%, more than double the IMS population, while spending for outpatient services, 39%, and pharmacy, 18%, were much lower than the IMS population. Inpatient spending remained a higher proportion of overall spend. 43% 20% 31% IMS Privately Insured Under Age 65 Inpatient MEPS All Payers Outpatient MEPS Medicare 65 and Over Pharmacy Source: IMS LifeLink Health Plan Claims Database, Dec 2010; Medical Expenditure Panel Survey 2, 2009 Chart notes MEPS represents data from See Notes on Sources for details. IMS place of service definitions differ slightly from MEPS definitions. See Appendix for detail. 11

16 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Share of spending was disproportionate for certain conditions Proportion of Spending by Health Services Channel Condition Set All Members Chronic Conditions Oncology Auto-Immune/Other Specialty 10,657,042 3,862, , ,393 Members (N) 100.0% 36.2% 1.5% 1.7% $PMPM $320 $216 $25 $22 $PMPM (%) 100.0% 67.5% 7.9% 7.0% Spending was highly disproportionate to prevalence rates among health plan members with chronic conditions, cancer, auto-immune or other specialty diseases. When the prevalence of these various conditions was compared to total spending for members affected by these specific diseases, their impact was immediately evident and dramatic. More than one-third of all members, 36%, were shown to have at least one chronic condition, and comprised approximately two-thirds, 67.5%, of spending for all members. Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes $PMPM is a population-based measure that reflects the proportion of all plan spending attributable to overall members or member sub-populations. Estimates for subgroups will be relatively low, even when spending for each member in the subgroup is high, because the denominator is the overall population. 12

17 TOTAL HEALTHCARE SPENDING PRIVATELY INSURED Treatment pattern differences across conditions were noteworthy Distribution of Spending by Treatment Setting ($) 21% 24% 3% 3% 12% 56% 52% 53% 20% 21% 21% All Members ($320 PMPM N=10,657,042) Chronic Conditions ($216 PMPM N=3,862,984) 14% Oncology ($25 PMPM N=162,767) 39% 8% 37% 16% Auto-Immune / Other Specialty ($22 PMPM N=183,393) Inpatient Outpatient Medical Outpatient Medical Rx Pharmacy Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Treatment patterns were outpatient driven among members with chronic or oncology conditions, and pharmacy driven for members with auto-immune and other specialty conditions. For members with chronic conditions, 55% of all spending was for outpatient services, of which 3% was for medical drug therapy. Outpatient services comprised 65% of all spending for members being treated for cancer, with 12% of all spending for medical drug therapy. Inpatient spending represented a smaller share of all spending for members with auto-immune and other specialty conditions, while outpatient spending was 45% and medical drug therapy 8% of all spending. Pharmacy spending was 39% of all spending for members with autoimmune and other specialty conditions. Chart notes Outpatient Medical Rx includes injected or infused drug therapy administered in a facility, office, or home health setting. $PMPM is spending per member per month. 13

18 Outpatient Spending Professional and facility visits accounted for 74% of outpatient spending overall. Emergency room visits were 10% of outpatient spending overall. Medical drug therapy provided in the office, facility or home was 5% of outpatient spending overall, but represented 18-19% of spending for members with specialty conditions. 14

19 OUTPATIENT SPENDING PRIVATELY INSURED Most outpatient spending was on professional and facility services Distribution of Outpatient Spending $PMPM Home Health Medical, $5, 3% Professional Medical, $74, 39% Laboratory/Pathology, $7, 4% Radiology, $8, 4% Medical Rx, $9, 5% Emergency Room, $18, 10% Home Health $1 Facility $2 Emergency room visits, at $18 per member per month, was 10% of all outpatient spending. Home health medical services represented 3% of all outpatient spending, followed by radiology and laboratory/ pathology at 4% each. Outpatient medical drug therapy, including office, facility and home-based injections and infusions, were 5% of all outpatient spending, or $9 per member per month. Facility Medical, $65, 35% Professional $6 Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes Medical Rx includes drugs administered in an outpatient facility, office or home health setting, under the medical benefit, identified by HCPCS or revenue codes. Spending may be understated for this category since not all health plans capture outpatient service usage at this level of detail. $PMPM is spending per member per month. 15

20 OUTPATIENT SPENDING PRIVATELY INSURED Medical drug therapy use resulted in different spending profiles Distribution of Outpatient Spending $PMPM 1% 3% 39% 35% 5% 4% 4% 10% All Members ($188 Outpatient PMPM N=10,657,042) 1% 3% 38% 36% 5% 4% 5% 8% Chronic Conditions ($120 Outpatient PMPM N=3,862,984) 1% 2% 23% 44% 19% 2% 6% 3% Oncology ($16 Outpatient PMPM N=162,767) 1% 4% 30% 34% 18% 3% 4% 6% Auto-Immune / Other Specialty ($10 Outpatient PMPM N=183,393) Emergency Room Radiology Laboratory/Pathology Medical Rx Facility Medical Professional Medical Home Health Medical Other Source: IMS LifeLink Health Plan Claims Database, Dec 2010 In oncology, auto-immune and other specialty condition populations studied, higher use of medical drug therapy resulted in outpatient spending profiles that differed from the overall or chronic patient populations. Medical drug therapy represented 19% of all outpatient spending for members with various types of cancer, and 18% for members with auto-immune and other specialty conditions, compared to all members and members with chronic conditions at 5% each. Professional and facility spending represented the largest share of outpatient spending for members overall, and for members with chronic conditions. Gary Gatyas 11/15/2011 Should we add a - Y axis on the right to show dollars? Chart notes $PMPM is spending per member per month. 16

21 Inpatient Spending Facility-based services were 84% of inpatient spending, while professional services were 16%. Members with chronic conditions had 63% of all inpatient admissions. Inpatient services spending among members with chronic conditions or cancers was about 20% of their total spending, similar to that of the overall membership. Inpatient services were only 16% of all spending among members with auto-immune or other specialty conditions. Members with cancer had the highest spending per admission, at $20,074, which was nearly $6,000 higher than the average spending per admission across all members. 17

22 INPATIENT SPENDING PRIVATELY INSURED 84% of inpatient spending was for facility-based care Inpatient Spending Distribution and Service Use Professional 16% Measure Inpatient $PMPM Allowed Amount ($) Per Admit Average Length of Stay (ALOS) Cost Per Admit ($)/Rate $65 $14, Spending per inpatient admission was, on average, $14,248. Each inpatient admission lasted 4.2 days, on average, with 46.4 admissions per 1,000 members per year. Inpatient spending included professional visits, with 310 visits per 1,000 members per year. Admits Per 1,000 Days Per 1,000 Professional Visits Per 1, Facility 84% Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes $PMPM is spending per member per month. 18

23 INPATIENT SPENDING PRIVATELY INSURED Inpatient was a lower share of spending for specialty conditions Distribution of Total Spending $PMPM All Members $65 $254 All Chronic Conditions $44 $171 Inpatient spending was 16%, or $4 per member per month, of all spending for members with auto-immune and other specialty conditions. Spending on inpatient services, for members with chronic conditions and members with cancers, more closely resembled the proportion spent for inpatient services in the overall population. All Oncology $5 $20 All Auto- Immune/Other Specialty $4 $19 0% 20% 40% 60% 80% 100% Inpatient Outpatient & Pharmacy Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes $PMPM is spending per member per month. 19

24 INPATIENT SPENDING PRIVATELY INSURED Members with chronic conditions had 63% of all inpatient admissions Description Inpatient $PMPM Cost Per Admit($) Admits Per 1,000 Average Length of Stay (ALOS) Days Per 1,000 Professional Visits Per 1,000 All Members $65.33 $14, Chronic Conditions $44.49 $15, Oncology $5.33 $20, Auto-Immune /Other Specialty $3.59 $16, Members with chronic conditions had the largest share of inpatient facility admits at 29 admissions per thousand; they also had the largest share of professional visits, logging 219 visits per 1,000 members. Oncology patients had the highest average spending per admission, at $20,074, which was nearly $6,000 higher than the average spending per admission across all members. Oncology patients also had a longer average length of stay compared to the overall member population and members with a chronic condition, making cancer admissions the most expensive. Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Chart notes $PMPM is spending per member per month. 20

25 Pharmacy Spending Members with chronic conditions filled more than 75% of all prescriptions. Specialty medicines provided by a pharmacy were a very small share of all prescriptions, but 17% of all pharmacy spending. Spending on specialty medicines provided by a pharmacy, or administered in the facility, office, or home, when combined, accounted for: 6% of all spending across all members. 33% of all spending for members with auto-immune or other specialty conditions. 17% of all spending for members with cancer. 21

26 PHARMACY SPENDING PRIVATELY INSURED Specialty pharmacy was 1% of utilization, yet 17% of spending Specialty vs. Non-Specialty Rx Spend and Usage $ ,950 1% 17% Overall, 11,950 prescriptions per 1,000 members were filled annually, with 174 prescriptions per 1,000 members for specialty medications, the majority of which were branded. At $11.31 per member per month, specialty prescriptions were 17% of pharmacy spending. 99% 83% $PMPM Non -Specialty Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Specialty Scripts/1,000 Chart notes Figures reflect outpatient drug claims typically processed by a pharmacy benefit manager utilizing NDC codes. See Appendix for detail. $PMPM is spending per member per month. 22

27 PHARMACY SPENDING PRIVATELY INSURED Members with chronic conditions filled most prescriptions Prescriptions Per 1,000 Members All Members (Total Rx=11,950) Chronic Conditions (Total Rx=9,359) Oncology (Total Rx=462) ,776 9, Health plan members diagnosed with a chronic condition filled 78%, or 9,359 of the 11,950 prescriptions filled per year per 1,000 members. Members with auto-immune and other specialty conditions filled nearly 5% of all prescriptions, while those being treated for cancer filled only about 4% of all prescriptions. Specialty medications comprised 9% of prescriptions filled by members with auto-immune and other specialty conditions, and 3% of those filled by members with cancers. Auto-Immune/Other Specialty (Total Rx=575) Non- Specialty Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Specialty Chart notes Prescriptions per 1,000 is a measure of the total number of prescriptions attributable to members with the specified conditions relative to the overall population. See Appendix for details. Figures reflect outpatient drug claims typically processed by a pharmacy benefit manager utilizing NDC codes. See Appendix for detail. 23

28 PHARMACY SPENDING PRIVATELY INSURED Total specialty drug spending was 6% to 33% of all spending Percent of $PMPM Medical drug therapy and specialty pharmacy combined share of spending was highest in specialty conditions. $20.38 $14.14 $4.20 $7.50 Across all members, medical drug therapy and specialty pharmacy combined were $20.38 per member per month, and represented 6% of all spending. PERCENT OF $PMPM $ $ $21.12 $14.92 By contrast, medical drug therapy and specialty pharmacy represented 33%, or $7.50 per member per month, of all spending for members with autoimmune and other specialty conditions. At 17% of all spending, expenditures for medical drug and specialty pharmacy were also higher among members with cancers. All Members All Chronic Conditions All Oncology Inpatient, Outpatient Medical, Non-Specialty Pharmacy Outpatient Medical Rx, Specialty Pharmacy Source: IMS LifeLink Health Plan Claims Database, Dec 2010 All Auto- Immune/Other Specialty Chart notes Outpatient Medical Rx and Specialty Pharmacy includes drugs administered in the facility, office, home, or pharmacy settings. $PMPM is spending per member per month. 24

29 Top 1% Member Spending Cohort Profiles Average annual spending approached $100,000 per member. More than 75% of the members had at least one chronic condition; 16% had at least one cancer. Inpatient spending was more than double the proportion observed in the overall population. The share of spending for inpatient services resembled the share reported in the Medicare 65+ population. Members with certain chronic conditions had much higher costs than all members with the same conditions, reflecting higher inpatient spending. Spending on medical drug therapy administered in the outpatient facility, office or home was: 6 times higher for members with rheumatoid arthritis (RA) in the top 1% versus all members with RA. 3 times higher for members with multiple sclerosis (MS) in the top 1% versus all members with MS. 25

30 TOTAL HEALTHCARE SPENDING TOP 1% SPENDING COHORT Annual spending neared $100,000 per member in the top 1% Average Annual Spending Per Member Top 1% Cohort ($) $98,310 $97,652 $118,203 $86,289 Annual spending neared $100,000 per member for the top 1% cohort, in contrast to $3,837 per member for the overall population. In the top 1% cohort, 77% of members diagnosed with one or more chronic conditions had annual spending of $97,652 per member. Additionally, 16% of members in this cohort had one or more cancers, and average annual spending per member for those with cancer was higher, at $118,203, than for members with chronic, autoimmune or other specialty conditions. Average annual per member spending for the top 1% cohort members with autoimmune and other conditions treated with specialty medication, was lower, relative to cancer, at $86,289. All Top 1% Members (N=106,570) Chronic Conditions (N=82,152) Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Oncology (N=17,230) Auto-Immune / Other Specialty (N=13,387) Chart notes Members in this cohort may be more likely to have multiple conditions within and across condition groupings. 26

31 TOTAL HEALTHCARE SPENDING TOP 1% SPENDING COHORT Nearly half of all spending in the top 1% cohort was for inpatient Distribution of Spending by Treatment Setting 21% 10% 18% 45% 39% Spending in the top 1% cohort of the IMS population resembled the Medicare 65+ spending distribution. Inpatient spending in the top 1% population was more than twice the proportion observed in the overall population. Pharmacy and outpatient services represented a smaller share of spending for the top 1% cohort relative to the overall population. 59% 45% 43% 20% IMS Privately Insured Under Age 65 Top 1% IMS Privately Insured Under Age 65 MEPS Medicare 65 and Over Inpa ent Outpa ent Pharmacy Source: IMS LifeLink Health Plan Claims Database, Dec 2010; Medical Expenditure Panel Survey 2, 2009 Chart notes MEPS represents data from IMS place of service definitions differ slightly from MEPS definitions. See Appendix for detail. 27

32 SPENDING PROFILE - OVERALL AND TOP 1% COHORT Inpatient spending for the top 1% with chronic conditions was higher Average Annual Spending Per Member By Chronic Condition ($) $150,226 The top 1% cohort of members with chronic conditions had much higher, inpatient driven spending. Members with diabetes in the top 1% cohort had spending that was nearly nine times higher, on average, than all members with diabetes. $102,465 $115,445 $104,058 The difference in diabetes and other top 1% chronic conditions was reflective of higher inpatient spending. Pharmacy remained a small proportion of spending for members with these conditions across the top 1% cohort. $11,858 $22,107 $15,173 $33,801 On average, more than $150,000 was spent annually for each member in the top 1% cohort with chronic renal failure, which was considered particularly high. All Diabetes (N=517,997) Top 1% Diabetes (N=17,155) All MI (N=21,146) Top 1% MI (N=2,054) All Stroke (N=64,457) Top 1% Stroke (N=3,116) Inpatient Outpatient Pharmacy Source: IMS LifeLink Health Plan Claims Database, Dec 2010 All CRF (N=39,503) Top 1% CRF (N=5,329) Chart notes Results reflect Year 2 costs incurred by members with Type 1 or Type 2 diabetes, stroke, myocardial infarction (MI) or chronic renal failure (CRF) in Year 1 of the study period. Top 1% cohort estimates for these conditions exclude members with cancer, auto-immune and other specialty conditions. 28

33 $29,602 RA AND MS SPENDING PROFILES - OVERALL AND TOP 1% Inpatient spending for top 1% with specialty conditions was higher All MS (N=16,361) Top 1% MS (N=2,885) $16,932 All RA (N=53,120) Top 1% RA (N=3,131) Average Annual Spending Per Member By Specialty Condition ($) $17,308 (58%) $29,602 All MS Top 1% MS All RA Top 1% RA (N=16,361) (N=2,885) (N=53,120) (N=3,131) Non-Speciality Rx $2,768 $6,520 $2,255 $6,132 Speciality Rx $15,141 $27,522 $3,606 $9,367 Outpatient Medical Rx $2,167 $7,259 $1,842 $11,678 Outpatient Medical $7,175 $16,332 $6,434 $25,780 Inpatient $2,351 $8,813 $2,795 $26,449 Source: IMS LifeLink Health Plan Claims Database, Dec 2010 Inpatient Outpatient Medical Outpatient Rx Specialty Rx Non-Specialty Rx $35,781 (52%) $66,445 $5,448 (32%) $16,932 $21,045 (27%) $79,407 At $15,141 per member per year, specialty pharmacy was 51% of spending for all members with multiple sclerosis. For the top 1% cohort, specialty pharmacy spending was higher at $27,522, but represented a smaller proportion of overall spending at 41%. Outpatient medical drug spending was similar for all members with multiple sclerosis or rheumatoid arthritis, but six times higher for rheumatoid arthritis and three times higher for multiple sclerosis for members in the top 1% cohort. Specialty pharmacy and medical drug spending combined were 58% for all members with multiple sclerosis, and 52% for the top 1%; it was 32% for all members with rheumatoid arthritis and 27% for the top 1% cohort. Inpatient spending was a smaller proportion of all spending than for top 1% members with diabetes, stroke or myocardial infarction. Chart notes Results reflect Year 2 costs incurred by members with rheumatoid arthritis (RA) and members with multiple sclerosis (MS) in Year 1 of the study period. Top 1% cohort for myocardial infarction (MI) excludes members with cancers, stroke, MI or chronic renal failure (CRF). 29

34 Potential Implications Health plan management strategies for privately insured, under 65 members cannot simply be an extension of Medicare strategies, given their lower share of spending for inpatient service spending, and higher shares for outpatient and retail pharmacy spending. Outpatient service pricing, use and management are important to private payers ability to manage costs across their membership, particularly as health exchanges result in large numbers of new entrants to the privately insured population. Members with chronic conditions are responsible for the majority of healthcare expenditure in the overall as well as the top 1% spending cohort populations studied. These members and their health plans would benefit from: Employer-led wellness efforts; Prospective outpatient service management and outreach to reduce co-morbidity and complication risks; Healthcare payment and delivery model innovations that reward primary care physicians for coordinating specialty care for chronic care patients and align incentives to facilitate care coordination across providers; and Care management programs that target reductions in re-admission rates among members with conditions like MI, Stroke, Diabetes or Chronic Renal Failure, which could lead to system cost savings and improved member quality of life. Managing health status among health plan members with chronic conditions may result in cost savings down the road for Medicare, if investment in these individuals reduces or delays complications. Members with cancers remain a small proportion of all members but have high per patient spending, and higher proportions of outpatient spending, including medical drug therapy. These members could benefit from treatment pathway and setting management initiatives that align incentives among providers for care coordination. When possible, providing coverage for self-administered therapies through retail pharmacy outlets may lead to greater efficiency and better quality of life for members with cancer. Emerging guidelines around cancer screening and treatment may improve treatment effectiveness, lower cost, and improve quality of life for patients with different cancers. Continued on next page... 30

35 Potential Implications Continued In certain disease populations, increased use of specialty retail drug therapy may lead to decreased overall member spend. Specialty medications dispensed through the traditional or specialty retail pharmacy setting are a key cost driver and need contracting and utilization management. At the same time, patients with autoimmune and other specialty conditions had lower spending and use rates for inpatient services than members with cancers or for chronic conditions without specialty drugs. Additionally, members with auto-immune and other specialty conditions in the top 1% cohort, including MS and RA, had lower overall per member spending, despite higher shares of retail pharmacy spending. Medicare and private payers face similar challenges managing spending and utilization for drug therapy administered in an outpatient facility, office or home setting and paid under the medical benefit. These challenges include: Coordinating the management of outpatient medical and retail pharmacy drug use, spending, and appropriateness Evaluating effects of offering specialty medications through the retail or home health setting, in addition to or instead of in the outpatient facility or office setting, when clinically possible. 31

36 END NOTES 1 IMS Literature Review. August Medical Expenditure Panel Survey: Tables of Expenditures by Health Care Services. Agency for Healthcare Research and Quality tables_results.jsp 3 Cohen, S. and Yu, W. The Concentration and Persistence in the Level of Health Expenditures over Time: Estimates for the U.S. Population, Statistical Brief #354. January Agency for Healthcare Research and Quality, Rockville, MD. /data_files/publications/st354/stat354.pdf 4 National Health Expenditure Projections Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group expenddata/downloads/proj2010.pdf 5 Table 3.4 Persons Served and Program Payments for Medicare Beneficiaries, by Demographic Characteristics: Calendar Year Medicare & Medicaid Statistical Supplement. Centers for Medicare & Medicaid Services, Office of Information Services; Data from the Standard Analytical files; data development by the Office of Research, Development and Information StatSupp/08_2011.asp 6 Van Den Bos J. Low Cost vs. High Cost Patients: What Medical Conditions are Most Common. Milliman Pharmaco-Actuarial Advisor dfs/low-cost-high-cost.pdf 7 IMS Clinical Benchmarks, Disease & Condition Product Healthcare in America: Trends in Utilization. US Department of Health and Human Services. Center for Disease Control, National Center for Health Statistics A Data Book: Healthcare Spending and the Medicare Program, June MedPac. 2010; kentirereport.pdf 10 MEPS-HC Summary Data Tables Technical Notes. Agency for Healthcare Research and Quality. May hc_technical_notes.jsp 11 Projections of National Health Expenditures: Methodology and Model Specification. Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. July downloads/projections-methodology.pdf Glossary. Medicare & Medicaid Services Statistical Supplement. Centers for Medicare & Medicaid Services. June /list.asp#topofpage 32

37 continued on next page... NOTES ON SOURCES IMS LifeLink Health Plan Claims Database and Study Sample The LifeLink Health Plan Claims Database is comprised of de-identified, commercial health plan information obtained from health plans throughout the United States. It is fully adjudicated medical and pharmaceutical claims, including inpatient and outpatient facility, professional, retail and mail order pharmacy experience as well as member enrollment detail. Records in the LifeLink Health Plan Claims Database are generally representative of the national, commercially insured population in terms of age and gender. The data are also longitudinal, with average member enrollment duration of two to three years. Only health plans that submit data for all members are included in the database, ensuring complete data capture and representative samples. A contributing plan s data submission undergoes rigorous quality review prior to its addition to the Database, as well as with each subsequent transmission of data, and at various stages of processing and use to ensure end-to-end data integrity. Given the Year 1 identification and Year 2 reporting framework, it is possible that members diagnosed in Year 2 would increase the average annual cost for some conditions (e.g., myocardial infarction, stroke). However, this standard design approach enables reporting of costs and service use across a consistent time frame for all conditions. Only health plan members with 24 months of continuous enrollment and evidence of a medical and a pharmacy benefit are included in the study. It is possible that individuals with shorter enrollment duration and/or lower levels of healthcare coverage will have different patterns of healthcare use and spending. However, this standard design approach ensures consistency in the underlying population. Treatment setting definitions differ slightly between IMS and publically available sources, despite best efforts to align them where possible. This may account for some differences in spending distribution by setting. 33

38 NOTES ON SOURCES Medical Expenditure Panel Survey: Tables of Expenditures by Health Care Services 2009 National Health Expenditure Projections Medicare & Medicaid Statistical Supplement 2010 MEPS Household Component Data contain individual and household-level estimates of health expenditures and utilization. MEPS is comparable to IMS in its exclusion of institutionalized civilians and foreign visitors to the US. Furthermore, MEPS information is available by age distribution and insurance type which allows for data manipulation into comparable cohorts. In contrast, CMS data include US citizens living abroad, military personnel, inhabitants of US territories and institutionalized civilians. 1 To the extent possible, MEPS treatment settings were classified to mirror IMS definitions. Some definitional differences remain, however, regarding professional and dental services. For example, MEPS data do not distinguish between professional inpatient and outpatient visits or inpatient and outpatient dental services. Additional limitations to the MEPS/IMS comparison include use of data from different years (MEPS 2009; IMS 2010) and definitional differences in private insurance payment amounts. National Health Expenditure Projection tables present information on enrollment and expenditure by source of funds and type of service. We focused on enrollment and expenditure tables with the effects of the Affordable Care Act. We manipulated the data to evaluate specific trends between , a time in which a large amount of change is projected after the immediate onset of the Affordable Care Act. We then continued trend analysis up to year Trends are consistent with other internal IMS deliverables, as well as external sources that use public data (e.g., Congressional Budget Office) or private data sources. 1 This supplement provides metrics on Medicare, Medicaid and other CMS programs. We used data from this source to find the weighted average of annual Medicare program payments from The source presents Medicare program payments per enrollee, which allows for comparison with IMS metrics that also analyze enrolled members. Not included in Medicare program payments are interim payments to institutional providers, payments to institutional providers resulting from adjustments to the end of first-year cost reports, capitation payments for prepaid group health plans, beneficiary cost-sharing amounts and administrative costs. Medicare enrollees in managed care plans are not included in the denominator used to calculate average payments, since these payments are not borne by CMS directly. Trends in growth of payments per capita by age is consistent with other publicly available data, such as National Health Expenditure data from

39 APPENDIX 1 Conditions Included in Analysis Overall Membership and Disease Population Analysis ALL MEMBERS Chronic Conditions Oncology Auto-Immune & Other Specialty Conditions Anxiety/Phobia Asthma Back Pain Chronic Renal Failure Congestive Heart Failure Chronic Obstructive Pulmonary Disease Coronary Artery Disease Depression Diabetes - Type 1 Breast Cancer Cervical/Uterine/Ovarian Cancer Colorectal Cancer Kidney Cancer Leukemia Lung Cancer Crohn's Disease Cystic Fibrosis Growth Disorders Hemophilia Hepatitis C Diabetes - Type 2 Hyperlipidemia Hypertension Myocardial Infarction Obesity Osteoarthritis Osteoporosis Stroke Lymphoma Pancreatic Cancer Prostate Cancer Skin Cancer - Melanoma Stomach Cancer Thyroid Cancer Multiple Sclerosis Psoriasis Psoriatic Arthritis Rheumatoid Arthritis Ulcerative Colitis 35

40 APPENDIX 2 Treatment Type and Setting Definitions TYPE SETTING DESCRIPTION Inpatient Outpatient Pharmacy Facility Professional Facility Emergency Room Professional Medical Rx Laboratory and Pathology Radiology Home Health Other Non-Specialty Pharmacy Specialty Pharmacy Includes all ancillary and room and board services provided on an inpatient basis for services related to a medical or surgical event. Excludes professional services provided during the inpatient stay. Evaluation and management services provided in an inpatient facility setting by a physician or other healthcare practitioner and billed separately by the physician or practitioner. Includes all facility and other ancillary services provided during an outpatient facility visit. Excludes professional services. Includes all ancillary, professional, and facility services provided during an emergency room visit, unless an inpatient confinement occurred on the same day. If an inpatient confinement occurred on the same day, the emergency room visit would be subsumed under the confinement. Clinical services provided in an office by a physician or other healthcare practitioner, including evaluation, management and ancillary services. Drug therapies administered in an outpatient facility, office, or home health setting via injection or infusion. Non-facility based outpatient laboratory- and pathology-related services. Non-facility based outpatient radiology-related services. Physician and other healthcare practitioner services provided in the home, including ancillary services, durable medical equipment. Any services provided outside of a facility or office setting that could not be classified elsewhere, including medical drug, outpatient radiology, laboratory, pathology, transportation, occupational therapy, physical therapy, speech therapy, dental services and durable medical equipment. Outpatient drug claims typically processed by a pharmacy benefit manager, utilizing NDC codes, and not identified as specialty pharmacy by IMS. Outpatient drug claims typically processed by a pharmacy benefit manager, utilizing NDC codes and identified as specialty pharmacy by IMS. 36

41 APPENDIX 3 Measure Definitions MEASURE TYPE Rate-Based Metrics ($PMPM, Use per 1000) Average Cost and Use Metrics DESCRIPTION Rate-based metrics report on cost and utilization among members who qualify for a condition topic relative to all members, regardless of condition, and including claimants and non-claimants. As an example, the rate-based cost measure for diabetes, Total Amount $PMPM, reflects the total monthly allowed amount for all members with diabetes relative to all plan members, not simply those with diabetes. Similarly, the rate-based utilization measure for diabetes, Total Pharmacy Scripts per 1000 Members, reflects the total number of prescriptions filled by plan members with Diabetes relative to all plan members, regardless of their claimant or condition status. Cost and utilization per member metrics report on average overall healthcare cost and utilization relative to claimants who qualify for the condition topic of interest. As an example, Average of Total Allowed Amount per Member for diabetes reflects the average annual allowed amount in dollars per plan member with diabetes. Similarly, the utilization measure Average of Total Pharmacy Scripts per Member reflects the average annual number of overall prescriptions filled by members with diabetes. DRAFT 37

42 APPENDIX 4 Study Population: Age and Gender Distribution IMS ALL MEMBER COHORT NUMBER OF MEMBERS GENDER DISTRIBUTION BY AGE GROUP AGE GROUP DISTRIBUTION BY GENDER Age Group All F 527, ,868 1,862,738 2,207,749 5,469,646 M 555, ,646 1,710,110 2,009,556 5,187,396 All 1,082,375 1,784,514 3,572,848 4,217,305 10,657,042 F 49% 49% 52% 52% 51% M 51% 51% 48% 48% 49% All 100% 100% 100% 100% 100% F 10% 16% 34% 40% 100% M 11% 18% 33% 39% 100% All 10% 17% 34% 40% 100% IMS TOP 1% ALL MEMBER COHORT NUMBER OF MEMBERS GENDER DISTRIBUTION BY AGE GROUP AGE GROUP DISTRIBUTION BY GENDER Age Group All F 896 2,361 12,513 41,936 57,706 M 1,126 2,893 7,499 37,346 48,864 All 2,022 5,254 20,012 79, ,570 F 44% 45% 63% 53% 54% M 56% 55% 37% 47% 46% All 100% 100% 100% 100% 100% F 2% 4% 22% 73% 100% M 2% 6% 15% 76% 100% All 2% 5% 19% 74% 100% Source: IMS LifeLink Health Plan Claims Database, Dec 2010 DRAFT 38

43 APPENDIX 5 continued on next page... Study Population: Total Healthcare Spending by Age and Gender $PMPM BY AGE GROUP AND GENDER AGE GROUP GENDER TOTAL $PMPM TOTAL BREAKOUT Inpatient Outpatient Outpatient Medical Outpatient Medical Rx Pharmacy 0-9 F $109 $16 $78 $78 $1 $14 M $132 $18 $93 $92 $1 $ F M $149 $148 $24 $23 $97 $91 $95 $88 $2 $2 $28 $ F M $324 $182 $76 $32 $193 $112 $186 $108 $7 $4 $56 $ F M $525 $467 $98 $111 $310 $250 $291 $236 $20 $14 $117 $106 All F $357 $71 $214 $203 $11 $72 M $281 $60 $160 $152 $7 $62 OUTPATIENT BREAKOUT Outpatient Facility Emergency Room Outpatient Professional Outpatient Laboratory/Pathology Outpatient Radiology Home Health $19 $11 $42 $2 $8 $3 $24 $14 $48 $2 $1 $4 $25 $16 $47 $3 $3 $2 $24 $15 $42 $2 $8 $3 $63 $22 $82 $10 $13 $4 $36 $16 $46 $4 $10 $4 $120 $21 $133 $11 $1 $8 $100 $19 $98 $9 $3 $11 $76 $20 $93 $9 $10 $5 $57 $17 $66 $5 $15 $7 Source: IMS LifeLink Health Plan Claims Database, Dec 2010 DRAFT 39

44 APPENDIX 5...continued from previous page Study Population: Total Healthcare Spending by Age and Gender USE RATES PER 1,000 MEMBERS 1 BY AGE GROUP AND GENDER AGE GROUP GENDER Inpatient Facility Admissions Inpatient Professional Visits Outpatient Facility Visits Emergency Room Visits Outpatient Professional Visits Outpatient Laboratory/Pathology Tests Outpatient Radiology Tests Home Health Visits Prescriptions 0-9 F M ,447 3,895 1,804 1, ,361 3, F M ,187 4,682 1,449 1, ,963 3, F M , ,766 3,802 4,392 1, ,936 5, F M ,896 1, ,478 6,661 5,258 4,268 1, ,282 18,462 All F M , ,243 5,020 4,045 2, ,699 10,106 1 Rates reported are per 1,000 members within each age group/gender stratification Source: IMS LifeLink Health Plan Claims Database, Dec 2010 DRAFT 40

45 APPENDIX 6 Study Population: Condition Set and Condition Prevalence CONDITION/ CONDITION SET # OF MEMBERS % OF MEMBERS % IN CONDITION SET CONDITION/ CONDITION SET # OF MEMBERS % OF MEMBERS % IN CONDITION SET All Chronic Conditions Hypertension Hyperlipidemia Depression Back Pain Asthma Diabetes (Type 1 or Type 2) Diabetes - Type 2 Osteoarthritis Anxiety/Phobia Coronary Artery Disease Osteoporosis Obesity Diabetes - Type 1 Chronic Obstructive Pulmonary Disease Stroke Congestive Heart Failure Chronic Renal Failure Myocardial Infarction All Members 3,862,982 1,704,790 1,331, , , , , , , , , , ,965 94,135 68,894 64,457 40,775 39,503 21,146 10,657, % 16.0% 12.5% 7.9% 6.3% 5.0% 4.9% 4.3% 3.0% 2.6% 1.9% 1.4% 1.4% 0.9% 0.6% 0.6% 0.4% 0.4% 0.2% 44.1% 34.5% 21.9% 17.4% 13.7% 13.4% 11.8% 8.3% 7.1% 5.3% 3.9% 3.9% 2.4% 1.8% 1.7% 1.1% 1.0% 0.5% All Oncology Breast Cancer Prostate Cancer Lymphoma Cervical/Uterine/Ovarian Cancer Thyroid Cancer Colorectal Cancer Skin Cancer (Melanoma) Leukemia Lung Cancer Kidney Cancer Pancreatic Cancer Stomach Cancer All Auto-Immune and Other Specialty Crohn's Disease Cystic Fibrosis Growth Disorders Hemophilia Hepatitis C Multiple Sclerosis Psoriasis Psoriatic Arthropathy Rheumatoid Arthritis Ulcerative Colitis 162,767 56,675 24,426 20,694 18,191 11,390 10,291 9,424 7,072 6,302 3, ,393 17,425 1,962 24,220 1,076 10,198 16,361 42,925 7,758 53,120 18, % 0.5% 0.2% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.03% 0.01% 0.00% 1.7% 0.2% 0.02% 0.2% 0.01% 0.1% 0.2% 0.4% 0.1% 0.5% 0.2% 34.8% 15.0% 12.7% 11.2% 7.0% 6.3% 5.8% 4.3% 3.9% 2.1% 0.5% 0.3% 9.5% 1.1% 13.2% 0.6% 5.6% 8.9% 23.4% 4.2% 29.0% 10.1% Source: IMS LifeLinkTM Health Plan Claims Database unprojected analytic sample, Dec 2010 DRAFT 41

46 APPENDIX 7 Glossary of Terms continued on next page... SOURCE TERM EXPLANATION AHRQ 10 CMS, OACT, NHSG 11 MEPS Private Health Insurance National Health Expenditure Projection Expenditure The Medical Expenditure Panel Survey, which began in 1996, is a set of large-scale surveys of families and individuals, their medical providers (e.g., doctors, hospitals, pharmacies), and employers across the United States. MEPS collects data on the specific health services that Americans use, how frequently they use them, the cost of these services, and how they are paid for, as well as data on the cost, scope, and breadth of health insurance held by and available to US workers. Private health insurance is by AHRQ defined as insurance that provides coverage for hospital and physician care (including Medigap coverage). Insurance that provides coverage for a single service only, such as dental or vision coverage, was not counted. Private health insurance could have been obtained through an employer, union, self-employed business, directly from an insurance company or a health maintenance organization (HMO), through a group or association, or from someone outside the household. The Office of the Actuary in the Centers for Medicare & Medicaid Services annually produces projections of healthcare spending for categories within the National Health Expenditure Accounts, which track health spending by source of funds (e.g., private health insurance, Medicare, Medicaid),by type of service (e.g., hospital, physician, prescription drugs), and by sponsor (e.g., businesses, households, governments). The latest projections go through The model for healthcare spending by payer or source of funds, including private health insurance (PHI), out-of-pocket spending (OOP) and other private spending are bottom-up in nature. The aggregate breakout of spending for personal healthcare is determined by the sum of trends for each type of service. In this area aggregation can be expected to obscure trends that apply to specific types of services. 42

47 APPENDIX 7 Glossary of Terms...continued from previous page SOURCE TERM EXPLANATION CMS 12 Impacts of ACA Medicare & Medicaid Statistical Supplement Program Payments The Office of the Actuary Health Reform Model (OHRM) and related actuarial cost estimates are used to estimate the impact of the ACA coverage expansions, Immediate Reforms, Non-Expansion Modifications to Medicare and Medicaid, and the Excise Tax on High-Cost Insurance Plans. The impacts of reform generated by the model are then combined with actuarial cost estimates prepared by the Office of the Actuary for the Medicare and Medicaid provisions unrelated to the coverage expansions. These combined impacts are then applied to the baseline nominal NHE projections. The CMS Center for Strategic Planning produces an annual Medicare and Medicaid Statistical Supplement that includes 115 tables and 67 charts describing health expenditures for the entire US population, characteristics of the Medicare and Medicaid covered populations, use of services, and expenditures under these programs. This CMS report is published annually in electronic form and is available for each year from 2001 through present. The Statistical Supplement is organized into 15 chapters which can each be downloaded and viewed separately. The Medicare program payment amount includes only the amount shown in bills received and processed (as of a specific cutoff date) by the Medicare program in the CMS central office files. Not included in program payments are interim payments to institutional providers, payments to institutional providers resulting from adjustments to the end of FY cost reports, capitation payments for prepaid group health plans, beneficiary cost-sharing amounts and administrative costs. 43

48 APPENDIX 8 MEPS Treatment Type and Setting Definitions TYPE SETTING DESCRIPTION Inpatient Outpatient Pharmacy Not Included Hospital Inpatient Services Outpatient Services Emergency Room Medical Provider Visits Home Health Services Other Medical Equipment and Services Prescribed Medicines Dental Services This category includes room and board and all hospital diagnostic and laboratory expenses associated with the basic facility charge and payments for separately billed physician inpatient services. This category includes outpatient diagnostic and laboratory expenses associated with the basic facility charge and payments for separately billed inpatient services. This category includes hospital diagnostic and laboratory expenses associated with the emergency room facility charge and payments for separately billed inpatient services. This category covers expenses for visits to a medical provider seen in an office-based setting. This category includes expenses for care provided by home health agencies and independent home health providers. Agency providers accounted for most of the expenses in this category. This category includes expenses for eyeglasses, contact lenses, ambulance services, orthopedic items, hearing devices, prostheses, bathroom aids, medical equipment, disposable supplies and other miscellaneous items or services that were obtained, purchased or rented during the year. This category includes expenses for all prescribed medications that were initially purchased or otherwise obtained during the calendar year, as well as any refills. This category covers expenses for any type of dental care provider, including general dentists, dental hygienists, dental technicians, dental surgeons, orthodontists, endodontists and periodontists. 44

49 About the Institute The IMS Institute for Healthcare Informatics leverages collaborative relationships in the public and private sectors to strengthen the vital role of information in advancing healthcare globally. Its mission is to provide key policy setters and decision makers in the global health sector with unique and transformational insights into healthcare dynamics derived from granular analysis of information. Fulfilling an essential need within healthcare, the Institute delivers objective, relevant insights and research that accelerate understanding and innovation critical to sound decision making and improved patient care. With access to IMS s extensive global data assets and analytics, the Institute works in tandem with a broad set of healthcare stakeholders, including government agencies, academic institutions, the life sciences industry and payers, to drive a research agenda dedicated to addressing today s healthcare challenges. By collaborating on research of common interest, it builds on a long-standing and extensive tradition of using IMS information and expertise to support the advancement of evidence-based healthcare around the world. R ESEARCH AGENDA The research agenda for the Institute centers on five areas considered vital to the advancement of healthcare globally: Demonstrating the effective use of information by healthcare stakeholders globally to improve health outcomes, reduce costs and increase access to available treatments. Optimizing the performance of medical care through better understanding of disease causes, treatment consequences and measures to improve quality and cost of healthcare delivered to patients. Understanding the future global role for biopharmaceuticals, the dynamics that shape the market and implications for manufacturers, public and private payers, providers, patients, pharmacists and distributors. Researching the role of innovation in health system products, processes and delivery systems, and the business and policy systems that drive innovation. Informing and advancing the healthcare agendas in developing nations through information and analysis. GUIDING PRINCIPLES The Institute operates from a set of Guiding Principles: The advancement of healthcare globally is a vital, continuous process. Timely, high-quality and relevant information is critical to sound healthcare decision making. Insights gained from information and analysis should be made widely available to healthcare stakeholders. Effective use of information is often complex, requiring unique knowledge and expertise. The ongoing innovation and reform in all aspects of healthcare require a dynamic approach to understanding the entire healthcare system. Personal health information is confidential and patient privacy must be protected. The private sector has a valuable role to play in collaborating with the public sector related to the use of healthcare data. 45

50 IMS Institute for Healthcare Informatics 11 Waterview Boulevard Parsippany, NJ USA