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Reducing Healthcare Costs Through Patient Targeting: Risk Adjustment Modeling to Predict Patients Remaining High-Cost Jonathan A. Wrathall Intermountain Healthcare, [email protected]
Tom Belnap Intermountain Healthcare, [email protected]
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Recommended Citation Wrathall, Jonathan A. and Belnap, Tom (2017) "Reducing Healthcare Costs Through Patient Targeting: Risk Adjustment Modeling to Predict Patients Remaining High-Cost," eGEMs (Generating Evidence & Methods to improve patient outcomes): Vol. 5: Iss. 2, Article 4. DOI: https://doi.org/10.13063/2327-9214.1279 Available at: http://repository.edm-forum.org/egems/vol5/iss2/4
Reducing Healthcare Costs Through Patient Targeting: Risk Adjustment Modeling to Predict Patients Remaining High-Cost
Abstract Context: The transition to population health management has changed the healthcare landscape to identify high risk, high cost patients. Various measures of patient risk have attempted to identify likely candidates for care management programs. Pre-screening patients for outreach has often required several years of data. Intermountain Healthcare relied on cost-ranking algorithms which had limited predictive ability. A new risk- adjusted algorithm shows improvements in predicting patients’ future cost status to facilitate identifying patient eligibility for care management.
Case Description: A retrospective cohort study design was used to evaluate high-cost patient status for two of the next three years. Modeling was developed using logistic regression and tested against other decision tree methods. Key variables included those readily available in electronic health records supplemented by additional clinical data and estimates of socio-economic status.
Findings: The risk-adjusted modeling correctly identified 79.0% of patients ranking among the top 15% of costs in one of the next three years. In addition, it correctly estimated 48.1% of the patients in the top 15% cost group in two of the next three years. This method identified patients with higher medical costs and more comorbid conditions than previous cost-ranking methods.
Major Themes: This approach improves the predictive accuracy of identifying high cost patients in the future and increases the sensitivity of identifying at-risk patients. It also shortened data requirements to identify eligibility criteria for case management interventions.
Conclusion: Risk-adjustment modeling may improve management programs’ interface with patients thus decreasing costs. This method may be generalized to other healthcare settings.
Acknowledgements Acknowledgements: The authors would like to thank Andy Merrill, MS for his contributions.
Keywords Value/Cost, Care Coordination, Population Health
Disciplines Other Medicine and Health Sciences | Social Statistics
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Reducing Health Care Costs Through Patient Targeting: Risk Adjustment Modeling to Predict Patients Remaining High Cost
Jonathan Wrathall, PhD;i Tom Belnap, MS
iIntermountain Healthcare
Context: The transition to population health management has changed the healthcare landscape to
identify high risk, high cost patients. Various measures of patient risk have attempted to identify likely
candidates for care management programs. Pre-screening patients for outreach has often required
several years of data. Intermountain Healthcare relied on cost-ranking algorithms which had limited
predictive ability. A new risk-adjusted algorithm shows improvements in predicting patients’ future cost
status to facilitate identifying patient eligibility for care management.
Case Description: A retrospective cohort study design was used to evaluate high-cost patient status
for two of the next three years. Modeling was developed using logistic regression and tested against
other decision tree methods. Key variables included those readily available in electronic health records
supplemented by additional clinical data and estimates of socio-economic status.
Findings:
and more comorbid conditions than previous cost-ranking methods.
Major Themes: This approach improves the predictive accuracy of identifying high cost patients in the
future and increases the sensitivity of identifying at-risk patients. It also shortened data requirements to
identify eligibility criteria for case management interventions.
Conclusion: Risk-adjustment modeling may improve management programs’ interface with patients
thus decreasing costs. This method may be generalized to other healthcare settings.
ABSTRACT
Generating Evidence & Methods to improve patient outcomes
eGEMs
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Wrathall and Belnap: Predicting Patients Remaining High-Cost
Published by EDM Forum Community, 2017
Introduction
In the face of rising health care costs, many voices
within the health care industry have called for
changes toward a more sustainable approach to
health care with emphasis on population health
management.1 In this paper, we describe modeling
techniques used to improve identification of high-
cost patients likely to benefit from care management
interventions. The modeling techniques described
below do not require a resource intensive approach
and may provide a means for other health systems
to improve their own patient-intervention targeting.
One objective of population health management
at Intermountain Healthcare is to facilitate the
transition from a traditional “fee-for-service” system
that compensates providers for services rendered,
with a “fee-for-value” approach in which providers
promote health among a defined patient cohort.
This approach emphasizes improving outcomes and
quality of service, and lowering overall health care
costs.2 This new health care climate requires changes
to existing delivery systems in order to meet the
needs of the community in ways that focus on the
triple aim of improving the experience of care, the
health of the population, and the cost of health care.3
Case Description
Intermountain Healthcare is an integrated delivery
system based in Salt Lake City, Utah consisting of 22
hospitals and over 185 clinics. Intermountain has been
actively engaged in developing programs designed
to improve outcomes for defined patient populations
that may require additional resources beyond the
standard of care provided through a patient-centered
medical home. One of these programs, known as
Community Care Management (CCM), is designed
to provide high intensity care management to high-
cost, complex patients. This program is designed
to help patients navigate the health care system
with the goal of preventing avoidable utilization
and slowing the progression of chronic conditions.
The CCM teams specialize in in-home assessments,
interdisciplinary care, intensive care coordination,
and community integration. This program was
designed to decrease catastrophic health episodes
through patient education, disease management, and
connection to community resources. To accomplish
this, CCM teams are expected to improve the
timeliness of care, improve medical coordination
to reduce complications, and foster community
relationships. These initiatives are intended to
decrease overall health care costs primarily through
avoiding unnecessary care or overutilizations.
In order for CCM programs to be successful, it
is critical to identify and target the right patient
population. To accomplish this, the stakeholders
originally created a list of eligible patients via
a ranking methodology, or Rank Algorithm,
centered on reasonably simple inclusion criteria.
In order to be eligible for the program, patients
must be at least 18 years old, live within 30 miles
of the program location, not already be enrolled
in a care management program, be insured by
Intermountain’s affiliated health plan or be uninsured,
and have health care costs in the top 10 percent of
patients for the last year and in the top 15 percent
of patients in one of the preceding two years.
Patients meeting the inclusion criteria were then
ranked equally based on the four following inclusive
factors; prior year health care spending, the Charlson
Comorbidity Index Score,4 and two proprietary risk
scores available within the organization—the IndiGO
Expected Benefit Score5 and the Optum Prospective
Risk Score6. Patients were ranked independently
by each factor, then rankings were averaged across
the factors to get an overall rank. The patient with
the lowest overall score was prioritized first, and the
CCM staff was expected to invite patients into the
program based on the order of the prioritized list.
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The goal of this approach was to provide an
objective enrollment process that was likely to enroll
patients who would both benefit from the program
and have enough cost savings potential to make the
program viable. While the original approach was
largely based on past health care spending, it did
provide an objective approach to enrolling patient in
the CCM program. These elements were used to rank
patients based on historical data in order to guide
patient outreach in the upcoming year. As a result,
there were limitations to the Rank Algorithm that
became apparent in the program over time.
The implementation team worked closely with the
CCM clinical staff to implement the use of the Rank
Algorithm. Over time there was ongoing feedback
and refinement to the tool in order to ensure it was
meeting the program’s needs. The Rank Algorithm
resulted in clinical staff taking significant time
to review patient charts and appraise potential
candidates. Many patients were considered ineligible,
they declined to participate or their high cost
episodes had resolved. As a result, there was a need
to revisit the approach and methods used to identify
patients and put in place something that better
identified patients for the CCM program.
The team undertook an evaluation of the original
patient selection process and tried to identify how
the process had been used and how it could be
improved moving forward. This evaluation identified
several drawbacks to the ranking method, which held
two important consequences. First, retrospective
patient identification meant the system was less able
to introduce appropriate health care interventions
until after a health crisis, thus patients were able
to be candidates for care management only when
they had already experienced an acute episode.
Second, a retrospective targeting method required
significant time before patients accumulated enough
utilization and cost to be identified as eligible
for additional services. Additionally, this ranking
method relied somewhat on opaque, third-party
proprietary algorithms to establish clinical risk. These
algorithms could not be calculated on all patients
and were difficult for the clinical staff to interpret.
Going forward, a predictive algorithm was needed
to identify rising risk patients before they became
medically complex and high cost. To accomplish this,
a new algorithm has been developed to incorporate
an approach that better predicts future patient costs
and refines patient targeting. With these changes,
there is an increasing ability to identify at-risk
patients and to better engage them in their care.
Recent discussions of high-cost patient prediction
have included debate as to the importance of
administrative or clinical data sources.7 As part
of the recommendations made by Cucciare et al.,
the revised prediction methodology was modified
to take advantage of gains introduced by both
administrative and clinical data. In recent years,
high-cost patient prediction has increasingly
included an element of prior years’ cost data as a
means of predicting future patient costs. Doing so
leads to better predictions than those obtained by
patient demographics alone.8,9 Alternative studies
have shown that a combination of clinical and
demographic data has also proved useful as a means
to predict future patient costs.10,11,12,13
A retrospective cohort study design was used with
logistic regression to evaluate high-cost patient
status for two of the next three years, and was
termed the “Logistic Model.” The study sample
consisted of patients in the top 15 percent of health
care costs from January 1 to December 31, 2011
comprising 26,173 unique patients. Training data
consisted of a random selection of 75 percent of
the total sample while the remainder were reserved
for the test data set. Because of the emphasis on
patient enrollment in a Care Management program,
similar inclusion criteria were adopted from the Rank
Algorithm that included living adults over age 18,
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patients not already enrolled in a care management
program, uninsured patients or those covered
by Intermountain Healthcare’s insurance arm,
SelectHealth, and patients living within 30 miles of a
care management clinic. SelectHealth customers and
the uninsured were included as a group of patients
for which Intermountain Healthcare has assumed
financial risk.
Health care costs for the study excluded
chemotherapy, dialysis, intravenous (IV) therapy,
spinal fusion, and knee and hip replacement.
However, patients with these procedures could
still be included if they had significant health
care costs in other areas. It was determined that
these conditions could not be impacted by the
interventions provided by care management teams.
Key predictors used in logistic regression modeling
included age with gender and marital status derived
from patient records. Socioeconomic factors
included Average Household Income in the patient
ZIP code based on the 2010 U.S. Census and the
Area Deprivation Index (ADI) score in the patient
Census block.14 Dummy variables were used for ADI
values greater than 115. Supplementary indicators
were used for behavioral health conditions,
additional comorbidities including obstructive sleep
apnea, morbid obesity, coronary artery disease,
hyperlipidemia, hypertension, and the count of
Charlson Comorbidities.15,16 Charlson Comorbidities
and behavioral health conditions included in the
analysis are shown in Table 1. Summary statistics
on the training sample are included in Table 2. All
analyses were performed using R software for
statistical modeling and computing.17
Table 1. Charlson Comorbidities and Behavioral Health Conditions Included In Logistic Regression
Modeling
CHARLSON COMORBIDITIES BEHAVIORAL HEALTH CONDITIONS
Myocardial Infarction
Cancer
Connective Tissue Disease-Rheumatic Disease
Chronic Pulmonary Disease
Cerebrovascular Disease
Metastatic Carcinoma
Dementia
Moderate or Severe Liver Disease
Diabetes with complications
Diabetes without complications
Mild Liver Disease
Peripheral Vascular Disease
AIDS/HIV
Peptic Ulcer Disease
Congestive Heart Failure
Renal Disease
Paraplegia and Hemiplegia
Schizophrenic Disorders
Depression Disorders
Bipolar Disorders
Affective Disorders
Organic Psychotic Conditions
Nonorganic Psychoses
Neurotic Disorders
Personality Disorders
Alcohol/Drug Dependence
Eating Disorders
Childhood/Adolescence Disorders
Intellectual Disability
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Findings
The results presented here were aimed at predicting
the likelihood of a patient being in the highest 15th
percentile for costs in two of the next three years
for patients already in the top 15th percentile in the
last year as described in the Logistic Model. Many of
these metrics for the number of identified patients
are somewhat arbitrary. If we identify the likelihood
of being a high-cost patient in the future, there
could be a range of optimal likelihoods that could be
used. For example, determining the likelihood of a
50 percent chance of being in the top 15 percent of
costs in the next two years would result in a larger
patient cohort compared to those with a 95 percent
chance. Due to constraints of the CCM teams, the
number of manageable patients was estimated to
be about 2,000. These results reflect an optimal
match between the predicted likelihood of patient
targeting and the number of patients with whom
CCM teams might intervene. We report the results of
targeting patients with likelihood score greater than
0.85 based on the fitted population being in the top
15th percentile of high-cost patients in two of the next
three years. The original Rank Algorithm utilized by
CCM predicted 63 percent of patients from the prior
year would remain in the top 15th cost percentile for
one of the next three years. Using logistic regression
and additional sociodemographic covariates, the
Logistic Model increased the predicted likelihood
from 63 to 79 percent. Additionally, the Logistic
Model demonstrated increases in the predicted
likelihood of prescreening patients remaining in
the top 15th percentile of cost for two of the next
three years from 31 to 48 percent. The C-statistic,
representing the “goodness of fit” of each model,
also increased from .54 under the ranking model to
.71 using logistic regression. Estimates indicate the
patient cohort overlap to be less than 10 percent
between the two models. Additional results of
patient targeting methods are presented in Table
3. The Logistic Model shows gains in identifying
medically complex patients, namely among those
with additional chronic comorbidities, behavioral
health conditions, obesity, and hypertension.
Alternative validation analyses were also conducted
using decision tree methods including Classification
and Regression Tree (CART) and Random Forest
methodologies. CART is built on logical if-then
Table 2. Summary Statistics of Training Sample
VARIABLE PERCENT VARIABLE MEAN (SD)
Percent Female 66.34% Comorbidity Count
1.29 (1.26)
Percent White 92.48% Age 46.8 (14.9)
Percent Married 71.21% Mean ZIP Income $63,311 ($16,372)
Percent with Hypertension 40.35% Prior Year Health Care Costs
$13,213 ($16,711)
Percent with Obesity 30.22%
Percent with Behavioral Health Condition 55.95%
Percent with Area Deprivation Index > 115 10.57%
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conditions that partition data based on different
predictors. Predictions in CART are based on
stratifying the predictor space into regions and
making predictions based on the mean of the
total observations in each region. Random Forest
methodology utilizes bootstrapping to stabilize
the pathways of possible alternative outcomes. For
this test, the number of bootstrap iterations was
500. Both methods are considered alternatives to
regression methods in tuning variable importance
and selection used in predictive modeling. However,
neither test was found to increase the C-statistic of
outcome prediction.
Major Themes
In the search for sustainable health care, many
health care systems are turning to data for help
in understanding the health of their population.
The approaches used here demonstrate gains
in identifying the patients most likely to benefit
from patient intervention programs. The Logistic
Model described above relies primarily on patient
demographics, including the socioeconomic context
of the patient and patient health care cost in the last
year, to predict the future likelihood of being a high-
cost patient in two of the next three years. We claim
that the use of widely available patient demographic
information in combination with rudimentary clinical
data may be more predictive of high-cost patients
beyond alternative ranking methods such as the
Rank Algorithm, which rely on lengthy accumulated
cost history and third-party clinical risk-adjustment
indices.
Because of the cyclical nature of care episodes,
many high-cost patients will have decreasing health
care spending over time. As episodes resolve, there
is significant “regression to the mean” that occurs
within this patient population. Consequently it
becomes increasingly important to identify the
subset of the population that is likely to remain
high cost in the future. The Rank Algorithm relied
too heavily on past cost and was not designed
to effectively predict future health care spending
beyond relying on past trends. Since the Logistic
Model has been implemented, CCM clinic staff have
become more efficient in selecting the right patients,
Table 3. Results of Patient Targeting Methods
MEASURE RANK ALGORITHM LOGISTIC MODEL
Average, SD Prior Year Cost $38,700 ($27,256) $44,000 ($61,125)
Average, SD Number of Charlson Comorbidities 3.6 (1.9) 5.0 (2.4)
Average, SD Number of Behavioral Health Conditions 1.7 (1.3) 2.2 (1.84)
Average, SD Number of Other Comorbidities 1.4 (.98) 2.3 (1.2)
Percent of Patients with Area Deprivation Index > 115 (Top Quintile)
16.9 18.0
Percent of Patients Diagnosed With Behavioral Health Condition
63.2 82.8
Percent of Patients Diagnosed With Obesity 27.8 54.9
Percent of Patients Diagnosed With Hypertension 59.3 80.3
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which has resulted in a reduced overall burden of
vetting patients.
Additionally, the gains from a regression-based
patient targeting model provide the advantage
that engagement with future high-risk patients
could occur in multiple ways. For example, patient
outreach could happen at the point of care, in
proactive outreach settings such as the CCM case
setting described above, or by delivery systems or
payers with access to the necessary data used in the
statistical modeling itself. These data are relatively
common to most electronic medical record systems
and reduce the data requirements from three years
to one year of retrospective patient history. Using
one year of data to make predictions is beneficial
because it allows systems to more accurately target
the segment of the at-risk population most likely to
benefit from additional services and support. More
precise allocation of services can reduce waste and
improve access to care, which is particularly valuable
throughout the population health transition many
health systems are currently facing. Conversely,
in the era of “big data” there may be common
acceptance of the assumption that more data is
better to use in predicting overall health outcomes.
In this instance, health systems struggling to
make use of emergent data systems need not feel
overwhelmed by a lack of large or highly fine-tuned
data systems. Our Logistic Model was developed on
relatively few predictors on open-sourced software.
Furthermore, we found, at least for the time being,
that regression tree methods that rely on large data
sets were less effective in obtaining greater modeling
accuracy than traditional regression methods.
This study has several limitations. First, we claim
to have increased the ability to target high-
cost patients by using predictive methods over
a rudimentary ranking system in the pursuit of
reducing health care costs and improving patient
outcomes. We do not claim to show that predictive
methods can account for all these changes. Because
the study relied upon retrospective data for the
use of future cost prediction, we merely speak to
methodological updates in patient identification
and leave additional research to quantify how much
downstream interventions may be able to reduce
costs. Second, this modeling may not account for
all the health conditions that may cause patients
to be high risk in the future. The approach shown
here represents a parsimonious prediction strategy,
having compared multiple predictor variables and
methods. Due to its parsimony, the Logistic Model
may prove to be a useful starting point for alternative
health care systems to engage in their own high-
cost patient targeting intervention strategies.
However, data training and testing was performed
on a sample of patients with relatively homogenous
demographics living in the intermountain western
United States. This sample may represent a patient
population with inherently different risk factors
and health care needs than patients in another
geographic location. While the Logistic method was
not explicitly tested against the IndiGO or Optum
indices directly, the lower performance of both
indices combined as included in the Rank Algorithm
did not warrant additional independent testing. The
unanticipated finding surrounding the limited utility
of third-party algorithms underscores the need for
health systems pursuing population health initiatives
to be sensitive to the unique characteristics of their
population. In the present study, we found that
third-party predictive algorithms trained on other
populations were less helpful than training data on
our own population.
Conclusion
Many strategies have been implemented in the
search for health care delivery strategies that help
patients manage illness and reduce waste. High-
cost patient targeting can aid care management
teams to effectively focus their efforts on those
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in the most need of intervention. Compared to
alternative modeling techniques, our Logistic Model,
based on administrative and basic socioeconomic
context data as well as information on chronic
health conditions, increases the predictive ability to
target at-risk patients. Using this model can shorten
the time requirements to identify patients who
are most likely to benefit from case management
interventions, thus decreasing cost burdens to
hospitals and patients alike. It is possible that this
approach may prove helpful to other health care
settings seeking to establish patient intervention
programs of their own.
Acknowledgements
The authors would like to thank Andy Merrill, MS for
his contributions.
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