Health care expenditures are three times greater for patients who have both functional limitations and multiple chronic conditions than for patients without functional limitations. This was the impetus for a recent report, entitled High-Need, High-Cost Patients: Who are They and How Do They Use Health Care?1 The following is a summary of this Commonwealth Fund report’s main points and comparison to other findings.

Value-Based Health Care and the Costliest Patients 

The subset of patients termed “high-cost” account for the highest proportion of U.S. healthcare spending. Meanwhile, the basic goal of value-based payment models (VBPMs) is to improve quality while decreasing costs. Consequently, the shift to VBPMs has engendered an increased focus on clinical and payer interventions aimed at patients diagnosed with chronic conditions.

Five percent of the U.S. adult patient population was determined as “high-need”—based on a 2009-2011 nationally-representative sample—per this report. These patients were diagnosed with multiple chronic conditions plus functional limitations. Therefore, this report compared data on adults diagnosed with three or more chronic conditions and functional limitations in adult daily living activities (ADLs)(e.g., meal preparation and eating, toilet use, bed mobility, bathing, dressing) with a similar subpopulation not enduring such functional limitations. 

Understanding how high-need adults differ from other adults can help health systems, payers, and providers design and target programs. 

Findings of Sociodemographic and Health Status Differences

Patients classified as “high-need” based on health care use were found to differ from patients diagnosed with multiple chronic conditions but not experiencing any functional limitations, as follows:

  • Older age of “high need” patients: more than half were age 65 and older.
  • Gender of female: 66.6 percent of all “high-need” patients were women.
  • Caucasian: 75 percent of all “high-need” patients were categorized as white, non-Hispanic.
  • Low income: 50 percent of all “high-need” patients had incomes below 200 percent of the federal poverty level (FPL).
  • Publicly-insured: Four out of every 5 “high-need” patients were covered by Medicare, Medicaid, or both types of governmental insurance. 

Furthermore, 83 percent of the patients with functional limitations in addition to multiple chronic conditions self-reported fair or poor health status to their physicians, as compared to 38 percent of the patients with three or more chronic conditions but no functional limitations.

Medical Expenditure Panel Survey

The Agency for Healthcare Research and Quality (AHRQ) administers the Medical Expenditure Panel Survey (MEPS). Commencing in 1996, data has been collected by the AHRQ utilizing this survey from:

  • Individuals and families (e.g., patients)
  • Medical providers (e.g., physicians, hospitals, and pharmacies)
  • Employers

The latest MEPS data file available for public use is for 2014. This report’s findings were based on analysis of a subset (nationally-representative) of MEPS data from 2009-2011.

Health Insurance Enrollment Comparison

The following was the insurance enrollment status of the patients in the MEPS data subset utilized for this report:

  • Medicare: 31 percent of patients with 3 more chronic diseases and no functional limitations; 50 percent for “high-need” patients with functional limitations.
  • Medicaid: 7 percent of patients with 3 more chronic diseases and no functional limitations; 13 percent for “high-need” patients with functional limitations.
  • Dual Medicare and Medicaid: 3 percent of patients with 3 more chronic diseases and no functional limitations; 20 percent for “high-need” patients with functional limitations.
  • Private Health Insurance: 50 percent of patients with 3 more chronic diseases and no functional limitations; 13 percent for “high-need” patients with functional limitations.

Spending Patterns of High-Need Patients 

The data brief noted that “high-need” patients spent more than twice as much on out-of-pocket (OOP) expenses as adults in the population, suggesting the impact of chronic conditions (e.g., diabetes, COPD, lupus, and leukemia) on the finances of these patients and their families.

For the time period studied, the average annual OOP medical cost ascribed to the entire U.S. patient population was $702. In contrast, patients living with three or more chronic conditions plus functional limitations accrued annual OOP costs averaging $21,021. Meanwhile, patients with three or more chronic conditions but without functional limitations accrued costs of $7,526—far less than the subpopulation with functional limitations.

Cost Burden to Medicare of Chronic Diseases 

The findings of a similar study specifically focused on lupus (SLE) costs was conducted by Garris et al. Their results were published in 2015 in Cost Effectiveness and Resource Allocation.2

In contrast to the Commonwealth Fund researchers, Garris et al utilized a random sample extracted from the Medicare claims database provided by the Centers for Medicare and Medicaid Services (CMS). Next, Garris et al compared healthcare resource utilization by SLE patients with non-SLE patients. Their analyses showed that hospital utilization within an analyzed 12-month period was 40.2 percent for SLE patients, as compared to 17.2 percent for the non-SLE cohort.

In particular, Garris et al noted that “Patients with SLE incurred significantly greater average annual healthcare costs than matched controls without SLE.” Additionally, they found that hospitalization costs were 2.7 times higher in the SLE patient sample than the non-SLE patient sample. These researchers also found a two-fold greater utilization of outpatient physician services than by the non-SLE patient sample. 

Hospital Emergency Departments – Comparison of Utilization

The Commonwealth Fund report’s findings showed hospital emergency department (ED) utilization was twice the rate for “high-need” patients as compared to patients with multiple chronic disorders but without functional limitations. The rate of utilization by these “high-need” patients was also three times that of patients with no more than two chronic disorders and no functional limitations.

ED visits were more common among high-need adults who were under age 65, living in poverty, lacking a high-school degree, and covered by Medicaid only.

Outpatient Physician Visits – Comparison of Utilization

Ambulatory care physician visits by “high-need” patients were annually 50 percent more on average than for adults with multiple chronic conditions not experiencing functional difficulties. Meanwhile, the average annual number of paid home health care days was 26.1 for patients classified as “high-need” as compared to 1.6 for the adult patient population as a whole.

The report also stated that “Patients with a higher average number of doctor’s visits were under age 65, had relatively high income, were college-educated, and were privately insured.”

High-Need Patients More Likely to be Persistently High-Cost

Based on a one-year investigation compared to a following-year investigation, “high-need” patients were determined to fall within the top 10 or 5 percent of costliest patients, nationally. As compared to patients with chronic conditions but no functional limitations, “high-need” patients were determined to fall within the top 5 percent in terms of cost over a two-year period.

As a result, the authors of this report suggest to health policymakers that, “focusing on the high-need group may offer a better yield in identifying patients for intervention.”

Implications of Key Findings

This report concludes that “As health system reform shifts payment away from fee-for-service to value-based care models, the incentives to focus on and improve care for high-cost patients will grow.” Patient-centered medical homes (PCMHs) may be especially effective for these “high-need” patients in enabling better health status and reducing emergency department utilization.

To read or download a copy of the complete report, click here (PDF).


  1. Hayes SL, Salzberg CA, McCarthy D, et al. High-Need, High-Cost Patients: Who are They and How Do They Use Health Care? A Population-Based Comparison of Demographics, Health Care Use, and Expenditures. Commonwealth Fund. August 2016.
  2. Garris C, Shah M, and Farrelly E. The Prevalence and Burden of Systemic Lupus Erythematosus in a Medicare Population: Retrospective Analysis of Medicare Claims. Cost Effectiveness and Resource Allocation.  Cost Effectiveness and Resource Allocation. May 2015.