2014 Health Care Cost and Utilization Report October 2015 www.healthcostinstitute.org Copyright 2015 Health Care Cost Institute Inc. Unless explicitly noted, the content of this report is licensed under a Creative Commons Attribution Non-Commercial No Derivatives 4.0 License 2014 Health Care Cost and Utilization Report 1 Letter from the Executive Director The Health Care Cost Institute (HCCI) is pleased to release the 2014 Health Care Cost and Utilization Report. The report covers the health care cost and utilization trends for Americans younger than age 65 and covered by employer-sponsored insurance (ESI) for the years 2010 through 2014, and it is the first look at the 2014 data. In 2014, the insurance exchanges opened with varying participation and enrollment by state. Although impacts of the Affordable Care Act may have occurred in 2014 on the ESI trends discussed in this report, none of those were explicitly investigated here. The impact of the ACA on the health care trends of the ESI population is an important topic for future study. Health care spending per capita for this population grew 3.4% in 2014. Similarly, over the 2010–2014 period, per capita spending growth was relatively steady and grew between 3.0% and 4.0% in each year; growing an average annual 3.4%. Con- tributing to this steady spending growth were increasing average prices for health care services and declining utilization of services. Continuing a trend beginning in 2012, the ESI population’s utilization of services continued to decline. This decline occurred across genders, age groups, and categories of health care services. This report details these trends, and we hope that you find the report informative. Throughout the last year, HCCI has continued its efforts to better inform stakeholders, policy makers, and the public about the U.S. health care system. The most important of these efforts are detailed below, and more information on all of HCCI’s initiatives can be found on the HCCI Website (www.healthcostinstitute.org). Initiatives include the following:  Guroo: In February 2015, HCCI released the first version of Guroo, a free Web-based portal to provide health care price and quality information to the public. The goal of Guroo is to give consumers information on the costs and qual- ity of health care so they can make more informed choices about how they spend their health care dollars. HCCI is making continuous enhancements to the Website and anticipates releases throughout the upcoming year.  Data enclave: HCCI, in partnership with and hosted by the NORC at the University of Chicago, developed a secure da- ta enclave to host the de-identified, HIPAA-compliant HCCI data. HCCI is pleased to welcome many research teams to the data enclave, including teams from public and private universities, government agencies, and actuarial associa- tions. These research teams are engaged in non-commercial, academic research covering many diverse health care topics.  Grant-funded research: In late 2014, HCCI, in partnership with the National Academy for State Health Policy and with funding from the Laura and John Arnold Foundation, granted six research teams at universities across the country the use of the HCCI data to explore various questions around state reforms of health care policies. The research prod- ucts from these teams will be publicly released in early 2016.  Chartbook: During the fall of 2015, HCCI will release a Chartbook using the HCCI and Guroo data. The Chartbook in- cludes a series of graphs and maps comparing the average price of health care services in each state to the national average price for the same services. In addition to these activities, HCCI continues to be a source of public reporting on spending and utilization trends of the ESI population younger than age 65. Along with this annual report, HCCI recently produced the Children’s Health Spending: 2010– 2013 report and an issue brief on health care spending trends for individuals identified with diagnosed with diabetes. Our continued work would not have been possible without ongoing support from our stakeholders and partners. We look forward to another year of an expanding agenda of activities in 2016. David Newman Executive Director, HCCI www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report i Executive Summary BY THE NUMBERS: 2014 The Health Care Cost Institute (HCCI) lar rates. Between 2010 and 2014, is pleased to present the fifth in a se- spending grew at an average annual ries of annual reports detailing the health care cost and utilization trends rate of 3.4%. The largest spending growth of 4.0% was observed in 3.4% for the national population younger 2011, whereas the lowest growth Increase in health care spending per than age 65 and covered by employer (3.0%) occurred in 2013 (Appendix capita -sponsored insurance (ESI). This re- Table A1). port, the 2014 Health Care Cost and Growth in spending per capita was Utilization Report, covers the period 2010 to 2014, with the bulk of the relatively similar across age groups. 16.3% The slowest growth rate (2.4%) was analysis focused on the 2014 data. Share of total health care spending for intermediate adults (ages 26–44), Previous reports can be found on the paid by out-of-pocket by individuals, the same rate as in the previous year HCCI Website. As with previous re- the lowest share since 2011 (Table 1). Per capita spending growth ports, this report details trends in per rates were between 3.4% and 3.9% capita spending, out-of-pocket spend- for the other age groups. The fastest ing per capita, utilization of services per 1,000 individuals, and the average growth rates (3.9%) occurred for 2.2% young adults (ages 19–25) and pre- price per service. These trends were Increase in out-of-pocket health care Medicare adults (ages 55–64). broken down by various demographic spending per capita groups including U.S. Census regions, In 2014, per capita spending growth age, gender, and age/gender group- for men was higher than for women: ings. Additionally, we studied trends 3.9% as compared to 3.0% (Table 1). for two broad types of services: medi- In contrast, spending for women in 3.2% & 3.3% cal (inpatient admissions, outpatient that year was higher than for men. Increases in utilization and average facility, and professional services) and The spending difference between men price for generic prescriptions prescription (brand and generic).1 and women narrowed slightly, with a difference of $1,085 in 2014 as com- In 2014, per capita health care spend- pared to $1,090 in 2013. ing for the national ESI population As was observed in the previous year, –15.6% & 28.1% grew 3.4%. Overall, this increase in spending was largely driven by in- the fastest spending growth rate oc- Changes in utilization and average creased prices, which were not offset curred in the Northeast (5.0%), while price for brand prescriptions by declining service utilization. These the slowest growth rate was in the trends, increased average prices and West (2.4%; Table 1). These two re- gions also had the highest and lowest lower utilization of services, were observed across categories of services spending per capita of the four re- $780 genders, and age groups. gions: $5,232 and $4,599, respective- Dollar increase in average price of an ly. inpatient admission Growth in per capita spending steady during the study period Spending on each service catego- ry increased in 2014 National per capita spending grew 3.4% to $4,967 in 2014, an increase of Spending on the medical subservice $163 (Table 1). Per capita spending categories (inpatient admissions, out- for the study population has been patient visits, outpatient-other ser- growing since 2010 at relatively simi- vices, and professional services) in- www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report ii creased between 1.7% and 4.7% and generic prescriptions decreased scriptions during the study period (Table 1). (See Key definitions for (a total of $14 per capita), whereas (Appendix Table A1). At the same more information about these catego- spending on outpatient and profes- time, utilization of brand prescrip- ries.) Generally, per capita spending sional services increased (a total of tions fell by 15.6%, a decline of 7,224 grew more slowly in 2014 than in the $31 per capita). filled days of brand prescriptions per previous year. The fastest spending 1,000 individuals (Table 3). As in previous year, average pric- growth rate was for outpatient visits, es increased while utilization de- Of the spending increase, $29.60 was whereas the slowest was for inpatient clined attributable to three hepatitis C virus admissions. The largest dollar in- (HCV) antivirals (Appendix Table crease spent per capita was on outpa- The average price paid per service A49). Correspondingly, utilization of tient visits ($39), whereas the small- increased in 2014 for every sub- this subclass increased from .2 filled est dollar increase was on outpatient- service category. The smallest aver- days per 1,000 individuals in 2013 to other services ($15). Only for outpa- age price increase was for profession- 30 in 2014. tient visits did spending grow more al services (3.1%), an increase of $3 rapidly in 2014 than in the previous per service (Table 3). The largest av- Decline in out-of-pocket spending for year: 4.7% as compared to 4.5%. erage price increase was for inpatient pre-Medicare women: In 2014, out-of- admissions (4.4%), an increase of pocket spending by pre-Medicare Spending grew at faster rates for pre- $780 per admission. adult women declined by $11 per scriptions (6.5% for generic and 8.2% woman (–0.8%; Appendix Table A31). for brand) than for any of the medical Generic prescriptions was the only This was the only age/gender group subservice categories (Table 1). The subservice category that saw an in- whose out-of-pocket spending de- 8.2% growth rate observed for brand crease in utilization in 2014. Utiliza- clined during that period. While out- prescriptions was the fastest rate ob- tion increased by 3.1%, or 7,395 filled of-pocket spending by these women served in any of the previous 4 years. days per 1,000 individuals (Table 3). increased by $30 per woman on out- For generic prescriptions, a 6.5% For the other subservice categories patient and professional services, this growth represents the second fastest during this period, utilization de- growth was offset by a $41 decline in growth rate observed since 2010, as clined. The largest decline in utiliza- spending on inpatient admissions and spending grew 13.4% in 2012. The tion was for brand prescriptions (– prescriptions. The largest decline in larger spending growth for prescrip- 15.6%) followed by inpatient admis- out-of-pocket spending was on brand tions, as compared to the other ser- sions (–2.7%). prescriptions, which declined by $27. vice categories, largely contributed to the stable rate of overall spending Notable trends growth observed in 2014. ER visits continued to decline for chil- dren (ages 0–18): For the second con- Out-of-pocket spending grew HCCI AGE GROUPS secutive year for girls and the third more slowly for 2014 compared Children consecutive year for boys, the number to previous years of visits to emergency rooms (ERs) Ages 0 through 18. Overall, out-of-pocket spending by the declined. In 2014, the number of ER national ESI population younger than visits dropped by 3 visits per 1,000 Young Adults age 65 grew 2.2%, or $17 over the boys and by 1 visit per 1,000 girls Ages 19 through 25. previous year (Table 2). Per capita (Appendix Table A37). In contrast, ER out-of-pocket spending reached $810 visits by the other age/gender groups Intermediate Adults in 2014 and represented 16.3% of increased in 2014, after a decline in Ages 26 through 44. total per capita health care spending. utilization in 2013. Middle-Age Adults This was a similar, and only slightly Increase in spending on brand pre- smaller, share of the total spending Ages 45 through 54. scriptions: Spending on brand pre- than that in 2012 (16.4% of total scriptions increased by $45 per capita Pre-Medicare Adults spending) or in 2013 (16.5% of total in 2014 (Table 1). This was the larg- spending). Spending out of pocket on Ages 55 through 64. est spending increase on brand pre- inpatient admissions and on brand www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report iii KEY DEFINITIONS What is per capita spending? Per capita spending in this report is the estimate of total expenditures on medical and pharmacy claims divided by the employer-sponsored insured (ESI) population. What are medical services and their subservice and detailed categories? Three medical service categories are identified: inpatient facility, outpatient facility, and professional procedures. These service categories are divided into subservice categories and further classified into “detailed service” catego- ries.  Acute inpatient admissions: This subservice category consists of the five detailed service categories: medical, surgical, labor and delivery (LD), newborn, and mental health and substance use (MHSU) admissions. It excludes hospice, skilled nursing facility, and ungroupable admissions (see Data and Methods).  Outpatient visits: This subservice category consists of three detailed service categories: ER visits, outpatient sur- gery, and observation visits.  Outpatient-other services: This subservice category consists of four detailed categories that make up the outpa- tient-other services category: ancillary services, miscellaneous services, laboratory and pathology services (lab/ path), and radiology services.  Professional services: This subservice category consists of 11 detailed service categories: administered drugs (including chemotherapy drugs); the administration of drugs; anesthesia; office visits to primary care providers (PCPs); office visits to specialists; miscellaneous services; pathology and laboratory (path/lab) services; preven- tive visits to PCPs; preventive visits to specialists; radiology services; and surgery services. What are prescription service, subservice, and detailed service categories and subclasses? HCCI analyzes prescription drug and device claims from pharmacies. The prescription service category is divided into brand and generic drug subservice categories and is further classified into detailed service categories, and further into subclasses.  Brand and generic prescriptions: These detailed service categories for brand and generic prescriptions are based on the AHFS classification system. The prescription detailed service categories are: anti-infective agents; cardiovascular drugs; central nervous system (CNS) agents; eye, ear, nose, throat (EENT) preparations; gastroin- testinal drugs; hormones and synthetic substitutes (hormones); all other therapeutic classes (other); respiratory drugs; and skin and mucous membrane (skin) agents. www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 1 Spending Per Capita for the ESI KEY FINDINGS: 2014 Population This report analyzes trends in annual previous year. In 2014, spending spending per capita for individuals grew 3.4%. This rate of growth was Growth rate remained covered by employer-sponsored in- similar to that of the prior year steady surance (ESI) and younger than age (3.0%), and the other years studied Growth in per capita spending was 65. Per capita spending trends were (2010–2014; Appendix Table A1). 3.4%, a similar rate to 2012 (3.4%) examined for the ESI population na- Health care spending per capita in- and 2013 (3.0%) tionally; for population sub-groups creased with age. Spending was low- (by U.S. Census region, gender, age group, and age/gender group); and est for the youngest age group $4,967 (children, ages 0–18) and highest for across broad and detailed service cat- Spending per capita for the national the oldest age group (pre-Medicare egories (see Key definitions and HCCI ESI population adults, ages 55–64): $2,660 and age groups). This section describes $9,466, respectively, in 2014 (Table the per capita spending trends for the 1). The difference between the high- $6,806 ESI population for the study period est and lowest (oldest and youngest) (2010–2014), with specific focus on Difference in per capita spending be- spending groups increased every year 2014. tween children and pre-Medicare studied: from $6,281 in 2010 to adults Per capita spending increased; $6,806 in 2014. spending growth remained steady In 2012, the percentage changes in $45 In 2014, health care spending per per capita spending growth for each Increase in per capita spending on capita was $4,967 for the national ESI of the five age groups varied widely brand prescriptions population (Figure 1 and Table 1). (Figure 2). For 2011, growth ranged from a high of 7.9% (for children and This was an increase of $163 over the 15.3% Increase in per capita spending on brand prescriptions for pre-Medicare adult men young adults, ages 19–25) to 3.1% (for pre-Medicare adults). After 2012, growth rates appeared to converge, and were similar across the age groups. In 2014, the highest spending growth, 3.9%, was for young adults and pre-Medicare adults, whereas the lowest growth of 2.4%, was for inter- mediate adults (ages 26–44). www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 2 $68, and $55, respectively (Appendix Tables A16 and A17). For the other adult age/gender groups, the increase in spending on brand prescriptions was influenced largely by increases in spending on the “other” classes cate- gory (Appendix Tables A8-A15). Spending on outpatient visits in- creased by $39 in 2014 (Table 1). The bulk of this increase was on ER visits, which increased $26 to $304 per capi- ta (Appendix Table A8). Spending on outpatient surgery visits also in- creased, by $12 to $526 per capita and remained the detailed service category with the highest per capita spending (Appendix Table A18). At the same time, spending on profes- sional services increased by $30 per (Appendix Table A6 and Appendix capita (Table 1), and two-thirds of Spending on all subservice cate- Table A7). Though every age group that increase was due to increased gories increased saw an increase in brand prescription spending on administered drugs and Spending on all the subservice catego- miscellaneous services ($10 per capi- spending, the increase in spending for ries increased in 2013 and 2014. For ta each; Appendix Table A18). While men was larger than that for women. 2013, the largest dollar increase was spending on professional services as a For pre-Medicare adult men and for professional services ($42), whole increased, spending on three of women and middle-age adult men, whereas the smallest was for generic the detailed categories declined this increase was largely due to in- and brand prescriptions ($11 each; slightly: office visits to primary care creases in spending on brand anti- Figure 3 and Table 1). For 2014, the physicians (–$2 per capita), radiology infective agents: increases of $153, largest spending increase was on brand prescriptions — a $45 increase — more than four times larger than the increase of the previous year. This was the largest increase in spending on brand prescriptions during the study period. By comparison, in 2012, spending on brand prescriptions de- clined by $3. This increase in spending on brand prescriptions occurred across the study population for every age group (Appendix Table A4), gender (Appendix Table A5), and age/gender group (Appendix Table A6). The in- crease was largest for pre-Medicare adult men, whose spending on brand prescriptions increased by $190 (15.3%) to $1,427 per capita www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 3 (–$3 per capita), and surgery services (–$2 per capita). The spending increases on acute ad- missions and outpatient-other ser- vices were comparatively small: $16 and $15 per capita, respectively (Table 1). The largest spending in- crease in the admissions category was on surgical admissions (a $9 in- crease), whereas for outpatient-other services, the largest increase was for miscellaneous services (an $8 in- crease; Appendix Table A13). Notably, though spending on acute admissions increased only modestly, it remained a high spending category overall, reaching $988 per capita in 2014 (Table 1). Regional spending continued to vary decline in per capita spending on acute admissions (–$13). Interesting- For the second consecutive year, the ly, spending was higher on acute ad- Northeast had the highest per capita missions in the West than in the other spending and the fastest growth rate, regions (Figure 4). The West also while the West had the lowest spend- spent the fewest dollars ($762) and ing level and slowest growth rate the smallest share of its health care (Table 1). The South continued to dollars on prescriptions (16.6%) as have the second-highest per capita compared with the other regions. spending, followed by the Midwest. In each of the regions, most of the In 2014, the Northeast had large dol- spending was on professional ser- lar increases in spending on all sub- vices. In the Northeast, professional service categories as compared to the services made up a larger percentage other regions. For example, spending of its total health care spending increased $61 per capita on brand (36.2%) than anywhere else. While prescriptions, $56 on acute admis- the Northeast generally had the high- sions, and $45 on professional ser- est spending on the subservice cate- vices (Appendix Table A19). In com- gories, it had the lowest spending on parison, the South, with the second- outpatient visits, $201 per capita less highest per capita spending had a $44 than the highest-spending region (the increase for brand prescriptions and Midwest). just $12 and $24 increases, respec- tively on acute admissions and pro- fessional services. In contrast to the other regions, spending levels and growth remained low in the West due to a small in- crease in spending on outpatient- other services (a $5 increase) and a www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 4 www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 5 Out-of-Pocket Spending Per Capita This section describes the trends in out- the West was the region with the lowest spending grew 2.1% for women and of-pocket spending for the national ESI per capita out-of-pocket spending. For 2.3% for men. Even with the faster population during the study period 2014, the West also had the smallest growth rates for men, the spending gap (2010–2014). Out-of-pocket spending dollar increase in per capita out-of- between the men and women continued was defined as the dollars spent by indi- pocket spending over the previous year to grow. viduals for health care services in the of any region: just $4 per capita (Table Largest increase in out-of-pocket form of co-payments, coinsurance, and 2). This was the smallest increase for deductibles (see Out-of-Pocket Spending any region in any year during the study spending for intermediate adults Definitions). period (Appendix Table A2). The South Generally, out-of-pocket per capita continued to have the highest out-of- spending increases with age. In 2014, National out-of-pocket spending pocket spending, as was true throughout the youngest age group had the lowest continued to increase the study period. The gap between the spending ($472), whereas the oldest age In 2014, the national ESI population lowest-spending region (the West) and group had the highest ($1,300; Table 2). spent $810 per capita out of pocket, a the highest-spending region (the South) However, growth in spending varied $17 increase over the previous year grew in every year studied, and reached across the age groups over the years (Figure 5 and Table 2). The $810 per $169 per capita in 2014. studied. For 2014, the largest dollar in- capita represents 16.3% of the total crease in out-of-pocket spending was for In every year between 2010 and 2014, health care spending per capita. This is a intermediate adults (ages 26–44; $27), out-of-pocket spending by women was slightly smaller share of the total than in whereas in 2013, the fastest growth rate higher than that by men. This difference the prior two years: 16.5% in 2013 and was for children (ages 0–18; 4.9%) and grew every year, reaching $237 in 2014 16.4% in 2012. Similarly, growth in out- the largest dollar increase was for pre- (Appendix Table A2). Over the previous of-pocket spending (2.2%) was lower in Medicare adults (ages 55–64; $45). 2 years, out-of-pocket spending for men 2014 than in the other study years. had been increasing at faster rates than What had been consistent across the age Continuing a trend first seen in 2012, those for women. For example, in 2014, groups is that out-of-pocket spending increased year over year; however, in 2014, out-of-pocket spending by one age group declined (Figure 6; see Out-of- Pocket Spending Trends: 2013 for more information about trends by age/gender groups). In 2014, spending by pre- Medicare adults out of pocket dropped by $5 per capita, a 0.4% decline. Inter- estingly, this 1-year decline in spending was experienced only by pre-Medicare women, not by pre-Medicare men. Spending out of pocket by pre-Medicare women dropped by $11 per woman (see Out-of-pocket spending by pre-Medicare women declined in 2014 for more infor- mation), while for men in this age group spending increased by $1. Combined, this led to a net decline in out-of-pocket spending by the pre-Medicare adults. www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 6 other services and visits: $7 and $10, respectively. The largest increase within those service categories was for ER visits, which increased by $8 (14.9%; Appendix Table A20). At the same time and for the first time in the study period, out-of-pocket spending on acute inpatient admis- sions declined by $1 per capita (– 1.0%). This decline was not con- sistent across the age/gender groups. For children and intermediate adult women, out-of-pocket spending on acute admissions increased slightly, by about $1 per child and $3 per woman (Appendix Table A21 and Ap- pendix Table A22). For young adults (ages 19–25), this spending was steady in 2014. For the other age/ gender groups, out-of-pocket spend- Out-of-pocket spending on pre- professional services, spending in- ing on acute admissions was lower in scriptions and acute admissions creased by $15 per capita, reaching 2014 than in the prior year. declined $366 (Table 2). This was the largest increase in spending on a subservice The largest decline in 2014 in spend- In 2014, out-of-pocket per capita category for that year. Spending out ing on acute admissions was for pre- spending for three of the four medical of pocket also rose for outpatient- Medicare adults, whose spending was subservice categories increased. For $5 per person lower (Appendix Table OUT-OF-POCKET SPENDING BY PRE-MEDICARE WOMEN DECLINED IN 2014 For the first time for pre-Medicare women (ages 55–64), and only the second time for an age/gender group (by $2 for young adult women in 2013), out-of-pocket spending declined in 2014 (Table 2). Spending out of pocket by pre- Medicare women fell by $11. Prior to 2014, spending on all medical subservice categories and generic prescriptions had increased every year (Appendix Table A21). In contrast, 2014 spending declined on brand pre- scriptions, generic prescriptions, and acute admissions (Figure 7). The largest decline was in spend- ing on brand prescriptions: $27 lower in 2014 than in the prior year. Of the brand prescription detailed categories, the largest decline was for brand CNS agents ($10 per woman) followed by brand cardiovascular drugs ($8 per woman). www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 7 A21). For both pre-Medicare men and generic prescriptions increased be- vascular drugs (Appendix Table A31 women, this decline was due to lower tween 2010 and 2012 (Table 2). How- and Appendix Table A32). Spending spending on medical and surgical ad- ever, over the 2 subsequent years, on these drugs declined by $4 per missions. In contrast, for intermediate this spending had declined slightly. In man and by $5 per woman. Lower adult women, the increase in acute 2013, the decline in spending on ge- spending on cardiovascular drugs for admissions spending was due to more neric prescriptions was limited to the these age/gender groups was not spending out of pocket on labor and younger female age groups (girls, unique to 2014, as this was also true delivery (LD) admissions, which rose young adult women, and intermediate in 2013 $5 per woman . adult women; Appendix Table A21). What made 2014 different from prior (See 2013 Health Care Cost and Utili- Out-of-pocket per capita spending on years was lower spending on generic zation Report for more information brand prescriptions fell every year in anti-infective agents, central nervous about these trends.3) For 2014, the the study period, from $101 in 2010 system (CNS) agents, respiratory decline occurred for all the age/ to $67 in 2014 (Table 2). This decline agents, and the “other” classes catego- gender groups. The smallest decline was consistent across the population, ry (see Key Definitions for more infor- in tdollars was for children, young and was experienced by all age/ mation on these classes of prescrip- adult men, and intermediate adult gender groups. This was also con- tion drugs). Spending on these classes men ($2 per capita), whereas the larg- sistent with falling utilization of of drugs declined by $11 for pre- est was for pre-Medicare adults ($9 brand prescriptions during this time Medicare women and by $8 for pre- per capita). period (see Utilization of prescription Medicare men. services). For pre-Medicare adults, the 2014 decline in out-of-pocket spending on In contrast to the general decline in generic prescriptions was largely due spending out of pocket on brand pre- to lower spending on generic cardio- scriptions, out-of-pocket spending on OUT-OF-POCKET SPENDING DEFINITIONS Out-of-pocket spending per capita: Out-of-pocket spending includes the patient’s share of payment for the provi- sion of health care services and prescriptions covered by insurance; such spending includes any copayments, coinsur- ance payments, or deductible payments. If an insurance claim was not filed (e.g., for the purchase of over-the-counter medicines), the expenditures are not included in this metric. These payments also do not reflect any refunds, rebates, coupons, or discounts that individuals received after making the out-of-pocket payments. HCCI calculated out-of- pocket expenditures per capita by dividing total out-of-pocket spending by the total insured population. Deductibles: A deductible, both individual and family deductibles, is the amount of incurred health care costs that an insured must pay out of pocket before the health plan reimbursement begins in a contract period. For example, for health care expenses of $2,000 in a year, an insured with a $1,000 deductible would pay the first $1,000 out of pocket. After the deductible is satisfied, the insured and the health plan jointly pay for the remaining $1,000 of expenses ac- cording to the insurance contract’s coinsurance and co-payment policies. Coinsurance: Coinsurance is the portion of covered health care costs borne by an insured. After insureds meet their deductible requirements, they generally pay for a portion of the remaining health care expenses out of pocket. For example, they may pay according to a fixed percentage of the expense, such as 20%. The insurer (payer) pays the oth- er 80%. Co-payments: Co-payments are out-of-pocket expenses in which the insured pays a specified charge for a specified service. Typical co-payments are fixed fees for services such as physician office visits, prescriptions, and hospital ad- missions. Payer spending per capita: Spending by payers are the dollars paid by the insurer directly to a health care provider on behalf of the insured. Any rebates, discounts, or incentive payments between insurers and providers not captured by the insureds’ claims data are not included in this metric. HCCI calculated payer spending per capita by dividing to- tal payer expenditures by the total insured population. www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 8 www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 9 2014 TRENDS IN HEALTH CARE SPENDING BY PAYERS Payer spending reflects the amounts that insurers paid to providers for health care services excluding the portion paid out of pocket by the insured (see Out-of-pocket spending definitions). In 2014, payer expenditures accounted for the bulk of total health care spending per capita (83.7%) for the ESI population, increasing by 3.6%, from $4,011 to $4,157 (Appendix Table A33). In each year between 2011 and 2013, payer spending per capita grew at rates slightly slower than those for out-of-pocket spending. However, in 2014, payer spending grew at a rate faster than that of out-of- pocket spending: 3.6% as compared to 2.2%. In 2014, payer spending and spending growth rates varied across the four U.S. Census regions studied. Payer expendi- tures grew fastest in the Northeast (4.9%) and the Midwest (3.7%). For the fourth consecutive year, the Northeast had the highest per capita payer expenditures ($4,460) while the West had the lowest ($3,890). Overall in 2014, payers had higher per capita spending for older adults as compared with the other age groups, as ex- penditures for pre-Medicare adults reached $8,167 per capita. This increase was $2,730 per capita more than the ex- penditures for the next oldest group (middle-age adults, $5,437 per capita) and more than twice the amount spent on intermediate adults ($3,509 per capita). The fastest payer growth rate was also for pre-Medicare adults (4.7% in 2104), whereas the slowest rate was for intermediate adults (2.1%) Over the study period, there was little change for payers in the share of spending on each of the service categories. In 2014, the largest share of spending and the highest per capita spending were on professional services (31.3% and $1,303, respectively) and acute inpatient admissions (22.6% and $938, respectively). The smallest share of spending and lowest spending level per capita were on outpatient-other services (10.5% and $437, respectively) and generic prescriptions (5.0% and $208, respectively). In 2014, as in the 2 prior years, payer spending on generic prescriptions accounted for the fastest growth rate of any subservice category (12.4% in 2014; 6.8% in 2013; 14.9% in 2012). The second-fastest growth in payer expenditures was for brand prescriptions (11.4%), which saw the largest dollar increase in payer spending ($53 per capita). www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 10 Drivers of Spending Growth Health care cost growth is the result This trend mirrors the trend in 2013. of changes in the number of services The next two sections in this report provided (“utilization”) and the prices describe the trends in service utiliza- paid for those services. HCCI tion for the medical subservice cate- measures utilization for medical sub- gories and for the prescription sub- service categories as the number of service categories. services used per 1,000 individuals, and, for prescription categories, the number of filled days of a prescription per 1,000 individuals. Price is meas- ured in this report for medical sub- service categories as the average price of a service in that category, whereas for prescription categories, it is measured as the average price of a filled day of a prescription. (For more information about the subservice cat- egories, see Key Definitions.) In the following sections of the report, HCCI analyzed how the different com- ponents of spending — price and utilization — affected health care trends for medical and prescription subservice categories. Building on trends from the 3 years prior to 2014, the average price of the service cate- gories continued to grow while the utilization of services declined. In 2014, the average price paid for a ser- vice for each of the subservice catego- ries was higher than in the prior year (Figures 8 and 9). At the same time, the utilization of services for each of the subservice categories declined. The only exception to declining utili- zation was for generic prescriptions. Utilization of generic prescriptions rose by 3.2%, or 7,395 filled days per 1,000 individuals (Table 3). In combi- nation, the higher spending that oc- curred in 2014 compared to 2013 was due to increases in average prices, which offset declines in utilization. www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 11 Utilization of Medical Services As seen in Figure 8, utilization of all four of the medical subservice categories (acute inpatient admissions, outpatient visits, outpatient-other services, and professional services) declined in 2014. The largest decline in utilization (– 2.7%) was for acute admissions, which fell by 1 admission per 1,000 individuals (Table 3). The smallest decline in utiliza- tion (–0.9%) was for outpatient visits, which fell by three visits per 1,000 indi- viduals. Declines occurred across most of the medical detailed service catego- ries (see Key Definitions). While a few detailed categories saw small increases in utilization, most saw small or moder- ate declines. This section describes the trends in utilization of services across the medical detailed service categories. Acute inpatient admissions riod, there was an even larger decline substance use (MHSU) admissions were Between 2010 and 2014, the number of for surgical admissions, which dropped steady throughout the time period, acute inpatient admissions per 1,000 from 18 admissions per 1,000 individu- while newborn admissions increased by individuals declined every year: 59 ad- als to 13. At the same time, labor and 1 admission per 1,000 individuals missions per 1,000 individuals in 2010 delivery (LD) and mental health and (2.7%) in 2014. and 53 in 2014 (Appendix Table A3). For most adult age groups — intermedi- ate, middle-age, and pre-Medicare — the number of acute admissions de- clined each year during this period (Appendix Table A34 and Appendix Ta- ble A35). Girls (ages 0–18), however, accounted for a slight increase in the overall number of admissions: 39 acute admissions per 1,000 girls in 2010 and 40 in 2014. Of the five acute inpatient detailed ser- vice categories, medical admissions and surgical admissions declined in utiliza- tion in every year of the study period (Appendix Table A36). Between 2010 and 2014, the number of medical admis- sions declined from 22 admissions per 1,000 individuals to 19. During that pe- www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 12 ESI population, fewer than in the previ- ous year (Table 3). Between 2012 and 2014, the number of visits per 1,000 people declined from 324 visits to 317. The decline in visits since 2012 occurred for nearly all age/gender groups. Of the age/gender groups who had fewer visits in 2014, the biggest drop in visits was for boys (–6 visits per 1,000 boys; Ap- pendix Table A37), and girls and pre- Medicare adult women (–4 visits per 1,000 girls and women; Appendix Table A37 and Appendix Table A45). There was no change in the number of visits by young adult men and middle-age adult men in 2014 (Appendix Table A39 and Appendix Table A43). This decline in the number of visits overall was due largely to a decline in outpatient surgical visits (Figure 12 and The number of admissions and trends in A steady number and slightly positive Appendix Table A36). The number of utilization for acute inpatient admis- growth occurred in the number of new- surgical visits dropped every year be- sions were not consistent across age born admits over the study period. The tween 2010 and 2014, from 131 visits groups. As shown in Figure 10, the num- slight positive growth in the number of per 1,000 individuals to 120 visits. For ber and type of admissions varied by age MHSU admits (Figure 11) were driven the previous 2 years, this decline in the and gender. In 2014, the most admis- largely by girls, and young adult (ages surgical outpatient visits was the largest sions were for intermediate adult wom- 19–25) men and women (Appendix Ta- influence on the falling number of total en, and the majority of these admits bles A37-A40). Over the study period, outpatient visits. were LD admissions (61 per 1,000 wom- MHSU admissions increased for each of en; Appendix Table A41). In contrast, for these three groups. Over the same time In contrast to surgical visits, the number children — both boys and girls — the period, the number of MHSU admissions of ER visits increased slightly between most admissions were newborn admits: for the other age/gender groups re- 2010 and 2012. For 2013, however, ER 22 per 1,000 boys and 21 per 1,000 girls mained the same or fell slightly visits dropped (–4 visits per 1,000 indi- (Appendix Table A37). For the two old- (Appendix Tables A41-46). viduals), contributing to the decline in est adult age groups, most of the admis- the number of total outpatient visits Outpatient visits (Appendix Table A36). For 2014, the sions were medical admissions followed by surgical admissions (Appendix Table In 2014, there were 317 outpatient vis- number of ER visits was higher than in A43-A46). its per 1,000 individuals for the national the previous year (a two-visit per 1,000 ER VISITS BY CHILDREN CONTINUED TO DECLINE IN 2014 In the previous Health Care Cost and Utilization Report, HCCI noted that the number of ER visits declined in 2013. 3 However, for the adult age groups this reduction in the number of ER visits appeared to have been a 1-year dip in utili- zation, as ER visits by adults increased for 2014 (Appendix Tables A39-A46). In contrast, the number of ER visits by children continued to decline. In 2013, the number of visits to the ER per 1,000 boys dropped by 8 visits (Appendix Table A37). In 2014, they dropped an additional 3 visits, to 181 visits. There was a similar decline in visits for girls. In 2013, ER visits declined by 6 visits per 1,000 girls. In 2014, the number of visits dropped by an additional 1 visit, to 172 visits. Interestingly, the per capita spending on ER visits for both boys and girls continued to increase. Between 2012 and 2014, spending rose by $18 per boy and $24 per girl (Appendix Table A8). www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 13 total number of outpatient-other ser- vices was negative in every year be- tween 2012 and 2014, even as utiliza- tion of some detailed categories of ser- vices increased in those years. For ex- ample, utilization of miscellaneous ser- vices increased in 2012 and 2013. Con- tinuing the trend of fewer total services used, in 2014, utilization declined for all the detailed categories of outpatient- other services, with the largest decline in the utilization of lab/path services (a decline of 31 services per 1,000 individ- uals). Of particular note was the outpatient- other service utilization by young adult men between 2012 and 2014 (Appendix Table A39). While utilization of these services by all other age/gender groups declined, it increased for young adult individuals increase; for more infor- Prior to 2012, the utilization of outpa- men. As with to the other age/gender mation about the trends in ER visits, see tient-other services by the national ESI groups, young adult men used fewer ER visits by children continued to decline population had been increasing. As can ancillary and radiology services over in 2014). be seen in Figure 13, use of miscellane- that time period; however, their utiliza- ous services and laboratory and pathol- Also in 2014, the decline in the total tion of lab/path and miscellaneous ser- ogy (lab/path) outpatient-other services number of outpatient visits was influ- vices increased per 1,000 men, from 338 increased in 2011, and utilization of enced by a small drop in the number of services to 351 services, while miscella- miscellaneous and ancillary services observation visits. Observation visits neous service utilization increased from increased the next year (Appendix Table dropped by one visit per 1,000 individu- 309 services to 342 services. A36). However, the difference in the als in that year, from 21 visits per 1,000 in 2013 to 20 (Appendix Table A36). Outpatient-other services As with outpatient visits, utilization of outpatient-other services declined be- tween 2012 and 2014, from 2,599 ser- vices per 1,000 individuals to 2,515 (Table 3). This decline occurred for nearly all age/gender groups. Only young adult men experienced an in- crease in service utilization throughout that period, as use rose from 890 ser- vices per 1,000 men in 2012 to 928 in 2014 (Appendix Table A39). At the same time, the largest decline in service utili- zation was for pre-Medicare adult wom- en — by 255 services per 1,000 women — from 5,642 services in 2012 to 5,387 in 2014 (Appendix Table A45). www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 14 Professional Services The overall decline in the utilization of professional services in 2014 was due to In 2014, the utilization of professional declines in nearly all detailed categories services by the national population de- of professional services (Appendix Table clined. This was the first time between A36). The largest declines were in the 2010 and 2014 that utilization of profes- utilization of miscellaneous professional sional services declined (Appendix Ta- services (–82 services per 1,000 individ- ble 3). Utilization dropped by 207 ser- uals) and office visits to primary care vices per 1,000 individuals, to 16,232 providers (PCPs; –64 services per services in 2014. This decline in utiliza- 1,000). Only utilization of preventive tion was generally consistent across the visits to PCPs (7 visits per 1,000 individ- population. Only young adult men (as uals) and laboratory and pathology ser- was true for outpatient-other service vices (lab/path; 11 services per 1,000) utilization) had increased utilization of increased in 2014. professional services in 2014. In 2014, for young adult men, utilization Between 2010 and 2013, the percentage of lab/path services increased by 330 change in the utilization of professional services per 1,000 men (Appendix Table services was generally greater than zero A39). Additionally, utilization of miscel- for all age groups (Figure 14 and Appen- laneous services, office visits to special- dix Table A34). The trend for 2014, ists, and preventive visits to both spe- however, was reversed, as utilization cialists and PCPs increased. The combi- was lower than in previous years for nation of increases in these four services most age groups. Only for young adults led to a net increase in the utilization of did utilization grow in 2014, and this professional services by young adult was driven by young adult men (an in- men, the only age/gender group to expe- crease of 289 services per 1,000 men), rience such an increase in total profes- which offset the fall in professional ser- sional service use. vices utilization by young adult women (–58 services per 1,000 women). INPATIENT MAJOR DIAGNOSTIC CATEGORIES: 2014 HCCI assigned each inpatient facility claim a major diagnostic category (MDC). Major diagnostic categories are a classi- fication system for grouping related inpatient hospital admissions. As seen in Appendix Table A47, the five MDCs with the highest expenditure per capita remained constant for the third consecutive year. Pregnancy and childbirth hospital admissions had the highest spending per capita at $197*, followed by musculoskeletal ($167), circulatory ($124), digestive ($90), and nervous system ($64) diagnostic categories. All five MDCs saw an increase in the average price paid to providers. The increase in average prices combined with changes in utilization affected the MDCs’ per capita spending totals. For example, in 2014, the change in the average price of a circulatory system admission rose by 10.7%, but a 9.9% decrease in the utilization of those services resulted in an overall spending decline. Similar was utilization of the digestive system MDC, which dropped 7.1% and offset the 6.8% increase in price. The musculoskeletal, pregnancy, and nervous system MDCs also experienced a decline in utili- zation, but the corresponding rise in the average prices was high enough to drive up these MDCs’ spending per capita. One MDC to note is infectious and parasitic disease admissions. Per capita spending increased by 15.5% to $42 in 2014, a double-digit percentage increase that also occurred in 3 of the last 4 years. Additionally, utilization of these admissions increased by 10.3% in 2014, more than double the 5.1% increase in 2013, and the average price continued its upward trend with an increase of 4.7%. As a result, spending in 2014 was 1.5 times higher than that in 2010. *Females only. www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 15 www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 16 Utilization of Prescriptions Every year between 2010 and 2014, there was an increase (of less than 1% per year) in the total utilization of pre- scriptions (brand and generic), as meas- ured in filled days per 1,000 individuals (Appendix Table A3). In 2014, utiliza- tion increased by 0.1% — an increase of 198 filled days per 1,000 (Table 3). However, this increase in prescription utilization was not consistent across the age/gender groups. Utilization declined for children, young adult men, and inter- mediate adults, of which the largest de- cline was by intermediate adult men (– 2,996 filled days, –2.0%; Appendix Table A34 and Appendix Table A35). Utiliza- tion of prescriptions increased for the other age/gender groups. The largest year-to-year increases were driven by middle-age adult women (5,705 filled days), pre-Medicare adult men (5,052 decline during the study period. The In 2014, utilization of all detailed cate- filled days), and middle-age adult men largest decline in utilization occurred in gories of brand prescriptions declined (3,584 filled days). 2012, a decline of 14,478 filled days per (see Key Definitions; Appendix Table 1,000. A36). This decline was larger for some While total prescription utilization in- creased in every year studied, trends in utilization varied by brand and generic prescriptions. Utilization of generic pre- scriptions increased every year, includ- ing an increase of 7,395 filled days per 1,000 in 2014 — the smallest year-to- year increase during the study period (Figure 15 and Appendix Table A3). Conversely, utilization of brand pre- scriptions declined every year during the study period. In 2014, filled days per 1,000 declined by 7,224, the smallest decline in recent years. Brand prescriptions The 15.6% decline in the utilization of brand prescriptions in 2014 continued a multi-year trend of such declines (Table 3). Interestingly, this was the smallest www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 17 had routinely had lower utilization compared to the other detailed cate- gories of generic prescriptions. The most highly utilized category of generic prescriptions in 2014 was CNS agents (65,514 filled days per 1,000), followed closely by cardiovas- cular drugs (64,319 filled days; Ap- pendix Table A36). These were also the two categories with the largest increase in utilization in 2014 (Figure 17). For both of these categories, utili- zation increased with age; however, utilization by women in each age group of the CNS agents was higher, while utilization by men of the cardio- vascular drugs was higher. For boys, utilization of brand CNS agents made up a disproportionately detailed categories than for others. prescriptions by women was higher large share of their total generic pre- The largest declines were in cardio- than by men, and generally tended to scription use as compared to other vascular drugs (–2,545 filled days per increase with age. The decline in utili- male age groups. For example, as a 1,000; –23.8%) and central nervous zation of the hormones category in share of boys’ total brand prescrip- 2014 (–474 filled days per 1,000) was tion utilization, brand CNS agents system (CNS) agents (–2,463 filled relatively small as compared to the made up 45.9%, whereas utilization days; –28.2%). These categories ac- decline in the utilization of cardiovas- of generic CNS agents made up just counted for the second- and third- cular drugs and CNS agents (Figure 33.8% of their total generic prescrip- highest utilization: 8,163 filled days tion use (Appendix Table A37). In 16). and 6,267 filled days, respectively. comparison, for pre-Medicare men, Utilization of cardiovascular drugs Generic prescriptions brand CNS agents made up 7.5% of was largely confined to the oldest age their total brand prescription utiliza- groups. The highest utilization of car- Utilization of generic prescriptions tion, while the generic versions were diovascular drugs in 2014 was by pre- was higher than that of brand pre- 16.2% of their total generic prescrip- Medicare adult men (37,940 filled scriptions in every year of the study tion use (Appendix Table A45). days per 1,000) and women (21,903; period, and generic prescriptions rep- resented an increasingly large share The third-highest utilized detailed Appendix Table A45). For adults, utili- of total prescription utilization over category of generic prescriptions was zation of CNS agents (i.e., antidepres- the period. In 2010, generics made up that of hormones and synthetic sub- sants, opiate agonists, and ampheta- 71.6% of total filled days; this share stitutes (42,136 filled days per 1,000 mines) generally increased with age, increased to 86.1% of total filled days in 2014; Appendix Table A36). As and women had higher utilization in 2014 (Appendix Table A3). Howev- with CNS agents, utilization of hor- than did men. However, boys also had er, not every detailed category of ge- mones for women was higher than comparatively high utilization of CNS neric prescriptions had increased uti- that for men. Utilization of the hor- agents (7,152 filled days per 1,000 in lization in 2014. Both the utilization mones category was dominated by 2014; Appendix Table A37) as com- of generic anti-infective agents de- young adult women (82,043 filled pared to the other age/gender groups. clined, by 2.1% (–234 filled days per days per 1,000 in 2014; Appendix The most utilized subservice category 1,000), and utilization of the “other” Table A39) and middle-age women of brand prescriptions was hormones class of prescriptions declined by - (80,357 filled days per 1,000; Appen- and synthetic substitutes (10,934 0.2% (–80 filled days per 1,000; Ap- dix Table A43). Though the hormones filled days per 1,000 in 2014; Appen- pendix Table A36). These categories category had only the third highest dix Table A36). Utilization of these www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 18 increase in utilization in 2014, it had the largest net increase in utilization (measured as the increase in generic use minus the decline in brand use): 1,228 filled days per 1,000 (Appendix Table A36). The detailed category hormones and synthetic substitutes contains a multi- tude of drug subclasses. In 2014, the subclasses with the highest utilization by the study population were generic hormone contraceptives (13,045 filled days per 1,000), and generic thyroid agents (12,839 filled days per 1,000; Appendix Table A48). Both of these classes had increased use in 2014: 3.9% and 4.0%, respectively. AVERAGE PRICE PER SERVICE INCREASED FOR ALL SUBSERVICE CATEGORIES IN 2014 In 2014, the average price per service increased for all the medical subservice categories (Table 3). Additionally, the price per filled day also increased for both brand and generic prescriptions (see Drivers of spending growth). In every year of the study period (2010-2014), the average price per service increased for each of the medical sub- service categories (Appendix Table A33). Price growth tended to be highest for outpatient visits, with average annual growth of 5.6%. During that period, the largest year-to-year dollar increase in the average price per service was for acute admissions, which grew an annual average of $881. That category also had the largest dollar increase for 2014 ($831), reaching an average price of $18,728 per acute admission. The smallest growth in average price per service was for professional services, which grew from $94 in 2010 to $103 in 2014. The trends in average price for outpatient-other services were similar to those for professional services. The average annual growth in price for outpatient-other services was 4.6%, and the price per service increased from $176 per service to $210 during the study period. The average price per filled day of brand prescriptions increased every year of the study period. Brand prescriptions had growth rates faster than any in the other subservice categories, rising an annual average 23.3%. The average price of a brand prescription increased from $7 per filled day in 2010 to $15 in 2014. While the average price increased in 2014, generic prescriptions were the only subservice category for which the av- erage price declined in some years studied. Price declines occurred in 2011 and in 2013. Throughout the study period, changes in the price of generic prescriptions were relatively modest. In each year, the average price per filled day re- mained between $1 and $1.49. www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 19 Data & Methods Data been incurred but not adjudicated. in this report. Claims for years 2010 through 2012, HCCI’s dataset contains several billion though refreshed over time, were de-identified commercial health in- considered 100% adjudicated in Limitations surance claim lines for the years 2010 2014. through 2014. Three major health This report, like all research, had sev- insurers contributed data to HCCI for HCCI used the weighted, actuarially eral limitations that affect the gener- the purposes of producing a national, completed dataset to estimate per alizability and interpretation of the multi-payer, commercial health care capita health expenditures, average findings. For this reason, HCCI consid- claims database. These data include prices, and utilization of services for ers the work a starting point for anal- claims for individuals covered by 2010 through 2014. HCCI did not cor- ysis and research on individuals cov- group insurance through an employer rect dollars for inflation; thus, all re- ered by ESI rather than as a conclu- (fully insured and administrative ser- ported expenditures and prices were sive analysis of the ESI population’s vices only), individual insurance, and in nominal dollars. effect on health care in the United Medicare Advantage plans. The claims States. HCCI analyzed four major categories data include prices paid to providers First, our findings were estimates for of services, several subservice catego- by both insurers and insureds and the United States ESI population ages ries, and detailed service categories details about the services used. Fur- 0 through 64, based on a sample of (see Key Definitions). Inpatient facili- thermore, HCCI’s claims data are com- approximately 27% of these insureds. ty claims were from hospitals, skilled pliant with the Health Insurance Port- nursing facilities (SNFs), and hospices ability and Accountability Act Second, the analysis and results were in which detail was sufficient to iden- (HIPAA). descriptive, and the findings were not tify an overnight stay by an insured. causal and cannot be used to deter- For this report, HCCI performed anal- Outpatient facility claims did not en- mine causal relationships. ysis on a subset of data totaling ap- tail an overnight stay, and included proximately 5 billion claim lines for observation and ER services. Both Third, the effect of individual or popu- approximately 40 million insureds outpatient and inpatient claims con- lation health status, such as existence per year (2010–2014).4 This analytic sisted of only the facility charges as- of chronic conditions, was not specifi- subset consisted of all claims for in- sociated with such claims. Profession- cally investigated or discussed in the sureds younger than age 65 and cov- al procedures included claims billed report ered by ESI and represented about by physicians and non-physicians Changes in 20134 27% of the national ESI population. It according to the industry’s standard is one of the largest datasets on the procedure-coding practices. Prescrip- HCCI’s analytic methodology under- privately insured ever assembled. tion data reflected prescriptions filled went a number of changes to enhance at both retail and mail-order pharma- reporting for the 2013 Health Care Methods cies. Cost and Utilization Report. See the The analytic subset was weighted methodology document available on For a more detailed description of using U.S. Census Bureau age-gender- HCCI’s Website for details on these HCCI’s methodology and dataset, see geographic-based estimates of the ESI changes. 7 the Analytic Methodology on HCCI’s population to make the analytic sub- Data changes. Website.1 set representative of the national ESI population younger than age 65. HCCI recognizes that the terms heath HCCI’s analytic methodology under- Claims in the analytic subset from care spending and health spending went a number of changes to enhance 2013 and 2014 were actuarially com- could be interpreted differently; how- reporting for the 2014 Health Care pleted to account for claims that had ever, they were used interchangeably Cost and Utilization Report. See the www.healthcostinstitute.org 2014 Health Care Cost and Utilization Report 20 methodology document available on Suggested citation for 2014 re- HCCI’s Website for a complete de- port: scription of these changes.1 “2014 Health Care Cost and Utiliza- Data changes. In the 2014 report, new tion Report.” Health Care Cost Insti- data were provided for 2012 through tute, Inc., Oct. 2015. Web. 2014 from the data contributors, re- sulting in changes in the membership, expenditures, utilization, and prices Endnotes in all years. This is an unavoidable 1. Health Care Cost Institute. 2014 consequence of updating and refining Health Care Cost and Utilization the dataset over time. As a result, the Report Analytic Methodology trends reported in the 2014 report v.4.0. Health Care Cost Institute, are somewhat different from those in Oct. 2015. Web. the 2013 report. 2. McEvoy, Gerald K., ed. AHFS Drug The data were adjusted to account for Information. Bethesda, MD: new and revised data for 2013. For the American Society of Health- 2014 analytic dataset, 2010 through System Pharmacists, 2015. PEP- 2012 data were considered complete, ID. Web. and no actuarial adjustment was per- formed. The 2013 and 2014 claims 3. Health Care Cost Institute. 2013 were actuarially completed using the Health Care Cost and Utilization new data. The average intensity Report. HCCI, Oct. 2014. Web. weights were changed to reflect up- 4. Health Care Cost Institute, Inc. dates to DRGs, RVUs, and APCs by Aggregated ESI Cost and Utiliza- CMS in 2014. tion Dataset (2010-2014). Health Weighting methodology was updated. Care Cost Institute, 2015. Digital The weighting methodology was up- file. dated to reflect changes in the defini- 5. The Editorial Board. “Costly Hep- tions of micropolitan and metropoli- atitis C Drugs for Everyone?” The tan areas, and updates to the county New York Times, Sep. 2, 2015. to core-based statistical area (CBSA) Web. mapping by the Office of Management and Budget (OMB). The data used to 6. Hepatitis C Online. “Simeprevir create the population weights were (Olysio)”. University of Washing- updated to reflect new estimates from ton, 2015. Web. the American Community Survey. Professional procedure detailed cate- gory added. HCCI included a new de- tailed category “administration of drugs” in this year’s report. This cate- gory includes the CPT and HCPCS codes that reflect procedures and health care professionals who admin- ister drugs to individuals. www.healthcostinstitute.org Trend to Note: Hepatitis C Drugs and the National ESI Population Between winter 2013 and fall 2014, three new breakthrough drugs were approved by the FDA for the treatment of the Hepatitis C virus (HCV). These drugs were: Olysio (FDA approval 11/22/13); Sovaldi (FDA approval 12/6/13); and Harvoni (FDA approval 10/10/14). While the drugs have been reported to have important benefits to individuals with HCV, discussions regarding cost have also been ongoing. 5 In the American Hospital Formulary Service (AHFS) classification system used by HCCI, Olysio, Sovaldi, and Harvoni are all classified as brand anti-infective agents. In 2013, the per capita spending on Olysio and Sovaldi for the national ESI population was $0.20 (Appendix Table A49). In comparison, the per capita spending on all other brand anti-infective agents was $53.10. There was relatively low utilization of the Olysio and Sovladi in 2013: 0.2 filled days per 1,000 individuals. In 2014, both the per capita spending on and utilization of HCV drugs increased. In 2014, per capita spending on Olysio, Sovaldi, and Harvoni was $29.60, compared to spending of $52.10 on the other brand anti-infective agents. Utilization of these three HCV drugs combined increased to 30 filled days per 1,000 individuals. In both 2013 and 2014, the average price per filled day of HCV drugs was relatively similar. The price per day actually declined slightly in 2014, from $995.60 to $983.30. In contrast, the average price per filled day for all other brand anti- infective agents was much lower than for HCV drugs and rose slightly during that period, from $36.10 to $38.30. Neither the price per day nor the per capita spending takes into account any coupons, discounts, or rebates that might be applied to the cost of the HCV drugs. Other research has found similar prices per day for these HCV drugs: around $1,000 per day for Sovaldi, around $1,055 per day for Harvoni, and $790 per day for Olysio. 5,6 1100 G Street NW, Suite 600 Washington, DC 20005 202-803-5200 Copyright 2015 Health Care Cost Institute Inc. Unless explicitly noted, the content of this report is licensed under a Creative Commons Attribution Non-Commercial No Derivatives 4.0 License