Expenditure variations analysis using residuals for identifying high health care utilizers in a state Medicaid program

Background: High utilizers receive great attention in health care research because they have a largely disproportionate spending. Existing analyses usually identify high utilizers with an empirical threshold on the number of health care visits or associated expenditures. However, such count-and-cost based criteria might not be best for identifying impactable high utilizers. Methods: We propose an approach to identify impactable high utilizers using residuals from regression-based health care utilization risk adjustment models to analyze the variations in health care expenditures. We develop linear and tree-based models to best adjust per-member per-month health care cost by clinical and socioeconomic risk factors using a large administrative claims dataset from a state public insurance program. Results: The risk adjustment models identify a group of patients with high residuals whose demographics and categorization of comorbidities are similar to other patients but who have a significant amount of unexplained health care utilization. Deeper analysis of the essential hypertension cohort and chronic kidney disease cohort shows these variations in expenditures could be within individual ICD-9-CM codes and from different mixtures of ICD-9-CM codes. Additionally, correlation analysis with 3M™ Potentially Preventable Events (PPE) software shows that a portion of this utilization may be preventable. In addition, the high utilizers persist from year to year. Conclusions: After risk adjustment, patients with higher than expected expenditures (high residuals) are associated with more potentially preventable events. These residuals are temporally consistent and hence may be useful in identifying and intervening impactable high utilizers.