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Where the Money Goes: Understanding Medi-Cal’s High-Cost Beneficiaries

The Lewin Group and Ingenix Government Solutions

Seven percent of Medi-Cal beneficiaries accounted for more than three-quarters of fee-for-service program expenditures in fiscal year 2008. This snapshot makes recommendations for better controlling costs.

In fiscal year 2009, California spent $47 billion on Medi-Cal, the state's Medicaid program. As is common with other states' Medicaid programs and health insurance generally, spending was highly concentrated among a small number of beneficiaries: 7% of Medi-Cal beneficiaries accounted for more than three-quarters of fee-for-service program expenditures in fiscal year 2008.

Understanding this small but expensive group of beneficiaries is essential if California is to slow the growth of Medi-Cal spending, which accounts for an increasing share of the state budget. Although there is no single definition of a high-cost beneficiary, the analysis in this data snapshot considers high-cost beneficiaries as individuals whose Medi-Cal fee-for-service claims in 2008 cost $10,000 or more.

Among the key findings:

  • High-cost beneficiaries are a diverse group, spanning the age spectrum and presenting a wide array of physical and mental health conditions.
  • Most cases are not a function of episodic or catastrophic care; high-cost beneficiaries tend to have continuous Medi-Cal coverage and incur high claims for at least three years.
  • Among beneficiaries with claims costs greater than $10,000, nearly two-thirds have multiple conditions and more than one-third have co-occurring physical and mental health conditions.
  • Nearly half of high-cost Medi-Cal beneficiaries have Medicare coverage.
  • Long term care is a primary cost driver for high-cost Medi-Cal beneficiaries with Medicare coverage, whereas inpatient hospital admissions drive expenditures for those without Medicare coverage.
  • Annual expenditures for the 1,000 most costly beneficiaries averaged $502,465 per person.

The analysis concludes that new approaches are needed to better integrate physical health, mental health, and long term care services for the high-cost population, and offers several recommendations for managing and coordinating care more effectively.

The complete snapshot is available as a Document Download. Also available is an Excel file showing the aggregated data that lie behind the individual slides.

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