Medicaid: Demographics and Service Usage of Certain High-Expenditure Beneficiaries
Published: 2014-02-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Medicaid is an important source of health coverage for millions of low-income individuals. Research on Medicaid has demonstrated that a small percentage of beneficiaries account for a disproportionately large share of Medicaid expenditures. Understanding states' expenditures for high-expenditure populations—both those dually eligible for Medicare and Medicaid, and those who are Medicaid-only—could enhance efforts to manage Medicaid expenditures.
GAO was asked to examine the demographics and service usage of Medicaid beneficiaries, particularly those who are not eligible for Medicare. This report examines high-expenditure Medicaid-only beneficiaries, considering (1) states' spending on them compared with all other Medicaid beneficiaries; (2) their key characteristics; and (3) their service usage compared with all other Medicaid-only beneficiaries.
GAO analyzed beneficiary and expenditure data from the Medicaid Statistical Information System Annual Person Summary File for 2009, the most recent year available at the time GAO conducted its work. GAO defined high-expenditure beneficiaries as those with total expenditures in the top 5 percent of expenditures within each state. GAO combined these data at a national level, and analyzed the characteristics associated with being a high-expenditure beneficiary, the probability of being a high-expenditure Medicaid beneficiary, and what services contributed to high expenditures.
section_title: What GAO Found
paragraphs: In fiscal year 2009, states spent nearly a third (31.6 percent) of all Medicaid expenditures on the most expensive Medicaid-only beneficiaries, who were 4.3 percent of total Medicaid beneficiaries. States spent another third (33.1 percent) on all other Medicaid-only beneficiaries, who represented 81.2 percent of total Medicaid beneficiaries. Among dual eligible beneficiaries, a similar pattern existed, with a small proportion of the population accounting for a disproportionate share of expenditures.
Certain characteristics significantly increased the probability of being a high-expenditure Medicaid-only beneficiary. Specifically, the results of GAO's analyses indicate that the probability of being a high-expenditure Medicaid-only beneficiary was:
24.4 percent for those residing in a long-term care facility,
20.8 percent for those with human immunodeficiency virus/acquired immunodeficiency syndrome,
18.3 percent for those with disabilities, and
13.3 percent for new mothers or infants.
Overall, hospital services and long-term services and supports in non-institutional and institutional settings comprised nearly 65 percent of the total expenditures for high-expenditure Medicaid-only beneficiaries, with smaller proportions for drugs, payments to managed care organizations and premium assistance, and non-hospital acute care. In contrast to high-expenditure beneficiaries, payments to managed care organizations and premium assistance comprised 57.2 percent of total expenditures for all other Medicaid-only beneficiaries.
HHS provided technical comments on a draft of this report, which were incorporated as appropriate.

section_title: Letter
paragraphs: Medicaid, a joint federal-state program for certain low-income individuals,  is an important source of health coverage for millions of children, adults,  aged individuals (individuals aged 65 and older), and those with  disabilities. In fiscal year 2012, the Medicaid program spent  approximately $435.5 billion to provide health care services to about   72.6 million beneficiaries. Additionally, Medicaid enrollment is likely to  grow within states that choose to expand eligibility for Medicaid in  response to the Patient Protection and Affordable Care Act of 2010  (PPACA). The Congressional Budget Office estimated that, as a result of  PPACA, 10 million additional people could be enrolled in Medicaid and  the Children’s Health Insurance Program (CHIP) by 2016 compared with  2012. Within Medicaid, there are two groups of beneficiaries—one  composed of individuals who are only enrolled in Medicaid, and another  composed of individuals enrolled in both Medicaid and Medicare,   Research on  commonly referred to as dual-eligible beneficiaries.Medicaid enrollment and spending has demonstrated that a small  percentage of beneficiaries account for a disproportionately large share of  Medicaid expenditures. Understanding states’ expenditures for both high- expenditure populations—those dually eligible and those who are  Medicaid-only—could enhance efforts to manage Medicaid expenditures  for particular types of beneficiaries.
You asked us to provide information on the demographics and service  usage of different types of high-expenditure Medicaid beneficiaries, noting  that less attention has been paid to the demographics and service  utilization of high-expenditure Medicaid-only beneficiaries compared with  dual-eligible beneficiaries. In this report, we examine (1) states’ spending  for high-expenditure beneficiaries, both Medicaid-only and dual-eligible  beneficiaries, compared with other Medicaid beneficiaries; (2) the  characteristics associated with high-expenditure Medicaid-only  beneficiaries; and (3) the services that contributed to high expenditures  for Medicaid-only beneficiaries, and how they compared with service  usage by all other Medicaid-only beneficiaries.
To examine states’ spending for high-expenditure Medicaid-only  beneficiaries compared with other Medicaid beneficiaries, we used data  from the fiscal year 2009 Medicaid Statistical Information System (MSIS)  Annual Person Summary File. We first calculated the total number of  Medicaid enrollees and total Medicaid expenditures in each state   We  separately for both the Medicaid-only and dual-eligible beneficiaries.then determined the number of beneficiaries whose total expenditures fell  within the top 5 percent of total expenditures within each state for each of  these groups, designating them as high-expenditure beneficiaries. Finally,  we calculated the total expenditures for high-expenditure Medicaid-only  beneficiaries and all other Medicaid-only beneficiaries in each state, and  combined these data at a national level.
To examine the characteristics associated with high-expenditure  Medicaid-only beneficiaries, we determined the percentage of high- expenditure Medicaid-only beneficiaries with key characteristics and used  logistic regression to examine the effect of having key beneficiary  characteristics on the probability of being a high-expenditure Medicaid- only beneficiary. The key beneficiary characteristics represented as  independent variables in our logistic regression model included: eligibility  group (disabled, child, adult, aged), age, gender, race/ethnicity,  geographic location, participation in capitated managed care, period of  enrollment in Medicaid (whether full year or partial year), as well as  whether the beneficiaries had any of five health conditions or had  received any of two services. Finally, our logistic regression models  included characteristics of states’ Medicaid programs, such as their  spending on high-expenditure beneficiaries and long-term services and  supports (LTSS) in non-institutional settings (also called home and  community based services) and capitated managed care penetration  rates.beneficiary population, as well as the probabilities that demonstrate the  association of each characteristic with the likelihood of being in the high- expenditure group.
We report percentages that describe the high-expenditure  To examine the services that contributed to high expenditures for  Medicaid-only beneficiaries and how they compared with service usage  by all other Medicaid-only beneficiaries, we determined the distribution of  expenditures for high-expenditure Medicaid-only beneficiaries. The data  allowed us to describe patterns of usage for the following six service  categories: (1) hospital care, (2) non-hospital acute care, (3) drugs,   (4) managed care and premium assistance, settings, and (6) LTSS in institutional settings. We compared their  distribution to those of all other Medicaid-only beneficiaries.   (5) LTSS in non-institutional  We assessed the reliability of the 2009 MSIS Annual Summary File data  we received from the Centers for Medicare & Medicaid Services (CMS)  by performing appropriate electronic data checks and by interviewing  agency officials who were knowledgeable about the data. This allowed us  to determine that the data were suitable for our purposes. We retained  approximately 64.5 million of the original 71.6 million records (90 percent)  for our analysis; the majority of exclusions were due to unknown eligibility  status. For a more complete description of our methodology, see  appendix I.
Managed care and premium assistance describe Medicaid health insurance payments  made toward HMO/capitated risk-based, primary care case management, and prepaid  managed care health plans.
We conducted this performance audit from September 2012 through  February 2014 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform our  work to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: At the federal level, CMS, within the Department of Health and Human  Services (HHS), is responsible for overseeing the design and operation of  states’ Medicaid programs, and states administer their respective  Medicaid programs’ day-to-day operations. In conformance with federal  requirements, states establish beneficiaries’ eligibility for Medicaid, and  determine the services that will be provided to beneficiaries and how they  will be provided in their state.
subsections: section_title: Medicaid Eligibility and Financing
paragraphs: Eligibility for Medicaid is based on a variety of categorical and financial  requirements. Historically, categories of Medicaid eligibility included  pregnant women, low-income children and their parents, individuals who  are aged, and individuals with disabilities. In 2014, certain low-income  adults who did not fall into one of these groups may be eligible for  Medicaid in states that chose to expand coverage to these individuals  under PPACA. Dual-eligible beneficiaries, who are eligible for both  Medicaid and Medicare, generally fall into two categories: (1) low-income  seniors (individuals aged 65 years old and over) and (2) individuals with  disabilities under the age of 65.
While some characteristics of state programs vary, Medicaid generally  covers a wide range of health care services. These include hospital care;  outpatient services, such as physician services, laboratory and other  diagnostic tests; prescription drugs; dental care; and LTSS in institutions   Non-institutional LTSS include home health and  and in the community.personal care services, among other services. Medicaid is the nation’s  primary payer for LTSS, and provided approximately 41 percent of LTSS  funding in the United States in 2010.
As we have previously reported, nearly all states enroll some Medicaid  beneficiaries in a form of managed care. the scope of services they provide and the populations they enroll in  managed care. Some states contract with managed care organizations to  provide the full range of covered Medicaid services to certain enrollees,  for which they pay a set, or capitated, amount per member per month.  Alternatively, states may rely on arrangements, such as limited benefit  plans—which provide a limited set of services, including dental care or  behavioral health services—or primary care case management programs  in which enrollees are assigned a primary care provider who is  responsible for providing primary care services and for coordinating other  needed health care. States often provide long-term care services outside  of managed care arrangements.
section_title: Service Utilization and Expenditures among Medicaid Beneficiaries
paragraphs: GAO, Medicaid: States’ Use of Managed Care, GAO-12-872R (Washington, D.C.:   Aug. 17, 2012). top 10 percent of Medicaid spending were responsible for 51 percent of  Medicaid spending on dual-eligible beneficiaries.
The research also indicates that there is a subset of Medicaid-only  beneficiaries who are very costly, such as those with institutional care  needs or chronic conditions. One study showed that high-expenditure  Medicaid beneficiaries in 2001 included subgroups from each eligibility  category, with the elderly and disabled making up the greatest shares of  this high-expenditure group. The largest portions of spending were for  hospital care for children and adults, intermediate care for individuals with  disabilities, and nursing home care for the elderly. showed that annual per capita expenditures ranged from $8,000 to nearly  $16,000 for Medicaid beneficiaries with chronic conditions, including  asthma, coronary heart disease, congestive heart failure, diabetes, or  hypertension. This study also noted that annual per capita expenditures  may double and sometimes triple when single chronic conditions are  coupled with mental illness and a drug or alcohol disorder.
section_title: Nearly One-Third of States’ Medicaid Expenditures Were for High-Expenditure Medicaid-Only Beneficiaries
paragraphs: Intermediate care included intermediate care facility services for persons with intellectual  disabilities, services in institutions for mental disease for the elderly, and inpatient  psychiatric care under age 21. Kaiser Family Foundation, Medicaid’s High Cost Enrollees  (Washington, D.C.: March 2006). beneficiaries (less than 1 percent of the total Medicaid population) and  21.9 percent of total Medicaid expenditures on other dual-eligible  beneficiaries (13.8 percent of total Medicaid beneficiaries). (See fig. 1).
At the beneficiary level, per-capita spending on high-expenditure  Medicaid-only beneficiaries greatly exceeded that of all other Medicaid- only beneficiaries, but was less than what was spent on high-expenditure  dual-eligible beneficiaries. (See table 1.) Overall, per capita spending by  states on high-expenditure Medicaid-only beneficiaries was approximately  18 times higher than per capita spending on all other Medicaid-only  beneficiaries. This was similar to the pattern of spending for dual-eligible  beneficiaries, with per capita spending significantly higher for high- expenditure dual-eligible beneficiaries compared with all other dual- eligible beneficiaries.
At the state level, there was wide variation in spending per capita on high- expenditure Medicaid-only beneficiaries. (See fig. 2.) Per-capita  expenditures by state per beneficiary ranged from $20,896 to $83,365.
section_title: Disability, Certain Conditions, Delivery/Childbirth, and Long-Term Care Residency Were Strongly Associated with Being a High- Expenditure Medicaid-Only Beneficiary
paragraphs: Key characteristics—such as having a disability, having certain  conditions, delivery/childbirth, and residing in a LTC facility—were  strongly associated with being a high-expenditure Medicaid-only  beneficiary. These key characteristics had consistently strong  associations with being a high-expenditure Medicaid-only beneficiary  even when the data were examined separately for each eligibility group.
We found that about two-thirds of the high-expenditure group was  comprised of beneficiaries who were eligible for Medicaid due to  disability. only beneficiary was 18.3 percent for disabled Medicaid-only  beneficiaries, which was higher than for any other eligibility group. (See  table 2.) In contrast, non-disabled children and adult beneficiaries each  had less than a 3 percent probability of being in the high-expenditure  group, but made up 16.1 and 15 percent, respectively, of the high- expenditure Medicaid-only beneficiaries.
section_title: High-Expenditure Beneficiaries Had High Hospital Expenditures and Significantly Different Spending Patterns Compared with All Other Medicaid-Only Beneficiaries
paragraphs: Overall, hospital services and LTSS represented the bulk of spending for  high expenditure Medicaid-only beneficiaries—almost 65 percent. In  contrast, payments to managed care organizations and premium  assistance constituted the largest proportion of expenditures for all other  Medicaid-only beneficiaries. In addition, when we examined Medicaid- only high-expenditure and other beneficiaries separately by eligibility  group, the differences in service use were generally consistent, but the  proportion of expenditures for the different services varied. Separately  examining high-expenditure Medicaid-only beneficiaries in LTC  institutions and beneficiaries with spending in the top 1 percent of  expenditures showed that these beneficiaries had the highest spending  for hospital services and LTSS.
subsections: section_title: Spending Patterns for All High-Expenditure Medicaid-Only Beneficiaries Compared with All Other Medicaid- Only Beneficiaries
paragraphs: For high-expenditure Medicaid-only beneficiaries as a whole, hospital  services comprised 30.6 percent, LTSS in non-institutional settings  comprised 24.3 percent, and LTSS in institutions comprised 9.7 percent  of their expenditures. Other expenditures were for drugs, managed care  and premium assistance, and non-hospital acute care. In contrast to high- expenditure Medicaid-only beneficiaries, the largest share of total  expenditures for all other Medicaid-only beneficiaries was for managed  care and premium assistance (57.2 percent), followed by non-hospital  acute care (16.6 percent), hospital services (11.9 percent), drugs   (9.7 percent) and LTSS in non-institutional settings (4.5 percent). (See   fig. 3.)
section_title: Spending Patterns for Eligibility Groups
paragraphs: The general pattern of greater hospital and LTSS service use by high  expenditure Medicaid-only beneficiaries compared with greater spending  on managed care and premium support by all other Medicaid-only  beneficiaries was consistent across eligibility groups. However, there  were some differences in expenditures by eligibility category among high- expenditure Medicaid-only beneficiaries and all other Medicaid-only  beneficiaries.
Beneficiary Profile  Beneficiary A was a 61-year-old disabled  African American male in 2009, with $73,539  in total Medicaid expenditures in that year. He  was not enrolled in managed care at any point  in the year. He was indicated to have  diabetes, a mental health condition, and  resided in a long-term care facility. His  expenditures were highly concentrated in  LTSS non-institutional care (81.9 percent).  About 10 percent of his expenditures were for  prescription drugs.
Disabled: For high expenditure Medicaid-only beneficiaries in the  disabled category, LTSS non-institutional (27.5 percent), hospital  (24.8 percent), and LTSS institutional services (11.9 percent)  represent almost two-thirds of their expenditures. (See fig. 4.) In  contrast, all other Medicaid-only beneficiaries in the disabled category  had over half of their expenditures for managed care and premium  assistance (52.1 percent), and had almost no LTSS institutional  expenditures (0.1 percent). Overall, 79.5 percent of expenditures for  Medicaid-only beneficiaries in the disabled group were for the high- expenditure beneficiaries.
Children: Medicaid-only children had almost no LTSS institutional  expenditures (less than 1 percent), whether in the high-expenditure group  or not. (See fig. 5.) High-expenditure Medicaid-only children had   70 percent of their expenditures for hospital (46.1 percent) and LTSS  non-institutional services (23.9 percent). For all other Medicaid-only  children, over 58 percent of their expenditures were for managed care  and premium assistance, followed by non-hospital acute (18.8 percent)  and hospital services (9.8 percent). About 22 percent of expenditures for  Medicaid-only children were for those in the high-expenditure group.
Adults: Similar to children, Medicaid-only adult beneficiaries had  almost no LTSS institutional expenditures (less than 1 percent of each  of their total expenditures) whether in the high-expenditure group or  not. (See fig. 6.) Hospital services represented over half the  expenditures for high-expenditure adult beneficiaries. The remaining  expenditures were almost equally distributed between non-hospital  acute care (15.2 percent), drugs (14.2 percent), and managed care  and premium support (14.1 percent). LTSS non-institutional services  were a relatively small part of their total expenditures (3.4 percent).  The greatest share of expenditures for all other Medicaid-only adult  beneficiaries were for managed care and premium support   (58.4 percent) followed by hospital (16.2 percent) and non-hospital  acute care (15.4 percent) services. About 22 percent of expenditures  for Medicaid-only adult beneficiaries were for the high-expenditure  group.
Aged: For the aged, both high-expenditure and all other Medicaid- only beneficiaries had LTC institutional expenditures, but the share of  those expenditures differed—28.2 percent compared with 4.2 percent.  Among the high-expenditure Medicaid-only aged beneficiaries,  hospital (28.6 percent), LTSS institutional (28.2 percent), and LTSS  non-institutional (15.4 percent) services represented over 70 percent  of total expenditures. (See fig.7.) For all other Medicaid-only aged  beneficiaries, managed care and premium support represented   48.3 percent of their expenditures, followed by drugs (18.2 percent),  hospital (13.7 percent), and non-hospital acute care (10.6 percent)  services. Over 73 percent of expenditures for the Medicaid-only aged  were for those in the high-expenditure group.
section_title: Spending Patterns for High-Expenditure Medicaid-Only Beneficiaries by LTC Facility Residence Status
paragraphs: LTSS spending differed for high expenditure Medicaid-only beneficiaries  living in LTC facilities and those living in the community. (See fig. 8.)
Among high-expenditure Medicaid-only beneficiaries residing in a LTC  facility, expenditures for LTSS in institutional settings (50 percent),  hospital services (27.2 percent), and LTSS in non-institutional settings  (7.3 percent) accounted for almost 85 percent of their total  expenditures.
Among high-expenditure beneficiaries not residing in a LTC facility,  expenditures for LTSS in non-institutional settings (28.4 percent) were  much greater, and expenditures for hospital services were similar  (31.4 percent)—and these two services represented almost   60 percent of their total expenditures. In addition, the percentage of  expenditures on drugs and non-hospital acute care was greater for  high expenditure Medicaid-only beneficiaries who were not living in  LTC facilities.
While hospital services were the largest expenditure category among  high-expenditure beneficiaries not residing in a LTC facility, per-capita  hospital expenditures for beneficiaries residing in a LTC facility were over  two times as much ($21,589 compared with $9,978). (See table 4.)
section_title: Spending Patterns for Beneficiaries in the Top 1 Percent of Expenditures
paragraphs: Beneficiaries with expenditures within the top 1 percent for their state— the top one-fifth of the high-expenditure group—had a greater share of  spending on hospital services, LTSS in non-institutional settings, and  LTSS in institutional settings compared with all of the high-expenditure  beneficiaries. Spending on these services comprised almost 80 percent of  the total expenditures for beneficiaries with expenditures within the top   1 percent for their state. (See app. IV for complete table of results, and  app. V for the demographic characteristics and spending for some  randomly selected beneficiaries in that group.)
section_title: Agency Comments
paragraphs: HHS reviewed a draft of this report and provided technical comments,  which we incorporated as appropriate.
We are sending copies of this report to the Secretary of HHS and to  interested congressional committees. In addition, the report is available at  no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7114 or YocomC@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made major contributions to  this report are listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This appendix describes the methodology for addressing three objectives  that examine: (1) states’ spending for high-expenditure beneficiaries, both  Medicaid-only and dual-eligible beneficiaries, compared with other  Medicaid beneficiaries; (2) the characteristics associated with high- expenditure Medicaid-only beneficiaries; and (3) the services that  contributed to high expenditures for Medicaid-only beneficiaries, and how  they compared with service usage by all other Medicaid-only  beneficiaries.
We analyzed data from the fiscal year 2009 Medicaid Statistical  Information System (MSIS) Annual Person Summary File. The summary  file consolidates individual beneficiaries’ claims for the fiscal year,  including data on their enrollment and information on their expenditures.  The summary file also includes beneficiary specific information regarding  enrollment categories, expenditures among six categories, dual eligibility  status, age, gender, payment arrangements—including fee-for-service  payments and capitated payments made to managed care  organizations—and indicators for five conditions and two service  categories.in the full claims files (for example, the summary file may not include   The summary file excludes some encounter details included  details regarding the care encounter, such as individual cost per  encounter; however, it does include monthly enrollment data).
We made several adjustments to the summary file in order to ensure that  the data were reliable for our purposes. Specifically we excluded:  records with unknown eligibility status (eliminated 5,166,648 records,  or 7.21 percent of total records); all records associated with duplicate MSIS IDs or Social Security  numbers within a state (eliminated 277,363 records, or 0.39 percent of  total records);  records with negative total spending amounts (eliminated 975,869  records, or 1.36 percent of total records), which may reflect  adjustments to claims made in the prior year;  records of individuals who were only enrolled in a stand-alone,  separate Children’s Health Insurance Program during the year  (eliminated 471,507 records, or 0.66 percent of total records);  records associated with a payment adjustment rather than an  individual (eliminated 202,456 records, or 0.28 percent of total  records);  records of individuals whose age appeared to conflict with their  identified eligibility group (eliminated 65,016 records, or 0.09 percent  of total records). For example, records of individuals in the child  eligibility group whose age was 85 and older;  records with unknown dual status (eliminated 698 records, or less  than 0.01 percent of total records); and,  records of individuals whose age was over 65, but indicated as having  delivered a child (eliminated 126 records, or less than 0.01 percent of  total records).
After making these adjustments, we were able to retain 64,457,343, or   90 percent, of the summary file’s 71,617,026 original records.
In order to determine variations in states’ spending for high-expenditure  Medicaid-only beneficiaries compared with other Medicaid beneficiaries,  we calculated the total number of Medicaid enrollees and total Medicaid  expenditures in each state. We then calculated these same statistics for  our subpopulations of Medicaid-only and dual-eligible beneficiaries based  on the “last-best” indicator of dual eligibility status available in the  summary file. Medicaid-only beneficiaries were eligible for Medicaid but  not Medicare. Dual-eligible beneficiaries were eligible for both Medicaid  and Medicare. Next, we determined the number of beneficiaries whose  total expenditures fell within the top 5 percent of total expenditures within  each state (we calculated these figures separately for Medicaid-only and  dual-eligible beneficiaries). We termed these 2,763,407 beneficiaries as  high-expenditure beneficiaries. We then separately calculated the total  expenditures for our high-expenditure beneficiaries and other  beneficiaries in each state for Medicaid-only and dual-eligible  beneficiaries, and summed this data at a national level.
To examine the characteristics associated with high-expenditure  Medicaid-only beneficiaries, we determined the percentage of high- expenditure Medicaid-only beneficiaries with key characteristics and used  logistic regression to examine the effect of having key beneficiary  characteristics on the probability of being a high-expenditure Medicaid- only beneficiary. The key beneficiary characteristics for which we  describe the high-expenditure beneficiary population and represented as  independent variables in our logistic regression model included: eligibility  group (disabled, child, adult, aged), age, gender, race/ethnicity,  geographic location, participation in capitated managed care, period of  enrollment in Medicaid (whether full year or partial year), as well as  whether the beneficiaries had any of five health conditions or had  received any of two services. Finally, our logistic regression models  included characteristics of states’ Medicaid programs, including their  spending on high-expenditure beneficiaries and long-term services and  supports (LTSS) in non-institutional settings (also called home and  community based services) and capitated managed care penetration  rates.beneficiary population, as well as the probabilities that demonstrate the  association of each characteristic with the likelihood of being in the high- expenditure group if all beneficiaries had a particular characteristic while  holding all other characteristics constant. Probabilities were calculated by  converting the odds that resulted from our logistic regression models. The  size of the independent effect of each enrollee characteristic is expressed  as a probability, with greater values reflecting a greater chance that the  characteristic increased the likelihood of being a high-expenditure  beneficiary. Medicaid-only beneficiaries had a hypothetical 5 percent  probability of being in the high-expenditure group by chance alone. All  probabilities were significant at the 0.05 level.
We report percentages that describe the high-expenditure  In order to determine which service categories contributed to  expenditures for high-expenditure Medicaid-only beneficiaries, we  examined how total expenditures for high-expenditure Medicaid-only  beneficiaries were distributed among the following six expenditure  categories: (1) hospital care, (2) non-hospital acute care, (3) drugs,   (4) managed care and premium assistance, (5) long-term services and  supports (LTSS) in non-institutional settings, and (6) long-term services  and supports in institutional settings. of spending among each of the six expenditure categories for  beneficiaries in our high-expenditure group compared to the distribution of  spending among each of the six expenditure categories for all other  Medicaid-only beneficiaries.
The summary file includes information on spending for 30 types of services. We  consolidated 28 of these types of services into the six categories we report.
We conducted this performance audit from September 2012 through  February 2014 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
section_title: Appendix II: Characteristics of High- Expenditure Medicaid-Only Beneficiaries
paragraphs: The table below demonstrates the characteristics of high-expenditure  Medicaid-only beneficiaries, and how expenditures were distributed within  each characteristic of interest. For each subpopulation, we also  calculated the per-capita expenditures in dollars. High-expenditure  Medicaid-only beneficiaries who resided in a long-term care (LTC) facility  during fiscal year 2009 had the highest per capita expenditures ($79,464).
section_title: Appendix III: Key Characteristics Associated with Estimated Probability of Being a High- Expenditure Beneficiary
paragraphs: Our logistic regression analysis found that key characteristics—such as  having a disability, having certain conditions, delivery/childbirth, and  residing in a LTC facility—were consistently strongly associated with  being a high-expenditure Medicaid-only beneficiary when looking at all  records, and when the data was examined separately for each eligibility  group.
section_title: Appendix IV: Characteristics of High- Expenditure Beneficiaries in the Top 1 Percent of Expenditures
paragraphs: The table below demonstrates the characteristics of Medicaid-only  beneficiaries with expenditures in the top 1 percent of total expenditures  (558,798 beneficiaries). For each subpopulation, we also calculated the  per capita expenditures in dollars. The top 1 percent of Medicaid-only  beneficiaries had per capita spending of $94,821, over 2.5 times that of  beneficiaries in the top 5 percent of total expenditures whose per capita  spending was $35,983 (top 1 percent included).
section_title: Appendix V: Selected Cases of Medicaid- Only Beneficiaries with Expenditures in the Top 1 Percent
paragraphs: We examined individual cases of a random group of Medicaid-only  beneficiaries in the top 1 percent of expenditures. Some of these  beneficiaries illustrated the trends identified in our analysis, but we also  found beneficiaries who demonstrated that there was diversity among the  high-expenditure group. Below are some examples of the characteristics  and spending patterns for individual beneficiaries. Overall, per capita  spending in the top 1 percent ranged from $19,068 to $43,728,641, with  an average expenditure of $94,821.
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Sheila K. Avruch, Assistant  Director; Giselle Hicks; Drew Long; Vikki Porter; Kristal Vardaman;   Eric Wedum; Jennifer Whitworth; and Carla Willis made key contributions  to this report.
section_title: Related GAO Products
paragraphs: Medicaid: States Reported Billions More in Supplemental Payments in  Recent Years. GAO-12-694. Washington, D.C.: July 20, 2012.
High Risk Series: An Update. GAO-13-283. Washington, D.C.:   February 14, 2013.
Medicaid: CMS Needs More Information on the Billions of Dollars Spent  on Supplemental Payments. GAO-08-614. Washington, D.C.: May 30,  2008.
Medicaid Demonstration Waivers: Recent HHS Approvals Continue to  Raise Cost and Oversight Concerns. GAO-08-87. Washington, D.C.:  January 31, 2008.
Medicaid Long-Term Care: Information Obtained by States about  Applicants’ Assets Varies and May Be Insufficient. GAO-12-749.  Washington, D.C.: July 26, 2012.
Medicaid: Data Sets Provide Inconsistent Picture of Expenditures.   GAO-13-47. Washington, D.C.: October 29, 2012.
Medicaid Home and Community-Based Waivers: CMS Should Encourage  States to Conduct Mortality Reviews for Individuals with Developmental  Disabilities. GAO-08-529. Washington, D.C.: May 23, 2008.
Medicaid: States’ Use of Managed Care. GAO-12-872R. Washington,  D.C.: August 17, 2012.