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The Paradox of Higher Charges for Lower-Risk Inpatient Admissions: When Healthier Patients Cost More

Risk stratification is essential to achieving the Triple Aim of better health, better care, and lower costs. Although risk tiers based on chronic disease diagnoses and recent healthcare utilization were predictive of healthcare utilization and charges in a managed population, their correlation with specific high-cost outcomes was unknown. More detailed analyses were performed to confirm that admissions for higher-risk patients were more expensive. However, these analyses found that charges for admissions of high-risk patients were actually not more expensive but 33% less expensive. The billing categories of implants, surgery, and supplies accounted for 93% of this difference. These findings may reflect that high-risk patients are less often appropriate candidates for elective surgery. An understanding of this difference, especially if validated by claims data and replicated in other populations, may lead to important insights into using risk stratification for predicting health services utilization in managed care populations.