Understanding the Patient

Utilization of Medicare Services

Low Consumption Study Cover

Low Consumption and Higher Cost:
Consumption Clusters in a Medicare Fee-for-Service Population

A study by the National Minority Quality Forum analyzes the utilization of benefits and services by all Medicare beneficiaries over a six-year period. Study authors used the Medicare Beneficiary Annual Summary Files from 2000 to 2005 to glean insights on the consumption patterns of all Medicare benefits and services.

Results from this analysis show that Medicare beneficiaries who consume the fewest benefits and services are more likely to have health complications and cost the program significantly more in the short term, as evidenced by the level of reimbursement associated with their care.


Key Findings:

  • Medicare beneficiaries may be clustered into five consumption groups (crisis consumers, heavy consumers, moderate consumers, light consumers and low consumers) based on how much Medicare reimbursed for services provided to beneficiaries in any year. These are dynamic clusters whose consumption rates vary significantly from one year to the next.
  • The two most-costly clusters are crisis consumers and heavy consumers – representing only 11% of Medicare beneficiaries, but 65% of all costs.
  • Each year, movement from the less-costly clusters (moderate consumers, light consumers, and low consumers) to the two most-costly clusters (crisis consumers and heavy consumers) drives cost increases in Medicare.
  • The study shows a potential correlation between the low Medicare reimbursement rate for the care of chronic diseases and future high costs to the health care system.
  • Low-consumer diabetics are likely to cost Medicare significantly more in the near term.

Click here to download full text.

This study builds a foundation for subsequent analyses that will follow a cohort of Medicare beneficiaries with diabetes and examine the economic burden of underutilized benefits and services in order to make cost-saving recommendations for the Medicare program.

This is an installment within a series of articles that examine the utilization of medicare services. To receive an alert when the next study becomes available, please contact us here.


Did You Know?

Diabetes affects older adults more frequently — among U.S. residents ages 65 years and older approximately 10.9 million or 26.9 percent reported having diabetes in 2010, according to the Centers for Disease Control.2