E-Book: Behavioral Health and Its Impact on Total Cost of Care: Bridging the Gap with Advanced Analytics

Tanya Travers

by Sheila Talton CEO of Gray Matter Analytics and Allen J. Karp Executive Vice President of Healthcare Management and Transformation at Horizon BCBSNJ

Healthcare spending in the U.S. reached $3.8 trillion in 2019 and is projected by the Centers for Medicare and Medicaid Services (CMS) to exceed $6 trillion by 2028. Driving these increases in healthcare costs are an aging population and an alarming number of Americans, particularly Medicare and Medicaid beneficiaries, suffering from one or more chronic physical conditions such as hypertension, hyperlipidemia (high cholesterol), lung disease, cancer, and diabetes.[1]

While estimates vary, the general consensus among experts is that chronic conditions are responsible for roughly 80% of U.S. healthcare spending. A Rand study concluded that while Americans with five or more chronic conditions comprise only 12% of the population, they account for 41% of total healthcare spending.[2]

But dig a little deeper and you find that another factor has a huge impact on how much is spent to manage and treat chronic conditions: behavioral health. Research by global consulting and actuarial firm Milliman Inc. into how people with behavioral health conditions contribute to total healthcare spending found:

• The most expensive 10% of the study population accounted for 70% of total healthcare costs

• 57% of this high-cost group also had diagnoses for behavioral health conditions and/or received behavioral-specific treatment

• This group of high-cost patients who have behavioral health issues comprised only 5.7% of the total study group, yet accounted for 44% of total healthcare costs

• Only 4.4% of total healthcare costs for the entire study population was for behavioral health treatment [3]

Clearly there’s a connection between behavioral health and overall spending on healthcare. Unfortunately, lack of quantitative data on behavioral healthcare makes it nearly impossible to close this care gap. There is an urgent need for providers and payors to apply advanced analytics to identify patients at risk upstream and intervene to prevent avoidable care utilization costs.



[1] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trendsand-Reports/NationalHealthExpendData/NHE-Fact-Sheet

[2] https://www.rand.org/content/dam/rand/pubs/tools/TL200/TL221/RAND_TL221.pdf

[3] https://www.milliman.com/-/media/milliman/pdfs/articles/milliman-high-cost-patientstudy-2020.ashx