It’s an undeniable truth: the United States spends approximately 18 percent of its Gross Domestic Product (GDP) on healthcare each year-more than any other developed country in the world1. Not only is this model economically unsustainable, but this excessive cash outlay has done little to elevate the overall quality of care.
For most plans, the bulk of this budgetary bleeding occurs in six key areas: population management, utilization management, service delivery planning, service system design, contractual strategy and benefit/medical management strategy misalignment. The good news is, by making better use of plan, provider and patient data, healthcare organizations have the opportunity to reduce excessive spend while improving outcomes for the people they serve.
And, here is how.
Although the overwhelming majority of patients in the United States are healthy and incur very little expense, it’s the five-to-fifteen percent of the population with multiple medical conditions that account for a disproportionate amount of spend. This is particularly true when behavioral health issues, or social determinants of health-like poverty or an abusive environment-are involved.
With the right data and analytic tools in place, plan leaders can better identify who these high-risk patients are, the type of coaching or assistance they need, as well as the best method of outreach. Just as important, they can identify which patients are most likely to respond to this outreach, so they can focus their resources where they’ll make the greatest impact.
Delivering the right care to the right patient at the right time is the hallmark of healthcare. Part of that promise is ensuring that patients aren’t left waiting for the diagnostics or care they need. The other is making sure that they’re not receiving unnecessary tests or procedures, either.
That’s difficult to accomplish, on a timely basis, with manual utilization management.
If there’s not an automated, data-driven utilization review in place to validate whether or not the request meets medical necessity standards, there will be incidents of unnecessary care. Not only could this be injurious to the patient and increase costs to the health plan, but ultimately increase premiums for anyone on the plan.
Service Delivery Planning
Identifying what hospitals, medical groups and surgical care centers should be in an insurer’s network is critical to delivering the high-quality services that fit the needs of the plan population, and do it at the lowest possible cost.
However, many plans don’t have a good way to effectively monitor provider behaviors and performance on an ongoing basis. So, even though they may have negotiated reduced rates, they could be paying more for misdiagnosis, repeat hospital stays or other issues that not only impact cost, but quality of care. Ongoing data analysis of plan providers enables plan leaders to stay on top of their networks, so they can correct any performance issues before they impact quality and cost.
Service System Design
Even if plans have done their due diligence on provider groups, they need a way to identify any “bad actors” within those groups—the one cardiologist, orthopedic surgeon or other physician with poor utilization patterns or consistently low patient ratings.
Without a way to capture and track physician data, that outlier could slip through the cracks.
Health plans should be developing a dashboard at an individual physician level. Then, if there’s one physician who’s not measuring up, plan management can have an objective, fact-based discussion with the practice’s leadership to help with performance management, or eliminate that one practitioner from the network-without alienating the entire group.
Determining the best contractual strategies for each medical group or facility is a complex process-and still a highly manual one for many plans. Without automation and analytic tools in place, it’s difficult to identify where a different contract strategy could reduce costs.
A per diem approach may save money for some facilities, whereas, based on the relationship and history, a performance-based approach may be the way to go.
Ongoing data collection and analysis of each network provider enable plans to put the best contract model in place for each group or facility, as well as monitor contract performance to create an environment of continual optimization.
Aligning Benefits with Medical Management Strategy
Creating a strategic provider network is one thing. To be effective, and control costs, health plans have to motivate patients to actually use the providers in that network.
Health plans have to think about how their benefit array aligns with their other strategies. For example, if they don’t want to incur costly, out-of-network expenses, maybe they make the in-network co-pay $10 and the out-of-network co-pay $50.
Plans should also use their data to analyze where they are spending the most money.
If it’s on physical therapy (PT), the plan could restructure its benefits to reduce the number of PT visits allowed. If the cost overrun is on durable medical equipment, perhaps they put a spend cap on certain items, if they can do so and still be competitive. The key is having the insight to know where the overruns are happening, then put a strategy in place to mitigate the issue.
When it comes to reducing excessive healthcare spend, one thing is clear: what you don’t know can hurt you.
By effectively utilizing the data you have to track provider behaviors, referral patterns, where cost overruns are coming from, and gain a deeper understanding of the patients you serve, your plan can provide better program management and ultimately, lower the cost of care.
To learn more about how EXL can help your organization effectively use and analyze the data you have to reduce costs and improve outcomes, contact us.
Dr. Victor Collymore,
Chief Medical Officer