On the surface, the recent statement from the Center for Medicare and Medicaid Services (CMS) concerning the prevention of $210 million in fraud over the last two years (1) appears to be a good thing. Yet, aside from giving the government a pat on the back for its auditing skills, the news is overshadowed by the National Institute of Health Care Management Foundation’s (NIHCMF) recent study. The study confirmed a direct correlation of member premiums to the overall cost of care; meaning, as the costs of care have increased, premiums have, and will continue to, also increase. The Foundation’s study identified the key drivers of cost to be: medical spending, prescription drugs, and provider consolidation (5). Until controlled, the drivers will continue to cause premium hikes.
The NIHMCF study was further supported by another study conducted by the Health Care Cost Institute (HCCI). The Institute found that more recently, although still of concern, it was not so much utilization which is driving up spending, but more so increases in provider pricing (6) – so even if utilization remained flat, medical spending would still rise.
Together, these studies indicate that although fraud and utilization may be an additive to medical spending, they should not be seen as separate focuses in efforts to decrease the nation’s healthcare costs. There should be renewed attention on the importance of continued, holistic use of business intelligence to combat cost.
Bridging Analytics Analysis to Drive Down Medical Spending
Most insurers appear to have gained a handle on reporting and analysis for fraud detection and prevention and general utilization. However, as recent reports indicate, this is not enough. Insurers should move toward holistic analysis of their healthcare data to ensure maximum cost containment. This means starting data analysis with provider contracting, carrying it through claims reimbursement, and then analyzing the cross-functional impact(s). The only way to accomplish this is through a unified, coordinated effort by the insurer.
By coordinating intelligence gathering and analysis efforts within four key areas – Provider Contracting, Case Management and Member Wellness, Claims Utilization, and Fraud and Abuse – insurers will be able to not only better understand their populations, but identify areas requiring cost containment improvement across the board:
- Provider Contract Analysis: Insurers should look to analyze areas like pricing agreements, specialized services, bundling of services, and quality of service provided. Outputs of this type of analysis may lead to better customer communications, improved pricing agreements, and business process or system changes to decrease service payments.
- Case Management and Member Wellness: Insurers can go beyond the question of, “How healthy is our enrollee base and what steps should occur to improve their health?” by looking for additive intelligence around the quality of care provided to their members. Analysis of data within this spectrum will help support initiatives with the potential to lessen the cost of care, via decreased readmissions and utilization, while enabling healthier populations and supporting contract negotiations.
- Claims Utilization: Working hand in hand with provider contract analysis, reviewing service utilization offers insurers valuable information that can be used during provider re-contracting.
- Fraud and Abuse: As noted by CMS’ recent example, insurers have gained strides in this area. Continued systematic review of healthcare data for preventive and post analysis will help keep fraudulent costs to a minimum.
The key requirement in moving forward with holistic analytics is the acknowledgement that it is not an individual departmental effort. For meaningful analysis and continued changes in driving down healthcare costs, business departments along with their IT counterparts must all work together. One way to accomplish this is by the department-by-department designation and intra-organizational networking of analytics/business intelligence ‘champions’. Once these individuals are identified and connected, enterprise-wide connectivity of these broad analytic efforts can come into greater, more meaningful synchrony. Regardless of the approach taken, healthcare insurers must take action – those that do not will continue to experience an unchecked rise in costs.