Health data analytics for identifying wasteful services

October 1st, 2014

By Nancy Zoelzer

Zoelzer-NancyEliminating inefficient and unnecessary medical services improves overall healthcare efficiency while reducing costs. In 2009, the Institute of Medicine (IOM) identified $750 billion of wasted spending with unnecessary services accounting for $210 billion. The Congressional Budget Office has estimated that 30% of medical care in the United States is unnecessary care. Removing this waste and unnecessary care from the system will reduce costs, and is an opportunity to improve quality and patient safety.

Health data analytics for identifying wasteful services

There are a number of use cases for analyzing health claims data to find wasteful and likely to be wasteful services.

• Quantify necessary vs. wasteful services
• Identify opportunities for cost savings
• Provider profiling and pay for performance risk sharing reporting
• Employer group reporting to convey the value of health plan services provided to employers

In a wasteful services pilot study, Milliman looked at one health plan’s claims data for Medicare and commercial over a one-year period (November 2012 – October 2013). Observations from that study found that 21% of members had at least one wasteful service, 25% of all services provides were wasteful and 2.12% of the total claim cost allowed dollars were wasteful. Further data analysis found that 80% of the wasteful dollars came from only four measures:

• Stress cardiac imaging or advanced non-invasive imaging (58% – $8,568,369)
• Annual EKGs or cardiac screening (12% – $1,779,260)
• Lower back pain image (6% – $940,363)
• ED CT Scans for Dizziness (4% – $533,876)

To assist in the identification of wasteful services Milliman, along with VBID Health, has developed the MedInsight Waste Calculator. This analytical tool provides actionable data to support healthcare quality, efficiency, and effectiveness reporting. The calculator brings together clinical expertise and powerful data analytics – allowing healthcare managers to target and reduce wasteful spending.

To learn more about the MedInsight Waste Calculator, click here.

This article first appeared at Milliman MedInsight.

Electronic Health Records, Healthcare Intelligence , ,

Regulatory roundup

September 29th, 2014

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

HHS releases rate review annual report (September 2014)
The HHS has released a new report showing that in 2013 alone, consumers benefitted from $1 billion in savings from lower than originally requested health insurance rates. This includes $290 million in savings for individuals and families, and $703 million in savings for small employers. Combined with refunds consumers received because of the 80/20 rule, consumers saved more than $2.8 billion in 2012 and 2013.

To read the entire report, click here.

HHS issues guidance for same-sex couples under HIPAA
The Department of Health and Human Services (HHS) has released new guidance clarifying that same-sex couples who are legally married, even if they live in jurisdictions that don’t recognize the marriages, are afforded the same privacy protections under the Health Insurance Portability and Accountability Act (HIPAA) rules as other married couples. This guidance was developed to assist covered entities in understanding how the Windsor decision may affect certain of their privacy rule obligations.

For more information, click here.

Benefit news ,

Evaluating opportunity in the CMMI BPCI program: Comparison of PAC utilization to benchmarks

September 25th, 2014

By Javier Sanabria

The opportunity to reduce Medicare claims cost in the Center for Medicare and Medicaid Innovation’s Bundled Payment for Care Improvement Initiative (BPCI) is typically in the post-acute care (PAC) period. Analyzing the opportunity to reduce Medicare PAC spending requires providers to adopt a payor state of mind—payor tools and approaches will be very helpful. Benchmarking to best practices is one of those tools.

Milliman has developed nationwide average and well-managed (WM) benchmarks for PAC periods of 1-30, 31-60, and 61-90 days. Milliman’s Bruce Pyenson, Kate Fitch, Michele Barrios, and Tyler Engel provide perspective in this healthcare reform paper.

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Insurer considerations related to ACA auto-reenrollment

September 23rd, 2014

By Javier Sanabria

The federal health exchange’s automatic reenrollment process was intended to simplify renewing policies. However, auto enrollment could also introduce unpredictability for insurers. This New York Times article examines how these issues will impact the exchange and quotes Paul Houchens offering some perspective in regards to the financial implications.

Here’s an excerpt:

Automatically renewing marketplace plans will be a mistake for many people, but it is an especially risky one for the 85 percent of people who qualified for some sort of subsidy. The Obama administration has chosen not to recalculate the value of tax credits for people who don’t return to the site.

If your subsidy should go down – either because you have received a raise since last year or because the benchmark plan in the market became cheaper – you could end up owing the government a lot more money than you think, and you won’t find out until tax time.

…Not everyone has to worry about these invisible price changes, especially if incomes haven’t changed. But in markets where federal rules apply and the benchmark is going down a lot, it pays to return to the marketplace before renewing. Places where that will be an issue include parts of Georgia, Indiana and Ohio – where benchmark prices are declining by more than 15 percent. For people in those areas, returning to the marketplace could prevent a surprise tax bill.

“The structure makes for a very competitive environment among the insurance carriers,” said Paul Houchens, an actuary at Milliman, who estimates that, in some cases, what looks like a 5 percent premium rise could actually mean an increase of more than 30 percent. “But,” he said, “I can see how it would create more confusion for consumers.”

To understand how the reenrollment process will affect premiums and potentially create financial barriers to coverage in 2015, read this healthcare reform paper.

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Regulatory roundup

September 22nd, 2014

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

IRS releases draft instructions for ACA-related forms
The IRS has released draft instructions for two forms associated with individual obligations under the Patient Protection and Affordable Care Act (ACA):

Form 8962 draft instructions – Premium tax credit to be completed for health insurance coverage in a qualified health plan purchased through a Health Insurance Marketplace.
Form 8965 draft instructions – Health coverage exemptions to be completed by to report a coverage exemption granted by the marketplace or to claim a coverage exemption on a tax return.

IRS releases guidance expanding the permitted election rules for health coverage under section 125
The IRS released Notice 2014-55, which expands the permitted election rules for health coverage under a § 125 cafeteria plan and addresses two specific situations in which a § 125 cafeteria plan participant is permitted to revoke his or her election under the § 125 cafeteria plan during a period of coverage. The first situation involves a participating employee whose hours of service are reduced so that the employee is expected to average less than 30 hours of service per week but for whom the reduction does not affect the eligibility for coverage under the employer’s group health plan. The second situation involves an employee participating in an employer’s group health plan who would like to cease coverage under the group health plan and purchase coverage through a competitive marketplace established under § 1311 of the Patient Protection and Affordable Care Act, commonly referred to as an Exchange or Marketplace.

To read Notices 2014-55, click here.

IRS issues guidance providing the applicable dollar amount for determining the PCORI fee
The IRS issued Notice 2014-56, providing the applicable dollar amount that applies for determining the PCORI fee for policy years and plan years ending on or after October 1, 2014 and before September 30, 2015.

To read Notice 2014-56, click here.

IRS releases final rule on $500,000 deduction limitation for remuneration by insurance providers
The IRS has released a final rule on the application of the $500,000 deduction limitation for remuneration provided by certain health insurance providers under Section 162(m)(6).

The final rules will be published in the Federal Register on September 23, 2014.

For more information, click here.

Benefit news ,

Introduction to utilization health waste in the US healthcare marketplace

September 15th, 2014

By Michael Chernew

The American healthcare system is experiencing rapid change, largely driven by the recognition by both public and private payers that the trajectory of healthcare spending growth must be slowed. Despite the recent slowdown in healthcare spending growth, which many attribute to the recession, efforts to transform benefit design and payment systems are proceeding rapidly. For example, public payers are both cutting payment rates and experimenting with bundled and global payment models. Private payers are adopting similar payment models and developing more sophisticated benefit designs that encourage patients to seek care from low cost and maybe high value providers, and to avoid expensive and maybe low value services.

In this environment it is crucial to try to eliminate waste. The new payment models allow providers to share some of the savings if utilization of wasteful services can be curtailed. The challenge of course is identifying which services are wasteful. The fact that waste exists in the healthcare system is widely accepted. Berwick and Hackbarth (2012) estimate there is about 200 billion dollars in waste due to over treatment in the United States’ healthcare system, almost 10% of total spending.

But eliminating that waste may be a challenge. Like everything in healthcare, the waste is likely to vary across geography and more importantly, across providers. Identifying which providers to focus on is a challenge. More fundamentally, aggregate measures of waste are not necessarily helpful to providers. Detailed, operational measures that can be applied to provider systems are needed. Fortunately, there has been a recent increase in effort to identify wasteful services. A number of lists exist. Perhaps the most prominent of these efforts is the Choosing Wisely campaign, sponsored by the American Board of Internal Medicine Foundation, challenged specialty societies to identify wasteful practices. Other panels, such as the United States Preventive Services Task Force, have identified services that might be wasteful. Thus clinically meaningful knowledge of what is wasteful exists.

Translating the knowledge of what is wasteful into tools that can be applied to identify that waste at the system level is difficult. Claims data is not ideal in many cases to identify waste. Often the measures of waste depend on patient history. Clinical knowledge and IT expertise are needed. Academic efforts to quantify waste using subsets of available measures are just beginning. For example, using a limited number of services, Schwartz et al. (2014) find 0.6% – 2.7% of Medicare spending may be wasteful and between 25% – 40% of beneficiaries have received at least 1 low value. Moreover, they found that there was significant regional variation in spending on low value services, suggesting some providers are more prone to use low value services than others. Finally, different measures of low value services were correlated across regions suggesting that measures of low value services based on a small number of services may be indicative of broader patterns of waste.

Commercial tools to quantify practice patterns will be crucial to many cost containment activities. Data can help focus efforts on reducing waste and thereby improve value. Such tools could be used to support payment reform, provider education, tiered benefits or even value based insurance designs. One way or another spending growth must be contained. Our goal must be to do so in a way that improves value.

This article first appeared at Milliman MedInsight.

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Utilization , ,

Regulatory roundup

September 15th, 2014

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

CMS will not suspend low-ranking Medicare Advantage Part D plans from 2016 program
The Centers for Medicare and Medicaid Services (CMS) recently released a memorandum indicating that it has decided not to terminate low-performing Medicare plans in 2015. Although CMS is authorized to end contracts for plans that fail to receive at least three out of five quality stars for three consecutive years, the agency won’t do so at least until the end of 2015.

To read the entire memo, click here.

Benefit news ,

The advantage of a top-down cost-allocation approach in developing markets

September 10th, 2014

By Javier Sanabria

A top-down cost-allocation model averages out all of a hospital’s expenses based on its activities. This type of model provides a more accurate reflection of a hospital’s expenses when defining package rates. In this short film, Lalit Baveja provides a primer on top-down cost-allocation and discusses a Milliman project for the state government of Mandholi, India, that used the methodology.

Read more about how Milliman consultants assisted India’s Meghalaya Health Insurance Scheme (MHIS) set up a top-down cost-allocation model here.

To read the video transcript, click here.

Cost, Universal coverage , ,

Data confidence: The MedInsight® differentiator

September 4th, 2014

By Javier Sanabria

Milliman’s MedInsight Data Confidence Model offers advanced business intelligence methodologies to help healthcare entities benchmark healthcare costs and quality. This short video explains how the model produces high quality data integration and accuracy.

To learn more about MedInsight, click here.

Healthcare Intelligence ,

Regulatory roundup

September 2nd, 2014

By Employee Benefit Research Group

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

IRS issues draft forms, instructions for ACA employer mandate
The Internal Revenue Service (IRS) released draft forms and instructions for employers on how to comply with the reporting requirements under the Patient Protection and Affordable Care Act’s (ACA) employer mandate. The IRS released drafts of the following forms and instructions:

Draft Form 1095-A, Health Insurance Marketplace Statement
Draft Form 1095-B, Health Coverage
Draft Form 1095-C, Employer Provided Health Insurance Offer and Coverage

Instructions for Form 1095-A, Health Insurance Marketplace Statement
Instructions for Form 1094-B and 1095-B
Instructions for Form 1094-C and 1095-C

IRS issues notice and request for comments on ACA employer mandate draft forms
The IRS filed a notice and request for comments on Forms 1095-A, Forms 1094-A and-B, and Forms 1095-A and B. Comments are due 60 days after publication in the Federal Register. Publication is scheduled for September 2, 2014.

IRS updates website concerning unreasonable assumptions in actuarial certifications
The IRS has updated its webpage pertaining to unreasonable assumptions in actuarial certifications for post-retirement medical benefits. For more information, click here.

Benefit news ,