Category Archives: Electronic Health Records

Five healthcare analytic trends

Naugle-AndrewIt goes without question that the U.S. health insurance industry is in a state of flux. Americans are buying individual products through health insurance marketplaces, new insurance carriers have entered the market, and Medicaid has been expanded in 29 states and the District of Columbia. These market changes, in addition to other reform provisions already introduced and others just starting to take hold have subjected the market to an unprecedented level of change.

It is said that insurers like risk but hate uncertainty. What is for certain today is that the old strategies of accepting good risks and repelling poor risks are no longer a recipe for success. To thrive in this new environment, health insurers must make smart decisions using data to keep ahead of the competition.

Within that context, here are five areas where Milliman clients are using data and analytics in innovative ways to bring some order to the chaos:

1. Provider network optimization. Despite bending the cost curve, one of the great lessons of the health maintenance organization (HMO) era was that consumers value choice. For years, preferred provider organizations (PPOs) competed on network size; employers cared more about network disruption affecting their employees than the cost/volume trade-off. In the face of cost pressures, employers and consumers are now starting to accept that smaller networks may be worth the disruption. To meet this need, plans are deploying sophisticated modeling that combines traditional network access and adequacy measures with reimbursement and quality analytics to develop new “smart” networks.

2. Value-based incentive programs. It’s widely accepted that fee-for-service (FFS) reimbursement rewards volume over value. As a replacement for FFS, many payers are promoting value-based incentive strategies that shift reimbursement from fee schedules to bonus pools that pay additional incentives when quality and/or cost targets are met. Analytics are key to selecting measures, setting thresholds, and assessing provider performance. They also aid providers trying to operate under these new risk arrangements, identifying gaps in care, and benchmarking peer performance.

3. New trend dynamics. While predicting the actual numbers requires the proverbial “crystal ball,” the health insurance industry has a reasonably mature understanding of the drivers of healthcare cost trend. But things are getting more complicated as physician practice patterns change, populations age but live longer, millions of new consumers flood into the individual and Medicaid markets, and burgeoning innovation (e.g., telemedicine/telehealth, wearables, smartphones, home visits, retail clinics, etc.) disrupts how and where care is provided. Analytics are key to understanding the “trends in trend” in this new world.

4. Transparency. The healthcare market has earned a reputation for opaqueness. Consumers are more likely to rely on word-of-mouth when selecting a physician, the price of services depends on who’s paying and has little relationship with the actual cost of services, and information on outcomes and quality is kept locked away from prying eyes. Not so in a post-reform world. Consumers can now shop on the basis of price and quality. They can go online and find out how much an appendectomy costs at hospital A or B and which one has a higher success rate. Health plan quality ratings are there for all to see when selecting an exchange plan. Big data and analytics make all of this possible.

5. Care management efficiency. Gone are the days when health insurers had unlimited funding for care management programs. Today, plans must make judicious use of limited administrative dollars to meet medical loss ratio minimums while still managing complex and catastrophic cases. Analytics help plans optimize their care management programs, prospectively identifying those members most likely to benefit from care management, and then enrolling them in the right program.

With many of their traditional performance management tools neutralized by reform, health insurers have had to get smart about how they leverage data and information. They use analytics to design benefit plans, develop marketing strategies and consumer segmentations, select network providers, develop reimbursement strategies, improve clinical quality, and optimize their remaining cost and quality management tools. In today’s market, how a plan leverages analytics, turning data into actionable information, will make the difference between survival and demise.

This article first appeared at Milliman MedInsight.

Top 10 worldwide Milliman publications of 2014

In 2014, Milliman published a range of articles and videos, covering issues including retirement ideas for Millennials, the pros and cons of catastrophe models, the value of enterprise risk management (ERM) programs, and the impact of the Patient Protection and Affordable Care Act (ACA) on financial statements. We also published on challenges related to healthcare costs and insurance and risk management issues—and about real insurance for fantasy football and insurance for ride sharing. To view this year’s 10 most viewed articles and reports, click here.

Health data analytics for identifying wasteful services

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 U.S. Congressional Budget Office (CBO) 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
• Use provider profiling and pay for performance risk sharing reporting
• Use employer group reporting to convey the value of health plan services provided to employers

In a pilot study of wasteful services, Milliman looked at one health plan’s claims data for Medicare and commercial over a one-year period (November 2012 to 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 claims 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 noninvasive 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.

Analytic basics: Completeness and outlier episode flags

Bates-DougAnalysts working with episode of care groupers for the first time often have questions about how to use the various value-added flags assigned to episodes. Episode of care groupers link together all of the claims that pertain to the treatment of a particular condition for a particular patient, to create a powerful unit of analysis. For example, a patient with a condition such as diabetes may receive multiple types of services from multiple providers and provider types for the treatment of their diabetes. An episode of care grouper will combine all of the individual claims from the different providers so that the full cost of treatment can be assessed.

Two of the value-added flags commonly assigned to episodes include completeness flags and outlier flags. Both of these flags enable analysts to filter out, or include, types of episodes to optimize their reporting. How to apply filters using these flags depends on the analysis being performed. A brief summary of these flags, and their use, is described below.

Completeness flags
Many episodes in a data set will not be complete, meaning there are still outstanding claims related to those episodes that were not available when the data were grouped. Typically, episodes that start toward the end of your grouping period are more likely to be incomplete. For instance, if you are grouping data incurred from January 2011 through December 2013 and an episode begins on December 19, 2013, there is a lower probability that all claims for this episode will be available in the data than if the episode had started in January 2013.

Episode groupers use different logic when assessing completeness for acute and chronic conditions. For acute conditions, most groupers determine that an episode is complete if there are no incurred professional claims for that condition for a predefined number of days. Chronic conditions such as diabetes are never cured, so technically those episodes never end, but in order to support analyses, chronic conditions are often divided into annual periods and may be defined as complete when a full year of data is available for the members with those episodes.

When comparing costs to benchmarks, incomplete episodes should be excluded because incomplete episodes are excluded from cost benchmarks.

If you are comparing the average length (days) or average cost of episodes across various populations or provider groups, then you should also exclude incomplete episodes. It is impossible to accurately assess average costs per episode if every claim for every episode is not included.

If the purpose of your analysis is to evaluate the prevalence of episode conditions, then include all episodes (complete and incomplete) in your reports.

Table 1 displays the distribution of complete and incomplete diabetes episodes from a sample data set. The average cost for incomplete episodes is usually lower than the average cost for complete episodes.

Table 1

Outlier flags
Episodes that have atypically higher costs or atypically lower costs compared with other episodes within the same class are flagged as high or low outliers. There are multiple methodologies for defining outlier episodes, but commonly the flags are based on statistical variance (i.e., a number of standard deviations from the mean). In and of themselves, outlier flags are not a measure of efficiency or quality, but the magnitude of the variance in their cost indicates there is something atypical about these cases.

When comparing with benchmarks, outliers should be excluded because most benchmarks will exclude outliers for consistency.

When comparing average costs across populations or provider groups, many analysts may choose to exclude all outliers, because a few outliers for a given group may skew their results. That being said, it is also important to assess if any given population of patients has significantly more episodes flagged as high outliers compared with others. A higher percentage of high outliers might warrant the need for further investigation.

For many episode classes, all that is needed to start an episode is a professional encounter with a primary diagnosis relevant to that episode class. In some cases, very short episodes may represent visits to rule out a specific diagnosis or other situations that don’t really represent full treatment for a condition. Excluding low outliers can help remove those types of episodes from your analysis.

Table 2 displays a sample of diabetes episodes by outlier status.

Table 2

Episode completeness and outlier flags can, of course, be used together. For most comparative analyses (to benchmarks or across populations), only complete non-outlier episodes are included. Table 3 displays the distribution of diabetes episodes when both flags are used as report dimensions.

Note that an analysis based solely on complete non-outlier episodes from these sample data would reduce the number of episodes from 57,193 to 34,250, removing 40% of the episodes from the analysis. When analyzing episode classes with a limited number of episodes, applying these filters may reduce your sample size to volumes that are too small to produce statistically significant results, so it is important to assess how many episodes are in your sample before you begin.

Table 3

Episodes of care provide a useful unit of analysis for evaluating healthcare utilization and cost. The episode completeness and outlier flags allow users to include, or exclude, types of episodes to further refine their analysis.

This article first appeared at Milliman MedInsight.

Medicaid population management

Moyer-RichardIn previous blogs, we’ve discussed population management concepts and given specific examples of pediatrics, accountable care organizations (ACOs), and clinical populations. In this blog we turn to the Medicaid population. Medicaid has unique characteristics because of the nature of the financing and because of the social demographics of the population served. This population is going through big changes because of Medicaid expansion and the advent of programs that may resemble some of the characteristics of Medicaid, such as subsidized rates through the federal and state exchanges.

A key to analyzing this population is to create homogeneous sub-populations. There are several ways to define the subpopulations:

• Program: Children’s Health Insurance Program (CHIP), Temporary Assistance for Needy Families (TANF)/Aid to Families with Dependent Children (AFDC), Aged, Blind, and Disabled (ABD) Medicaid (duals), waiver programs.
• Type of delivery model: Managed care and fee-for-service.
• County: Rates are typically defined at the county level for managed care and care delivery is organized around counties.
• Special populations: Pregnant women, children, mentally ill.

There are specific issues that drive the metrics and analysis for Medicaid recipients, including:

• High levels of emergency room (ER) use: This population has much higher ER usage rates, which often reflect access and sociodemographic issues.
• Maternity: This population has higher rates of maternity and has wider variability in maternity outcomes.
• Behavioral health: Managing behavioral health is a more important component of care.
• Community resource access: Population wellness is much more dependent on additional community resources such as case workers, food banks, and social workers.

It’s important to focus on the key issues that drive the results for the population and to create metrics that reflect these key issues and characteristics. Below are some sample metrics that should be tracked and improvement goals developed.

This article first appeared at Milliman MedInsight.

What data is needed to support population health management?

Zoelzer-NancyIn our series of blogs on the topic of population health management, we have discussed how to define populations in “Analytics for population health management,” and we have looked at the types of analytic tools available for analysis of populations in “Identifying appropriate metrics for population management.” In this blog, we will focus on types of data, both traditional and nontraditional, that can assist in the performance of a robust population health analysis.

Many healthcare organizations have access to a wealth of data. However, this data has not historically been brought together in an organized manner. An emerging concept in data management is “big data,” an approach where all data relevant to an individual’s healthcare—including those data that may exist outside an individual organization’s walls—are gathered and linked for analysis.

To effectively gather and link these data for population health management, the enterprise data warehouse needs to be flexible enough to accept data from traditional and nontraditional sources. Data sources that can be accessed and linked for robust population health analysis include:

• Insurance administration data (e.g., claims, pharmacy, enrollment data): Insurance administration data is by far the most commonly used data for analysis.
• Clinical data (e.g., electronic medical records, lab results, registries): Clinical data increases the richness of data available about an individual and a population. This type of data is starting to make its way into the enterprise data warehouse.
• Medical management data (e.g., health risk assessment, authorization, disease/case management data): Most health organizations have medical management data readily available, but most have not yet brought this data into an enterprise database.
• Provider administrative data (e.g., physician practice management, hospital billing, admissions discharge, and transfers data): Provider administrative data is generally available in a more timely manner, allowing for data analysis that is nearer to real-time.
• Public data (e.g., state discharge data sets, immunization registries): Public data has not typically been accessible in an enterprise data warehouse, yet it can provide additional insight for population health analysis.

Why incorporate all these data?
Access to a wide variety of data allows for broader population health analysis, which can lead to new and earlier insights to help identify improvements, efficiencies, and effectiveness of the healthcare delivery system. A population health management strategy with a robust data warehouse can help answer the question, “Who will benefit from which programs?”

For more information download the paper entitled “Population health management concepts.”

This article first appeared at Milliman MedInsight.

Identifying appropriate metrics for population management

Zoelzer-NancyFor many reasons, including the advent of the Patient Protection and Affordable Care Act (ACA), population health management is gaining increased attention from healthcare organizations. A population health initiative has the promise to make care proactive, better coordinated, and more customized for the population. A previous MedInsight blog entitled “Analytics for population health management” outlined how populations are defined and also presented a sampling of metrics for measuring performance. In this blog article we dive deeper into the process of identifying the appropriate metrics for population health management.

One size does not fit all for population-based analytic methodologies. One reason to look at populations from a variety of perspectives is to analyze trend. What is driving trend? Is it something clinical? Is it geographic disparity? Or network variations? Differing metrics are needed in order to effectively analyze a population. For example, looking at compliance with recommended HbA1c lab testing is appropriate when looking at a population of diabetics, but the same measure is far less meaningful when looking at a population of cancer patients.

In identifying the appropriate analytic metrics one should consider the population to be analyzed, as well as the focus of the population analysis initiative. There are several categories of analytic tools for population health management, including measures, service categorization, clinical categorization, and risk adjustment.

Measures include:

• Primary prevention measures: Disease avoidance, immunization rates, and wellness program participants
• Secondary prevention measures: Early detection and treatment of disease, colon cancer screening, and breast cancer screening
• Tertiary prevention measures: Reducing the impact of disease and aspirin use in congestive heart failure (CHF) patients
• Quaternary prevention measures: Avoidance of unnecessary or unsafe interventions and avoidance of imaging for low back pain

Service categorization is a methodology used to analyze resource utilization and cost by service types. Categorization enables the creation of a cost model for population trending, benchmarking, and profiling. Milliman’s Health Cost GuidelinesTM is used to organize healthcare claims into service categories.

Clinical categorization, such as Milliman’s Chronic Condition Hierarchical Groups, helps organize populations by disease cohorts.

Risk adjustment is a methodology used to assess the overall health of a population or subpopulation. Risk adjustment enables comparison across populations by adjusting the health risk of the population. Additionally, individuals within a population can be stratified by risk. There are many risk adjustment methodologies available in the industry, including the Milliman Advanced Risk Adjuster (MARA).

Other analytic tools include resource efficiency tools (e.g., Dartmouth Atlas, NYU Avoidable ED Visits, and Prometheus), care management tools, and Milliman Global RVUs (a method to measure utilization across all categories of care).

For a robust population analysis, benchmarks are needed in addition to the analytic tools. Benchmarks enable the comparison of actual population cost and utilization with a benchmark.

Watch for upcoming blog posts that dive into the development of a population analysis for a specific population. To review an earlier post describing pediatric population analysis, click here.

Download Milliman’s white paper entitled “Population health management concepts” here.

This article first appeared at Milliman MedInsight.

Milliman launches next generation Hospital Performance Index

Milliman has announced the launch of a next generation Hospital Performance Index software, a benchmarking tool for payors and providers that uses statistical methods to identify opportunities for increased efficiency in patient populations. The new product significantly enhances the granularity of hospital benchmarking available to payors and providers and fits the needs of accountable care organizations (ACOs) by identifying instances where care management may yield improved quality and increased efficiency.

“The move toward accountable care spurred by the Affordable Care Act requires payors and providers to constantly benchmark their populations in search of opportunities for increased efficiency,” said John Cookson, Milliman principal. “The enhanced Hospital Performance Index, which builds on technology with a 20-year track record, is optimized for today’s market and allows national, regional, and local benchmarking. This benchmarking can be performed using multiple variables, including diagnosis-related groups (DRGs), major disease category, readmissions, and avoidable inpatient days.”

The enhanced Hospital Performance Index includes an updated user interface that brings these benchmarks to payors and providers in an intuitive fashion. The benchmarks can be applied against Medicare, Medicaid, and commercial populations and allow for comparison with every hospital in the country. The updated tool can help payors and providers prioritize their care management efforts, highlight instances where better management could result in cost reduction, and aid in contract negotiations and in the creation of accountable care partnerships. For more information, click here.

ACO: Care coordination measurement

Ward-BarbaraAccountable care organizations (ACOs) are evolving in their ability to measure the effectiveness of their efforts. This blog focuses on ACO analytics. It also reviews some insights from Modern Healthcare’s 3rd Annual ACO Survey and MedInsight analytic support of ACO effectiveness in care coordination.

Discussing results from Modern Healthcare’s ACO survey, the article titled “Still seeking best practices: Annual ACO survey shows care coordination remains a work in progress for many providers,” (subscription required) highlights both the progress and challenges facing ACOs at all levels of the ACO payment model, from providers to patients. The survey captured responses from over 35 ACOs across a variety of organizations including ACOs with and without hospitals, ranging in size from those that manage care for 553,000 covered lives to those with 5,600 covered lives. As noted in the article, as accountable care continues to expand and evolve, organizations seeking to embrace the payment model are experimenting with how best to measure the impact of critical strategies to improve patient care, including better care coordination.

To gain a better understanding of the care coordination measurements currently in place, Modern Healthcare added two new care coordination questions to this survey for the first time this year. They were: 1) Is care coordination measured? and 2) If so, name the ACO’s top five measures. The responses varied but it is clear that effective care coordination measures are still evolving.

While there are limited consistent measures across the spectrum of care coordination, there was consistent feedback from the respondents about what is currently used. Measures mentioned in the article and available in Milliman tools include:

• Readmission rates
• High-cost members
• Emergency department (ED) frequent visits
• Medication management
• Where patients received care, such as the emergency room, including the level of care
• Health promotion and education to monitor care coordination
• In-network coordination of care
• Patient engagement in care management

The patient engagement capabilities are available through the use of Milliman’s Enrollment Assessment and Survey tool. This is a web-based tool that includes three online survey tools that measure the level of engagement patients have in their own care, as well as the ability to track individuals and the related outreach made to members on a periodic basis, including action plans.

Below is an example of population level reporting for “in-network vs. out-of-network” emergency department (ED) visits. MedInsight uses the claim detail and the Milliman Heath Cost Guidelines analytic engine to efficiently bucket and identify the ED visits. Using this same engine and the MedInsight Analytic Cube, Figure 1 below delivers a report that provides a wealth of information about ED visits for a given population. In this example, the utilization of ED visits are split between in- and out-of-network visits, including the distribution of visits across each day of the week. Additionally, MedInsight provides additional metrics that provide further insight into the relationship between ED visits and inpatient admissions. Subsequent analysis may include:

• The review of admit hour to evaluate whether these visits were after hours or during normal office hours, highlighting education opportunities and access issues.
• Facility location of these ED visits.
• Evaluate the distribution of visits across the primary care physicians (PCPs) as well as members, to identify frequent visitors to the ED or specific patterns.
• Compare ED utilization to benchmarks: The percentage of admits from ED visits nationally is approximately 13%, according to CDC Fast Stats. More specific benchmarks, integrated into MedInsight reporting and analytics, are the Milliman Benchmarks, as shown in Figure 2 below.

Figure 1: ED Cases = In and out of ED, ED Visits Admitted = ED visit turned into IP Admit, ED Patient Visits = Total of ED Cases and ED Visits Admitted

Care Coordination

Figure 2: Compares the ED Visits to 50% Degree of Health Care Management and Well Managed degree of health care management (degree of health care management is a measure of the level of management processes in place, e.g., case management, UM, disease management)

Care Coordination 2

While real-time data is important for immediate care transition management, retrospective measures are also critical to evaluating success. MedInsight’s strength is to efficiently report cost and utilization detail at a population level as well as the ability to report on detailed member data. This provides access to several levels of analysis to more effectively manage and measure care coordination trends and analytics.

This article first appeared at Milliman MedInsight.

Managing administrative expenses with operational benchmarking

Zoelzer-NancyFor all healthcare payors, managing administrative costs is increasingly important under the medical loss ratio requirements of the Patient Protection and Affordable Care Act (ACA). Under the ACA, health insurers must utilize 80% of premiums on benefits in the individual and small group markets and 85% in the large group market. Payors need to efficiently and effectively manage these administrative costs in order to maximize the limited funds available for these operational activities.

For a healthcare payor organization, administrative expenses include those costs associated with operational activities such as claims adjudication, agent commissions, marketing, call centers, software licenses, and more. Tracking and managing these administrative costs can be a challenge, and identification of areas where there is opportunity to optimize administrative spending can be an even greater challenge.

Benchmarking is an effective practice used by payor organizations to compare the cost and utilization in the delivery of medical benefits. Likewise, operational benchmarking of administrative activities enables healthcare organizations to understand the performance of their internal and vendor-provided administrative services. Types of administrative benchmarking measurement categories include:

• Efficiency benchmarks: The level of resource required for the completion of a defined number of transactions or members.
• Quality benchmarks: Both the level of consistency applied to similar transactions against recognized standards and the relative level of value of those services.

The purpose of establishing operational activities performance benchmarks is to define a vision for what is possible in “best practice” operations. Healthcare organizations utilize these benchmarks to identify strengths and weaknesses in their own operations and to support operational improvement initiatives.

Administrative performance benchmarking allows a payor organization to:

• Analyze the efficiency of the health plan operational areas including claims, medical management, customer service, and administration
• Compare how the organization’s resource allocations compare to peers and competitors
• Evaluate whether resources are allocated correctly and whether additional staffing is warranted
• Measure administrative cost of the operations
• Target areas for improving customer service

Milliman has developed operational benchmarks that include measures for all medical administrative functions. They establish the worst, median, and best practice levels of cost, efficiency, and quality for administrative functions such as processed claims per 1,000 members per processor, reversed and adjusted claims, and call center abandonment rates. Milliman’s operational benchmarks have been collected from more than 100 payor organizations representing the full spectrum of the healthcare industry, ranging from small single-line carriers to large national carriers supporting a full suite of commercial products, as well as government programs and self-funded employer groups.

As shown below, Milliman operational benchmarks can be used to compare a client’s administrative costs by functional area. The results can be used to target specific areas for optimization or additional investment. Note that the information shown in the table below is for illustration purposes only. Milliman develops customized benchmarks for each client based on the client’s unique mix of business, plan size, location of operations, and administrative intensity.

Administrative Benchmarking-MedInsight

This article first appeared at Milliman MedInsight.