Tag Archives: Cost

Analyzing data can help hospitals manage the costs of post-acute services

The Centers for Medicare and Medicaid Services (CMS) has implemented a new payment structure under the Comprehensive Care for Joint Replacement (CJR) model. The model is meant to reduce costs and improve the quality of care for Medicare beneficiaries following some lower extremity joint replacement (LEJR) procedures.

Services rendered by post-acute providers will affect the payments hospitals receive for LEJR patients. However, payments are partly tied to certain quality metrics. In this article, Milliman’s Pamela Pelizzari discusses how important it is for hospitals to understand and analyze the data sources CMS will make available for the CJR model.

Here is an excerpt:

Because the CJR episodes include services rendered after discharge from an LEJR hospitalization, much of the hospital’s financial responsibility is tied to services performed outside the walls of the hospital. The only way to fully understand these services is by analyzing the data sets that CMS provides to CJR hospitals throughout the life of the model, beginning with historical baseline data that was provided in early 2016. This data allows hospitals to examine their historical utilization of CJR-included services, particularly high-cost services such as skilled nursing facility stays, inpatient rehabilitation stays, and readmissions to acute care hospitals that may be avoidable….

While understanding a hospital’s own historical utilization on a simulated episodic basis is the first step toward success under CJR, it is also essential for that hospital to compare itself with other hospitals (both within the same census region and across the country) to understand what savings opportunities may be available and how far utilization needs to be managed to achieve the regional target prices enforced through CJR. Looking at regional and national benchmarks can allow a hospital to comprehend the level of achievement that may be possible. By understanding national average and best-performing hospital utilization patterns, it is possible to initiate conversations about the potential to shift utilization for LEJR patients to lower-acuity post-acute settings.

Introducing physician-focused consumerism

Physician-focused consumerism is a set of initiatives designed to align physician decision making with high-quality healthcare outcomes provided in a cost-efficient manner. Physician-focused consumerism can include the redesign of financial incentives, greater access to patient data, decision support tools, ongoing education about treatment alternatives, and an understanding of the financial impact of alternatives on patients. It can be the basis for collaborative efforts between employer health plan sponsors, provider systems, and physicians to help achieve high-quality care in a cost-effective manner.

Milliman is well-suited to support employers’ collaborative efforts with accountable care organizations (ACOs) and to review current provider networks to identify the status of physician-focused consumerism. Dan Bostedt offers some perspective in his article “Health plan consumerism: Who is the consumer?

S&P: Healthcare expenditures for commercial plans up 3.2% in the year to August 2013

Data released today for the S&P Healthcare Claims Indices showed that total medical costs rose 3.2% in the 12 months ended August 2013 compared to the 4.8% rise for the 12 months ended August 2012. Medical costs—inpatient and outpatient hospitalization plus professional services—rose 3.7% and prescription drugs rose 0.9% over the same period. All rose less than a year earlier.

Among the key components of medical costs, inpatient fee-for-service costs rose 4.2% compared to 4.4% in the earlier period while outpatient fee-for-service costs rose 5.7% compared to 7.9% in the earlier period. Prescription drugs expenditures were up 0.9% versus 2.9% in the 12 months ended August 2012. These figures, which represent the most current data available, are based on expenditures incurred in the 12 months ended August 2013. Because of standard industry lags in invoicing claims and resolving disputed charges, it is not possible for the indices to be calculated without a lag.

“The S&P Healthcare Claim Indices show healthcare expenditures rose less in the most recent period. This confirms other reports that the supposedly inexorable rise in healthcare costs is moderating,” says David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “While the slower cost increases are most welcome, there is debate over the cause. For some categories there is sufficient detail to examine price and usage separately. For instance, in inpatient fee-for-service, one area showing relatively stable cost increases, the indices show that declining usage is contributing to the slowdown while unit costs rise at about 6% annually.

“One often cited source of moderation is the growth of generic pharmaceuticals, which compete with their branded counterparts on price. Among branded prescription drugs, prices continue to climb at more than 15% annually. Apparently the purveyors of branded pharmaceuticals chose to respond to price competition by increasing prices to offset declining usage. Compared to the branded, where usage is dropping by 15% annually, generics see consistent increases.

“It is too soon to credit the slower cost increases to Obamacare, going forward the indices will show whether the slowing of cost growth continues.”

Economic impact of community-acquired pneumonia in the employed population

Community-acquired pneumonia (CAP) is frequently associated with the very young and the elderly but is a largely under-recognized burden among working-age adults. Although the burden of CAP among the elderly has been established, there are limited data on the economic burden of CAP in the employed population.

This study assesses the economic impact of CAP in the United States in working-age adults from an employer perspective by estimating the incidence rate and costs of healthcare, sick time, and short-term disability for this patient population and recommends prevention strategies that may reduce the morbidity and costs associated with CAP among working-age adults, especially those with comorbidities.

This research was first published in American Health & Drug Benefits, Vol. 6, No. 8 (September/October 2013).

The choice facing many young people: Buy insurance or pay the fee?

The New York Times today analyzes the decision facing many young people as the Patient Protection and Affordable Care Act (ACA) comes online: Is it in my economic best interest to buy insurance through the exchange, or should I go without insurance and pay the penalty? The Times worked with Milliman to examine this question given a range of possible scenarios. This infographic summarizes our findings:

Comparing_ cost_of_3_conditions

This excerpt helps explain the analysis:

Consider a young uninsured man living in New York City who earns $50,000, which means his income is slightly too high for subsidized coverage. If he received treatment for his back, he would, on average, be billed about $4,890 in 2014, according to an analysis conducted by Milliman, a consulting and actuarial firm, using data from the latest Medical Expenditure Panel Survey. That includes the cost of treating his back, as well as other typical medical and prescription expenses during the year. Add in the $400 penalty, and his total outlay for the year reaches about $5,290.

But if he bought the silver plan with the cheapest premiums on the New York health insurance exchange, his overall costs would be slightly less, or $5,133, according to Milliman’s analysis. That includes about $4,311 in annual premiums and $821 in out-of-pocket costs. (Again, a young person may pay even lower premiums in other places).

A catastrophic plan, which has high deductibles and low premiums, purchased on the New York exchange would cost the young man with a compromised back $4,940, still less than remaining uninsured (about $2,200 in annual premiums and nearly $2,740 in out-of-pocket costs). Catastrophic plans, which are available to people under 30 or those suffering a hardship, generally require that you shoulder all of your medical costs until you meet the hefty annual deductible.

But there are instances where the uninsured young person — even one with a medical ailment — could potentially pay less. Milliman estimates that a young person with asthma would incur medical charges of $2,200 a year, or less than half the cost of buying the cheapest silver plan in New York.

Of course, landing in the hospital even for just a few days — about $11,600 a night for a medical or surgical stay, Milliman estimates — could push any person, young or old, to the financial brink, though a consumer could potentially negotiate those rates down…

There are still millions of people who are expected to pay the penalty and take their chances. “Getting struck by lightning is an insignificant risk,” said Stuart D. Rachlin, a principal and consulting actuary at Milliman, who calculated that the average American under the age of 65 had a 10 percent chance of incurring more than $30,000 in medical charges, including drugs, in a year. “To me, a 10 percent risk is a meaningful possibility.”

How can employers add incentive to a wellness program?

Health reform may create an opportunity for employers contemplating new or expanded wellness programs. In the latest issue of Benefits Perspectives, Sharon Stocker examines keys to creating a valuable program, with an emphasis on effective communications to ensure employee engagement and participation.

Here’s an excerpt:

1. Understand Your Audience
The goal of health promotion is behavior change, and reversing unhealthy habits that may have been built over many years is not easy. An effective change strategy calls for knowing your audience—what motivates them, potential obstacles, and tools they need for support.

Surveys and focus groups are a useful way to uncover what is most relevant for your employees and their families. (Involving family members is critical – dependent healthcare costs are a sizable factor.) Once the top areas of need and interest are clear, as well as potential barriers to participation, you can target strategies to address them.

Asking for opinions and input serves another important purpose – nurturing a sense of pride and ownership in the program. The most engaging communication is interactive, with ideas and information flowing both ways.

Be sure to clearly state survey/focus group objectives from the outset, letting employees know how the research will be used. You don’t want to imply sweeping changes unless that’s your intent. Acknowledge the value of their input and be serious about acting on the results—or risk having disgruntled employees.

2. Create and Promote a Brand That is Uniquely Yours
The best brands inspire recognition, enthusiasm, and loyalty. Once you have a positive, action-oriented campaign, branding it will help the program capture—and keep—people’s attention.

Your wellness program name and graphic look should align with and reflect the organization’s identity and values. You want to infuse the program with a sense of excitement so that people want to be a part of it. Engage employees and invite participation from the start by having a contest, with healthy prizes, to name the program.

A strong brand also conveys commitment, sending a message that the program is here to stay and worth attention as well as involvement.

To read the entire article, click here.