Show Me The Data: Using historic claims data to build better strategies

Imaging trying to fly an airplane cross-country without an instrument panel and no gauges.  You wouldn’t dare put your life in that kind of jeopardy; not knowing how much fuel was in the tank, not knowing your altitude, not knowing your speed, not knowing your manifold pressure or engine temperature.  It would be suicide, right?

While not quite as “life or death” as flying with no information, managing a self-funded plan with no data is just as futile as flying cross-country with no instruments nor gauges.

The old saying goes, “You can’t manage what you don’t measure”, and it is really interesting when I come across self-funded employers who are not measuring their health care spend whatsoever. 

Many employers have given up believing that health care costs can be managed, and so they’ve given up even analyzing their data, or having someone analyze it for them.  I’ve heard numerous employers say things like, “Claims are claims, and it is what it is, we’ve tried everything to lower our health care costs.”  But when I press a little deeper, I find that many times, they are oblivious to where their health care dollars are going, much less, how much.

Some employers are analyzing their data, or having their broker/consultant do it, but it is not leading to solutions.  Many brokers go to their client and say, “Yep, you had some high claims, and you have a high specialty drug utilization rate, and yep, you had too many ER visits” etc…..but then they turn around and advise the client to double down on status quo carrier networks and strategies that haven’t yielded great results for decades.  So it’s one thing to just get your data, and it’s another thing to act on it.

I asked a prospective client in a meeting last week who had given me permission and access to their plan’s claims data, “Do you know what you’re spending, on average, for CT Scans and MRI’s over the past 12 months?”  Of course they had no idea, but they were spending over $2700 per diagnostic image, and they had 2 dozen scans performed in the last 12 months.  It totaled more than $65,000 the organization had spent on MRI’s and CT Scans alone, in one year.  All but one MRI had been conducted in an acute care hospital setting, and only two MRI’s were conducted during an emergency visit.

So, what does that tell the employer?  Probably not much.  But to me, it is a clear opportunity to help this employer save money, while delivering a better patient experience and lower cost for the employee too.

Let’s take out the two MRI’s that were “emergent” and focus on the other 22 scans that were not.  The average cost of an MRI and CT Scan under a direct contract we have with a free-standing imaging center near this employer is $475.  Had those 22 non-emergent images been conducted at the free-standing imaging center, it would have saved this employer right at $50,000 for the year.  Two different exams, $50,000 in savings. 

In addition, we customize self-funded plans what waive member deductible and out of pocket when they use the free-standing imaging center where we’ve secured a direct agreement.  For these 24 employees who had an MRI or a CT scan, they averaged $982.74 out of pocket for an MRI, and $365.74 out of pocket for a CT scan.  Especially for the MRIs, that would have been a significant savings for each of those employees.

So, let’s talk about a solution to this particular issue.  How can you get employees to utilize solutions like the free-standing imaging center where we have a direct agreement at a much lower cost?  Is it enough to just “hope” your employees remember the solution, and then insist on going there whenever they are prescribed a diagnostic image?

If you think “hope” is a poor strategy, then consider your PRIOR-AUTHORIZATION list as a way to put up a yield sign before the plan will approve just any MRI or CT scan at just any location.  Using prior-authorization allows the plan time to redirect employees to the free-standing facility, and the opportunity to educate the employee about their “no-cost” option if they do choose to use the free-standing facility.

Our plans do not put this barrier/requirement up in emergent situations.  We understand that diagnostic imaging in an emergency room is often necessary right then and there and that the ER is not going to outsource those images in an emergent situation.  So, our solution focuses on non-emergent imaging.  It’s an easy way to reduce costs, and it starts with getting your data and MEASURING risk.

The ability to access claims data is a major reason employers consider self-funding in the first place.

Before an organization can manage health care costs, they first need to measure their health care costs.  Where is your money going???  Once you know, you can begin to adopt and implement strategic solutions that address specific risk, lowering your health care costs and improving benefits for employees. 

Here are a few of the key things you can extract from good, detailed claims data:

It is my belief that health care costs CAN be better managed, and costs CAN be reduced for employers. It all starts with the data.