By PATRICIA VOWINKEL, who has worked for national media outlets for more than 20 years
In September 2009, the SCOOTER Store, a leading national provider of power wheelchairs and scooters for disabled people, obtained a new report on its pharmacy and medical claims that provided numbers in a way the Texas company had not seen before.
The report, an analysis of the health of its employees, allowed the company to reach out with a targeted approach to at-risk employees. With that information in hand, the company took a quantum leap in its effort to control healthcare costs.
The SCOOTER store, which like many of the nation's largest companies, was self-insured. It had access to the claims data before receiving the new analysis, but it never had been able to pull the data together in a way that made it compelling and usable, said Deanna Scott, vice president of human resources and corporate operations.
Through the use of predictive modeling and data analytics provided by one of its vendors, Wellnet Healthcare Group, the company now had an analysis showing how many employees were at risk of a serious health problem.
It also had an analysis of the top medical conditions facing its employees, the types of medications that were being prescribed, and whether the medications were brand name drugs or generics.
Of the company's 2,600 employees, 142 were at high risk of a significant event, such as a heart attack, and 216 were at medium risk, Scott said.
The New Braunfels, Texas-based company then reached out to those at-risk employees through care-management specialists.
One of the employees was a woman who was considered a medium risk by the predictive model. A care manager who contacted her learned that she had gained a lot of weight after she had quit smoking.
After some additional questions, the care manager also learned that the woman ate mostly processed foods and was not a very good cook.
The care manager kept in touch with the woman, encouraged her to work on her cooking skills and helped her find healthy recipes in books, online and in magazines. The employee added walking to her daily routine, and soon began losing weight as a result of the exercise and a better diet.
For an employer, every employee who starts exercising, eating right, and taking their medications on time and in proper sequence is a major claim that is less likely to happen.
But without an analysis of claims data, companies are flying blind when it comes to knowing where to focus their efforts, said George Pantos, executive director of the Healthcare Performance Management Institute, a Bethesda, Md.-based organization calling for the more efficient delivery of healthcare through the use of technology and management principles.
The analysis of the pharmacy and medical claims data reveals important clues about employee health that allows companies to intervene with those who are most at risk.
The combination of the data analytics and outreach to employees is at the core of an approach known as Healthcare Performance Management, which uses technology developed by Wellnet Healthcare and its affiliate Healthcare Interactive.
Other healthcare companies also have recognized the importance of predictive modeling and data analytics of pharmacy and medical claims data as a way of helping plan sponsors manage rising healthcare costs.
In 2005, for instance, Aetna acquired ActiveHealth Management, a technology-driven health management and healthcare data analytics company as part of its own effort in this area.
And MDI, based in Ponte Vedra, Fla., earlier this year released a major enhancement to its Viewpoint Analytics, a web-based data warehousing management and reporting solution. As part of the database enhancements, MDI has integrated more pharmacy data, which provides better analytics and reporting of patients' pharmaceutical expenses.
For SCOOTER, the upshot is that the company's 2010 healthcare expenses came in at 91 percent of expected claims, the first time since 2006 that they came in under 100 percent, Scott said. That translated into annual savings on its health benefits of 22 percent, or $2.34 million.
The company, however, does not attribute all the improvement to Healthcare Performance Management, Scott said. In 2008, the company had opened an onsite gym and health clinic, and had begun some other wellness programs focusing on exercise and weight loss.
EMPLOYERS GET INVOLVED
The cost of health benefits has been a top concern for almost every business in the United States for more than a decade. There's no reason for businesses to think otherwise. Most are expecting healthcare benefits cost increases in the range of 9 percent to 12 percent in 2011 over the previous year, according to a number of leading national consulting groups.
"Executives at the highest ranks need to pay attention," said J.P. Hannan, the chief financial officer at Atlanta-based Cumulus Media Inc., the second-largest owner of radio stations in the country. "It's a runaway expense. It's not something you reel back overnight."
Average annual premiums for employer-sponsored health insurance plans have risen from $5,791 in 1999 to $13,375 in 2009, according to the Kaiser/Health Research & Educational Trust survey of employer-sponsored health benefits.
While that represents a jump of 131 percent, workers have shouldered the brunt of the increase as the portion paid by them has gone up 128 percent over the period, the survey found.
As the cost of health benefits soars, some businesses are no longer content to sit back and wait for their policy renewal, before paying attention to the issue.
In other areas of business--customer-relationship management, sales, logistics--executives and claims managers have a wealth of data to manage their operations. Not so where health benefits are concerned.
For years, businesses have renewed their health insurance plans without much in-depth analysis of the drivers of the cost of their premiums.
In some cases, it has been force of habit. Senior management has often been willing to delegate health benefits to human resources managers, who then rely on their brokers and health insurers for information.
In many cases, the health plan sponsors had no way of obtaining the information from the claims data, either because their insurers wouldn't provide it or because the technology was not in place to crunch the raw data.
At Cumulus Media, the rising cost of health benefits had management worried.
"It was the single fastest growing expense every single year," Hannan said. "When it's your fastest growing expense and you feel completely helpless to stop it, something has got to change."
Cumulus Media began using Healthcare Performance Management software in January 2009 and had a 32 percent reduction in its medical and pharmacy claims that year, said Tony Cannata, chief executive of Clearview Group in Atlanta, who works with Cumulus Media.
With the constant stream of data and feedback, the media company now can make adjustments to health plan design when needed, and can discuss strategies for controlling costs throughout the year.
"The main thing is we have a lot more parties at the table," Hannan said. "There are more people that I'm talking to about this topic, whereas before it was literally the human resources manager, and the human resources manager talked to the broker and the broker talked to the carrier."
Discussions now include the third-party administrator, medical and disease management companies, the stop-loss carriers and other vendors, he said.
In one instance, one of the company's Miami offices called to complain about the network of doctors in the area. In response, the company was able to add more doctors to the network in that region.
For 2010, Cumulus Media experienced a 2.5 percent increase over 2009 medical claims expenses. One particularly costly claim was blamed for the jump, and the 2.5 percent increase is well below increases that most businesses were seeing.
"The real benefit will be the catastrophic claims that aren't going to happen in the future because of more preventive care on the front end," Hannan said.
BREAKING DOWN BARRIERS
One of the challenges for employer health plan sponsors seeking to control costs has been the lack of timely, detailed information about employee health risks and cost trends.
In cases when businesses are fully insured, they then must rely on their health insurer for data and not all insurers are either able or willing to release information in a timely manner.
A number of businesses have been getting around this by self-insuring. Of firms with 5,000 or more employees, 86 percent use self-insured medical plans, according to the Employee Benefit Research Institute.
New legislation in certain states is also helping to bring about more transparency. A law requiring insurers to disclose to employer health plan sponsors certain medical claims information about the employer's own health plan went into effect in Connecticut last year.
The law, similar to legislation enacted in Texas, requires an insurer to disclose all medical, dental and pharmacy data for claims incurred under the employer's policy.
Some companies have been developing technology that takes the claims data and converts it into timely business intelligence.
Aetna's New York-based ActiveHealth Management, for instance, has been a leader in using data analytics, said Dr. Richard Feifer, national medical director for national accounts at Aetna.
"Aetna has paved the way in many regards in the use of data to identify care improvement opportunities," Feifer said. "Using data to target our identification and our outreach to members is absolutely essential."
ActiveAnalytics, a web-based reporting tool, for instance, enables ActiveHealth clients to analyze and detect trends and opportunities, reduce medical costs and increase efficiencies.
While some plan sponsors have had difficulty obtaining claims data from their insurers, Feifer said that information is available, but it often depends on the plan sponsor's objectives.
It can depend on how much time and attention plan sponsors want to give to claims analysis, he said. "Not all plan sponsors have the same goals or desires to dig into this," he said.
"Usually they want us to help them understand the data. They want our expertise to dig through it," he said. "That's what they hire us to do."
Feifer also said that many company benefits departments are not staffed to handle the day-to-day management of trends and other insights gathered from claims data.
Looking ahead, Feifer said more data will begin to become available from electronic medical records and health exchanges. Aetna earlier this year acquired Medicity Inc., a Salt Lake City health information exchange technology company, which will help Aetna to link with provider hospitals and doctors offices and exchange data to help improve care.
Wellnet Healthcare and its affiliate Healthcare Interactive, meanwhile, have been instrumental in developing and promoting software used in Healthcare Performance Management, known as Point to Point.
Wellnet completed a successful pilot program with more than 250 companies last year, using a single software platform to measure and manage group health performance.
Other firms are providing elements that are available in Healthcare Performance Management software, but Pantos, who's also the former legal counsel to the Self-Insurance Institute of America, which represents the nation's large self-insured companies, said he has yet to come across an organization that combines all of its elements in a single unified environment.
The analysis of claims data is giving companies the ability to take a hands-on approach to their health benefits.
Houston-based clothing retailer Men's Wearhouse, which began using Healthcare Performance Management software in January 2010, was astonished at the information it began to receive.
"It was an eye-opening difference being able to look at the data in the timeframe they were giving it to us, which was every single day," said Bill Lavis, a broker at Sitzmann, Morris & Lavis in Oakland Calif., who has been using the software with Men's Wearhouse and five other businesses.
The analysis included a risk profile of employees, including the medical conditions employees are facing and whether they are at high or medium risk of a serious health problem.
Analysis of pharmacy claims, in particular, is crucial because that information can be used in a predictive way about people's health.
After an employee fills a prescription, the claim information goes through a predictive model and individuals are assessed as a low, medium or high risk, based on demographic information such as age and sex. "What HPM technology allows us to do is to see the people who are the highest risk candidates that are going to incur the costs in the future," Lavis said.
The retailer is projecting "a 6 percent future medical cost avoidance," Lavis said. That equates to several million dollars of potential savings on medical spending and about 8 percent on prescription drug spending.
For 2011, Lavis is projecting an increase in healthcare costs of 2 percent to 3 percent for Men's Wearhouse, compared with an average projected increase of 9 percent to 12 percent nationally.
"Our clients are never going to go back to any system that doesn't allow them the access to the data when they want it and how they want to use it," Lavis said.
PROVIDER FEE TRANSPARENCY
The fees charged by doctors and hospitals are another important piece of the puzzle. When employees go to the doctor or have a procedure they have no idea what the final cost will be.
But as more companies move their employees to high-deductible health plans, employees are shouldering more of the cost of their medical care and they need to know what providers are charging.
Information about prices charged by providers also can help employers who can then work with providers to develop special relationships and "centers of excellence" to help control costs, said Christopher Parks, chief executive of change, healthcare, of Brentwood, Tenn.
This is the kind of deal that Lowe's Companies Inc., the operator of the big-box hardware store chain, announced last year with the Cleveland Clinic, which has been ranked No. 1 in the nation for cardiac care for 15 consecutive years.
Full-time Lowe's employees and their covered dependents enrolled in the company's self-funded medical plan may elect to schedule qualifying heart surgery procedures at the Cleveland Clinic.
For patients approved for the surgery, the Lowe's program will cover all medical deductibles and coinsurance amounts as well as travel and lodging expenses for the patient and a companion plus concierge services to make the arrangements.
As businesses seek to rein in runaway healthcare expenses, one thing is clear, information is a critical tool that can empower both health plan sponsors and their employees.
For plan sponsors, new technology is making more information available than ever before. "Having access to the data, having the data be very, very usable and very, very accurate is the key," broker Lavis said.
"This is a new age where employers are willing to be more aggressive and willing to be more proactive," he said. "When the data is driving all of this, it allows them the comfort level of making some decisions, but not making them in the blind."
August 15, 2011
Copyright 2011© LRP Publications