Payers can increase profits through quality improvement programs

How can Payers compete today, and sustain success for the future?

The critical need to improve quality of care has been a long-standing concern in the United States. From the initial reports in the 1990s’ to the Institute of Medicine’s (IOM) 2001 Crossing the Quality Chasm report1, to the Institute for Healthcare Improvement’s (IHI) Triple Aim, the quality improvement imperative has grown stronger and clearer. However, while the need to improve healthcare quality has been clear, the means to institutionally achieve this goal have taken longer to complete.

Payers are taking action to work with providers to improve healthcare. The central role of the payer is clear: facilitate the right care, at the right time, for the right cost. Despite this clear mandate, payers are still learning to gather, analyze, monitor and drive improvements using the vast quantities of patient data, including clinical, financial, operational and more.

Quality through a health plan’s perspective

Industry quality standards are based on the premise of the aforementioned reports, and provide health plans with the simplest means of achieving its quality improvement objectives. These prescribed measures focus not only on health outcomes, but also on various elements of business processes, organization structure and member satisfaction. Health plans are incentivized to continuously improve upon these measures. However, in the process, they lose the ability to utilize and leverage information available to them.

Further, thanks to the Patient Protection and Affordable Care Act (PPACA) and the industry transition from volume- to value-based delivery of care, a health plan’s profitability is now a function of clinical quality and member satisfaction. This is true for direct revenue (e.g., risk-adjustment) as well as for predictions for renewals. And profitability on a given member tends to increase after year one in the same policy, making member retention even more critical. Therefore, payers need to revise their quality goal to financially enable the highest standard of continued health at the lowest cost to their population, and improve their bottom-line. Health plans can achieve this by further embracing the “facilitator of information” role and setting a sound foundation for measuring quality. This foundation looks beyond today’s prescribed quality standards–whether they are HEDIS, AHRQ, CMS, HHS, NQF, AMA or TJC–and allows for designing quality measures that will ensure survival and profitability in the future.

Foundation for quality improvement programs

Health plans should keep the following fundamentals in mind to design such quality improvement programs:

  1. Healthcare is local. Any given community or population will define the needs of the care required. Payers should be intimately familiar with the nuances of local populations – understanding demographics, care seeking behaviors and care delivery behaviors at the local level.
  2. A small percentage of the population will always be responsible for the majority of cost. Through this close understanding of member and providers (beyond clinical and claims data), payers can proactively manage high risk members with high quality providers. Payers can also better engage the same members and providers to track treatment and communications through technology.
  3. Consumers rule the day. Health plans can leverage lessons from other industries, such as retail or travel, to empower the consumer and improve member satisfaction on multiple levels (choice, follow-up, care coordination).
  4. The role of technology. In order to make this vision a reality, health plans must be willing to invest in the correct technology and resources for a particular community. If internal IT budgets—and administrative burden—are competing with profitability due to medical loss ratio (MLR) regulations (and dependence on expensive, legacy claims systems), technology choices will be limited for CIOs.

Health plans must expand their horizon to the types of information available, and use this information to design multi-dimensional quality measures. Examples include:

Medical claims data Clinical data
Pharmacy data Lab data
Provider demographic data Provider compliance data
Member demographic data Socioeconomic data
Member historical data (through HRAs, PHRs, etc.) Eligibility and benefit data
Community data Business process data
Organization Structure data Health outcomes data
Comparative effectiveness research data Behavioral data (social networks and mobile)

For payers to truly galvanize a community to embrace health, they need to have the ability to combine individual, disease, provider and economic data into a coherent whole to drive behaviors, align incentives and focus on expertise that has the highest impact on outcomes. Long-term success and future sustainability depends on the ability of the payer to look beyond normal parameters, see a decrease in costs, improvement in care and healthier members.

Please check Part-II of this article, here.

1 Across the Chasm: Six Aims for Changing the Health Care System

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Shitang Patel is a Senior Healthcare Consultant at CitiusTech, a leading provider of healthcare technology services and solutions. Shitang has over 15 years of experience spanning healthcare management and health policymaking settings, with a focus on payer strategy, business operations and supporting technologies. His expertise includes business transformation, payer-provider integration and contracting, product design and implementation, core admin system evaluation and selection, business process reengineering, value-based insurance design, financial reporting and consumer-centric operations. Prior to joining CitiusTech, Shitang worked for PwC Health Industries Advisory (serving payer and provider clients) and also worked in the areas of health services research and policymaking in Washington D.C. Shitang holds a Master’s degree in Health Services Administration from the University of Michigan.

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