Tag: healthcare

Analytics For Employers: A Tutorial (Part 2)

Healthcare

A succinct guide on how to use analytics to save money on healthcare.

Over the past 3 years, the most common question we have heard from employers and brokers is this: health analytics is good, but what do we do with the data? Well, we are going to answer that question in this very post. That’s right, we’re sharing all the most actionable areas we look at for self-insured employers to help them to gain control over their spending. Some may say that we’re giving away our secrets, but we don’t see it that way. Our mission for employers is to make them savvy health care consumers, so making information transparent is what we do. Furthermore, it’s important to open up conversations on how organizations are using analytic data, because these conversations will help to advance insight and foresight so employers can use their data to create, track and refine a long-term strategy for the benefits they offer.

In Part 1 of this post we established that for employers, the best strategy for using health analytics moves beyond simply looking at spending to enter the realm of strategic benefit planning. This is the limitation of traditional healthcare analytics. Over the next decade, we will continue to see employers move away from watching spending go up and down and move towards looking at data in a way that provides both insight and foresight into population health. The next evolution of employer analytics informs a deeper understanding of who associates are, the benefits that will attract the best talent, and identifying the optimal strategy for funding these next-generation benefits packages.

To start, we pulled together a list of areas that any employer can explore if they want to ensure they’re using data to guide their spending decisions on health benefits. We’ve broken this into 3 sections: 1) Goals, 2) What’s Actionable? and 3) Areas of Insight.

Beginning with the end in mind, here are the top goals that self-insured employers have when it comes to monitoring their health spending:

Goals:

1.      To cut excess and wasteful healthcare spending and to accurately project future spending. Approximately 20% of an employer’s healthcare spending is wasted due to unnecessary and preventable costs. Open access to data helps to inform employers on exactly what areas are driving wasteful spending and how to better predict future spending.

2.      Identify strategies to support associates on their health journeys. While 5% of people drive 51% of health costs, 50% of plan members account for only 3% of health spending. Understanding how to support the unique, complex health needs of members affects a company’s bottom line in both healthcare costs and employee productivity.

3.      Track progress on the current healthcare and wellbeing strategy. An unbiased evaluation of a healthcare program is eye-opening. Not only does it guide the strategic evolution of an employer’s healthcare strategy, it may reveal opportunities to recoup hefty vendor performance guarantees.

4.      Make sure members are getting the preventative medical attention they need. We consistently see that between 10%-20% of members never see a doctor. It’s within this group of people who are notdriving costs today where an employer’s greatest future healthcare risks can lie.

In order to meet these goals, an organization needs to identify what exactly can be actionable. It’s easy to spot the costs that stick out, but when is it too late to intervene on a cost-driver? Here are the most common areas where employers can focus to influence spending, care quality, preventative care, and effectiveness of condition management.

What Is Actionable?

·        The plan’s pharmacy formulary (with some limitations based on the PBM partner).

·        The plan’s rules surrounding specialty medications.

·        The healthcare partners the employer selects (health plan, PBM, condition management services, smoking cessation, behavioral health services, direct primary care, centers of excellence).

·        Plan contributions, deductibles and coinsurance paid by employees for their healthcare benefit, emergency room surcharges, spousal surcharges, smoker surcharges, stop loss arrangements.

·        Cost variation among high cost and/or high volume services (MRIs, musculoskeletal surgeries, cancer care, etc).

·        Effectiveness of member education on health benefits.

·        Targeted wellbeing services offered to members.

Now that we’ve laid out the goals of using data and the areas that are actionable, here are some specific questions to answer when looking at the data.

Areas of insight.

1.      Which conditions and medications represent the largest population health risks? How do these conditions vary by both dollars spent and number of people affected?

2.      Can amending prescription drug policies surrounding step therapy, specialty drugs, generics, place of service/purchase lead to savings for members?

3.      Does the member base have a problem with emergency room (ER) misuse and are certain locations or member categories driving ER costs?

4.      Do changes in member risk score, medication adherence and prevalent disease states such as diabetes show that your investments in condition management, smoking cessation and wellbeing interventions are working? Could performance guarantee fees be recovered from vendors?

5.      Are there trends noticeable related to members who are not engaging with physicians at all? Through looking at healthcare utilization among work location, salary bands, plan types—can we identify trends as to why certain people are not using necessary health services? These barriers to accessing care could be cost, lack of understanding of benefits, and even corporate culture, among others.

6.      What percentage of people are receiving preventative care and age-appropriate screenings among various member demographics?

7.      What are the largest cost variances that can be actionable? For example, could costs associated with procedures such as joint and hip replacement surgery or even MRIs be standardized via options that are available to your members? (Could centers of excellence be leveraged?)

8.      Could a direct primary care model have benefit for the member population?

9.      Are there actionable insights with respect to absence data and workers compensation claims?

10.  What is the size and scope (in dollars and members) of opioid use and dependency-related costs?

In the same way that reading an abstract is not the same as reading the book, please keep in mind that this is a very brief overview of a complex subject.* Every employer has unique challenges related to population health and health spending, so there’s is no real “one size fits all” approach. The data drives the discussion in a unique direction for each employer.

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About BetaXAnalytics:

We combine data science with clinical, pharmacy and wellness expertise to guide employers and providers into a data deep-dive that is more comprehensive than any data platform on the market today. BetaXAnalytics uses the power of their health data “for good” to improve the cost and quality of health care. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

* A Note on Data Privacy The purpose of using health analytics is to identify actionable areas to target costs and to improve effectiveness of care options on an aggregate level. This is done by looking at trends in data and under no circumstances should insights be presented to an employer in a way where data is individually identifiable. There are a number of data-related best practices that we recommend to remain adherent to privacy laws. Any employer, broker or consultant who is using health analytics should do so under strict adherence to HIPAA regulations and under the advisement of an experienced data privacy attorney.

Analytics For Employers: A Tutorial (Part 1)

DataHealthcare

It’s been almost 3 years since we started BetaXAnalytics with the goal of using data science to offer strategic guidance to employers and providers on healthcare spending and services. Since opening our doors, we’ve spent a lot of time talking with companies who pay for healthcare for their employees, as well as the brokers and consultants who help to guide these decisions. At the same time, we’ve spent time taking a look at many of the analytic tools that are on the market right now—these are the technology platforms that provide spending transparency to employers and their brokers.

From day 1 when we started these customer interviews, one resounding theme was apparent. The biggest question we heard from employers and their brokers is simply this: Having data is good…but what do you do with it?

3 years later, this is still the most common question we hear. We see this recurring question from employers and their brokers as a symptom of the early-stage maturity of the employer health analytics market. In short, over the past decade as more self-insured employers use health data to help to manage their spending, we haven’t moved too far from the starting line.

Anyone who is familiar with the general progression of analytics will recognize the analytic maturity model below.

At its most basic level, health care analytics is often pigeonholed into “counting things.” Counting dollars, counting medications, counting members…and watching these numbers go up and down. So every time we get the question, “What do you do with the data?” this just reaffirms that most employers are still in the dark with respect to using data to drive their benefits strategy. This type of “analytics” examines only the past and gives very little insight into the 4 critical areas of focus as a healthcare purchaser (which we explain in Part 2 of this post).

After seeing many of the analytic tools on the market today, we can confidently assert that that the market for using health analytics to control employer healthcare spending is here:


Having data is good…but what do you do with it? This recurring question is a symptom of the low analytic maturity of the current state of employer health analytics—that is to say, we pay for access to data, but it’s rarely actionable. “Analytics” in this stage is synonymous with “counting” and data is hindsight-focused on reporting what has already happened.

The current state of employer analytics is a good start, but it barely scratches the surface of the strategic potential of analytics. Tracking spending is important, but true analytics go far beyond just spending to understand insights into your population health, designing and tracking programs to target conditions and support mental health, and even to provide insight into how well benefits are being communicated to employees. When we move past hindsight analytics to incorporate insight and foresight, we move past counting things, and to the realm of strategic benefit planning. This means developing a deeper understanding of who associates are, the benefits that will attract the best talent, and identifying the optimal strategy for funding these next-generation benefits packages. As with so many initiatives that fall under the Human Resources / Human Capital umbrella—including talent acquisition and retention, compensation, healthcare, engagement, benefits, wellbeing—the most strategic analytics should consider all of these areas. This is the future of analytics—and the future is here.

About BetaXAnalytics:

We combine data science with clinical, pharmacy and wellness expertise to guide employers and providers into a data deep-dive that is more comprehensive than any data platform on the market today. BetaXAnalytics uses the power of their health data “for good” to improve the cost and quality of health care. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

Healthcare’s Next Disruptors: Employers

Healthcare

The cost of healthcare in the United States is rapidly rising with no end in sight, and this cost problem is hitting the American worker’s pocket in a more profound way than ever in history. Healthcare in the U.S. is now at 18% of US GDP at a cost of over $10,000 per person annually. To put this into perspective, healthcare costs in 1960 were 5% of U.S. GDP ($170/person). 

Here’s what not everyone knows: on the other side of this problem of rising healthcare costs are pockets of people effecting serious change—these people are employers.

Forward thinking employers and the HR leaders responsible for making their healthcare decisions are thinking outside of the box to find health care models that are more effective at keeping employees healthy. These are people who are rejecting the traditional benefits model of disjointed, piecemeal solutions. Instead, these employers are using data to form a comprehensive strategy to ensure their healthcare dollars are keeping members healthy.

Consider the following developments in 2018 alone as an indication of the trends we’re seeing in the employer market:

  • Solution Scale: Amazon, Berkshire Hathaway and JPMorgan Chase announced in early 2018 their formation of a healthcare alliance to tackle finding more effective care models for their combined employee base of 1.2 million people.
  • Accountability: The National Drug Purchasing Coalition (NDPC), whose members include employers like PepsiCo and ExxonMobil, has partnered with Express Scripts to form a fully-transparent model where the NDPC pays what Express Scripts pays for prescription drugs. In turn, Express Scripts will administer a pay-for-performance clinical care model that shifts the financial risk previously borne by employers onto the prescription drug plan administrator.
  • Emphasis on Health Outcomes: GM announced a deal with the Detroit-based hospital system Henry Ford Health System for a direct contracting healthcare model for its 24,000 employees and family members
  • Using Data to Guide Health Strategy: Morgan Stanley recently announced that they have created a chief medical officer role to oversee their use of HR data and analytics. Said Morgan Stanley’s Chief Human Resources Officer Jeff Brodsky, “Harnessing our HR data, we can achieve better wellness for our employees and address rising healthcare costs.”
  • Making Healthcare Easier for Employees: Amazon and Apple have joined the 30% of employers that offer onsite medical clinics for employees and their families.

If your company is looking to help to effect change in this healthcare revolution, here are a few ways to start:

1.     Shift financial risk. Seek partners who are willing to step outside of the traditional fee-for-service healthcare models that currently put the highest financial risk on the employer (and in turn, employees). Instead, shift financial risk to care providers and other partners who directly impact health outcomes. Direct primary care is a great example of this type of accountable care model. 

2.     Gain data transparency. Get access to timely and ongoing data to drive your healthcare benefit decisions. It is easy to get inundated by mountains of complex data and trying to aggregate it with location and other benefits data, so we recommend that employers assign a strategic data subject matter expert to drive the discussion. This is what the team at BetaXAnalytics does—as data scientists with clinical, pharmacy and wellness expertise, our deep-dive into employer data is more comprehensive than any data platform on the market today.

3.     Remove barriers. Think about ways to remove the barriers that prevent employees and their families from getting the care that they need—the financial barriers, the time constraints and convenience barriers. Onsite clinics and telemedicine are just a couple of examples of strategies to make healthcare convenient and inexpensive for employees.

“Employers taking healthcare into their own hands is the most meaningful way we can change healthcare in this country”


~Bret Jackson, president of The Economic Alliance for Michigan, a member of the National Alliance of Healthcare Purchaser Coalitions

This week we presented at the Strategic HR Conference at Mount Washington to Chief Human Resource Officers and HR leaders throughout the Northeast to share best practices on how HR leaders can use data to drive their health and benefits strategy in a way that maximizes their healthcare budget. If you’re interested in learning more, email me.

Who pays for healthcare in the U.S.? We all do. By way of taxes and out of pocket premiums, we all contribute to these costs that flow largely through the government and employers. And the more informed the people are who are paying for healthcare become, the more we can effect change.

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About BetaXAnalytics:

If you’re an employer who feels there’s got to be a better way to control health care costs, you’re on to something. And we can help. BetaXAnalytics partners with employers to use the power of their health data “for good” to improve the cost and quality of their health care. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, to save health dollars and to better target health interventions to keep employees well. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

Employers Are Using an Innovative Way to Soften the Financial Burden of High Deductible Health Plans

Healthcare

As a healthcare data technology company, the most common question we hear from employers is, “how can we lower our healthcare spending?” The high cost of healthcare has a significant impact on employer expenses. The Milliman Medical Index projects that in 2018 the average premium for a family of four is $28,166. While the magnitude of health costs is a reality for our employer clients, finding an effective way to manage these high costs is often their first priority.

When we drill down into cost-drivers, we consistently see a startling theme across employers—that only 5% of people are driving 51% of healthcare spending. A very small group of people with chronic conditions (such as diabetes, rheumatoid arthritis, or cancer) are contributing to half of the total health spending. While this disproportionate spending is a reality within employer populations, according to the Kaiser Family Foundation Medical Expenditure Panel Survey, this also holds true for Americans as a whole.

As a way to manage the rising cost of healthcare, nearly 40% of adults are covered by what is known as a high-deductible health plan. Under this model, employees share in a greater share of their health expenses, responsible for on average $5,248 of out of pocket medical costs each year. The thinking behind this way of cost-sharing with employees is that when employees are responsible for paying a greater share of their health expenses, that they will become better healthcare consumers by shopping for the best prices and avoiding unnecessary procedures. 

Unfortunately, in many of these cases the high out-of-pocket medical costs cause financial hardship on many people. A survey from the Kaiser Family Health Foundation found that 1/3 of adults have trouble paying their medical bills, and 73% have cut back on spending on food, clothing or basic household items to pay their medical bills. The Report on the Economic Well-Being of U.S. Households, an annual survey conducted by the Federal Reserve Board, found that 44 percent of adult Americans claim they would not have $400 in case of an emergency without turning to credit cards, family and friends, or selling their own possessions. When those who are financially strapped have mounting healthcare bills, the consequences can be personally devastating. A 2015 poll by the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health found that 26 percent of those who took part in the survey claimed medical bills caused severe damage to their household’s financial wellbeing.

Because the impact of high healthcare deductibles causes such a financial hardship for individuals and their families, many recent studies have shown that this type of health plan causes individuals to delay necessary healthcare. Researchers from UC Berkeley and Harvard studied the results of a large employer’s choice to offer a high deductible plan over 2 years. Instead of finding evidence to support the theory that high-deductible plans make people take more charge of their health spending, they found no evidence to show that employees were comparing costs or cutting unnecessary services once they had a high healthcare deductible. They cut low-value health services at the same rate as they were cutting important medical services, causing the employer to question whether members were making the right choices for their long term health. Additional studies have found that the danger of high deductible health plans is that their members with the highest health risks have shown that they avoid necessary care and medications due to cost. 

On the other side of the phenomenon that 5% of people drive 51% of health costs, we see another theme that is equally surprising—half of plan members contribute to only 3% of total health spending. That’s right—a large proportion of costs come from a small number of people, yet a large number of people contribute very little to overall costs. Why is this? 

At BetaXAnalytics, when we look at employer utilization of health services we consistently find that between 10%-20% of members never see their doctor. These are the employees who either feel they simply “don’t have time” to see the doctor or “don’t have the money” to spend into their annual deductible. But it’s within this group of people who are not driving costs today where an employer’s greatest healthcare risks can lie. 

The answer for employers? Make it as easy as possible for members to get the care they need. One effective way to ensure that people aren’t avoiding necessary care is to remove the traditional financial and convenience barriers that prevent employees from seeing the doctor. Hooray Health provides a template for employers to solve this problem. They afford first dollar coverage for preventative, basic and urgent care visits with $0 deductibles, and $25 copays for all in-network visits. Their innovative network consists of over 2,400 retail clinics and urgent care centers across the country with extended hours and no appointments necessary. They also provide access to telemedicine visits via phone 24-hours a day, 7 days a week at no cost which makes getting necessary care quick and easy, even when work and family schedules make it difficult to go into a doctor’s office. Their app-based tools and live medical concierge are available 24/7 make finding care easy and convenient. As an added benefit to address employee concerns about prescription costs, Hooray Health offers a prescription discount card to ensure employees that they are receiving competitive prices for their medications.

Hooray Health removes financial and convenience barriers that prevent people from getting the care they need by making access to necessary care easy, convenient, and free for employees. This type of solution is particularly useful for employers with high deductible health plans where high out of pocket costs may deter employees and their families from seeking the necessary care that they need. While solutions like these remove barriers to care, they also save employers money by providing an affordable alternative to many of the care services needed by their members. Providing easy-to-use concierge-based access to a network of retail clinics, urgent care centers and telemedicine doctors ensures that employee health won’t neglect their health due to lack of money or lack of time. You can learn more by contacting them at info@hoorayhealthcare.com. 

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About BetaXAnalytics:

If you’re an employer who feels there’s got to be a better way to control health care costs, you’re on to something. And we can help. BetaXAnalytics partners with employers to use the power of their health data “for good” to improve the cost and quality of their health care. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, to save health dollars and to better target health interventions to keep employees well. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

About Hooray Health:

Since its founding in 2017, Hooray Health has been committed to disrupting the health insurance industry by providing employers, individuals and their families with the assurance that their basic healthcare needs are covered. Here at Hooray Health, we believe that healthcare should be simple, honest, and affordable, that’s why whether you apply online or over the phone, the process is always simple, and acceptance is guaranteed. Partnered with over 2,300 urgent care and retail clinics, and a 24/7 medical concierge team, Hooray Health members know that no matter where they are or what time it is, their healthcare is there for them. Starting plans have a low monthly cost with no annual deductible, an affordable copay, and no surprise balance bills. Every day, Hooray Health is smashing the industry norms and bringing healthcare to all.

Image credit: iStockPhoto

Forget Flashy Technology: Here Are 3 Data and Analytics Best Practices Any Company Can Use Right Now

Data

The ability to take data—to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it—that’s going to be a hugely important skill in the next decades.


~Dr. Hal Varian, Chief Economist at Google

Practically everyone is talking about using data and analytics to succeed today in business, but surprisingly companies are only deriving a fraction of the value that’s available to them in their data when they’re making decisions. The reasons for this vary across organizations, but often times it comes down to budget constraints, talent constraints, or lack of recognition from leadership that analytics will help their business to run better. During an interview in 2009, Google’s Chief Economist Dr. Hal R.Varian predicted, “The ability to take data—to be able to understand it, to process it, to extract value from it, to visualize it, to communicate it—that’s going to be a hugely important skill in the next decades.” 

Let’s take a look at some of the highest-performing companies out there today. Over the past 5 years, there have been 13 companies that have managed to outperform the S&P 500 each year. And when you take a look at this elite group—which includes companies such as Facebook, Amazon, and Google—you find that the majority of these businesses are algorithmically-driven. These companies take in data constantly, and use this data in real time to update the user-experience. In their 2012 feature on big data, Andrew McAfee and Erik Brynjolfsson shared findings from their research that “companies in the top third of their industry in the use of data-driven decision making were, on average, 5% more productive and 6% more profitable than their competitors.” It is hard to deny that success in our respective businesses is not a function of how well we make use of the data available to us. 

So how does Human Resources (HR) fit in to this picture? HR may not be the first group that you think of when considering who should have a strategy around using data. However, HR has the weighty responsibility of managing the top expenses of a company—salaries, healthcare, and benefits. The 2018 Milliman Medical Index estimates that the cost of healthcare for a family of 4 this year will be upwards of $28,166. Yet approximately 20% of employer-sponsored health care spending is wasted each year due to unnecessary or preventable costs across the continuum of care. The rise of high deductible health plans mean that decisions made within HR on health plans and benefits are decisions that weigh heavily on their employees pocketbooks as well.  When we look at HR through the expense-management lens, we see that HR carries the company’s fiduciary responsibility to manage these expenses not just for the bottom line of the employer, but also for the sake of their employees’ wallets.

We often see companies who make the decision to start using data and analytics immediately start shopping for a tool to make use of their data. While this step may be right for some companies, there are a few foundational analytics best-practices that we recommend companies have in place before making any analytic technology investments.

1.      Understand the quality of your data. One of the biggest mistakes we see companies make is that they assume that just because a report comes from I.T. or from a vendor, that the data is correct. However, very rarely is the data captured by a company in “ready-to-use” form. IBM estimates that poor data quality cost American companies $3.1 trillion in 2016 alone. A recent study of 75 executives who assessed their own organizations data quality found that only 3% of their companies’ data met basic quality standards. Furthermore, understanding data quality is a fundamental issue within organizations, executives are more informed to understand how data quality affects their vendor partners as well. Every bit of data that we review is a piece of a much larger picture, and understanding the limitations of the quality of your company’s data helps to make a more accurate assessment of its insights.

2.      Develop your data strategy. Take a step back from day to day operations to decide how to data can help to inform your decisions. This affects what metrics you’re looking at, and how often you’re receiving it. Many companies are surprised to find that the process of developing a data strategy often means reducing the amount of reports people are looking at. A common assumption is that the more data we’re looking at, the better off we are. In reality, when decision-makers are inundated with extraneous reports, they may miss valuable messages that they need to see. What goals is your division working towards? Which pieces of data most closely track progress to these goals? The best way to guide a strategic process for looking at data aligns your business goals with a limited number of key metrics to indicate when changes are needed to reset course. 

3.      Identify a data “expert” on your team. Given the issues that exist in every organization with data quality, it is valuable to identify someone who is intimately aware of the source and limitations of the data your company assesses. This person can answer questions on why particular data might be wrong, if duplicate records are skewing the data, or how outliers are affecting results. Your data expert can help to tell the story of your organization’s data to better frame what actions are needed to meet your operating goals.

Using data to make better business decisions does not need to be cost-prohibitive. Before investing in any data and analytics tools, implement these best practices to lay the groundwork for a sound approach to using the data you already have. They can be used by any company, regardless of size or budget. And the best part is, you can start to use these best practices today.

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Bob Selle has led culture change and organizational design for America’s most recognized retailers. He is currently the Chief Human Resource Officer for the northeast’s premier close-out store Ocean State Job Lot, leading a transformation that has named them a Forbes Best Midsize Employer two years in a row.

Shannon Shallcross is a data expert who believes that data interpretation holds the key to solving healthcare’s toughest challenges. As the co-founder and CEO of BetaXAnalytics, her company uses the power of data “for good” to improve the cost, transparency and quality of healthcare for employers.

See Bob and Shannon at the Strategic HR Mt. Washington Conference on October 29th, 2018 during their plenary session, Metrics That Matter: Let Numbers Tell a Story.

Risk Adjustment: 5 Things You Should Know About the Latest in the Unraveling of the ACA

Healthcare

$10.4 billion is in limbo, representing roughly 11% of individual market health insurance premium dollars. This is the latest headline on the unraveling of the Affordable Care Act as the government recently made a disruptive announcement that they would be freezing risk adjustment payments that were expected to be paid in the fall. While on the surface this sounds like a doomsday scenario, healthcare’s future in America may look less bleak than it sounds. Here are 5 things you should know about this trending topic.

1.      What is Risk Adjustment?

Risk adjustment has played a big part in the ACA to encourage insurers to cover people regardless of their health status instead of cherry-picking the healthiest people. This is not to be confused with other ObamaCare subsidy programs. Instead, risk adjustment payments shuffle money from insurers with relatively healthy populations to insurers with unhealthy members. As a way to keep this system fair, insurers with the healthiest members pay money to those with the least healthy members to cover their more expensive costs of care. This system was designed to remain budget-neutral. This most recent decision to freeze risk adjustment payments equates to $10.4 billion tied to the individual and small group health insurance markets for the 2017 plan year. For reference, risk adjustment transfers play a large role in the current insurance system, comprising 11% of total premium dollars in the individual market in 2016. 

2.      What led to this announcement that risk adjustment payments would be suspended?

The government has announced that risk adjustment payments expected for the fall of 2018 would be frozen due to a February 2018 ruling of the US District Court for the District of New Mexico. This ruling pertained to a complaint made by a New Mexico insurer who claimed that the risk adjustment formula was inaccurate and was disproportionately rewarding larger insurers. The New Mexico federal judge on the case ruled that the risk adjustment formula is unfair because it uses the statewide average premium in the calculation, whereas some have argued that using the carrier’s own average premium would be fairer. It is interesting to note that this New Mexico ruling from February 2018 conflicts with a ruling in a similar case from just one month earlier in Massachusetts, where the federal court sided in favor of using the statewide average premiums in the risk adjustment methodology.

3.      Why should we care?

An announcement like this spreads chaos that comes with uncertainty during an already challenging time for American healthcare. Payers who were expecting risk adjustment payments prior to this freeze would lose billions, as presented in CMS’s recent summaryreport of the 2017 risk adjustment program.

Insurers’ 2019 rate filings are in progress, and the $10.4 billion in risk adjustment payments factor heavily in how these health insurance plans are priced. Furthermore, suspension of these payments in 2018 could lead to financial solvency challengers for insurers, which would lead to higher premiums.

4.      What do the experts say?

Despite the current uncertainty, many policy experts believe that the risk adjustment payment freeze will be lifted, and payments will be ultimately made in the fall. The Centers for Medicare and Medicaid Services (CMS) released a statement saying that the agency has asked the New Mexico court to reconsider its decision and expressed hope for a prompt resolution of the issue. 

5.      Where do we go from here?

The government could do a few things that would immediately fix this issue:

·        File an interim final rule which could address the risk adjustment formula concerns raised by the court  

·        Ask for a stay on the impact of the New Mexico court ruling

·        Appeal the ruling

·        Ask the court to clarify that the ruling only applies to plans sold in New Mexico

Whether any of these things will actually happen is still unknown. We can expect to hear the result of CMS’s request for reconsideration of the New Mexico decision, as well as CMS’s further clarification on the status of the risk adjustment payments in the near future.           

For more information on risk adjustment, the following sources provide a well-rounded view of the issue:

Politico – Obamacare Insurance Rate Hikes

CMS 2017 Summary Report Risk Adjustment 2017

Wall Street Journal – Trump’s Latest Affordable Care Act Move Adds to Insurers Uncertainty

The Incidental Economist – Taking a Dive on Risk Adjustment

Fierce Healthcare – Examining the Future of the ACA

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BetaXAnalytics combines clinical data science with emerging technology to improve the cost and quality of health care for payers, providers and employers. Our risk adjustment natural language processing tools help payers and providers to improve coding accuracy and to maximize their financial performance. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

How Much of Our Healthcare is “Waste”?

Healthcare

It’s no secret that healthcare costs in the United States are skyrocketing, as the latest estimates put our annual healthcare spending at 18% of the U.S. GDP. Furthermore, the health of Americans ranks among the worst compared to health outcomes in similar developed countries. This complex reality is aggravated by a number of problems. Much of the care that we receive is known as “fee-for-service”—we pay for each medical service or test we receive. What this means for patients is that the more they see their doctor, the more they pay. This is problematic for many Americans, as nearly 40% have a high deductible health plan where individuals are responsible for on average $5,248 of out of pocket medical expenses each year. A survey from the Kaiser Family Health Foundation found that 1/3 of adults have trouble paying their medical bills, and 73% have cut back on spending on food, clothing or basic household items to pay their medical bills. With the cost of healthcare in the U.S. being such a recognized problem, one of the many concerns that contributes to this issue is what is known as “low value care,” or in other terms, wasteful healthcare services. 

Choosing Wisely® is an international initiative that promotes facilitating conversations between patients and their doctors about the clinical need for low value care. The goal is to reduce wasteful medical tests and unnecessary health services.  As part of this initiative, over 80 partners have published an extensive list of clinically-vetted recommendations that represent medical best practices. A 2014 study of the Virginia All Payer Claims Database applied a list of these clinical recommendations and found that low cost, high volume health services contribute the most to unnecessary health spending; wasteful spending in this study was estimated at $538 million.

What does spending on wasteful healthcare services look like at an employer level? One of our clients, a large, self-insured employer, was interested in understanding if wasteful health spending was an area of concern for their members. To answer this question, we looked through 3 years of their medical and pharmacy claims to pull out services that were deemed “clinically wasteful.” From this data, we narrowed our focus to 11 specific measures of wasteful services which are based on areas of waste that are clinically validated under both the Choosing Wisely® initiative and HEDIS. These 11 areas are as follows:

  1. Don’t do imaging for an uncomplicated headache.
  2. Don’t perform PAP smears on women younger than 21.
  3. Don’t perform PAP smears on women who had hysterectomy for non-cancer disease.
  4. Don’t perform routine annual PAP tests in women 30–65 years of age.
  5. Don’t diagnose or manage asthma without spirometry.
  6. Members with a primary diagnosis of low back pain should not have an imaging study (plain x-ray, MRI, CT scan) within 28 days (4 weeks) of diagnosis.
  7. Don’t indiscriminately prescribe antibiotics for uncomplicated acute rhinosinusitis.
  8. Don’t order sinus computed tomography (CT) for uncomplicated acute rhinosinusitis.
  9. In the evaluation of simple syncope and normal neurological examination, don’t obtain brain imaging studies (CT or MRI).
  10. Don’t do CT for evaluation of suspected appendicitis in children until after ultrasound has been considered.
  11. Don’t recommend follow-up imaging for clinically inconsequential adnexal cysts.

Out of the entire member population consisting of employees, spouses and children who were covered under the company’s health benefits, there were 2515 members who received care in the 11 categories of care that we studied. Our study found that half (1274) of these people received medical services that are considered clinically wasteful.

15.5% of spending in these 11 categories was considered to be wasteful. Out of $1.47 million spent on care within these 11 categories, $229k was spent on these clinically wasteful services. 

There are a few limitations to keep in mind while evaluating these measures of waste. First, we examined 11 out of over 500 clinical best practices. This is because we wanted to focus on data points that were more accurately represented by claims data, as EMR notes were not available as part of this study. What we measured were specific types of waste and we did not calculate the total amount of “healthcare waste” in this employer’s spending. Furthermore, our study examined direct claims-based costs and made no assumptions of additional downstream medical costs for those who received low value care services. 

What do these findings mean for this company and others who are paying for healthcare? Healthcare waste (low value care) is a reality in our healthcare system today. Patients, providers, and those paying for care are all affected. Even in this study that examined health spending in one company, out of the 11 areas of clinical waste we studied we found that half of the people receiving care in these categories received low value services. Initiatives such as Choosing Wisely® are effective in raising awareness of low value care and opening conversations between patients and their doctors to avoid unnecessary medical tests and treatments. You can find more information on this educational initiative at www.choosingwisely.org. 

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BetaXAnalytics is a healthcare data consulting firm that helps payers and providers to maximize their CMS reimbursements and helps employers to reduce their healthcare spending through proven strategies to contain costs. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

The Missing Piece of Corporate Well-being—How We Treat Each Other

Healthcare

What has the greatest impact on employee well-being? Often when we hear the word “well-being” we instantly think of health screenings, nutritional education, fitness challenges, and online health risk assessments. But imagine you have the best-designed wellness program at your company.  Would your employees all be at their peak of health and productivity?

Consider my personal story. I worked at a wellness company—it was a lot of fun! Inside the company’s walls you saw daily company-wide walking breaks, ping pong tables in the break room, and a massive gym on-site. The whimsical environment came along with a mission to change people’s lives through improving their health. It wasn’t uncommon to see someone floating from reception to the call center on a skateboard. Your dog is snuggling at your feet below your desk. Sounds like the perfect recipe for a health utopia, right? 

Well get this—I gained weight while working at this wellness company. Why? Stress! Along with this fun environment came a lot of stress which was natural at any rapidly-growing startup. The stressful environment wasn’t because the company didn’t offer enough healthy programs and perks. We worked in a metaphorical test-kitchen for corporate wellness program best-practices. But none of this cancelled out the abundance of meetings where our days would be spent sitting in a chair, the long hours fixing issues, and a daily obsession with identifying who was responsible for these issues. There was frequent travel which increased pressure to get even more accomplished while in the office. And let’s not forget the ever-important foundation that how we treat each other in the workplace is essential to creating engaged, happy, high-performing teams. No wellness program can create this—the values exhibited by a company’s culture are strategic, deliberate, and are fostered by people from the top to the bottom of an organization. 

Well-being encompasses the whole person—not just a person’s body, but their mind as well. In this sense, a health check on company culture is just as important, and perhaps even more important, than offering programs to ensure physical health. An environment where employees are happy is one where there is respect for people. Emotionally healthy workplaces are marked by trust, kindness, and forgiveness. Hundreds of studies by pioneers of positive organizational psychology including Adam Grant at Wharton, and Jane Dutton and Kim Cameron at the University of Michigan, have found that a positive work culture characterized by humanity improves employee loyalty, engagement, productivity and performance. With three quarters of the U.S. workforce disengaged when they’re at work, how can we expect them to engage in the company’s wellness program? 

Even beyond considering an employee’s emotional well-being, stress in the work environment impacts physical health. A large study by Anna Nyberg at the Karolinska Institute found the link between a harsh boss and heart problems in employees. A separate study found that bad bosses significantly increase employees’ risk of heart attack. And after examining 279 different studies, the Journal of Applied Psychology linked an employee’s perception of unfairness at work to physical health. An unfair work environment was linked to mental health issues, sleep disorders, high blood pressure and obesity. 

There is an abundance of data that supports the link between a positive work environment and physical health.  So how do companies miss this when shaping their wellness strategy? Unfortunately in many cases we mislabel “work environment” as a place instead of a feeling. Creating a positive work environment could be mistaken for building a Zen space, adding a foosball table to your break room or instituting Puppy-Snuggle Fridays. In reality it might mean processing employee feedback, crafting a meaningful company culture, and making developing leaders a core competence. The most important step to improving employee health could be as simple as examining the employee experience. A work environment that fosters well-being gets to the core of workplace culture—how we treat each other. 

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– Shannon Shallcross is Co-Founder and CEO of BetaXAnalytics, a healthcare data consulting firm that helps employers to cut their healthcare spending through proven strategies to contain costs. 

For more insights on using data to drive healthcare, pharmacy and well-being decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

Medications that Don’t Work and Costs that Vary by 865%: Here’s What We Found Hiding in 1 Employer’s Healthcare Spending

Healthcare

Approximately $2 billion of employer-sponsored health care spending is wasted each year due to unnecessary or preventable costs across the continuum of care. This is approximately 20% of total health spending by employers each year, according to the American Health Policy Institute. 

Wasteful spending was a concern that one of our clients was facing when we met them. Their healthcare spending was increasing year over year in line with the healthcare industry trend, which is right now at +6% to +7% each year. Like most employers, a small group of people was driving a large percentage of their healthcare costs. And as, year over year, they were footing the gargantuan bill for their employees and their families, they were left with some very reasonable questions:

“Is the money we’re investing in our wellness program even making people healthier?”

“Is our diabetes-management program working?”

And, quite literally, the million dollar question…

“Where can we save on our healthcare costs?”

This employer partnered with us because of our team’s background in healthcare and wellness data science, as well as our team’s experience in advising large employers on their health spending strategy. We studied several years of their health and pharmacy data and we looked at this data by member status (employees, spouses, children) and by work location (corporate office, field offices, distribution center). We brought in absence data and we looked at the smoking status for each member. Here’s just a sampling of some of the highlights we found:

Diabetes is a major cost driver, but it could be costing less. Diabetes test strips, which were one of their top prescription drug cost-drivers, have costs that can vary by brand by up to 865%. The high cost variability of these test strips is not necessarily correlated to their quality. On one hand, an employer wants to make it as easy as possible for employees to access the diabetic supplies they need. However, without controls around this spending this could be a source of health spending leakage.

Members are not being driven to cost-effective medications. Pharmacy costs for diabetes medications were increasing year over year while medication adherence was decreasing. That right…the employer was paying more for less pills. What we found was that fewer people were taking their medications (adherence was decreasing). And of those who were taking their medications, they were being driven to the “preferred” brand of medication, but this brand was not the cheapest. This explains why they were paying more for less pills. This is also an indication that their medication formulary needs to be revised. 

An expensive method to quit smoking was not working. A costly and well-marketed medication to quit smoking was costing in excess of $63,000. When we examined adherence, very few of the people who took this medication completed treatment. This was most likely due to the medication’s unpleasant side effects. In fact, of the 58 people who started taking this medication, only 3 completed the recommended round of treatment. Clinical evidence indicates that 1 in 2 patients completing this therapy will quit smoking. This means that it cost this company $63,000 for 1 or 2 people to quit smoking. This expensive (and, in this case, ineffective) medication was on the plan’s preferred drug list. If the pharmacy plan had step therapy in place, people looking to quit smoking would be directed to use effective, yet less expensive medications before moving to more costly medications.

The Emergency Room is a cost-driver, while very few members use Urgent Care. Emergency Room visits were on average 4 times more costly than visits to Urgent Care. Not only were very few members ever using Urgent Care, there was a long list of Emergency Room “frequent flyers.” This informs the employer’s communication strategy on educating their members on the purpose of Urgent Care, as well as how to identify when a trip to the Emergency Room is necessary.

Employers typically have two goals when it comes to paying for employee healthcare: they want to support employees in improving their health, and they want to control costs. As a former veteran of the corporate wellness industry, I will be the first person to tell you that lots of companies will promise to make employees healthy and to save them money. Very few will actually deliver. This is because employers want a partner who will help them to control health costs, not just to deliver a program. 

Unfortunately, there’s no magic wand an employer can wave to suddenly reverse everyone’s chronic diseases. But there are many opportunities to ensure condition management programs have a positive return on investment. Furthermore, there are subtle clues hiding in their data that can show them areas where they are losing money where they shouldn’t. These are the many little holes where there’s healthcare spending leakage. It is our job is to find these holes for employers.

The good news for any employer looking to reduce wasteful health spending is that the insights we find are actionable. In this example, what we uncovered in this data is now being used by this employer to save money. Their Chief Human Resource Officer deserves enormous credit for not accepting the status quo with respect to their healthcare spending. He is among a growing number of HR professionals who understand that with the high cost of healthcare comes a responsibility to closely manage these costs. Their data drives a holistic strategy around health and wellbeing services that aligns with the strategy of the business. We are proud to partner with them to provide the actionable transparency they need to achieve their wellbeing goals.

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BetaXAnalytics is a healthcare data consulting firm that helps employers to cut their healthcare spending through proven strategies to contain costs. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

Will Amazon’s Joint Healthcare Venture Make You Smile?

Healthcare

Amazon has revolutionized so many aspects of our lives, and now the big question is: will they revolutionize healthcare? It seemed that way, given their joint announcement on January 30th with Berkshire Hathaway and JPMorgan Chase, claiming they were teaming up to form a healthcare company “free from profit-making incentives and constraints.” While the intended goal of this joint venture is “to improve U.S. employee satisfaction while reducing overall costs,” Jamie Dimon of JPMorgan Chase explained, “the three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.” This announcement sent shockwaves throughout the market, as the stocks for major insurers and healthcare companies went tumbling. Market analysts began waging their predictions for what this new company would look like—Alexa for employee benefits? Diagnostic wearable technology? What could it be? To calm the fears of JPMorgan Chase’s clients, company representatives tempered the message, explaining that the initiative can be compared to a group purchasing organization, similar to the type of setup used by hospitals to buy supplies, so the 3 companies could leverage better deals for their employees.

Whoa, Nellie.

OK, maybe we all got a bit ahead of ourselves. Warren Buffet, who compared healthcare’s skyrocketing costs to a “hungry tapeworm on the American economy” admitted that the three companies do “not come to this problem with answers.” But he resolutely stated that they did not need to accept the current state of healthcare. Bezos went on to say, “hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.” These companies bring serious purchasing power to the healthcare market.  Amazon, JPMorgan Chase and Berkshire Hathaway have a combined market cap of $1.62 trillion, and between all 3 companies there are 1.2 million employees. Last year, JPMorgan alone spent $1.25 billion on medical benefits for U.S. employees where the medical plan covers almost 300,000 individuals, including employees and their family members.

What will this healthcare partnership most likely look like?

While we can’t predict what this solution will evolve to become over time, JPMorgan disclosed a crucial piece of information following the joint venture announcement—that the initiative can be compared to “a group purchasing organization.” The overall goal of this initiative is to cut healthcare costs and to improve employee satisfaction. So the best way we can understand what this joint venture solution will be is to look at the current state of employee healthcare for these companies.

Hint: follow the money

Taking a look at who is currently making a profit off of Amazon, Berkshire Hathaway and JPMorgan Chase’s healthcare benefits is a good place to start when we’re asking ourselves what this new healthcare company will look like. 

A 30-second tutorial on health benefits

But it’s useful to take a 30 second detour for anyone unfamiliar with the employer healthcare market to understand where these companies are coming from. These days, most employers with over 1000 employees “self insure” for their healthcare benefits, meaning they pay health claims for their associates from dollar 1. For large employers, and especially for jumbo employers like Amazon, Berkshire Hathaway and JPMorgan Chase, it’s simply more cost-effective to pay for healthcare in this manner—they tend to not need to pay a health insurance company to take on the financial risk of their “sickest,” most costly employees (i.e. people who require major surgeries or treatments, those requiring costly medications or people with multiple chronic illnesses). Employers like this work with a health insurance company (for instance, United Healthcare, Aetna, Blue Cross) to perform the administrative functions of paying providers and settling claims. Either the health insurance company or a pharmacy benefits manager will handle the pharmacy side of employee healthcare claims.

Large employers such as these 3 have been using innovative tactics to control healthcare costs for years. From using healthcare analytics to strategically manage wasteful spending to moving health clinics right into their corporate offices, large employers historically have been ahead of the game with managing healthcare spending. After all, it’s Warren Buffet who notoriously said, “GM is a health and benefits company with an auto company attached,” understanding that because healthcare is the first or second highest company expense, that portion of the “business” must be managed as strategically as any other business unit.

Mission critical: cut out middleman expenses, cut down on employee healthcare headaches

So back to the original question of, “who profits from Amazon, Berkshire Hathaway and JPMorgan Chase’s healthcare spending today?” Here’s a sampling of the likely suspects who are middlemen in the game of keeping employees and their families healthy:

1.      Health insurer(s) (United Healthcare, Aetna), who charge an administrative fee for settling medical claims

2.      Clinical condition managers (often employed by the health insurer) who help to coordinate care for employees with chronic conditions such as diabetes, cancer, heart conditions

3.      Wellness service companies such as Limeaid or Virgin Pulse, who administer health-related educational programming, employee health screenings, incentive programs to encourage employees to see their doctor and stay active, and fitness challenges to encourage physical activity and healthy behaviors

4.      Pharmacy benefits managers or related pharmacy services, such as Optum or CVS who take care of prescription drug claims and/or cost-management

5.      Surgery cost-bundling vendors who negotiate with medical providers to receive more competitive, bundled rates on surgeries and costly medical tests

6.      Health analytics companies such as Truven (IBM) or Medeanalytics who use health and pharmacy data from employee claims to help with strategic healthcare cost management

7.      Telemedicine vendors who offer the availability of doctors via phone for employees who need to discuss a health concern, but cannot see a doctor in person (or cannot wait for an appointment)

8.      Health advocates and/or health “concierges” that exist to help employees navigate the confusion of the health system to better understand services that are in and out of network, applicable deductibles and coinsurance

9.      Employee benefits platforms that exist so employees can understand the specifics of all benefits available to them, including health insurance and pharmacy coverage, and employee health savings accounts

10.  Benefits brokers and consultants who help to manage the coordination of all these programs and manage vendors

Understanding that the goal is to cut healthcare costs, it’s this list of middlemen who may be on the chopping block, as their services may potentially be replaced by this new joint venture. For instance, these 3 companies may form a non-profit company to handle settling their employee claims (the job which is currently done by the health plan). Similar to many health insurance companies, managing chronic diseases, managing pharmacy claims and offering wellness services could be companion services offered by this new venture. Only these services would likely be more effective than those of a health insurer because the company would solely exist to keep employees healthy—not to make money. And since profit would not be the motive, access to healthcare analytics to enable strategic management of costs and population health would be more transparent, truly existing for the benefit of Amazon, JPMorgan and Berkshire Hathaway. There are many possible solutions that will save healthcare dollars and improve employee satisfaction for these companies, but the most likely solution will incorporate some form of replacement of some or all of these 10 services that employers use to provide healthcare coverage, to manage healthcare costs, or to help employees to better leverage healthcare services for better health outcomes.

So will this forward-thinking trifecta hack healthcare to solve the problem of rising costs for the rest of the country? Perhaps in time. But the more significant message in this bold move is that Amazon, JPMorgan and Berkshire Hathaway have taken a public stand to say that they will not accept the status quo of healthcare in the United States. The rising costs, the confusion of employees trying to navigate the tangled healthcare maze, and the overall lack of improvement in employee health can no longer be accepted as the norm. And as this solution begins to take shape, it will send ripples through the healthcare space, as a new expectation takes priority in employer-sponsored healthcare—getting healthcare shouldn’t be so difficult, it shouldn’t cost so much, and healthcare should be making people healthier. Now there’s a change that will bring a smile. 

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BetaXAnalytics is a healthcare data consulting firm that helps employers to cut their healthcare spending through proven strategies to contain costs. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

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