Medical Claims Transparency a Must to Lower Health Costs
Insurers recently drew the ire of government officials by announcing that the new healthcare law would force them to raise premiums. "I want health insurance companies to be transparent and honest when increasing premiums," Sen. Jay Rockefeller (D-W.Va.) declared.
Others have called for hospitals and doctors to be more transparent about their prices, in hopes that patients might be able to shop around and make more informed treatment decisions.
Price transparency is important. But it won't do much to lower health costs. After all, most Americans don't pay for their health care directly -- they get it through work. So individual patients have little incentive to comparison shop for their care or seek better value for the benefit dollar.
Transparency of medical claims information, on the other hand, can deliver billions of dollars in savings. Employers, who pay for most private health insurance in this country -- over $2 trillion annually -- should make sure that they have access to such data and that they're taking full advantage of it.
What is medical claims data? Essentially, it's a summary of how employees are using their health benefits. Of course, an employee's detailed health records are protected by privacy laws. But by examining de-identified data from across their employee population, tested cutting-edge technology can be used to find out things like how often workers are visiting the doctor and whether they face potential serious health risks.
Studies show that analysis of separate prescription claims data can help pinpoint potential costly employee catastrophic health conditions such as diabetes or stroke.
Armed with this information in advance, powerful software programs can be used to analyze where a firm’s health plan dollars are going -- and engage employees in programs to reduce unnecessary costs, mitigate health risks, and improve the quality of care.
For instance, if an employer discovers that her workers have a higher-than-average risk of developing high blood pressure, she can launch a wellness initiative or set up customized outreach programs to educate at-risk employees on how to make better life-style and healthcare decisions.
Patients and employers alike benefit from early intervention. At-risk individuals receive assistance in improving their health, while firms nip potential health problems in the bud before they necessitate even costlier treatments. And with the savings from these programs, employers can devote resources to improving plan benefits and reducing employee out-of-pocket expenses.
This process of analyzing claims data in order to save money on health care and improve health outcomes is at the core of a business strategy called Healthcare Performance Management (HPM). Advanced HPM software can be used to aggregate and sort workforce population claims data, identify medical spending trends, and cut health costs.
Unfortunately, many businesses are walled off from their medical claims data. Their insurance companies often refuse to share it with health plan sponsors.
The insurers' resistance is not always consistent with their clients' own business interests. After all, if a company doesn't know precisely how it's spending its health dollars, it will be less likely to be able to question ever-increasing premium increases.
That has to change. Policymakers should require carriers to give employers who pay their premiums access to claims data that are rightfully theirs.
Texas provides a model for reform. Two years ago, lawmakers in the Lone Star State granted employers access to select privacy protected employee health information, including total paid claims, their employees' general census data, and total monthly premiums. Businesses throughout the state have taken advantage of this data to manage their plans more effectively.
Implementing this insurer transparency requirement at the federal level would open the door to huge savings. Companies that have been able to access their medical claims data have seen as much.
For instance, Atlanta-based Cumulus Media, a large radio station operator, has used HPM software to identify over $4 million in savings among its 2,000 employees.
Berry College, located in Rome, Georgia, discovered through HPM that it could significantly cut health expenses by incentivizing patients to switch from brand-name drugs to generics. After restructuring its insurance plan into a self-insured plan, Berry College saved about 6 to 8 percent on every prescription drug it covered. Generic drug use jumped 10 percent, generating yearly savings of $238,000.
Without action, American businesses are going to be crippled by healthcare costs. Employer health expenses are expected to increase 7 percent this year -- and to double over the next seven years.
Medical claims data can help businesses ward off those increases. That's good news not just for businesses, but also for workers, who will see less of their paycheck consumed by health care. Employers should agitate for access to claims data -- and policymakers should support their efforts by removing the barriers to this data.
George Pantos is the Executive Director of the Healthcare Performance Management Institute.
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