Helping payers control healthcare costs through greater transparency
Payers who believe big data provides all the answers they need to establish competitive pricing are only getting half the picture. Comparative analytics take big data to a new level, allowing payers to achieve reduced costs by providing pricing transparency.
Many organizations believe they already have an analytics solution. However, the missing piece is often the comparative component. Comparative analytics offer the ability to help lower the medical cost of care, enhance member engagement and reduce administrative costs. As a result, payers have the data they need to help reduce their medical cost of healthcare by enabling their members to compare pricing in the ever-changing healthcare services market-delivering information that patients otherwise would not have.
Patients are largely unaware of their total healthcare costs because, historically, insurance companies have been responsible for negotiating pricing with the providers and reimbursing those providers at the negotiated rates. As a result, patients are left to pay only a portion of the bill. However, with changes in health plan options, more patients are becoming financially responsible for a larger portion of the episode of care, while also facing rising premium costs. Patients must now seek out the best value when evaluating healthcare services-meaning they need true pricing transparency to make informed decisions, just as they would in purchasing any consumer good.
One solution to these challenges is to implement a bundled pricing program inside an episode of care strategy that payers can implement to limit increasing medical costs of care. Procedures such as an MRI or an entire episode can be priced at a flat “bundled” rate to help payers and consumers better control component costs.
Comparative analytics can guide payers to establish bundled pricing as they try to keep healthcare costs in check. A contributing factor to rising healthcare costs is the lack of published pricing and comparative information available to patients.
Comparative analytics makes it possible to establish bundled pricing. It begins with episode of care analytics-examining historical claims data, group costs by episodes of care and establishing actual prices. By applying these pricing methodologies, payers can reduce costs with a consumer-driven model that focuses on value-based choices.
Bundled pricing also makes it easier for patients to compare medical costs and understand how procedures are valued based on variables, including the cost of the facility and providers. With this level of transparency, patients now have access to full pricing information to help understand how much the entire procedure will cost. This approach enables patients to be price savvy and seek out the facilities and providers who deliver low cost, high value care.
Payers looking to implement episode of care pricing strategies need to find a comparative analytics solution provider with the technology to analyze and aggregate data as it relates to episodes of care. The development of bundled pricing begins with the payer providing claims data to the analytics solution provider for analysis. This claims data is analyzed and bundled according to identified episodes of care, then normalized using proprietary algorithms for true apples-to-apples comparisons, by location, procedure and provider.
The resulting data offered through comparative analytics helps payers identify the steps needed to maximize savings. This information exposes the cost drivers of medical procedures, allowing payers to identify steps needed to reduce costs, such as:
- Creating tiered and narrow provider networks
- Designing new lines of value-based benefits
- Developing new pre-authorization and care management approaches
- Preparing for Accountable Care Organization participation
- Modifying provider network management and contracting strategies
- Excluding low value providers from the network
Additional benefits payers can reap by leveraging comparative analytics to create bundled pricing include the ability to:
- Measure the effectiveness of a pricing program. A key benefit of episode of care analytics is the ability to measure the effectiveness of programs following implementation. For example, payers can quantify the savings captured during pre-authorizations when consumers are guided toward more cost-effective providers.
- Maximize every healthcare dollar spent. Using episode of care analytics is a powerful way that health plans can elevate the value that they provide to employers and patients. It gives control back to the patients and keeps the market competitive. Episode of care analytics also deliver pricing transparency that patients can use to reduce their out-of-pocket costs. Ultimately, these tools help payers, employers and patients maximize every healthcare dollar spent.
Bundled pricing is one strategy that helps payers achieve a more effective way to deliver value to providers and patients. It gives the consumer greater control and, keeps the market competitive and in turn, helps to manage healthcare costs. Comparative analytics provides the tools and technology needed to help payers deliver this pricing model, and helps maximize the value of every healthcare dollar spent.