Effective Application of Comparative Utilization Data in Managed Care Organizations

FOR YEARS, MCOs HAVE STRUGGLED to make effective use of the volumes of data they have at their disposal. Many have discovered the importance of this capability only when it was too late. The rash of IPA failures in California, Texas and other markets was caused in no small part by their inability to identify adverse utilization trends before they became irreversible. Managing insurance risk is a highly leveraged business, where relatively modest fluctuations in cost can have catastrophic effects on the bottom line. The core of good data management is standardized reporting. Every MCO should have a consistent library of periodic reports that will highlight trends as they begin to emerge and enable the MCO to track trends already on the “radar screen.” The MCO should include a variety of report categories that capture financial and utilization statistics—from both a static and longitudinal perspective—of its population. The database also should have discursive or drill-down capabilities, so that an issue from one report can be examined in further detail on another. It is critical to note here that any use of comparative data is impossible if the MCO cannot capture information on its own population and providers. Effective data use also means presenting it in a way that provides the viewer with some level of insight. Abstract figures (“Our commercial hysterectomy rate is 3.6/1,000.”) are seldom useful unless they are compared to some other metric. Comparisons create context. If the MCO knew that last year’s hysterectomy rate per thousand was 2.5, or that the national average is Summary The most critical determinant of managed care organizations (MCOs) success is their ability to capture and utilize data. Understanding—and shaping—the factors that affect MCOs’ bottom lines requires a multi-dimensional approach to data management. A vital component of this approach, and one that too few organizations possess, is the effective application of comparative utilization data. The ability to acquire external utilization comparisons, and use them to identify cost-saving opportunities, is an essential survival skill in the management of an at-risk medical budget. The American Association of Integrated Healthcare Delivery Systems (AAIHDS) is considering establishing an actuarial data repository as a service to its members. This project would involve the collection of “claims-level” data from at-risk MCOs nationwide. The data would be mapped into standardized schema, ensuring consistent processing of all types of claims, enrollment, capitation, and related data. The benefits of this centralized warehouse would then be available to association members through a) regular side-by-side comparisons of participants’ utilization and costs against the balance of the data universe, and b) customized studies of utilization management (UM), outcomes, disease management, and other population-based managed care studies.