HEALTHCARE Management

V O L U M E 7 • N U M B E R 1 S P R I N G 2 0 0 5

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Predictive Modeling:

The Science Behind

Lower Healthcare

Costs

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Case Management

Program Improvement

By Mary Kay Gilbert

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Valuable

ROSE

Seminar

6

ING Re Announces

New Perinatology

Consultant

I N T H I S I S S U E :

GED CARE REINSURANCE

ING AMERICAS

W

disease management initiatives continue to play an important role in health management. However, the industry has come to realize that these programs are too reactive.

We expect members to take the ini-tiative to seek out what is appropriate and as a result, members are treated after the onset of a diagnosable disease or acute episode that would warrant enrollment into a health management program.

Getting aggressive with health care cost containment requires another element to any health man-agement program – a way to find and treat members proactively, inter-vening and treating members before an acute crisis occurs.

This article discusses predictive modeling, how it works, why it’s

HEALTHCARE

Management

Forum

Reinsurance Solutions

Predictive Modeling:

The Science Behind Lower Healthcare Costs

By Dr. Julie A. Meek, President and CEO, The Haelan Group

capable of helping more members, and how it achieves significant first-year financial returns for the payer.

Predictive Modeling Explained

Predictive modeling uses a set of tools that takes information about a given population and stratifies people according to their risk for seeking higher than expected levels of health care in the next six to 12 months. As a result, a percentage of the population is identified as needing intervention before an acute crisis or the development of further complications results in increased current year medical costs.

Health plans have traditionally used predictive modeling in two ways: • To predict group cost and

risk-adjust of a person or population in order to project premium costs or to compare illness burden on eco-nomic outcomes.

The following material was developed prior to RGA’s acquisition on January 1, 2010 of the Group Reinsurance Business formerly owned by ReliaStar Life Insurance Company (a subsidiary of ING Groep N.V.) If you have questions, please contact RGA.

• To manage provider-driven cost by comparing risk-adjusted costs of care of a provider group to that of a similar group, thereby compar-ing adherence to clinical practice guidelines and cost outcomes. However, a third, benefit of predic-tive modeling and the one with the most financial impact – is to manage consumer-driven demand and cost by identifying future near-term, high care users. By identifying the top 10 percent of members most likely to seek high-cost care within six to12 months), predictive modeling greatly increases the chances of pro-ducing successful outcomes and significant cost-savings.

The first step is to decide how you want to use predictive model-ing. Then, you must select the right

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PREDICTIVE MODELING

(Continued from page 1)

ter a targeted ICD code. For exam-ple, studies show other reasons for why members seek care:

• The HERO study (Goetzel et al, 1998) shows that the most power-ful predictors of highest near-term care use are depression & stress. • A MEDSTAT/IHPM study

(Meneades et al, 2000) on 4.1 million lives shows that 46 to 63 percent of patients with claims representing 75-79 percent of all claims costs are NOT represented by the ten most costly diseases. • A Kaiser Permanente study

(Cummings & VandenBos, 1981) shows 40-60 percent of primary care visits were for symptoms for which their physicians could find no diagnosable disorder.

predictive modeling tool. Each pur-pose requires a different tool to achieve the best results. In other words, you can’t use the same tool to risk-adjust or profile providers and then turn around and identify high-cost cases. It’s important to match the correct predictive modeling tool to your primary business goals.

Finding the High-Cost Member

Until recently, the primary way to find high-risk members was through the analysis of claims information – finding members with a specific ICD code, or diagnosable disease or recent cost profile. While claims information is readily available and follows standard guidelines, claims information is an unreliable way to identify high-cost users and is often inaccurate for the following reasons: • Lag time between claims

submis-sions and their analysis

• Data is often incomplete, unreli-able or of poor quality for accurate predictive modeling

• Doesn’t capture new enrollees who do not have claims history

• Lower than desired sensitivity, specificity and predictive value

There’s a real problem relying on disease identification alone. This limits our ability to find the mem-bers that will become sick for rea-sons other than conditions that

regis-It has become apparent that find-ing the high cost user requires lookfind-ing for more than traditional disease-based factors.

Predictive Modeling and Perceived Health

The traditional view of health looks for the presence or absence of a dis-ease to predict care-seeking behav-ior. Health Perception Science, which is the “engine” behind survey-based, self-reported predictive mod-eling, defines health very differently.

The Perceived Health model, developed at Indiana University by Dr. Brenda Lyon, takes other con-tributing factors into account, such as emotions and health beliefs, and defines health as a person’s total

However, a third, benefit of predictive modeling and the one with the most financial

impact – is to manage consumer-driven demand and cost by identifying future

near-term, high care users.

TRADITIONAL/DISEASE-SILOED

IIndustry oriented towards management of diseases

IPremise that better disease management will result in lowered cost

ITypically identifying only 1-3 percent of the population, meaning only 10-15 percent of the near-term cost brought under proactive care management

NEW/PERCEIVED HEALTH MODEL

IOriented towards all factors

that contribute to a person’s sense of illness

IPremise that unless

non-disease-based factors are identified and addressed, the person won’t feel better and reduce care use

IIdentifies 10 percent of employees

that will account for 70-80 percent of their costs, dramatically

increasing the ROI potential T R A D I T I O N A L V S . N E W V I E W O F H E A LT H

The following material was developed prior to RGA’s acquisition on January 1, 2010 of the Group Reinsurance Business formerly owned by ReliaStar Life Insurance Company (a subsidiary of ING Groep N.V.) If you have questions, please contact RGA.

evaluation of how he/she is feeling or doing. In other words, a person can feel well, even if they have a disease.

As such, predictive modeling and the perceived health model become an important complement to tradi-tional case management and disease management that traditionally use historical data to find patients after they meet desired thresholds for

inter-vention. Predictive modeling using self-reported information helps pre-empt the patient’s suffering and the costs associated with the acute event.

ROI Made Easy

At the end of day, health plans need to use a predictive modeling approach that can show a positive benefit to cost ratio. When selecting or working with any vendor on a predictive modeling program, there should be clear goals and ways to assess program success based on ROI.

page 3 Healthcare Management Forum, Volume 7, Number 1

PREDICTIVE MODELING

(Continued from page 2)

When evaluating a vendor or pre-dictive modeling program, these ele-ments are key to achieving high ROI: • Find the right people

– Predictive modeling should find the 10 percent of the member population that are high-risk. One to three percent, which has been traditionally acceptable, will not make for very good ROI. – Predictive modeling must have at

least 50 percent sensitivity and specificity. It’s not enough to find the high-risk members when you can also avoid wasting resources by identifying the low-risk members.

• Use an intervention that works – Health coaching (rather than traditional case management) provides the correct balance of support, encouragement, and information to motivate patients to seek assistance, learn new skills, and make lifestyle/ behavior changes that improve their perceived health.

• Enough of the right people have

to engage in that intervention to produce enough benefit to realize a positive benefit to coast ratio!

– Engagement levels should be 60-70 percent.

Meeting Employer Demand

Health plans have a tremendous opportunity to introduce predictive modeling as a new health manage-ment program that makes employees more productive and less apt to seek high-cost care. Self-funded employ-ers are in the vanguard of using pre-dictive modeling and finding real success. In fact, they’re beginning to pressure health plans into offering survey-based predictive modeling.

Health plans can easily catch up and use predictive modeling without the traditional worries of how to engage more people and gain a clearer understanding of ROI?

Insisting on objectively verified outcomes and proof from any vendor is important to ensure that your pre-dictive modeling program achieves your stated goals. By adding predic-tive modeling to traditional disease management and case management, health plans can expect a substantial cost reduction and near-term ROI. I

It has become apparent that finding the high

cost user requires looking for more

than traditional disease-based factors.

Dr. Julie A. Meek, DNS

is Chief Executive Officer, Chief Science Officer and Founder of The Haelan Group. She has been involved in the design, testing and evaluation of sys-tems and processes for effective population health management for nearly two decades.

By looking at more than disease factors alone, health plans can manage fewer members, but capture and manage more of the cost.

The following material was developed prior to RGA’s acquisition on January 1, 2010 of the Group Reinsurance Business formerly owned by ReliaStar Life Insurance Company (a subsidiary of ING Groep N.V.) If you have questions, please contact RGA.

page 4 Healthcare Management Forum, Volume 7, Number 1



Case Management Program Improvement

By Mary Kay Gilbert

T

excellence by offering thorough, performance based on-site operational reviews of their case management programs. Our knowledge and experience from working with many national health plans and managed care organizations, allows us to offer useful and important information through these reviews.

Operational Reviews provide a comprehensive assessment of the structure and function of the client’s case management program, looking at it’s strengths and areas for potential improvement.

It is important to note that an Operational Review is not consid-ered an “audit.” An audit involves a methodical examination of records to check for accuracy. Although there are some published guidelines and benchmarks for case management programs, it is not within the scope of our practice to serve as a reviewer for this type of compliance. We believe an accred-iting body such as URAC1_or NCQA2_{better serves this purpose.}

Typical components of the ROSE Operational Review of the client’s case management program include:

• Organization and work flow • Training procedures and

continu-ing education initiatives • Case management process • Internal communication

• Quality programs, internal QA/QI procedures, education and training • Use of technical resources (staff

and tools)

• Management of difficult diag-noses such as transplants, prema-ture babies, and others…

Prior to the on-site visit, the client’s case management policies, organi-zational structure and other perti-nent information are reviewed. The on-site visit includes staff interviews and individual case reviews.

Specific client requests are incorporated into the process. For example, one client asked us to focus on the following components of their out-sourced case manage-ment program:

1) Case assessment and proactive coordination of care by the case managers.

2) Triage and the use of network providers.

3) Educations and management of cancer patients to minimize complications and readmissions. A comprehensive report is provided to the client, including an analysis and summary of findings and observed trends. The report’s key component is a discussion of the program’s strengths and identified

The following material was developed prior to RGA’s acquisition on January 1, 2010 of the Group Reinsurance Business formerly owned by ReliaStar Life Insurance Company (a subsidiary of ING Groep N.V.) If you have questions, please contact RGA.

page 5 Healthcare Management Forum, Volume 7, Number 1

C A S E M A N A G E M E N T

(Continued from page 4)

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areas to consider alternate or addi-tional processes or procedures.

The executive summary includes a high-level overview of findings at the end of a visit. The formal writ-ten report is sent to the client to serve as an external check and rein-force the goals and procedures ini-tially identified by the client. The feedback contained in the summary report can be used as a springboard for quality improvement. This

ulti-Mary Kay Gilbert, RN CCM, is a Health

Services Consultant for ING Re’s ROSE Program. Mary Kay has been with ING Re for nearly five years and has more than 10 years experience in the area of case management. She has provided care coordination and case management within her areas of expertise with perinatal, neonatal, and ER triage medicine. In her current role, she is responsible for working with clients to control risk, reduce cost and support quality healthcare outcomes.

mately can help enhance future case management initiatives. The client gains valuable information from the Operational Review.

Confidentiality is a key tenet of ING Re. It is important to rein-force that the information we learn from an operational review remains confidential. We may offer general suggestions based on a process and/or procedure we observed from another insurer, but we will not reveal their names nor identify the client’s activities and methods to any other insurer.

REFERENCES

1 URAC. An independent, nonprofit organization is a well known as a leader in promoting health care quality through its accreditation and certification programs. URAC offers a wide range of quality benchmarking programs and services that keep pace with the rapid changes in the health care system, and provide a symbol of excellence for organizations to validate their commitment to quality and accountability. http://www.urac.org/

2 NCQA. NCQA sets standards for the quality of care and service that health plans provide to their members. Health plans that meet standards receive NCQA Accreditation, which is nationally recog-nized as a seal of approval. For more information contact NCQA directly at:

http://www.ncqa.org/

Since the completion of an Operational Review one client has: • Improved communication and

process flow with their case management vendor.

• Expanded resource utilization. • Identified other areas for potential

economic impact.

ING Re can play a part in helping you know more about your opera-tions and ultimately better manage your risk and raise the bar for your case management program. I

BENEFITS OF ING RE’S OPERATIONAL REVIEW SERVICES:

The following material was developed prior to RGA’s acquisition on January 1, 2010 of the Group Reinsurance Business formerly owned by ReliaStar Life Insurance Company (a subsidiary of ING Groep N.V.) If you have questions, please contact RGA.

Healthcare Management Forum, Volume 7, Number 1

Healthcare Management Forum is

pub-lished by the Medical and Managed Care Reinsurance Team of ING Re. This publi-cation’s mission is to provide news and information to healthcare insurance professionals and thereby advance knowl-edge regarding healthcare insurance. The information contained in the articles represents the opinion of the authors and does not necessarily imply or repre-sent the position of the editors or ING Re. Articles are not intended to provide legal, consulting or any other form of advice. Any legal or other questions you have regarding your business should be referred to your attorney or other appropriate advisor.

Copyright © 2005 ING North America Insurance Corporation. All rights reserved. ING Re includes the reinsurance business of ReliaStar Life Insurance Company of Minneapolis, Minnesota, a member of the ING family of companies. No portion of this publication may be reproduced without permission from the publisher. For more information about articles, contact Kathy Petron, Newsletter Editor, ING Re, PO Box 20, Minneapolis, MN 55440-0020; telephone (800) 378-6965 or via email at [email protected]. If you would like more information or copies of Healthcare Management Forum, or wish to submit an article or comment, please call us at the number above or write us at the address above.

EDITORIAL BOARD Michelle Fallahi Jane Johnson Kathy Petron H E A LT H C A R E M A N A G E M E N T F O R U M

ING Re Announces

New Perinatology

Consultant

ING Re welcomes William A. Block, Jr., M.D. to its team of medical consultants. Dr. Block is board certified in obstetrics and gynecol-ogy, and maternal fetal medicine. He is a practicing perinatalogist at United Hospital in St. Paul; Mercy Hospital in Coon Rapids; and Abbott Northwestern Hospital in Minneapolis, Minnesota.

Dr. Block’s special interests are medical complications of pregnancy, prenatal diagnosis and fetal therapy. He has published several articles on high-risk perinatal complications, and has lectured throughout the United States.

Dr. Block is available to ING Re clients to consult on individual high-risk pregnancy cases, or for perinatal program development or review issues. There is no charge for this service of the ROSE®_{program. Additionally,}

Dr. Block is providing quality review support and physician consultation for the ING Re ROSEBUD®_{specialty case}

management program.

Block replaces Dr. Emanuel Gaziano, who resigned from his ROSE Program consulting position because of increas-ing work demands.

To access Dr. Block, contact your ROSE health services consultant at 1.800.767.3509. I

Valuable ROSE

_Seminar

The 21st annual ROSE Seminar will be held July 31 through August 2, 2005 at the Minneapolis Hilton and Towers. This free conference is available by invitation only for ING Re clients and business associates.

This year’s Seminar will feature a variety of topics of interest to medical management and claims manage-ment professionals. A sample of the topics and speakers follows.

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Care provided by noted research scientist and

consultant, Roger Evans, Ph.D.

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from HIP Insurance Company of New York.

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a nationally recognized leader in transplantation from Fairview University Medical Center, Minneapolis, Minn.

•

Expandable Limb Implant

–cutting-edge technology for managing bone cancer patients, presented by Michael Neel, M.D., from St. Jude Children’s Research Hospital, Memphis, Tenn.

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Obesity, Integrative Disease

Manage-ment, Hospital Services Audits, Technology and Biorehab, Migraine Management, and Key Elements for a Case Management Program.

This is an excellent opportunity for your healthcare profes-sionals to receive free continuing education credits, network with individuals from peer organizations, and to obtain addi-tional information from some of the key business associates of ING Re. We hope to see you there! I

The following material was developed prior to RGA’s acquisition on January 1, 2010 of the Group Reinsurance Business formerly owned by ReliaStar Life Insurance Company (a subsidiary of ING Groep N.V.) If you have questions, please contact RGA.