Blog: A Faster Route to Getting the Most From Medical Cost Management Vendors

By Gokul Varadharaj, Chief Revenue Officer & Co-Founder

As payers face sharply rising cost pressures, it’s tempting to take a Whack-A-Mole approach to medical cost management efforts. Time is of the essence to keep medical costs from outpacing premiums. Providers are now pushing for sizable rate increases as much as 40% in certain markets — based on what some payers are telling us. McKinsey predicts no relief, estimating U.S. health expenditures to rise $370 billion by 2027.

A burst of short-term fixes that combines hiring 70 or 80 new medical cost management vendors and expanding current programs for everything from radiology to behavioral health is thought to be the quickest solution.

But instead of finding near-term savings, payers discover it takes the better part of a year to onboard just one new vendor — let alone dozens. It takes even longer to find out which programs are working, putting payers farther behind in their goal of getting ahead of rising costs.

The delays in ROI can really add up. Each new or expanded medical cost management program can generate $2 million a month in savings. Multiple that by the 70 or 80 vendors and that is $140 to $160 million at risk.

Accelerating value from medical cost management vendors.

Rather than leap to new and expanded programs, a more effective strategy centers on data and data infrastructure. At first glance, cost of care management teams may see this as falling outside of their control. But acquiring and using reliable data is as urgent as onboarding new vendors.

This approach will drive longer-lasting success and savings at every stage:

  • Expanding existing managed care cost initiatives
  • Onboarding new medical cost management partners
  • Identifying and scaling the more effective performers
  • Refining and adjusting new and expansion efforts for better results
  • Jettisoning underachievers

Action steps for cost of care and technology teams to improve vendor effectiveness.

Executives and teams managing cost of care should lean into their technology colleagues to initiate discussions about usable data and data models they need to succeed. With rising expectations to deliver results that mitigate cost pressures, technology leaders, who are a critical link in the care management value chain, should ready themselves to collaborate on updating their organizations’ data infrastructure to maximize medical cost management results.

Cost of care management and technology leaders should come together to create three strategic initiatives that will both accelerate value near-term while setting up stronger performance long term:

1. Develop a flexible data integration framework.

Instead of struggling for six months to develop point-to-point integrations that meet each new vendor’s specific data needs, payers must build a flexible data ingestion and distribution framework. This bidirectional integration model also solves the problem of accessing and activating vendor insights, which are otherwise stuck in PowerPoint presentations.

This type of data integration engine should feed both:

  • analytics engines to produce insights for developing targeted campaigns as well as distribute data and insights to vendors and in-house programs.
  • operational and workflow systems, such as populating a queue for making outreaches to high-needs members.

2. Make data usable.

Medical cost analysis and interventions are only as good as the data they are based on. The new payer standard for data is usability, which goes beyond quality to meet six dimensions: accurate, complete, timely, relevant, versatile and use case and application agnostic.

Usable data is the key to moving beyond risk modeling with populations near/around expected rates of disease burden, i.e. 30% of population has unmanaged diabetes with co-morbidities. With usable data, payers can finally identify which members make up that 30% and where they are in the care journey. Usable data powers personalized prevention and interventions that are essential to driving down medical costs while improving member outcomes and health.

3. Create an integrated view of all programs with usable data

A decentralized approach to data ownership for the last 15 or 20 years has really hurt payers’ ability to analyze and manage across departments and health plans. It has led to different groups creating their own reporting with differing definitions, field-level translations, and decisions around how data needs to be mapped/consolidated across sources.

To maximize impact, payers instead need an integrated view of medical cost management programs across analytic engines and workflows. It should have a semantic overlay. This integrated program view is critical to scaling the most effective efforts and removing the duds faster.

Fueled by usable data that collects and consolidates data from all sources, standardizes definitions and validates data, an integrated view offers the ability to measure and monitor each program individually and across programs using common definitions for key business value metrics such as PMPM by disease category and PMPM by site of care.