Important strategies for a plan’s medical management team
It wasn’t too long ago that the clinical staff and practitioners in the medical management arena of health plans only focused on the quality and continuity of care with their members. These objectives were very important, and should continue to be the focus of any medical management team. However, in more recent times, it has become just as important for the clinical areas of health plans to become aware of the costs of care they incur and to become involved in the control of those costs.
The Patient Protection and Affordable Care Act of 2010 mandates that health insurers report plan costs for the purpose of calculating their medical loss ratio (MLR), which is defined as the percentage of insurance premium dollars spent on reimbursement for clinical services and activities to improve health care quality. Large group insurers must spend at least 85 percent of premium dollars on claims and activities to improve health care quality, while individual and small group insurers must spend at least 80 percent of premium dollars to improve health care quality. If insurers fail to meet these minimum MLRs in a given year, they are required to provide a rebate to their members.
Thus, as a barometer of a health plan’s solvency, management of the MLR is an important strategy for the plan’s medical management arena. For example, the effective use of health information technology, or medical economics, can be one of the best assets for a health plan in controlling costs and service levels, especially when there may be an increase in plan membership. In addition, investing in quality improvements, such as electronic health records for the plan’s provider network, or a web portal for the exchange of health care information can indirectly help to improve the health plan’s MLR by reducing administrative costs. Reviewing the utilization data of the health plan’s services to determine areas of over or under utilization, and monitoring the process for the authorization of member services are two additional important means for medical management to identify unnecessary costs that may be occurring.
Although there are multiple ways to look for an optimal MLR for health plans through medical management functions, the ultimate goal should be to monitor and take action to improve key indicators affecting MLR, such as the management of complex / high cost members, network contracts with providers and ancillary groups, inpatient performance, and pharmacy utilization, all of which can help to improve a health plan’s overall financial performance.
Resources
On Friday, September 26 Join John Gorman, GHG’s Founder and Executive Chairman together with colleague, John Nimsky, Senior Vice President of Healthcare Innovations, as they discuss the vehicles for achieving what could be characterized as a reengineering of the health care delivery process and its effectiveness. Register today >>
On Tuesday, August 19, GHG’s Senior Vice President, Bill MacBain and Senior Vice President of Healthcare Innovations, John Nimsky, explored the drivers and trends in cost and revenue which affect your MLR. Access the webinar recording here >>
Save the Date for the Gorman Health Group 2015 Forum. Join us April 7-9, 2015 at the Gaylord National Resort and Convention Center in National Harbor, MD. Learn more about the event >>