Measuring provider cost and utilization

By Becky Niehus

No matter the time of year, payers and providers should work to agree on a shared source of truth when it comes to data. With the recent end of the year, it’s time to celebrate the new year (who isn’t ready to say goodbye to 2020?) and close the books, which includes the reconciliation of any shared savings or losses. To settle the year with a minimal amount of pain and frustration, payers and providers must have a shared acceptance of data and methodology. This most often means both draw information from the same source of data, which helps make end-of-the-year reconciliation easier to achieve.

Data Requirements

To successfully reconcile yearly performance, payers and providers should agree about the source of truth and make sure both draw information from the same place. Paid claims data (both medical and pharmaceutical) from the payer is likely the most complete, as providers may not have access to patient data from outside their walls. However, it is critical for successful programs that providers have ongoing access to this data (outside of year-end activity) to monitor their performance and make appropriate adjustments.

Additionally, it may be necessary to supplement paid claims data with encounter, lab results or EMR data to have a full look at performance against quality benchmarks.

Finally, patient attribution must be transparent so providers can engage their patient panel to lower the total cost of care and close gaps in care.

Setting New Targets

As part of the process, payers and providers may reconsider both cost and quality targets. In the COVID-19 era, for instance, previously agreed to targets may be unrealistic. Finding good benchmark data may be a challenge given the unprecedented decrease in healthcare utilization and spending in 2020 and the length of time it takes to compile comprehensive benchmarks. Given this, payers and providers may need to rely more on forecasts than history and plan for more flexibility in next year’s payment reconciliation process.

Considerations for future planning

To prepare this year and those ahead, I have four thoughts providers and payers can take into consideration to ensure both are on the same page when it comes to reconciliations, all of which can help ensure long-term success.

  1. Collaboration between payers and providers can help improve coding practices to hit hierarchical condition category targets, which can provide tangible financial benefits for both
  2. Confirm patient attribution methodologies and align these between payer and provider to appropriately target and manage high-need patients
  3. Payers and providers will need to evaluate the impact of foregone care in 2020 and the care anticipated in 2021. Providers will need to manage capacity and prioritization while payers may have to evaluate the impact on their reserves if utilization suddenly increases
  4. Payers should ensure providers understand their contracts and the limitations of risk-sharing. A discussion with key providers may be helpful to ensure year-end transitions go smoothly

With 2020 behind us and 2021 beginning, it’s time to consider the long-term advantages of using a data repository as a single source of truth for payers and providers.

Additional resources

Becky Niehus

Becky Neihus’ focus at MedeAnalytics as a Product Consulting director is with the payer solution portfolio, including Employer Reporting, Provider Analytics, Healthcare Economics, Quality and Population Health. She has more than 10 years of experience in healthcare analytics and consulting. In addition, she has worked extensively with healthcare payers to use their data to surface insights around key cost drivers, clinical quality and member health.