When it comes value based-care accounting, few metrics are as useful as Total Cost of Care (TCOC).
TCOC can show you precisely where your value-based care initiatives should be focused for the most efficient use of resources.
And yet, as useful as TCOC can be, there are few metrics as difficult to pin down with a reliable degree of accuracy, precision and granularity.
That’s because most efforts to calculate TCOC fall far short of being able to capture and “normalize” the data needed to drill down and create comparisons that can be used to drive efficiency and cost competitiveness.
A 3-pronged approach for calculating TCOC
Defined as the direct and indirect costs of healthcare services for a member or a risk-specific population over a coverage period, calculating TCOC requires a three-pronged approach and the data to support it:
- Service Type Categorization: enables you to drill down by setting; e.g. inpatient, outpatient, professional, pharmacy, ancillary, etc.
- Utilization Normalization: provides more accurate TCOC results by assigning claims a “normalized” relative value across all service categories
- Risk Grouping: uses adjusters to score risk levels and ensure that high-risk conditions and groups are accurately factored into results, so comparisons among physician groups, service settings, procedure type – or any other level of drill-down – are valid
Use cases for TCOC that drive improvement
Accurate TCOC data can be used to drive improvement across the healthcare ecosystem including payers, providers and ACOs, government payers and employer groups. Here are a few examples.
- Payers can leverage TCOC data for more precise benefit design and contract negotiation
- Providers/ACOs can use TCOC to fine-tune estimates of total cost and evaluate the true efficiency and competitiveness of the costs of individual services by settings, by provider, and more
- Employer groups can use TCOC to compare resource use and cost by marketplace
TCOC-driven insights to improve healthcare delivery models
When your analytics are powered with data that lets you see the real TCOC down to the smallest details, you can identify opportunities to drive improvements that both reduce the TCOC and improve patient outcomes. These include identifying sources of potentially avoidable utilization and the under-utilization of preventive services. You can also use TCOC to identify providers and/or sites of service that should be operating more cost-effectively.
With reliable and detailed TCOC data powering your insights, you can develop actionable KPIs, like the top five utilization and efficiency initiatives for your organization, sites of service, and providers. TCOC insights can also help you establish a process for ongoing strategies and communication around your goals.
Financial performance goals can be established with per-member, per-month (PMPM) targets, adjusted for risk and calculated by physician group, by line of business and service settings: granularity matters when it comes to assessing the TCOC.
You can’t act on what you can’t see
MedInsight tools are designed to ensure that you can see the full picture of what is driving your costs and impacting efficiency. While many organizations use TCOC to glean insights about utilization and cost drivers, the data that goes into these calculations can vary tremendously, with many healthcare organizations relying on a view that provides only a glimpse of what they need to see.
To be truly effective, TCOC must start with the right data sets, big enough to shine light on the trends and granular enough to point to the true source of inefficiencies and unnecessary costs. Without the comprehensive data you need and the tools to be able to grab it, organize it and adjust it for risk factors, you can be left with insights you are unable to prioritize and act upon.
MedInsight tools and benchmarks are built around an unmatched level of data, including over 80 million lives of Medicare claims data that are refined and customized by analytics so you get to the source of cost drivers and inefficiencies and can identify opportunities with the greatest potential for impact.
MedInsight tools for healthcare analytics that drive solutions
Using our rapid Opportunity Assessment tools, Health Cost Guidelines, Health Waste Calculator, Global RVUs, MARA risk adjusters, and Chronic Condition Hierarchical Groupers, among other proprietary processes and datasets, MedInsight clients leverage a level of transparency into their TCOC that move value-based care efficiencies from the aspirational to the bottom line.
MedInsight solutions are built to drive improvement across the entire spectrum of healthcare, from patients, to payers, to employers, providers, accountable care organizations and state government agencies.
Speak to our TCOC data experts today to learn more about how your organization can put MedInsight tools and solutions to work identifying opportunities and efficiencies at every level of care. The best care is the most efficient care, and the most efficient care begins with insight.