Case Study

MA Plan identifies hidden cost drivers and recovers millions through deeper inpatient cost transparency

How advanced analytics helped a Medicare Advantage plan pinpoint the true drivers of rising short-term inpatient costs and improve contract terms

Key Highlights

  • More than $350,000 in funds recovered after DRG coding audit of short-term inpatient stays
  • Support for affordability initiative analytics equal to 2 FTEs
  • Year 1 ROI estimated at 5X investment
  • Millions of dollars in provider contract savings

When a Midwest provider of MA plans was facing mounting costs that its legacy analytics capabilities could not explain, the organization sought help with analyzing utilization costs by facility, market and product, and surfacing trends and insights that could identify cost-saving opportunities.

Without the ability to drill down into cost drivers, the unjustifiably high acuity levels in short-term stay claims at a single facility looked like just a general uptick in volume and went undetected.

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Challenge

As costs and underwriting losses climbed nationwide, the organization needed to understand what was truly happening in its own facilities.

Without the ability to do unit-level analysis, rising inpatient costs were assumed to be the result of unfavorable contract changes, and the organization undertook a painstaking contract review. Without a simple method to determine whether provider payments had actually increased year over year, the organization couldn’t break down why their costs were mounting.

“In the past, we’ve always said it was volume, it was cost – and we’ve gone with that story. There was more to the story than that.”

Senior Director of Medical Economics

Action

To manage its increasingly complex data and identify specific cost outliers, the organization partnered with Milliman MedInsight (MedInsight) to upgrade its analytic capabilities.

After implementing the MedInsight Payer Platform and using its benchmarking and repricing capabilities to conduct a comprehensive review of facility and inpatient costs, the organization uncovered a significant outlier. Nearly half of all short-stay admissions at one facility had been billed at high-acuity levels – compared to less than one-third of such admissions at peer facilities. A targeted claims audit showed that 45% of the reviewed claims did not support the billed DRG acuity.

The organization also identified an error in a 20-year-old contract that had mistakenly applied commercial rates instead of Medicare rates for years.

Results:

Before

  • ■
    Limited ability to drill down into utilization costs by facility to identify outliers
  • ■
    Struggling to find the source of a significant uptick in spending

After

  • ■
    Visibility into short-stay admission claims at the facility level enabled the recovery of unsupported billings
  • ■
    Advanced analytics capabilities for more ambitious inquiries

Today, the organization is tackling new budget and affordability initiatives with the same small staff of data analysts.

Using the Milliman MedInsight Payer Platform, the organization can continue to drill down into specific cost drivers and identify opportunities for additional savings.

Ongoing capabilities to explore:

  • Additional budget and affordability initiatives using the MedInsight Payer Platform, benchmarking, and repricing
  • New analysis focused on network performance and steerage

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