Val and Her Team Trimmed Claims Cost by Two Percent*

February 25, 2016
Heather Lavoie, Chief Strategy Officer, Geneia


As I wrote in a previous blog, Geneia is focused on one thing: transforming healthcare - for the better.

Geneia’s physicians, nurses, technologists, analytics experts, and business professionals know that technology is a means to end – a very powerful one – yet the heart of healthcare transformation is people. People like Val who trimmed claims costs by two percent.

Let me tell you more about Val and how Geneia helped her achieve her goals. Val reports to the chief medical officer of a health plan with about three million members, about 300,000 of whom are Medicare beneficiaries. The health plan’s business is split approximately 70-30 between administrative services only (ASO) and fully insured business. The plan is involved with a few accountable care organizations (ACOs) and has created a number of other risk-sharing arrangements with its provider partners.

Val was tasked with taking a holistic approach to population health management to improve the health of her members and lower the costs to care for them.  In the first year of using the Theon® platform, she focused on four key drivers of quality and cost:

  1. Performance contracts with hospitals and physicians
  2. Inappropriate use of the emergency department
  3. Hospital readmissions
  4. Prescription drug prescribing patterns

Performance Contracts with Hospitals and Physicians

The ability to more closely and more effectively manage the quality and financial components of performance contracts with hospitals and physicians was one of the primary reasons the health plan purchased the Theon platform.  The first action Val took was to calculate the total cost of care for attributed members covered by each performance contract. Then she viewed reports that allowed her to compare providers with their peer group, and used that information to identify and close gaps in cost as well as improve quality and utilization performance.

One of the most important insights she gleaned from this analysis was that 10 percent of hospital admissions in 2014 occurred at a hospital without a performance contract or ACO.  Although only 10 percent of total admissions in 2014, the associated costs were 20 percent of total hospital costs for the year.

Armed with this information, Val was able to negotiate a performance contract with this hospital.  The contract began in July 2015, and has already resulted in a 15 percent savings from the previous year.

Inappropriate Use of the Emergency Department

Even before she had access to the Theon platform, Val knew that her members’ utilization of the emergency department was high.  She used the Theon platform to determine why and to begin resolving the issue.  She identified three primary causes:

  1. 3.1 percent of members who visited the emergency department in the past year but had not seen their primary care physician.
  2. 1.3 percent of members who had visited the emergency department four or more times in the past year but had not been admitted to the hospital. When she looked more closely at these visits, she learned that many were for ambulatory care sensitive conditions, reinforcing the need to encourage these members to visit their primary care physician.
  3. 275 members with a diagnosis of congestive heart failure who visited the emergency department one or more times in the past year.

She remedied the three causes with a combination of physician and patient education and new incentives for members to choose and develop a relationship with a primary care physician.

Hospital Readmissions

Val knew that hospital readmissions were costly to her health plan. She used the Theon application to discover that many readmissions were costlier than the original admission. Upon further review, she learned that readmissions were high for a couple of very large health systems. To remedy this, she worked with her health plan’s provider management unit to craft new performance improvement measures around transitions of care and medication reconciliation. Within six months, the health plan began reaping savings that exceeded those being shared with the health systems. The health plan and the health systems are benefiting from the increased focus on transitions of care and medication reconciliation, as are Val’s members.

Val also determined the cause for 27 percent of the readmissions: coronary artery disease (CAD).  An enhanced CAD management program was created and implemented, and has already resulted in an 11 percent reduction in related readmissions.

Prescription Drug Prescribing Patterns

In less than 10 minutes on the Theon platform, Val determined that nearly five percent of her members were taking brand name prescriptions for which there is a clinically equivalent generic.  She also learned that there were more than $135,000 in retail prescription refill costs that could be redirected to lower-cost, mail-order channels. 

All together, these four initiatives within the health plan’s comprehensive population health approach resulted in a two percent reduction in claims costs in the first year of using the Theon platform coupled with an increase in the quality of healthcare for Val’s members. One more example of how our technology with a heart is helping to transform healthcare.

*Val’s experience is an illustrative example based upon the actual experience of a Geneia client. This information is provided for illustrative purposes only. Val is fictional and not intended to represent any specific person. Any direct similarities to any real person are purely coincidental and unintentional.