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The Case for a Comprehensive Cross-Payer Health Database Mac McCarthy, FSA, FCA, MAAA Middle Atlantic Actuarial Club September 13, 2013 Speakers Mac McCarthy, Tom Persichetti, FSA, FCA, MAAA ASA, FCA, MAAA McCarthy Actuarial Consulting Persichetti & Associates [email protected] 804-651-5293 [email protected] 202-321-5426 www.McCarthyActuarial.com 1 Agenda • Current State of Healthcare Claim Data • Affected Parties’ Issues – Buyers – Payers – Researchers & Policymakers – Providers • • • • • Consequences Why Consolidated, Shared Data Makes Sense Potential / Emerging Solutions Impediments & Concerns Audience Q&A www.McCarthyActuarial.com 2 Current State of Healthcare Claim Data • Each payer has proprietary database – Payers include government programs, insurance companies (including HMOs), and employers • State all-payer databases • Data warehouse services • No central repository – Little or no information sharing www.McCarthyActuarial.com 3 Buyers’ Issues • Buyers = – Individuals / Consumers / Patients – Employers • Inability to ascertain providers’ and competing treatments’ value • Information overload & credibility deficits • Frustration due to: – Poor communication between care providers – Inconsistent billing and benefit statements – Lack of accountability • Distrust is widespread www.McCarthyActuarial.com 4 Payers’ Problems • Payers = – Insurers – Employers – Governments • Projecting future costs • Fraud and waste • Assuring value for clients/employees/constituents • Managing financial risk www.McCarthyActuarial.com 5 Policymakers’ & Researchers’ Needs • Credible data on alternative treatments for specific conditions – Prevalence, effectiveness & costs – Stratified by population characteristics – Considering comorbidities • Reliable information on the impact of: – Plan design – Alternative payment strategies – Wellness & disease management programs – Provider consolidation & density • Quantification of fraud, abuse and waste in the healthcare industry www.McCarthyActuarial.com 6 Providers’ Concerns • Inappropriate / unmanageable risk assumption • Demand anticipation • Revenue protection • Reputation • Control www.McCarthyActuarial.com 7 Consequences • FBI estimate for 2009 fraud1: 3% - 10% of total health spending ($75–$250 billion) – Recoveries in 2012? Only $4.2 billion2 • Truven Payment Integrity Analysis3: – Annual fraud and abuse = $125 – 175 billion – Lack of care coordination = $25 - $50 billion – Provider inefficiency and errors = $75 - $100 billion 1: Health Affairs, 28, no.5 (2009): Combating Fraud In Health Care: An Essential Component Of Any Cost Containment Strategy 2: HHS/DOJ Healthcare Fraud and Abuse Control Program, FY2012 3: Truven Health Analytics: Payment Integrity Analysis, April 2013 www.McCarthyActuarial.com 8 Consequences • Time for recommended evidence-based practice to be fully implemented4: 9 years • National Health Expenditures increase, relative to GDP growth, 2000 - 2011: Double 4: Commonwealth Fund: Blueprint for the Dissemination of Evidence-Based Practices in Health Care www.McCarthyActuarial.com 9 Consolidated, Shared Data Makes Sense • Fraud payment avoidance • Consumer Driven Health Plans • Shared risk models – ACOs, PCMHs, Bundled Payments • Efficient capital investments and provider workforce development • Comparative effectiveness studies • Enhanced disease tracking for early identification of emerging epidemics and localized “hotspots” www.McCarthyActuarial.com 10 Potential / Emerging Solutions • Verisk Health – Pooled-Data Alliance between health insurers – “For the first time, healthcare payers will be afforded the same comprehensive view of suspect providers and schemes that has proved so successful for the property/casualty industry.” – Applies fraud detection tools developed in the property & casualty insurance markets, adapted to the healthcare environment www.McCarthyActuarial.com 11 Potential / Emerging Solutions • HealthcarePays – Member-owned “industry utility” • Membership is open to healthcare payers and providers – “The HealthcarePays network connects employers, payers, providers, banks, key government agencies and waste and fraud systems to provide a level of transparency that enables unparalleled waste and fraud detection.” – Mirrors fraud avoidance techniques used by credit card industry – Cross-payer / cross-provider claims data will be available to members , subject to member defined governance and applicable privacy regulations www.McCarthyActuarial.com 12 Impediments & Concerns Dialogue No one understands me What do you mean? www.McCarthyActuarial.com 13 You have Questions We have Answers www.McCarthyActuarial.com 14