Milliman MedInsight: Network Waste and Harm Prepared for: Rhode Island Business Group on Health October 5th, 2018

Agenda Demand More from Your Network Part 1 - Measuring Inefficiency Part 2 - Keep an eye on the future of Waste Finally - Measure specific forms of Provider Waste

A Network Can’t be Just About Discounts This goes toward what we were talking about yesterday. High risk discounts – Vet care by discount vet with low ratings on Yelp. Corollary to our own healthcare choices… Low risk discounts – Dog Halloween costume on Amazon

How Do We Measure the Value Lunch? The economist puts out the Big Mac Index each year – it works to show areas where the big mac is under or over valued against the dollar. You can think of RVUs in a similar way. They serve to compare the value of different types of services no matter the geographic region. A way to compare apples to apples.

Calculate Cost Per Unit of Care using RVUs Sum of Allowed Charges Sum of RVUs Conversion Factor or Cost per Unit of Care The individual services/procedures make up the conversion factor, or lunch. Compare lunches between providers to create a more efficient network. No matter the components, lunch is lunch, and a great way to compare providers and their efficiency is by their cost per unit of care. Calculating a the cost per unit of care is as simple as adding up the Allowed charges and dividing by the RVUs for a set of services provided. The set of services and individual RVU components only give so much insight into comparing the actual cost of care.

Purchasers Demand a Full Network Snapshot Provider Network Member Months Average Risk Score Risk Adjusted Allowed PMPM Cost Relative to Group A Risk Adjusted RVUs PMPM Cost Per Unit of Care Relative Unit Price Utilization Efficiency Group A 773,061 1.22 $344.38 1.00 6.196 $55.58 Group B 287,911 1.17 $421.67 6.447 $65.41 1.18 1.04 Group C 70,652 1.02 $344.95 5.902 $58.45 1.05 0.95 Group D 196,743 0.93 $371.92 1.08 6.042 $61.56 1.11 0.98 Group E 485,694 1.12 $366.31 1.06 5.908 $62.00 Group F 178,147 $393.11 1.14 6.439 $61.05 1.10 Group Average 2,387,799 $373.70 1.09 6.175 $60.52 Use GlobalRVUs to compare networks. Groups C and E have the lowest relative efficiency at 0.95, but risk scores of 1.02 and 1.12 respectively. Group D, is slightly less efficient at 0.98, but has the lowest risk score overall.

The Future is Here!

Proprietary rating for disruptive medical technologies: A: Established benefit B: Some proven benefit C: Potential but unproven benefit D1: No proven benefit – published evidence shows that the technology does not improve health outcomes or patient management or is unsafe. D2: Insufficient evidence 232 active D1 or D2 reports

What is the Health Waste Calculator Collaborative effort between Milliman and VBID Health based on Choosing Wisely® Uses claims data to identify and quantify tests, procedures, prescriptions, and other healthcare services that are unnecessary based on the clinical context. The output can be used to: Analyze the cost savings potential of reducing unnecessary services. Report on and improve quality and patient safety. Source: www.cdc.gov/antibiotic-use.

Uncharted Territory - Employers Barriers Perceived helplessness – “This is the health plan’s job.” Oversimplification – “Just tell me what I shouldn’t pay for so I can turn it off.” Risk of employee backlash due to lack of understanding. Harm Physical: How many employees were exposed to a harmful service? Financial: Report on employee cost sharing for wasteful services Iatrogenic: What downstream harm occurred due to wasteful services? Other: emotional harm, loss of productivity, travel and dependent care expenses Engage Use Choosing Wisely® materials to educate employees. Leverage waste reports by health plan to negotiate with payers on contracts.

Purchasers are Taking Action! Employers are creating initiatives to target other types of waste/low value care. Health plans need employers to tell them to reduce waste. All employers should: Accept that low value care is an issue that won’t go away on its own. Put together a plan to reduce waste that is well suited to your labor market. Look to external vendors! Google rolled out a care direction strategy to direct Googlers to high value care settings for low risk diagnoses. In 12 months, they redirected 10,000 visits at an estimated $1.4MM in cost savings. Walmart incentivizes the use of centers of excellence, resulting in 3 weeks less time taken off work for employees who underwent spine surgery. AT&T has a second opinion program for their employees to address misdiagnoses. Washington Health Care Authority produces certified patient decision aids and provider training to help promote shared decision making and more appropriate utilization of healthcare services without limiting choices.

Thank you for your interest Connecting Cost Management and Care Management for Decision Confidence