• Cognizant 20-20 Insights

Elevating Medical Management Services to Meet Member Expectations
Healthcare payer organizations can lower the cost of commoditized medical management functions via better and different processes, and invest the savings in member-centric care management services.
Executive Summary
With the launch of healthcare exchanges and intensified competition among payers, healthcare consumers are rapidly taking their place at the center of healthcare transactions. Payers that deliver rich, member-centric experiences that go beyond mere claims processing will be positioned to win — and sustain — market share. Results from our recent Medical Management Survey indicate that chief medical officers and other medical management executives understand this new value proposition (see Figure 1, next page). (See page 7 for a full description of the survey.) These decision-makers identified care management as the component of medical management that delivers the highest satisfaction to members and consumers. Yet they continue to invest one-third or more of their medical management budgets in utilization management (UM), a service that is at best invisible to consumers and, at worst, seen as a barrier to care. This white paper examines how payers can address the gap between the medical management services they know members want and where their resources are being invested. We review key survey findings and how these illustrate where payer organizations must challenge their traditional thinking about medical management priorities. Finally, we discuss better processes and different approaches that payers are evaluating to control costs and avoid unnecessary care while delivering member-facing programs that achieve and grow their competitive value.

Aligning Satisfaction Drivers with Financial and Clinical Resources
Like most businesses, healthcare payer organizations must balance cost reduction mandates with the need to offer more individualized services and products delivered via current technologies. Our survey results indicate that payers could achieve the financial flexibility necessary to carry out this dual mandate by rethinking how they apply medical management resources. Key Finding #1: Payer CMOs and clinical directors say care management is a critical driver of member satisfaction. Of the chief medical officers and clinical directors surveyed, 42% cited care management programs as the leading factor in delivering satisfying benefits, while 35% named disease management for the top spot. Taken together, 77% of respondents agreed that member-facing case and disease management programs deliver the highest level of member satisfaction (see Figure 2, next page).

cognizant 20-20 insights | january 2014

Survey at a Glance
Execs may need to re-allocate budget to member satisfaction…

…however…

77%
Many respondents believe care management delivers member satisfaction…

34%
…over one-third of the budget continues to be allocated to utilization management.

70%
…as a majority of respondents are not completely satisfied with existing process performance.

Reforms

Nearly 50%
…with almost half of respondents evaluating partners for medical management.

> 66%
Most plan to streamline and automate processes and use analytics. Global delivery models are also coming into play…

…as multiple industry reforms continue to be a challenge for payers. Respondents are also keeping  an eye on legislation…

Source: Cognizant 2013 Medical Management Survey Figure 1

Member satisfaction and “quality of outcomes” are the two leading metrics by which decisionmakers evaluate the success of medical management efforts. Meanwhile, less than one-quarter of respondents ranked utilization management as a key member benefit.

Key Finding #2: Payers expect little change in budget allocation for care management and utilization. Decision-makers surveyed predicted that more than one-third of their medical management budget will be allocated to utilization management in the next two to three years (see Figure 3, next page). Respondents do not expect any significant shifts in budget allocation to care management in this timeframe. Clearly, payers’ budget priorities are not aligned with what they say are key member satisfaction drivers, i.e., care management programs. Utilization management is a commodity. It must be done quickly and accurately, but those qualities will not be an advantage for payers competing for employer or healthcare consumer business. Meanwhile, shifting budget resources away from utilization management to care management offers payers clear opportunities for creating member-centric programs that create competitive differentiation. Collecting more meaningful quality of outcome metrics is a distinct area of differentiation that

Critical Satisfaction Drivers
Q: What provides the most benefit to your members?
Case Management 

Disease Management  Utilization Management 

Source: Cognizant 2013 Medical Management Survey Figure 2

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Little Change in Budget Allocation
Q: In the next 2-3 years, what percentage of your medical management budget do you foresee being allocated to support these programs?

30.8%
Utilization Management 

36.1%
Case Management 

31.9%
Utilization Management 

35.5%
Disease Management 

33.9%
Disease Management 

32.6%
Case Management 

Source: Cognizant 2013 Medical Management Survey Figure 3

payers could achieve by shifting utilization management spend. Such metrics must go beyond simple gaps in care, such as overdue procedures or exams, and measure results in a timeframe that is longer than the one-year period that satisfies most pricing actuaries. More comprehensive metrics should be gathered on well-defined treatment groups and the cost and quality of the care that members receive from specific physicians and providers. These views can be achieved with advanced analytics that can discover and analyze patterns across a wide range of data sources. “Member satisfaction” data also needs to go beyond measuring plan member longevity. A more telling measure is “likelihood to recommend.” Reallocating administrative spending on utilization management must be done carefully. Savings realized from utilization management are more easily and quickly quantified than those gained from care management programs. Utilization management also helps identify and prevent unnecessary procedures, contributing to cost reduction and control. By adopting different processes and better approaches, payers can spend less on utilization management without sacrificing its efficacy. For instance:

• Global

clinical resources can be used for the vast majority of utilization requests and reviews, enabling the reallocation of highly trained, locally-based registered nurses and other clinicians to more satisfying work. programs can be used with large, disparate data sources — such as financial and clinical outcomes databases — to probe for patterns, causes and effects that can help payers quantify the savings gained from care management programs, as well as new and different utilization management processes. Such data can help justify additional process improvements and greater financial support of care management and other member-facing initiatives.

• Analytics

Building Better and Different Member-Facing Programs
About 70% of survey respondents said they were not completely satisfied with their current medical management processes (see Figure 4, next page). They intend to adopt a variety of approaches that could streamline processes and support more member-facing initiatives (see Figure 5, next page).

Q: In the next 2-3 years, what percentage of your medical management budget do you foresee being cognizant 20-20 insights 3 allocated to support these programs?

Room for Improvement with Medical Management
Q: How satisfied are you with your organization’s current medical management practices?

Not Satisfied

Slightly Satisfied

Not Satisfied

Slightly Satisfied

Completely Satisfied

Completely Satisfied

Not Satisfied

Slightly Satisfied

Completely Satisfied

Source: Cognizant 2013 Medical Management Survey Figure 4

Key Finding #3: Payers focus on process improvement to reduce costs. Almost all survey respondents expect to streamline and optimize existing processes in the next two to three years to provide better cost manage-

ment. Nearly 75% expect to introduce more automation and new technologies, including social and mobile, suggesting that payers want to alleviate any inefficiencies experienced with their current processes and systems.

An Array of Planned Improvements
Q: Which initiatives for cost reduction in clinical operations do you expect your organization will implement in the next 2-3 years?
Process improvement initiatives  Technology and process automation  (social and mobile)  Global delivery options (sourcing) Analytics to create better processes

90%

73% 69% 65%

Pay-as-you-go model (subscription-based) 

61%

Source: Cognizant 2013 Medical Management Survey Figure 5

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Additionally, payers want to utilize more data to make better decisions about members and business through the use of analytics. Analytics was cited by 65% of respondents as a means to drive better processes. Key Finding #4: Use of external partners and creative sourcing for medical management is likely to grow. Respondents see utilization management intake and review (60%) and case management (50%) as two key areas for partnering with an external service provider. Respondents said discharge follow-up and managing readmission rates were additional sourcing candidates, with nearly 40% indicating these would be appropriate areas for partnerships. Almost two-thirds of payers said they are evaluating and are likely to turn to global service delivery options and sourcing to reduce their clinical operations costs. In our experience, payers that address dissatisfaction with existing medical management processes can open doors to greater automation and other, better ways of delivering utilization, disease and care management. These initiatives are most likely to succeed if payers re-evaluate their core competencies and processes to identify which are commodities vs. competitive differentiators and allocate resources accordingly. Our

survey results indicate that payers are examining a variety of medical management processes, including routine discharge follow-up tasks, to determine whether they are true core activities or “commodity” processes. Streamlining commodity processes, such as intake, pre-certification reviews and concurrent reviews in utilization management, should give payers the flexibility to focus on delivering services that build member loyalty and satisfaction. These include case management and health and wellness programs. At least one leading health plan with which we work realized savings of up to 60% per utilization management transaction by combining more automation with less expensive yet highly qualified global clinical resources delivering routine reviews. Furthermore, applying analytics to abundant aggregated member data will improve a variety of payer processes and deliver richer member experiences. Better and earlier risk stratification, personalization of case management programs and behavioral economics-based member engagement models can be driven through the use of member and core business analytics. These analytics-derived insights enable payers to move from process-centric to member-centric business models.

Vast Majority Planning New Technology Platforms
Q: Has your organization implemented technology platforms that help support care and medical management?
In place

20%

In preliminary stages of evaluation

34%
Under active consideration

24%
Decided on platform, but not implemented yet

92% under various stages of implementation

14%
Currently not in plans

4%

Figure 6

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Adopting technology that digitally savvy younger consumers now rely on in their daily lives also will enable payers to deliver richer experiences to members, such as self-service mobile portals and on-demand data delivery. Healthcare consumers have said e-mail, text and voicemail can be as helpful as in-person provider visits or phone calls.1 Millennial consumers in particular already use social technology regularly for healthcare purposes.2 Savings that are achieved by streamlining noncore processes, including utilization management, should be invested into digital transformation.

nurses to assemble records or conduct routine reviews is an inefficient use of expensive resources. More member satisfaction can be gained by realigning these clinicians with highvalue, member-facing programs. Our internal calculations reveal that many payers are spending $1.50 to $2.30 per member per month for utilization management. These costs may be reduced to $1.00 per member per month via global delivery models. Utilization management cost reductions vary depending on payer automation levels (such as the availability of physician self-serve Web portals) and the rate of global service delivery adoption. In general, cost saving are achieved by using offshore skilled nurses to do routine utilization management work. The more work a payer sends offshore, the greater the savings. If a payer also has Web portals, physicians and/or members can use it to check pre-authorizations (vs. phone calls, letters, etc.), which leads to additional cost savings.

Challenging Assumptions about Utilization Management Efficiencies
Our research indicates that few payers are completely satisfied with their utilization management processes, with about 70% indicating room for improvement. Payers working through the following checklist can identify where utilization management may be more expensive and less efficient than it appears. 1. Evaluate your current spend on utilization management. Are expenses high because of an inefficient process? Are expenses too low, indicating a potential loss of opportunity for cost savings? 2. Create models that show ROI for all utilization reviews. Account for the “sentinel effect,” i.e., treatments that are not requested or ordered because they are unlikely to pass a utilization request. This ROI model should be adjusted at least once a year based on unit costs and cost per utilization management (UM) review. 3. Determine cost per UM review. This review should also calculate the cost of appeals, including the expense of sending cases to independent review organizations and the percentage of cases found in favor of providers and/or members. Another cost to consider is the impact of such reviews on provider and member relations. 4. Evaluate utilization management automation levels. Automation that can significantly reduce utilization management costs while improving its performance includes provider self-service portals with decision support; automated queues and workflows; automated processing of routine requests; and auto-generated routine correspondence. 5. Evaluate “up to license” use of clinicians. Using highly trained, locally-based registered cognizant 20-20 insights

Accepting the Challenge to Transform Medical Management
Payers seeking to boost their competitiveness in an evolving healthcare market must answer these questions:

• How well does the organization’s clinical budget
align with member and consumer priorities? ated experience for members?

• How will the organization create a differenti• How
will process transformation and new technology initiatives be funded?

It is a challenge to balance the dual requirements of cost reduction and member satisfaction. That said, many payers already have the resources to achieve both goals locked within their traditional approaches to medical management. By challenging conventional wisdom about how to derive value from utilization management, payer organizations can transform a wide range of utilization review processes. The savings they gain can be shifted to care management programs that enable them to build more personal, customized relationships with their members. Such relationships will build on payers providing tools and information that members can use to better manage their health as their life circumstances change. These member-centric services deliver a competitive advantage today and a firm foundation for additional future growth.

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Footnotes
1

“Technology Beyond the Exam Room: How Digital Media is Helping Doctors Deliver the Highest Level of Care,” TeleVox, October 2012, http://www.televox.com/downloads/technology-beyond-the-exam-room/ BC850054C4664748696D766F8BC9358C/TVX-TechnologyBeyondExam%28Screen%29final.pdf.pdf. “2012 Survey of U.S. Healthcare Consumers: Five-Year Look Back,” Deloitte University Press, Dec. 14, 2012, http://dupress.com/articles/2012-survey-of-u-s-health-care-consumers-five-year-look-back/.

2

About the Survey
In August 2013, we conducted an online- and telephone-based survey of 50 clinical decision-makers, including chief medical officers and clinical directors, at U.S. payer organizations with an average of 2.2 million members and annual revenues of $4.1 billion. Each respondent was verified as having budgeting/ purchasing authority for medical management activities.

About Cognizant Global Clinical Services
Cognizant GCS provides service across the value chain to more than 29 U.S.-based customers through more than 2,000 clinical associates. It is the first and only offshore provider with multiple URAC accreditations, including a URAC accreditation specific to utilization management.

About the Authors
Gajen Kandiah is the Executive Vice-President and General Manager for Cognizant’s Business Process Services (BPS) practice. As the Global Head of Markets, he is responsible for accelerating the growth of the BPS business, developing services and solutions leveraging the synergies between ITO and BPO, and extending Cognizant’s capability to become a leading provider of business services automation and management solutions. These solutions include business process-as-a-service (BPaaS) and combine new business, delivery and commercial models to help customers embrace the future of work. Gajen is a proven entrepreneur and business leader who has demonstrated his ability to build winning businesses within multinational corporations and startups for over two decades. Anthony Nguyen is Cognizant’s Chief Medical Officer, responsible for setting the overall clinical direction of the company’s Healthcare Business Process Services (BPS) Practice, while providing guidance to teams developing solutions, technologies and global clinical services that enable healthcare professionals to improve care delivery. In his previous role as Senior Vice President and Medical Director at WellPoint, Anthony was responsible for all aspects of care delivery (utilization management, case management, wellness and condition care) for 34 million members. He has extensive clinical global sourcing experience, having pioneered work in this area. He received his M.D. from Tufts University School of Medicine and M.B.A. from the Paul Merage School of Business. He can be reached at Anthony.Nguyen@cognizant.com.

About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 166,400 employees as of September 30, 2013, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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