The Never Ending Story of Healthcare Analytics

Getting sick, figuring out why and then what to do about it is complicated enough. When you add in doctors, hospitals, insurers and government, it gets beyond complex. A simple change can have cascade effects that will impact the effectiveness of healthcare analytics.

For example, on April 1 Medicare implemented a new rule regarding knee and hip replacements. For certain regions Medicare will pay a flat rate which includes the surgery and rehabilitation afterwards. If the surgery and rehabilitation afterwards exceeds the flat rate, the hospital must cover the costs for the difference.

Existing and new healthcare analytics must take into account:

  • A subset of procedures (hip and knee replacements ) …
  • ….For a subset of insurance (Medicare)…
  • … For certain regions  (67 metropolitan statistical areas) …
  • ..starting at a particular time.
This is chapter one…

Why is this important?  Medicare spent $7 billion on hip and knee replacements.  Hospitals are now encouraged to find new ways to perform the surgery and rehabilitation that are effective and cheaper. This is the goal of the rule. Analytics can definitely assist in achieving this goal.

The cost and risk  impact may encourage other behavoir changes (No metric can beat us) that will impact healthcare analytics.

  1. Many hospitals are part of a larger company of several hospitals. Hospitals may relocate their knee and hip replacements centers  of excellence outside of the impacted geographies.
  2. People may have simultaneous Medicare and private health insurance coverage. There will be an incentive for hospitals to charge the costs to private insurance even if they are not the primary payor.
  3. The financial risk will now be  factor for doctors in deciding whether or not to pursue the surgery.  This may change pre-surgical options and frequencies.
  4. Systems that generate claims will have to take into account the new rule.  Systems that pay claims will also need to include the logic of the new rule.  This will impact analytics particularly in the area of Payment Integrity.

The selection of geographies for the new rule is also not self evident.  For example, Detroit is not on the list, yet much smaller areas such as New Orleans are included in the rule.

And this was a simple change by government standards…..


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