Blog Building the Optimal Network for Members’ Health Needs and Your Business Objectives

Posted May 8, 2015 by Rick Valentine

Your provider network sets your health plan apart from the competition. To a great extent, it also determines the quality and cost of care your members receive. How can you be sure that it’s the right network for your members’ needs and your business objectives?

Healthcare reform legislation has taken away many of the levers – for example, underwriting – that payers traditionally used to manage risk. The primary lever available today is the provider network. The optimal provider network – one that includes the right physicians, hospitals, and other providers for the members’ specific health needs – can help payers control costs and ensure that members have access to quality care.

To manage risk even more effectively, many payers are developing narrow networks and ultra-narrow networks, which include far fewer providers than do traditional networks. Although these can help bring down costs and enhance quality, the key to success is ensuring that the right providers are included in these networks. It’s also important that payers be prepared to deal with member dissatisfaction, knowing that some favored physicians won’t be included in the narrower network.

Advanced Optimization can Help You Build the Right Network for Your Members’ Needs

An advanced optimization tool can help you identify the most effective physicians and hospitals to include in your provider network.

The tool also can help you understand the implications of including providers not identified as optimal but who, for geographic or other reasons, might be considered desirable. Conversely, it will help you understand the tradeoffs involved in excluding designated providers from the network.

Until now, payers have lacked affordable analytical tools to help them fully leverage the power of their data. This is beginning to change. A few payers have begun to adopt predictive tools to forecast future events. Advanced optimization tools add a powerful new dimension: prescriptive analytics. In addition to making predictions, advanced optimization tools can suggest decision options for taking action on the predictions. The tools indicate the best possible business decisions and their consequences – before the decisions are implemented. Within network management, you can use advanced optimization to take into account a wide range of variables as you consider providers for possible inclusion in your network. These variables include:

  • Quality standards
  • Cost, prescribing and utilization patterns
  • Willingness/ability of physicians to adhere to protocols such as evidence-based medicine
  • Willingness/ability of physicians to submit the data you request

You can also take into account physicians’ ability to contribute revenue to your organization. For example, does the physician fully and correctly document patients’ medical conditions so that your Medicare Advantage or Accountable Care Act (ACA) plan gets appropriate revenue for the risk assumed?

The variables you choose can be weighted to reflect their importance. If provider quality is more important than geographic location, you can weight these criteria accordingly.

The analysis will give you in-depth comparisons of every provider in the marketplace. It also will give you a detailed picture of the optimal network, given the criteria you’ve chosen.

And it will show you the tradeoffs associated with each variable; for example:

  • How would one group of physicians versus another affect your plan’s revenue, given the two groups’ different utilization rates?
  • If particular physicians are excluded from the network, how badly will that hurt member-satisfaction levels?
  • What are the cost implications of including providers not identified as optimal but whom, for geographic or other reasons, you might want to include anyway?

Payers are under mounting pressure to control costs and improve quality of care. Network management is one of the few levers that they can use to accomplish these objectives. Advanced optimization takes network management to a new level of precision, helping you meet your business objectives while meeting your members’ health needs.

In our next blog, we'll focus on the power of advanced optimization to help you reach peak efficiency in another important business function: care management. Later, we’ll look at optimization of other payer business functions, including bid preparation, provider payment, benefit design, and formulary management.

The views expressed in this publication are solely those of the author and do not necessarily reflect the position or policy of DST Systems, Inc. or its affiliates, subsidiaries, joint ventures, officers, directors, or management.

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