Outcomes Analysis is nothing new to healthcare payers. Like any other business, health insurers need to know whether their expenditures yield the best possible results for the health of policy holders and the ‘health’ of their ongoing corporate enterprise. Unlike other businesses however, health payers are operating in the volatile reform-focused arena of medical care. Treatment decisions are quite naturally not in their hands but in the hands of physicians whose diagnoses and applied responses to symptoms still vary dramatically. In addition, payers will now have to deal with new federal guidelines governing medical loss ratios (MLR):

CMS is supposed to work with state insurance regulators to make sure that insurers spend at least 85% of the premiums collected from large groups and at least 80% of the premiums collected from small groups and individual insured’s on medical costs.”

 

Last year’s healthcare reform bill (ACA) included the formation of the Patient Centered Outcomes Research Institute (PCORI). The new institute has a lofty mission:

“To assist decision makers by advancing the quality and relevance of evidence concerning the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed through research and evidence synthesis that considers variations in patient subpopulations, and the dissemination of research findings with respect to the relative health outcomes, clinical effectiveness, and appropriateness of the medical treatments, services, and other items”

 

Dr. Scott Ramsey of the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) points out that only very large organizations such as Kaiser Permanente & Geisinger Health can and have made the significant investments required to carry out the sort of in depth, IT intensive outcomes analysis needed to match the mission. Indeed, for the majority of payers some method of public/private funding to carry out outcomes research will be essential and is built in to the plan:

“The law stipulates that PCORI will be funded initially through federal subsidy and over time by a mixture of federal funds and a tax on public and private health insurers. By 2014, available funds will be to equal $150 million plus an annual $2 fee per Medicare beneficiary transferred from the Medicare Trust Fund, and an annual $2 fee per-covered-life assessed on private health plans adjusted for health expenditure inflation…”

 

We know from an increasing number of public & private research partnerships (such as those between pharma and universities) that improved patient treatment outcomes are already emerging. But are there financial benefits to be gained by payers who pursue outcome studies? After all, private healthcare insurance must remain a profitable business if it is to remain at all.

The answer is yes. Performing outcomes analysis to find providers with the most effective treatments is the best incentive for payers to migrate their insured clients to those providers. Doing so bolsters economic assurance that payer MLR’s will meet the guidelines set by the ACA while simultaneously delivering the most successful patient care. Higher rates of treatment success ultimately emerge in the form of reduced payer expenses.  The mechanism for realizing such benefits rests in the application of the broad range of healthcare IT software and services that are gradually transforming virtually every aspect of delivering medical care.

We are in the midst of a complex merger…a merger which revolves around the dramatic improvements of IT and analytics. These advances are being applied with increased intensity from drug safety and effectiveness to more personalized medicine using EHR’s…from pharmacoeconomics to fraudulent claims discovery and in every other sector of healthcare performance.

Whether seen from the perspective of the patient, the physician/provider or the payer, superior treatment results that emerge from diverse, steadily pursued outcomes research can only result in benefits for all aspects of the healthcare sector.