Transcript - The National Association of Subrogation Professionals

Using Applied Analytics To Increase
Return To Your Customer And
Improve Medical Cost Containment
NASP 2009 Annual Conference
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Welcome
Marcia L. Moberg, Ph.D.,
Operations Research Analyst
Ingenix Subrogation Services
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The Context: Rising Cost of Health Care
 Alarming Facts:
 Health care spending is 4.3 times the amount spent on
national defense. (California Health Care Foundation, 2005)
 About 1.5 million families lose their homes to
foreclosure every year due to unaffordable medical
costs. (Robertson, C. T., et al, 2008)
 Since 1999, employment-based health insurance
premiums have increased 120 percent, compared to
cumulative inflation of 44 percent and cumulative
wage growth of 29 percent during the same period. (The
Henry J. Kaiser Family Foundation, 2008)
 Health expenditures are expected to rise at a rate of two
times the rate of inflation for the next decade, reaching
a projected $4.3 trillion by 2017. (Keehan, S. S., et al, 2008)
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At Issue: Health Care Cost Containment
• Campaign Platform for Government Officials
• Important Aspect of Health Care Reform
• Financial Risk faced by Employers, Employees,
Insured, Uninsured, virtually EVERY CITIZEN
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The Opportunity: Subrogating Claims
• Accident-related claims typically account for 8 to
10 percent of claims volume.
• The health plan may not have primary
responsibility for accident-related claims, but it
could be the responsibility of another insurer,
such as Workers’ Compensation, Auto Insurance,
or other medical payment insurance.
• The health plan may be able to recover benefits
paid from liability, other insurers or the other
parties through the right of subrogation.
• There are over 20,000 ICD-9 Codes.
• 3,700 ICD-9 Codes are indicative of an accident.
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Health care subrogation is an important
weapon in combating rising costs
associated with financing accident-related
health care claims.
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The Value of Subrogation
• Places the burden of health care expenses on the
appropriate party responsible for paying.
• Helps control administrative expenses and
improve overall medical loss ratios.
• Improved medical loss experience may drive
lower premiums, resulting in increased
affordability and access to health care.
• Increased affordability and access to health care
benefits everyone.
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Subrogation Case Lifecycle
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How can we use Applied Analytics…
• to MAXIMIZE results?
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What does “Applied” mean?
 “To put to practical use; especially: applying general
principles to solve definite problems <applied
sciences>”
applied. (2009). In Merriam-Webster Online Dictionary.
Retrieved September 30, 2009, from http://www.merriamwebster.com/dictionary/applied
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What is “Analytics”?
 “The extensive use of data, statistical and quantitative
analysis, explanatory and predictive models, and factbased management to drive decisions and actions”
Davenport & Harris, 2007
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Analytics, further defined:
 Data
 factual information
 Statistical
 Employing the principles of statistics
 Quantitative
 Expressed in terms of quantity
 Analysis
 Separation of a whole into its component parts
 Explanatory model
 A useful description of why something happens
 Predictive model
 A prediction of future events using historical results
 Fact-based management
 Using “facts” to make decisions
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One definition of Applied Analytics…
The use of predictive analysis to identify
additional subrogation and savings
opportunities, provide data that will enable the
business to make better decisions, and find
ways to reduce expenses, maximize recoveries,
increase revenue, and improve productivity.
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“Science” and “Art”
 Science is organized knowledge. Wisdom is
organized life.
Immanuel Kant (1724-1804)
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“Science” vs. “Art”
Definition and discussion of Applied Analytics
 “Science”
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Hypothesis Testing
Descriptive Analytics
Trend Analysis
Predictive Analytics
Data Mining
 “Art”
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Analysis
Explanatory Models
Business Acumen
Intuition
Experience
Industry Knowledge
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What is Science?
 Science involves rigor and discipline, validity and
reliability, as well as the testing of hypotheses.
 An important component within the science of data analysis
is trying to avoid decisions based on human assumption.
 Utilizing a scientific method of investigation and introducing
both independent and dependent variables into our study
enable us to attribute a change to a specific set of variables
that have been manipulated.
 Advanced analytic techniques, such as statistical analysis,
data mining, and predictive analytics, allow researchers to
draw conclusions from the data and facilitate the forecasting
of results and the optimization of processes.
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What is Art?
 Art is creative. It can be spontaneous, but also flexible
and organic. It is influenced by the characteristics of the
artist and is an expression of what is important and
salient to that person.
 Knowing what questions to ask can be both science and art.
 Business experience and acumen, as well as intuition, play
an important role in designing both the questions to be
answered with your data as well as knowing which followup questions to ask once you have your data.
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Identification of Subrogation Cases
The role of Applied Analytics in Subrogation case
identification
 ICD9 Codes
 Place of Service Codes/CPT Codes/DRG Codes/ETGs
 Third Party Data Sources
 State Worker’s Compensation Boards
 External Litigation Databases
 ISO ClaimSearch
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Investigation of Subrogation Potential
The use of Applied Analytics in Subrogation case
investigation
 Accident Questionnaires
 Response Rate
 Open Rate
 False Negatives
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Case Management
The role of Applied Analytics in Subrogation case
management
 Case “Scoring”
 Case Specialization
 Metrics Development
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Optimization of Processes and Results
The use of Applied Analytics in Subrogation processes
 Settlement Ratio Targets
 Analyst Performance Analysis
 ICD9 Code Analysis
 ICD10 Code Preparedness
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Telling the Story: Context is Key
 Good statistics should tell a story
 Statistical analysis has a narrative role that allows us to
sharpen the point to that story
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The Key: Science AND Art Combined
 Operations Research teams
 Data Mining
 Descriptive Analysis
 Predictive Analysis
 Business Operations teams
 Productivity/Performance Reporting
 Experience/Business Acumen/Intuition
 Negotiation Skills
 Expertise
 Client Services
 Client Reports
 Benchmarking
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Summary
The use of data mining, analytics and predictive
modeling isn't the solution, its just the start. The best
subrogation teams will differentiate themselves in the
marketplace with their ability to use…
• SCIENCE to combine advanced analytics
techniques/statistics /predictive modeling
/automation
• ART to combine expert knowledge/intuition/design
and interpretation of results
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Questions?
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Thank You!
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Resources:
 Executive Briefing/White Paper
 http://www.ingenix.com/thoughtleadership/innovations/052609
 ISO ClaimSearch
 https://claimsearch.iso.com
 Recovery Data Connect
 http://www.recoverydataconnect.com
 ICD10
 www.icd10prepared.com
 www.5010prepared.com
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