By Ed Willard

Why Utilizing Insurance Claims Data is Necessary for Any Healthcare Strategy Team

Why Utilizing Insurance Claims Data is Necessary for Any Healthcare Strategy Team

Using insurance claims data for strategic healthcare decision making and understanding market dynamics is relatively new to the healthcare market, and it is becoming a necessary part of any strategic planning process. While using claims data in this way can be very valuable, there are some principles to keep in mind to ensure you obtain the most benefit from the data (and avoid the mistakes many organizations have made when pursuing claims data).

How Do You Ensure the Claims Data You Acquire is Actionable?  
Only robust, transparent and detailed claims data is valuable in organizational strategy. The following factors are critical with regard to claims data:

  • Coverage: When exploring non-institutional claims data, the most important factor to consider is whether the data has enough market coverage – at a minimum, it will have 65 to 85 percent coverage. Without at least this level of coverage, you won’t be able to get a holistic view of the market, understand your competitors’ activities or use the data to analyze market dynamics.
  • Transparency: A lack of comparable, transparent healthcare data is an ongoing obstacle for most organizations and extends to claims data as well. When it comes to transparency, claims data should be cleaned and updated frequently as well as managed for duplicates. Additionally, stay away from data providers that don’t offer transparency in types of insurance companies, shared patients, etc. The more transparent the data, the more accurately you can understand the market and, in turn, craft stronger strategic objectives and action plans.
  • Detail: The level of detail in claims data is very important as well, notably for more complex decisions such as increasing market share among specific insurance companies or understanding physician outpatient activity by procedure, by specific payer and by location.

Is Claims Data Alone Enough?

While claims data is a critical part of data-driven decision making, we at INTELLIMED, a healthcare data analytics company, are the first to acknowledge that claims data alone will not provide all of the data needs for strategic decision making or deliver a full picture of the healthcare ecosystem of a city, state or region. Claims data definitely offers a large portion of what is needed, but not all.

By combining claims data, available state discharge data, and demographic data with a healthcare organization’s own data — including information from its electronic medical record (EMR) — claims data can be used to understand what is happening within an organization and within the external environment. The EMR in particular, with its rich information around patient encounters and clinical data, can yield a more detailed view of a patient’s progress through the encounter and his or her status at discharge, while the claims data will provide a holistic view of the patient’s interaction with the healthcare system.

What Can Be Done with Claims Data?

Every healthcare encounter creates a claim for payment from physicians, hospitals, pharmacies and other healthcare providers. There are two ways that claims are submitted and the data collected:

  • UB-04 is the standard billing form used by institutional providers for claim billing. Although it was developed by the Centers for Medicare and Medicaid (CMS), it has become the standard form used by all insurance carriers.
  • CMS-1500 insurance claim form is used for fast professional health care claims submission. The CMS-1500 form is the standard claim form used by a non-institutional providers or suppliers to bill Medicare and commercial carriers. Durable medical equipment providers also use this form to bill regional carriers.

Among the more common uses of external claims data is accessing outpatient market data to understand the connections between doctors, patients and payers beyond the inpatient setting. Other purposes include utilizing the data for physician relations and marketing, including increasing physician market share, facility loyalty and other physician patterns. Using data strategically for both patient- and physician-focused marketing campaigns can yield a positive return on investment.

Additionally, claims data can be mined for important information that has an impact on decisions in many areas, including competitors; service line expansions, decreases or closures; purchase of independent physician practices and clinics; and marketing and pricing strategy, including:

  • Which hospitals have the highest and lowest prices by service line.
  • How far consumers travel for services.
  • Which health plans provide the best discounts and pay the highest by service.
  • Emergency department and outpatient usage among commercial and non-commercial consumers.
  • Utilization patterns of the commercial and non-commercial population.
  • Payer mix by geography, specialty, and procedure, among other factors.

While all healthcare organizations have access to their own internal claims data, there is no publicly available source for competitor claims data, therefore it is essential organizations find trusted partners who have extensive claims data to support strategic decision making. Internal data, along with state discharge data, simply is not enough in today’s increasingly competitive marketplace

A New Data Paradigm
The changes in the healthcare system at all levels triggered by the Affordable Care Act (ACA) have put new emphasis on using claims data to facilitate cost savings at a system-level and for aligning with value-based purchasing initiatives. Claims data can also help to determine whether established clinical and quality safety guidelines are being met. In addition, to achieve the three goals of population health management and analytics: improved outcomes, increased patient safety, and decreased costs – which many organizations have prioritized – combining claims data with clinical data is absolutely essential.

ACA, coupled with the trend of an increasingly active healthcare consumer, has shifted the way healthcare organizations view market share. In fact, developing market share has drastically changed in the last few years. No longer are the days of a volume-based approach focused solely on patients in beds and emergency department usage.

The focus on delivering patient-centered care – one of the “Aims for Improvement” in the Institute of Medicine’s 2001 report, Crossing the Quality Chasm: A New Health System for the 21st Century – is shaping a new paradigm around market share and using data for strategic decision making. Factors such a facility convenience, online reputation, facility and physician ratings, and other variables are all influencing consumer choice. Organizations must market as much to the consumer as to the physician. Many healthcare organizations are looking to the best practices of retail marketing to reshape their consumer interactions.

Using data – including robust, transparent and detailed claims data – will allow healthcare organizations to be aware of the elements that have an impact on their market, a critical factor in organizational strategy and decision making. Such an approach will allow healthcare organizations to evolve with the new landscape and set the course for where they wish to be in the near as well as more distant future.

Ed Willard serves as INTELLIMED’s Executive Director of Business Development and is a member of the INTELLIMED leadership team. In his free time, he enjoys soccer and is involved in several local soccer organizations.