Five Analytic Trends

It goes without question that the U.S. health insurance industry is in a state of flux.  Americans are buying individual products through health insurance marketplaces, new insurance carriers have entered the market, and Medicaid has been expanded in 29 states and the District of Columbia. These market changes, in addition to other reform provisions already introduced and others just starting to take hold, have subjected the market to an unprecedented level of change.

It is said that insurers like risk but hate uncertainty.  What is for certain today is that the old strategies of accepting good risks and repelling poor risks is no longer a recipe for success.  To thrive in this new environment, health insurers must make smart decisions using data to keep ahead of the competition.

Within that context, here are five areas where Milliman clients are using data and analytics in innovative ways to bring some order to the chaos:

  1. Provider Network Optimization. Despite bending the cost curve, one of the great lessons of the HMO era was that consumers value choice. For years, PPOs competed on network size; employers cared more about network disruption affecting their employees than the cost/volume trade-off. In the face of cost pressures, employers and consumers are now starting to accept that smaller networks may be worth the disruption. To meet this need, plans are deploying sophisticated modeling that combines traditional network access and adequacy measures with reimbursement and quality analytics to develop new “smart” networks.
  1. Value-Based Incentive Programs. It’s widely accepted that fee-for-service reimbursement rewards volume over value. As a replacement for FFS, many payers are promoting value-based incentive strategies that shift reimbursement from fee schedules to bonus pools that pay additional incentives when quality and/ or cost targets are met. Analytics are key to selecting measures, setting thresholds, and assessing provider performance. They also aid providers trying to operate under these new risk arrangements, identifying gaps in care, and benchmarking peer performance.
  1. New Trend Dynamics. While predicting the actual numbers requires the proverbial “crystal ball,” the health insurance industry has a reasonably mature understanding of the drivers of health care cost trend. But things are getting more complicated as physician practice patterns change, populations age but live longer, millions of new consumers flood into the individual and Medicaid markets, and burgeoning innovation (e.g., telemedicine/ telehealth, wearables, smartphones, home visits, retail clinics, etc.) disrupts how and where care is provided. Analytics are key to understanding the “trends in trend” in this new world.
  1. Transparency. The healthcare market has earned a reputation for opaqueness. Consumers are more likely to rely on word-of-mouth when selecting a physician, the price of services depends on who’s paying and has little relationship with the actual cost of services, and information on outcomes and quality is kept locked away from prying eyes. Not so in a post-reform world; consumers can now shop on the basis of price and quality, they can go online and find out how much an appendectomy costs at hospital A or B and which one has a higher success rate, and health plan quality ratings are there for all to see when selecting an exchange plan. Big data and analytics make all of this possible.
  1. Care Management Efficiency. Gone are the days when health insurers had unlimited funding for care management programs. Today, plans must make judicious use of limited administrative dollars to meet medical loss ratio minimums while still managing complex and catastrophic cases.  Analytics help plans optimize their care management programs, prospectively identifying those members most likely to benefit from care management, and then enrolling them in the right program.

With many of their traditional performance management tools neutralized by reform, health insurers have had to get smart about how they leverage data and information: they use analytics to design benefit plans, develop marketing strategies and consumer segmentations, select network providers, develop reimbursement strategies, improve clinical quality, and optimize their remaining cost and quality management tools. In today’s market, how a plan leverages analytics, turning data into actionable information, will make the difference between survival and demise.

Analytics to Achieve the Triple Aim

In 2008, Dr. Don Berwick of the Institute for Healthcare Improvement authored a paper in Health Affairs that introduced the concept of the ‘Triple Aim’1. The Triple Aim is a simple approach to improving healthcare: improving health and experience while reducing the per capita cost. The Institute for Healthcare Improvement created the graphic in Figure 1 to visualize the Triple Aim idea. The concept is a straightforward way to tackle improvement opportunities for maximum impact: look for opportunities that provide a balance among the health of the populations cared for, the experience of patients or members, and the overall cost of healthcare.

Figure 1: The Triple Aim

The IHI Triple Aim

Some examples of how the Triple Aim could applied in healthcare delivery include:

  • Preventing unnecessary hospitalizations: improves health by keeping patients out of the hospital where they are at risk for infections; improves experience because patients are at home, where they would rather be; and reduces costs of unnecessary hospital stays.
  • Care coordination through disease and case management models: improves health by more frequent monitoring and support; improves experience through a personalized connection between caregiver and member; lowers cost by avoiding unnecessary visits to specialists.
  • Protocols for high-tech diagnostic imaging built into electronic health records: improves health by reducing unnecessary exposure to radiation; the patient’s experience is improved by skipping time-consuming and sometimes intimidating tests; and lowers cost by using evidence-based guidelines to determine when imaging is appropriate.

The combination of analytics and the framework of the Triple Aim is a powerful approach to prioritizing opportunities. For example:

  1. Cost: Utilize analytic tools to identify areas of variation, or compare administrative operational costs against national benchmarks to focus on inefficiencies.
  2. Quality/Health: Prioritize quality improvement efforts, using metrics like HEDIS.
  3. Experience: Listen to the voice of the customer: use patient experience tools like CAHPS (The Consumer Assessment of Healthcare Providers and Systems) for health plans,  CG-CAHPS (Clinician Group Consumer Assessment of Healthcare Providers and Systems) for ambulatory care groups, or HCAHPS (Hospital Consumer Assessment of Healthcare Providers and Systems) for hospitals. These surveys are AHRQ tools that health plans, providers, and hospitals can use to have members and patients provide feedback where they want improvement.
  4. Bring the Triple Aim together: Map cost opportunities back to quality and customer experience metrics, and determine where the greatest return on improvement is obtained.

Care for patients with diabetes is an impactful example of how to apply the Triple Aim.  Start with data: what percentage of your patients or members have a diabetes diagnosis, and how many are receiving hemoglobin A1c screenings on a regular basis?  Benchmark the results against other plans or providers in your area and nationally, and look for variation. The findings will help identify cases where patients with diabetes are receiving the best evidence based care, and situations where there is room for improvement.  Next, study the systems, providers or geographic care delivery regions that are beating benchmarks, and then spread learnings. This analysis has significant impact for the Triple Aim; for cost, a Milliman analysis published in the Journal of Managed Care & Specialty Pharmacy2 showed that the cost savings from reduced complications across patients with diabetes ranged from $67 to 105 PPPM in the commercial population to $59 to $106 in the Medicare population.  Patients with diabetes who are receiving regular hemoglobin A1c screenings avoid common complications from diabetes like lower-limb amputations, blindness, kidney failure, stroke and heart disease, which impacts the ‘health’ part of the Triple Aim. Finally, patients with diabetes that is under control spend less time in the hospital (more time at home), miss less work, spend less time in the doctor’s office, and have less complications that can impair quality of life, improving experience.  A well-crafted analysis of data can help organizations impact the Triple Aim of improved population heath, better patient and member experience, and lower per capita costs.


1Berwick DM, Nolan TW, Whittington J. The Triple Aim: Care, Health, and Cost. Health Affairs 2008; 27(3):759-69.

2Fitch K, Pyenson BS, Iwasaki K. Medical Claim Cost Impact of Improved Diabetes Control for Medicare and Commercially Insured Patients with Type 2 Diabetes. J Managed Care Pharm 2013; 19(8):609-20.

Graphic: Institute for Healthcare Improvement, available at


Health Insurance Growth in India

The health insurance industry in India has come leaps and bounds since the launch of the first Mediclaim policy was enacted in 1986. It is the fastest growing segment of the Indian insurance industry, as evidenced by the fact that it makes up 30.5% of the non-life insurance segment of the Compound Annual Growth Rate since the years 2005-06. This is particularly remarkable when one considers that the non-life insurance sector has shown the highest premium growth rate amongst emerging markets. Before the year 2000, there were only four public sector insurance companies providing health products in India. Currently, there are 26 private companies providing health insurance, including five stand-alone health insurance companies.

The health insurance coverage in India is split among central, state, employer, and commercial markets. Various government social schemes since 2003 have led to an enormous boost to the number of people with some form of health insurance coverage in the country. Today, nearly 370 million Indians (29%) have some form of insurance through central or state government, employer based, or private health insurance. Commercial, for-profit insurance is comprised of public and private commercial insurance companies that provide individual or family retail and group medical plans for members. State sponsored health insurance schemes offer protection to the lower income groups, and many government employee based schemes cover government, railways, and defense personnel.

Indian Health Insurance Overview graphic 1 resized 600

While these numbers show impressive growth in the India healthcare insurance industry, the overall penetration is still low. Of the 29% Indians covered under insurance, 85% are primarily covered through social and state health initiatives. Commercial insurance is only adopted by affluent urban populations and corporate groups, while social health insurance schemes target low-income groups in both urban and rural areas. There is still a huge gap in coverage for people in the working class, lower-middle class, or those living in tier-two or tier-three cities. There is substantial opportunity to improve access to health insurance across all segments and to launch additional comprehensive health benefits for Indians.

A few government employee-based programs include inpatient benefits in addition to outpatient benefits at public healthcare facilities or within a tight private provider network. The commercial and social health schemes are primarily annual Mediclaim-type indemnity products with maximum sum assured limits and sub-limits for certain benefits. Group medical policies offered to employers/commercial players offer enhanced benefits (maternity, no pre-existing exclusions) within a maximum sum assured limit.

Recently, the main innovations in health insurance products have been a substantial increase in maximum sum assured, the introduction of life-long coverage, improved portability amongst insurers, and a wider range of benefits with accident protection, hospital cash, and critical illness riders. A few health insurers have floated disease-specific insurance coverage (e.g., cancer, cardiac surgery, and, more recently, diabetes), as well as limited outpatient attendance in the individual/family health market.

The four existing public sector companies in India continue to lead the market share, but stand-alone health insurance companies and private sector companies are making inroads. The government opened the market in 2000 and allowed a 27% stake for foreign investors that triggered the influx of foreign players into the health insurance market, providing a wider range of choices to the consumer and driving up competition.

Indian Health Insurance Overview graphic 2 resized 600

Operationally, however, the expenses for the insurers remain higher than they are in other markets. High incurred claims ratio (ICR) is encountered in a very price-sensitive environment and profitability is limited. In the last financial year, there have been trends of rises in premiums and reduction of claim ratios and profitability by a few non-life companies, as well as one of the stand-alone health insurance companies. The experience is different across individual, family, government, and group medical policy portfolios, as well as across public, private, and stand-alone specialists. Private non-life companies have been controlling claims ratios well, however, they continue to lose out on corporate covers. Public sector companies are showing improvements but still have a long way to go.

Indian Health Insurance Overview graphic 3 resized 600

Various factors predict a favorable outlook of the industry in the coming years. The current majority government is expected to bring in stability and catalyze economic growth. A proposed bill to increase the equity share of foreign partners to 49% will invite more foreign players to the health insurance market, which will result in better choices for members, added capability, and more competitive plans. There is interest from a range of foreign insurers who look at India as a major opportunity for growth. The government’s declared mandate to introduce universal health insurance will continue to expand focus to other low- and middle-income groups and will give further impetus to the social health insurance sector. World Bank predicts India to bring in coverage to 50% of its population under some form of health insurance plan by the year 2015.