Health Plan (Plan) medical management functions are designed to provide solutions to a wide range of objectives including, controlling utilization, improving clinical quality, credentialing physicians and facilities, complying with regulatory requirements and meeting market expectations.  The Accountable Care Act’s provision limiting administrative costs has created an environment where all Plan administrative services are under pressure to credibly show value with a focus on demonstrating financial value.  This has brought increased pressure on medical management executives to show the value of all medical management functions.  Some functions meet regulatory and market demands and therefore are basic business requirements.  For these services the emphasis should not be on demonstrating financial value but on demonstrating best practice efficiency meaning the basic business requirements are being met at the lowest cost.  Other medical management functions directly target controlling utilization and claims cost and are expected to result in a quantifiable financial return on investment (ROI).  Reliable tools and metrics for measuring the ROI for medical management have not been readily available so Plan executives have had to rely on a variety of non-standardized and often unreliable methods.

This blog post explores the characteristics an idea medical management ROI tool or tools would have and shares Milliman research progress towards developing a portfolio of tools designed to provide solutions for Plan executives wanting to credibly measure ROI of medical management.

Future blog posts will describe each tool in detail.

We believe the ideal medical management ROI tool would have these characteristics,

• Calculates ROI using credible methods that do not over or under value the financial impact of medical management
• Does not credit medical management with value produced by non-medical management  interventions such as plan design, provider contracting and others
• Accepted as credible and valid by key internal and external audiences including,
  • Plan executives
  • Plan actuarial and finance functions
  • Plan marketing
  • Employer groups
  • Providers in risk arrangements where the Plan provides medical management services
• Uses industry standard metrics allowing benchmarking and credible comparison with other Plans