COVID-19 delivered a type of perfect storm filled with disrupted usage patterns and delayed elective surgeries with many opting for post-acute care at home due to fear of infection and facility lockdowns.
Lower utilization rates meant that health plans found themselves falling below the medical loss ratio (MLR) limits—even as restrictions are gradually lifted, some states are still not open to full capacity. This “pandemic effect” will continue to reverberate as payers look for ways to offset future risk and avoid future medical loss ratio (MLR) penalties.
“The pandemic created a huge disruption for utilization patterns and many payers are going to have penalties this year,” said Post-Acute Analytics (PAA) CEO Saqib Akhter. “Even if they’re waived this year, usage trends and actuarial models are so out of whack right now that you really don’t know what to expect in the coming years as you attempt to accurately establish a new baseline for Medicare rates and compensation. That’s a level of risk many CFOs lose sleep over.”
The “Pandemic Effect”
Before the pandemic, insurers had a good idea of the requirements of their markets. Memberships were relatively stable, allowing payers to set reserves based on accurately anticipated premiums as well as anticipated utilization and spending of service. COVID-19 removed all certainty:
Misalignment in reserves—With unemployment surging, the number of insured has plummeted, cutting into premiums revenue stream. At the same time, many people put off elective procedures and possibly delayed care in such a way that worsened health conditions. This has put insurers in a precarious position, tapping into reserve balances to pay claims while also striving to protect reserves for delayed care. Likewise, premium deficiency reserves (PDRs) face uncertainty due to claims arising from patients suffering from COVID-19 as well as the possibility of increased claims for delayed care.
Future uncertainty—From premium rate calculation to testing and treatment costs, COVID-19 has injected an unprecedented amount of unknown variables to. From region to region, the severity of COVID-19 infection has varied. Coupled with the unknowns of the virus—variants and “long-haul” effects—and possible new treatments, the actuarial task is a bit mind-boggling.
Offsetting MLR Risk with Population Management
One way payers can help offset these risks is to partner with or delegate full or part of the risk to partners who specialize in managing specific spending categories such as post-acute care.
This strategy also allows payers to eliminate the administrative and overhead costs of managing a post-acute care population.
Risk-based arrangements offload the burden of uncertainty volatility to the partner organization and often improve patient outcomes since the partnered organizations are typically subject to performance penalties.
Organizations like Post Acute Analytics (PAA), who deliver optimal patient outcomes and decrease post-acute care spending by providing care teams real-time actionable insights, are ideal partners for payers concerned about the volatility and uncertainty of managing an aging population post-pandemic.
Additional Benefits of Partnering with an Organization like Post Acute Analytics
The Affordable Care Act’s (ACA) MLR provision rewards investments in technology: Investments that “lead to measurable improvements in patient outcomes or patient safety, reduce hospital readmissions, promote wellness, or enhance health information technology in a way that improves quality, transparency, or outcomes” count as quality improvement, according to the Kaiser Family Foundation.
Investments in technology have led to reduced MLR penalties by giving payers more insight and control over their members as those members go through an episode of care.
The Post Acute Analytics Approach
With it’s proprietary platform Anna™, which offers real-time, actionable insights, PAA is well positioned to not only take full risk on post-acute care spending but also advise payers on the best risk-sharing model to implement based on the payers historical utilization trends and projected future trends.
Anna also helps payers by:
- Reducing out-of-network post-acute care utilization
- Alignment with existing workflows
- Alerts as soon as a patient enters a post-acute facility
- Predictive analytics based on established high-risk triggers
- Patient “off-track” alerts for quality/cost and readmission analysis
- Optimizing post-acute care network performance through a real-time scorecard
PAA solutions have increased in-network adherence to 85% on average, while reducing utilization management and care coordination tasks by 48% for our existing customers.
How Does Anna™ Work?
Anna™ integrates directly with any post-acute electronic medical record (EMR) systems with virtually zero cost and effort from the post-acute care providers. Once integrated, Anna pulls patient chart data from the EMR – including clinical data elements and clinical notes – to create a comprehensive patient profile. Anna leverages state-of-the-art machine learning and artificial intelligence to recommend the optimal path of care for each patient by comparing the patient’s profile to nearly 3.5M records in its data lake. As the patient’s progress is documented in the EMR, Anna pulls the progress notes and updated values to assess whether the patient is on track or if an intervention is necessary. Anna™ then alerts the care team in real time if an intervention is necessary to get the patient back on track.