Background and Challenge

A confluence of events (regulatory, structural, competitive) has increased pressure on the fundamental economics of many health plans. State limitations on rate increases, Medicare rebasing and coding intensity adjustments, mandatory medical loss ratios (MLRs), excise tax, and enrollment uncertainty around public exchanges have all created margin pressure, while restrictions brought on by the Affordable Care Act and state regulations have limited the degrees of freedom that health plans have to counter these challenges.

Under this margin pressure, health plans often view effective care management as a critical lever in ensuring a sustainable economic model. A leading regional health plan engaged L.E.K. to conduct a comprehensive review of their care management and medical management functions in order to identify opportunities for optimization and improvement.

Approach and Recommendations

We worked with key executives and functional leads within the health plan’s medical management team to perform a holistic assessment of the health plan’s strategies and capabilities, and to develop recommendations for opportunities to improve. Work streams included:

  • Detailed and comprehensive organizational and process mapping of care management functions across all lines of business, including prior authorization and referral review, case management, and medical claims review
  • Calculation of costs, medical savings, and indicative return on investment by sub-function and for specific care management activities
  • Documentation of best-in-class benchmarks and alternative models specific to the network, product, market, line of business, and population in question
  • Codification of improvement opportunities (e.g., staffing ratios for case management, prior authorization list, etc.), development and prioritization of improvement initiatives, and modeling of total expected impact, including various future-state scenarios by membership, product, and line of business

Results

We provided the health plan with a comprehensive roadmap of prioritized initiatives, with actionable initiatives for each care management activity. Our recommendations were presented to senior management and ultimately integrated into planning and budgeting for the care management function.