Why agile network management will be a game changer

Aug. 2, 2011

Imagine the ability to roll out a new provider network in a matter of days not months.

The ability to create provider networks is not a new idea. Making network management a core capability is becoming increasingly important for a sustainable advantage. Health plans are experiencing greater competition while attempting to grow membership. At the same time, the marketplace is demanding innovative approaches to improving access to quality providers while reducing medical costs, and financial pressures are demanding a leaner administration of operations. At the intersection of these three forces lies the provider networks needed to provide healthcare services.

Designing networks to meet this trisected problem is further complicated by interpreting the impact of healthcare reform laws for items such as health insurance exchanges, by new care delivery models such as patient-centered medical homes (PCMHs) or accountable care organizations (ACOs), and by inflexible core systems that cannot operationalize necessary capabilities to support these initiatives. What's required to deal with these challenges is agile network management. Agile network management is the ability to design, roll out and maintain provider groupings to quickly serve new market needs in an administrative-efficient manner.

Imagine the ability to roll out a new provider network in a matter of days not months. This speed and flexibility are surely game changers when it comes to being responsive to new sales situations and to supporting product marketing and medical management strategies. All of this is possible in a manner that utilizes modeling to fashion network characteristics for analysis before launching. It is also based upon user-defined network criteria to determine the desired provider population and allows for alignment of networks to member products. Additionally, it delivers administrative savings by managing the provider's affiliations to networks accordingly.

The essence of the agile network management capabilities can be summarized by using criteria to define the characteristics of the network intent and evaluating provider information to determine which providers are eligible for the network. Once the network is launched, provider affiliations to the network are automatically maintained by the system.

Let's look at an example where agile network management can assist with customer acquisition. Suppose we have an opportunity to win business from a large local employer that is looking for the following provider network characteristics:

  • HMO product combined with a third-party vision plan;
  • Lower premium required for steering employees to higher-quality hospitals;
  • PCMH approach to diabetes management;
  • Continued support for their contracted rates with a large pediatric practice.

The client-specific solution is to:

  1. Design the appropriate base networks for the customer with network criteria to determine the provider population.
  2. Combine these base networks into a larger product offering to determine the providers the employer can use for medical services.
  3. Set up the appropriate contracts where rate differentials are required for reimbursement.

Our client-specific product offering has the following characteristics:

  • One client-specific product offering that includes our base HMO network, a third-party vision network, a client-specific network for high-quality hospitals and a PCMH network.
  • For the client-specific network of high-quality hospitals, we filter the network to only include hospitals participating in the CMS Premier Hospital Quality Incentive demonstration.
  • For the PCMH network, we filter the network to include providers with the NCQA PCMH certification and our clinical quality rating of top 25 percent for diabetes management.
  • Rate differentials for when members are accessing the PCMH are set up on the contracts for the PCMH participating providers.
  • Rate differential for the large pediatric practice is set up as a new contract that includes the information for the client-specific reimbursement.

This level of flexibility to meet very specific customer requests ensures the ability to translate their requirements into a solution that can be supported efficiently. The same level of flexibility can be used to support other network design needs for care delivery models.

Taking an agile approach to network design is a game changer that also offers a strong value proposition. The value of agile network management can deliver a 20 to 30 percent increase in the speed to market for new products and networks, increase member steerage by 15 to 20 percent, decrease network management costs by up to 30 percent and improve network performance by 1 to 3 percent.

About the author:

Mike Flanagan is SVP of Products, Portico Systems. For more information on Portico Systems solutions: Portico Systems.

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