The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.


Although Not Typical, Walmart’s Employee Benefit Costs Worth Noting

By Truven Staff
Anita Nair-Hartman imageA recent CNBC article discussed Walmart’s announcement that it will spend far more than anticipated on employee health coverage and have to trim its earnings forecast for the year. The retailer expected more workers to seek coverage under the Affordable Care Act’s (ACA) mandated coverage requirement, but the actual number topped their projections. Although this news has gotten a lot of attention, National Business Group on Health research indicates that most employers aren’t expecting as large of a jump in healthcare costs as Walmart, and Truven Health research supports this. As the CNBC article points out, Walmart’s employee base has some unique characteristics -- including low-wage workers in states where Medicaid expansion didn’t occur, forcing them to chose Walmart (rather than Medicaid) coverage. These aren’t typical employer circumstances.

Nonetheless, after years of low healthcare inflation, employee benefit costs have grown this year, and Wall Street is going to be keeping an eye on the impact to every company’s bottom line. For employers, monitoring benefits spend and strategy is more critical than ever. Equally important will be engaging employees in healthcare decision making, improving health and productivity through wellness programs, and remaining vigilant on fraud and waste.

Anita Nair-Hartman
Vice President Market Planning and Strategy

Penalties for Avoidable Medicaid Readmissions….And the Gang Piles On

By Truven Staff
Jean Chenoweth imageThe release of the list of Illinois hospitals penalized for avoidable readmission of Medicaid patients in a recent Chicago Sun Times article was interesting reading! While the list was led by two brand name hospitals, Ann and Robert H. Lurie Children’s Hospital of Chicago and Rush University Medical Center, the list also included John H. Stroger, Jr. Hospital of Cook County, University of Illinois, University of Chicago, St. Mary, St. Catherine, and others with long histories of treating the poor and disadvantaged.

Policy wonks argue that the only way to reduce delivery system fragmentation, which is known to cause quality gaps, is by creating penalties that force changes in the structure of the delivery system. Development of metrics that force hospitals to be responsible for care beyond their current control has become much more common. Why? Because it’s the hospital that has the staff and financial resources to make changes in the delivery system across the community. If the penalty is high enough, the hospitals will innovate to avoid the penalties, ultimately transforming the healthcare system.

Transformation requires innovation, trial, and error, and the ability to rapidly correct error. Setting policies that attempt to drive innovation in the delivery system via stiff penalties is innovative itself! This approach might be reasonable if government could act fast enough to adjust for error inherent in the innovation process. However, in a democracy, government is deliberative by definition, and therefore slow to act. It is especially unfortunate that states are piling on to extend avoidable readmission penalties without taking into account socio-economic conditions of patients. Both state and federal government could simply exempt or reduce the impact of the penalties on safety net hospitals now. There are existing socio-economic adjustment methodologies that have been used for over a decade by health systems like Dignity Health. Neither solution is perfect, but fast action is necessary to reduce safety net hospital financial harm that is being exacerbated by the state “pile on.”
There is no doubt that the government is trying to innovate, and I applaud those efforts. Using hospital penalties to drive innovation and delivery system structural change might even work well in some cases.  But the risk of government’s inadvertent commission of “avoidable error” is too great, given its slowness to act. It would be better to run a few small pilots first to get the kinks out. Then, when the piling on occurs, it will not hurt those that are already hurting.

To read more about the connection between socio-economic factors and readmissions, download our white paper, Community Need Association with 30-Day Readmissions.

Jean Chenoweth
Senior Vice President, Performance Improvement and 100 Top Hospitals

Medicaid Program Integrity: Fighting Fraud in a Managed Care Environment

By Truven Staff
David Nelson imageA recently published study by the Government Accounting Office identified a need for states to ramp up their efforts to assure Medicaid program integrity under managed care. Although a majority of Medicaid beneficiaries are now enrolled with managed care organizations (MCOs), and payments for those plans are growing at a faster rate than fee-for-service (FFS) expenditures, some states are just now beginning to shift their program integrity focus from FFS to managed care. 

Traditionally, Medicaid has fought FFS fraud, waste, abuse, and overpayment by applying edits and algorithms to claims in prepayment, and using data mining, investigation, and recovery modeling and analytics in post payment. More recently, Medicaid has stepped up fraud-prevention efforts by expanding the use of prepay predictive analytics and implementing provider credentialing and stringent ongoing provider surveillance, as required under the Affordable Care Act (ACA). 

Best-practice Medicaid agencies have increased their managed care program integrity efforts through more comprehensive oversight of their contracted MCOs. They are collecting and validating encounter data, which allows them to perform advanced analytics to find fraud, waste, and abuse, and they are performing checks to ensure proper Medicaid administration. These agencies examine the full continuum of managed care fraud and abuse vulnerabilities:
  • Traditional FFS issues, such as over-utilization and billing for unnecessary or unused services
  • FFS/Managed Care crossover issues, including double billing and payment for ineligible recipients, such as prisoners and those with certain medical conditions or who are enrolled in certain waiver programs
  • Managed care operational issues, such as inaccurate encounter claims, under-utilization, and cherry-picking patients
  • Managed care financial auditing to ensure that MCOs accurately account for and categorize costs incurred and capitation rates are premised upon correct information
Medicaid agencies need to be diligent stewards of their managed care contracts. While managed care adds new complexities and challenges for monitoring program integrity, the rapid growth in managed care enrollment adds to the urgency of putting in place effective oversight mechanisms. 

Critical Success Factors
As we look across best-practice Medicaid agencies, several critical success factors have been shown to produce significant results for the integrity of the program under managed care. Some of these critical success factors are:
  • Encounter data accuracy and completeness
  • Contract provisions and rules to support managed care payment integrity
  • Capitation payment review
  • Data analytics examining MCO services and comparing MCO utilization to FFS
  • Inter-MCO comparisons and analytics
  • Managed care organization auditing (both financial and operational)
By incorporating such success factors, Medicaid agencies can avoid common fraud, waste, and abuse pitfalls under managed care and improve the integrity of the program.

Truven Health Analytics™ has been helping managed care organizations in all of these dimensions for several years. Our experts have advised 20 states over the past 15 years about managed care encounter data strategy, and our program integrity experts have been delivering recoveries to Medicaid agencies for three decades. In fact, IDC MarketScape recently named us an industry leader in fraud, waste, and abuse solutions.*

For more information, please contact me at

David Nelson
Vice President, Market Planning & Strategy

What is Appropriate Emergency Room Utilization?

By Truven Staff
Mike Taylor imageA recent NPR article discussed a study in the Journal of the American Medical Association pointing out that complex problems cannot be solved by simple solutions. The problem to be solved is the high cost of emergency department (ED) utilization. The solution being developed by many states: Don’t pay for non-emergent visits. Sounds logical. But, as the authors point out, patients don’t go to the emergency department with diagnoses, they go with symptoms. A person with chest pain and shortness of breath at 3 a.m. should be evaluated on an emergency basis; if that person is having a heart attack, the visit is justified. If the person actually is having gastroesophageal reflux, is the visit not necessary? How is the person to know? Clearly, some people use the ED for non-emergent conditions, but making payment decisions based on discharge diagnoses has the possibility of discouraging patients from seeking needed care. In this study, only 6.3% of ED visits were classified as “primary care-treatable.”

The article makes an excellent point—“Between 4.5% and 8% of individuals in the ED are frequent users, but they account for 21% to 28% of visits.” In a 2003 Massachusetts study, 3.8% of ED users accounted for 17.6% of all ED visits. Our own data show similar results for these ED 'frequent flyers.' Perhaps a better way to reduce ED costs is to focus on those individuals who are the most frequent users, addressing their medical and socioeconomic problems, rather than penalizing those who genuinely believe they are having a medical emergency. The Centers for Medicare and Medicaid Services (CMS) should consider studying the profiles of frequent users of the ED and designing policies to address their challenges.

In a fee for service environment, ED overutilization is a logistic challenge for hospitals, but in an accountable care organization environment, with hospitals financially responsible for the health of the population it serves, ED overutilization becomes a financial issue. It is time to take a detailed look at this problem. 

Good Intentions Gone Awry: Solving for the Prescription Pain Medication Epidemic

By Truven Staff
Tami Mark imageHeroin in New England, More Abundant and Deadly” headlined an article in the July 18 edition of The New York Times that described the alarming comeback that heroin is making across the quaint towns and larger cities in New England.  Behind the growth in heroin use is a sad story of good intentions gone awry. A push to better treat patients’ pain and the introduction of oxycodone, a powerful and highly addictive pain medication, resulted in today’s massive prescription pain medication epidemic. The CDC recently reported that more people are dying from overdoses from pain medication than car accidents.

Efforts to clamp down on pain medication misuse have created the unfortunate consequence of, in effect, encouraging people with opioid addictions to substitute heroin for prescription pain medication. How can the healthcare system avoid this continuing cascade of unintended consequences? A key step is to ensure that individuals have access to a robust addiction treatment system. This effort can be enhanced with coordinated use of data and analytics.

Medicaid programs, for example, have established prescription drug monitoring to identify individuals who are abusing prescription drugs. However, such efforts need to be coupled with access to a robust substance abuse treatment system that includes access to the most effective medications for the treatment of opioid addiction – Suboxone® (buprenorphine/naloxone) and methadone, as well as coordinated substance abuse outpatient, inpatient, and rehabilitative services. A number of state Medicaid programs do not provide coverage of methadone treatment and many have time limits on the use of Suboxone. Analysis of de-identified Medicaid prescription and medical claims data, substance abuse treatment data, and prescription drug monitoring data can help states determine whether their systems are not only reducing misuse and diversion of prescription drugs, but are also providing access to high-quality addiction treatment that will keep their populations from substituting heroin use for pain medications that they can no longer obtain.

The total U.S. societal costs of prescription opioid abuse was recently estimated at $55.7 billion in 2009 - more than double the $24 billion that was spent on all of substance abuse treatment in 2009* as reported by Truven Health Analytics in Health Affairs. Thus, the numbers suggest greater coordination will have an economic, as well as a public health payoff.

Tami L. Mark, PhD
Vice President, Behavioral Health and Quality Research