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Employer Group ABC
Incurred:
Apr 2014 thru Dec 2015
Paid:
Apr 2014 thru Mar 2016
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3.1 Medical Economics
Section 3.1 assesses medical economics - where cost increases are occurring, what is driving them, and how they
can be controlled. While the areas and opportunities assessed are not additive, they are complementary. For example,
managing Coronary Artery Disease more effectively can be expected to reduce the number of cardiac catheterizations,
reduce the overall number of cardiology consultations, and move cardiology consultations from the inpatient setting
to the lower-cost office setting.
Figure 3.1.1 shows the change in Medical expenses from previous period to current period. This chart is related to
chart 2.2.1 from our assessment of aggregate economics.
Figure 3.1.1 Medical Expense Growth over Time
(Refer to Figure 3.1)
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Changes in unit pricing
are
typically a function of overall medical
inflation, Payor discount power, and
the amount of services that are
delivered in-network versus out-of-
network. Payor contracting is the
primary lever to control this cost
driver.
Changes in utilization
are typically
a function of the overall disease
burden of a population, benefits
design and physician referral
patterns. Disease and Wellness
management programs, rational
benefits structuring, and close
network management are the
primary levers to control this cost
driver.
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Note:
Events are a distinct count of Member ID and Date of Service for the reported population and reporting period.
Source: Medical Intelligence : Claims Module / Custom timeframes for medical expenses.