UP TO 10 per cent of all in-patient admissions may prove to be unnecessary, and hospitals should not be paid to perform these procedures, a controversial new report on the VHI has urged.
The Milliman report on the State-owned health insurer, which was commissioned last year by the Department of Health, is expected to be published in part by the Government this week.
The report suggests that in some cases patients should have to receive pre-authorisation from their insurance company prior to undergoing a procedure.
The report, extracts of which have been seen by The Irish Times, says its analysis shows there is opportunity to reduce paid hospital utilisation by performing medical necessity reviews for inpatient hospital admissions.
“Pending a pilot programme testing this we cannot be certain of the magnitude of this opportunity, but our experience in other markets leads us to estimate that a minimum of 5 per cent to 10 per cent of all inpatient hospital admissions may prove to be medically unnecessary and hospitals should not, therefore, be paid to perform these procedures.”
The report says that while some medically unnecessary admissions for procedures could be converted and paid as day-case or side-room procedures, it would expect that “a significant number of medically unnecessary medical cases would simply have payment denied and there would be no or only a relatively small off-setting cost for out-patient services rendered in lieu of admission”.
“One important observation is that VHI’s focus on having minimal administrative costs may inhibit care management development. While low administrative costs are commendable, improving care management’s impact on controlling claims costs will require VHI to invest in resources and staff which is likely to increase administrative expenses.
“However, we believe that return on investment could be achieved through lower claims costs if the care management is focused in the right areas. For example, prior authorisation could be required for every claim, but this will increase administrative cost enormously and lower claims costs are unlikely to compensate.
“However, there are certain key preference sensitive procedures which benefit from prior-authorisation, and we believe it is worth investing in care management in these areas.”
The Government has been under pressure to publish the Milliman report following the recent move by the VHI to increase its subscriptions by up to 45 per cent in some cases.
Fine Gael health spokesman Dr James Reilly said the publication of the Milliman report would lead to a transparent assessment of the VHI’s finances. “I have heard it intimated that vast savings could be made if the recommendations of the Milliman report were implemented.”
Minister for Health Mary Harney said an edited version of the report would be published.
The report says that while it is undoubtedly true that the VHI has an older and arguably sicker population than its competitors, “we believe limited focus has been given to utilisation management and investing in ways to manage claims that can yield savings regardless of the risk profile of the population”.
It says that utilisation management “comprises a range of functions, including prior authorisation, inpatient concurrent review and retrospective review” .
The VHI has argued that the primary recommendation of the report is that it should move to become “a US-style healthcare utilisation management company”. However, Ms Harney denied this.
The VHI said: “Effectively what this means is that VHI Healthcare would transition from an organisation which currently funds the healthcare needs of our customers to one that actually determines what level of care and the type of treatment which our customers would receive.”
It said such a development would mean that in future its subscribers would face the insurance company, rather than their medical consultant determining their care pathway.
