THE STATE’s largest health insurer, the VHI, has strongly criticised a new Government-commissioned report which suggests that it could make considerable savings by introducing measures to control use of hospital services.
In a confidential letter sent to the Department of Health last week, VHI chief Jimmy Tolan said the Milliman report was “rushed”, carried out at far too high a level and that its assertions were not supported by evidence.
He said the report had failed to demonstrate that there were “tangible and real savings” to be made.
In a letter dated February 2nd and marked “strictly private – not to be disclosed to any third party”, Mr Tolan said Milliman had not concluded a benchmarking exercise on which it had initially maintained its conclusion would be based, but ultimately based their findings on meetings with stakeholders and similar results in other markets.
The Milliman report on the VHI, which was commissioned by the Department of Health last summer, is expected to be published by the Tánaiste and Minister for Health Mary Coughlan within the next few days.
The findings of the Milliman report that significant savings could be made by the VHI on its claims costs have gained increased importance following the recent move by the State-owner health insurer to increase its premiums by up to 45 per cent.
The report, which has been seen by The Irish Times,says there is a considerable opportunity to improve the management of care delivery and hence financial performance by both reducing in-patient admission rates and average length of stay.
It says that based on international experience, 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.
The report proposes that VHI adopt utilisation management strategies commonly used by US health insurers. It says that utilisation management consists of measures intended to control utilisation of medical services.
“The typical processes consist of payers evaluating the medical necessity for selected services either planned [pre-certification] or actually rendered [retrospective review] by providers”.
However the report warns that this process increases administrative costs as it requires using doctors and nurses in administrative roles. It also states that it can “create system noise as providers are highly vocal when they fail to be paid for rendered services”.
The report says if VHI takes a more pro-active role in managing quality and limiting inappropriate treatment, it could have “significant consequences for financial precarious private hospitals and cash-strapped public hospitals”.
Milliman report main findings
* A minimum of five to 10 per cent of all in-patient hospital admissions may be unnecessary
* Greater focus on evidence-based medical necessity could provide VHI with significant reductions in overall claims
* Savings could be made by concentrating on high utilisation, high cost procedures for particular segments of the population
* VHI staff lack the resources necessary to implement a “utilisation management” programme on a wider basis.
* VHI’s corporate culture is overly provider-friendly
VHI VIEW OF MILLIMAN
* Findings fail to demonstrate real and tangible savings to be made
* Findings are heavily qualified
Milliman does not quantify the savings that could be made
Report says investment needed to facilitate utilisation management but does not state level of investment needed
No analysis of impact of proposals on providers or on consumers.