Holding Down Health Care Costs

SAS® Helps Blue Cross and Blue Shield of Nebraska Find Healthy Ways to Save

Blue Cross and Blue Shield of Nebraska (BCBSNE) is the health care insurer for 640,000 people. As a member of the Blue Cross and Blue Shield Association, BCBSNE is one of forty-plus independently owned and operated Blue Plans.

As one of the largest insurers in the state, BCBSNE can negotiate aggressively on behalf of its customers. The company estimates that its negotiation practices saved its customers $175.5 million in health care bills in 2002, about $300 per patient.

One way BCBSNE saves money is by using SAS software to analyze its reimbursements, model rate payment programs and produce complimentary provider billing and charge activity reports. With just one systems analyst and SAS, the company can spot billing problems, explain reimbursement rates to providers, clarify rate structures to customers and perform rate modeling and reporting.

"Our SAS solution has enabled BCBSNE and providers to really understand claim information, billing patterns and cost trends," says Lynn Wattier, Director of Professional and Institutional Reimbursement. "SAS allows us to get to accurate, timely and detailed claim information for our analysis, rate setting and contracting activities."

BCBSNE must monitor services, treatment patterns, trends, payment rates, and the effect of all these items on the customer and premium cost. Not only does the company need to monitor services and charges but it also needs to look at billing practices in terms of appropriate coding, duplicate billings, services provided but not billed, improper or unintended billing fragmentation and other payers who may be primary to BCBSNE.

And finally, in order to keep its market share – and keep its providers happy – the company must be able to defend its rates and reimbursements. SAS helps there, as well.

SAS Provides Solid Data
BCBSNE initially chose SAS several years ago to help analyze hospital claims data to set inpatient payment rates and reimbursements. The outcome of the SAS application for setting inpatient rates was so successful the company expanded its use to other business areas.

With SAS, BCBSNE is able to:

• Quickly identify coding errors and unusual coding practices which increase claim payment and customer costs. The analysis has proven to be so detailed and fact-based that it is used when discussing billing or claim submission modifications, coding or charging practices with providers.
• Assemble a complete picture of claims incurred in Nebraska and throughout the rest of the country. BCBSNE can show Nebraska-based employers where their employees are incurring services, the cost of those services and the price benefits of the Blue Cross nationwide network.
• Apply predictive modeling to determine how anticipated changes may affect total payment, premium and customer retention.

Using SAS has helped uncover aberrant billing practices and unusual treatment patterns. BCBSNE has been able to address and resolve these issues as well as use the findings as part of ongoing monitoring. The positive results have led BCBSNE to form a separate health informatics group that uses SAS to look for more opportunities to minimize costs without jeopardizing health care quality.

Digging To Uncover Errors
BCBSNE is particularly happy with the way SAS helps them mine the claims data to address customer concerns about the effectiveness of provider contracting and provider payment rates setting. "That detailed claim information serves as a data source for a current BCBSNE customer to compare health plans," Wattier says. With such detailed information, the other carrier is obligated to prove their provider contracting effectiveness and discounting arrangements compared to those of BCBSNE.

Another key for BCBSNE is that they don't need many analysts to perform contracting, analysis, and rate setting functions. The analysts don't need to know how to program and they can do the work using their personal computers. "SAS provides so much more than a GUI front end. I think SAS gives us greater flexibility than we could get using another product," says Bobbi Nunn, BCBSNE Systems Analyst.

While Wattier figures you could do some of the calculations using a worksheet program such as Excel, building a dataset with SAS takes minutes not weeks. "With all the factors we're putting into this at one time, inflation rates, base payment amounts, rates, various outlier thresholds and other default payment mechanisms, it would be significantly more resource intensive to perform those functions in Excel." Without SAS, the information would need to be downloaded by the IT department and would likely take several days. By using SAS, the information can be quickly retrieved and put into formats for analysis and decision scenario modeling. Final decisions and actions can be made very quickly and with a high degree of predictability.

The Future: Finding New Ways for SAS to Help
In the coming year, Wattier and Nunn want to further expand their analysis capabilities to give contracting and rate analysts more detailed information for competitive provider payment rate setting. In addition, BCBSNE intends to expand into situational analysis, where they can develop scenarios and apply them to existing conditions to determine the best course of action. "We're just now getting into that," Wattier says.

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