Mitigating Overutilization to Reduce a D-SNP Medical Spend by $145M
About the Client
- Plan Type: Dual Special Needs Plan (D-SNP)
- Plan Size: ~46K members
- Geography: Northeast U.S
Issue
A Dual Special Needs Plan (D-SNP) selected Sagility to provide consulting services to help reduce the plan’s total cost of care (TCoC).
The small northeast payer serves a high behavioral health population, including members living with severe and persistent mental illness (SPMI). Many members have multiple chronic conditions, social determinants of health, and varying levels of functional impairment, requiring highly individualized care plans and coordination across multiple care disciplines.
Key challenges affecting medical loss included:
- High, outlier MLR: The plan’s medical loss ratio (MLR) exceeded the market by more than 30%.
- Overutilization: The plan’s TCoC was driven up by providing services at higher utilization rates and more units per member compared to the market, especially for complex care services under both Medicare and Medicaid reimbursement structures.
The plan needed to reduce costs quickly and set a goal of $70 million in savings through program and process realignment.
Action
Sagility approached this challenge through three distinct strategies:
- Deep population-based analytics: Sagility performed a population-based analysis to identify drivers of spend, specifically where overutilization was driving medical loss. Proprietary risk stratification was applied to key factors in care to determine impactable spend, identify appropriate levels of care, and mitigate overuse or inappropriate utilization.
- Utilization Management (UM) 360 approach: Sagility applied a proprietary UM 360 approach with a frailty algorithm to pinpoint impactable spend.
- Value-stream mapping: To identify inefficiencies contributing to higher operational costs, Sagility conducted a comprehensive value-stream mapping of the plan’s processes.
Impact
The outcome of the engagement included:
- High-impactable spend reduction: Sagility identified at least $145 million in impactable spend—more than double the initial goal—through a population-based, risk stratification approach that considers member frailty and other factors to align health outcomes with financial goals.
- UM 360 opportunity: Tailored management strategies that include utilization management (UM), payment integrity, and case management could save the plan:
- $11 million in Part B drug spending.
- $77 million in personal care attendant spending.
- $51 million in home health spending.
- Process efficiencies: More than $6 million in operational savings from improving processes, deploying technology, and strategically augmenting staff.
in identified impactable spend — more than double the initial goal.
savings potential in personal care attendant services
savings potential in home health services.
in operational savings through process improvements and technology.
