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Business intelligence enables improved revenue management and coding quality

Enhanced IT capability brings business insights and boosts revenue by $150 million a year.

Challenge

Following the introduction of a new national regulatory framework, our payor client’s revenue became dependent on how accurately healthcare providers coded the diagnosis and treatment of their patients. Our client was struggling to ensure its fair share of the fund allocation, due to pervasive problems with inconsistencies in the diagnosis codes entered into the system for chronic disease patients.

Discovery

When the project began, the client was managing more than 2 billion sets of claims and patient data, but it was not able to combine data effectively to identify instances of incomplete ICD (International Statistical Classification of Diseases) coding. Data were stored across many silos, which prevented the focused analysis needed to improve coding quality.

McKinsey proposed applying a business intelligence solution to identify insufficient coding for selected chronic diseases and to identify individual providers with below-average coding quality. Working closely with the client, our team identified three key steps to improve coding quality:

  • establish a unified database and an automated business intelligence solution that would enable high-performance data analysis across the different parts of the organization
  • design and validate medical rules for the identification of likely cases of incomplete coding, based on historical coding data. For example, the system contained rules for what to do when a certain drug is prescribed, but there is no coding of a corresponding disease. An initial run of this rule set determined that about 10 percent of all ICD coding was incomplete.
  • prepare and execute quarterly campaigns to identify and reach out to physicians with higher levels of inaccurate coding

Impact

The new tools and processes triggered additional revenues for our client of more than $150 million per year. In addition, the enhanced IT capability now enables our client to gain valuable insight from high-performance data analysis across the whole organization. Answers are now available in seconds, rather than hours or days.

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