OUTGOING MINISTER for Health Mary Harney and State-owned health insurer VHI were at odds last night over the main recommendations of a controversial report on the company’s claims costs.
VHI said yesterday that the primary recommendation of the Milliman report – which has not been published – is that it should move to become “a US-style healthcare utilisation management company”.
However, a spokesman for Ms Harney said last night that neither she nor her department accepted that the report made such a recommendation.
Extracts of the report, which have been seen by The Irish Times, maintain that up to 10 per cent of all inpatient admissions may be medically unnecessary and that hospitals should not be paid for these.
In a statement yesterday, the company said Milliman had expressed the view that healthcare savings could be achieved by the VHI becoming a US-style healthcare utilisation company.
“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.”
VHI 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.
It suggested that subscribers would have to have their treatment pre-authorised, undergo reviews of their care while it was under way and have it reviewed on conclusion.
The report states in its executive summary: “While it is undoubtedly true that 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.
“To give an indication of what could be achieved with better utilisation management, we compared VHI’s claims to our Milliman best practice benchmarks. These benchmarks are based on an insured health system in the US and we categorise them into loosely managed and well managed.”
Elsewhere the report says “utilisation management comprises a range of functions, including prior authorisation, inpatient concurrent review and retrospective review”.
On the level of potential cost savings, the report states: “While utilisation trends may not have spiked significantly in 2008 or 2009, our analysis illustrates there is opportunity to reduce paid hospital utilisation by performing medical necessity reviews for inpatient hospital admissions and provides some useful insight into the areas where this is likely to be most fruitful.
“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.”
VHI chief executive Jimmy Tolan said the board of the VHI had considered the Milliman report and concluded that the transition to healthcare utilisation company would involve “a long and complex journey with an uncertain outcome”.
He also said that the company would have to make investments up front, and that to go down the road fully to becoming a healthcare utilisation management company would increase the VHI’s cost base by between €20 and €30 million.