After September 11th, 2001 I went to work for the CEO of one of my old clients: \u00a0Eckerd Health Services responsible for business development, strategy and program management. \u00a0Eckerd was a Pharmacy Benefit Manager and mail order pharmacy with revenues around $5 Billion. Eckerd was a second tier player among PBMs but we were an innovator in utilizing big data to drive insights that we could intervene on. <\/p>\n
At this time the PBM industry had established a common data standard for communication between PBMs, Pharmacies and Physicians. \u00a0A patient would get a paper or electronic prescription and then go to her pharmacy to pick up the drug. \u00a0The pharmacist would enter details of the prescription along with the data on her drug card which would be transmitted to a PBM. \u00a0The PBM’s claims system would execute a number of ‘edits’ testing for eligibility, formulary compliance, drug interactions and so forth. \u00a0The most critical ‘edits’ were termed ‘hard edits’. \u00a0These were issues like deadly drug interactions or not being eligible that would stop the claim being paid until the pharmacist, physician or customer resolved the issue. \u00a0There were very few of these ‘hard’ edits because pharmacists were too busy to handle very many. \u00a0That meant that less critical but still important ‘soft’ edits were ignored.<\/p>\n
The industry had developed a standard way of dealing with these ‘soft’ edits: \u00a0the would take the claims data for a period of time and reprocess them through the claims engine at night when volumes were low. \u00a0They then would provide the customer with a monthly or quarterly report that identified compliance issues and made recommendations for changes. \u00a0Eckerd did this too. \u00a0However, we concluded that if giving a customer a report a month later was valuable how much more valuable would it be if we could actually identify significant ‘soft edit’ issues in almost real time and intervene with the patient and her physician to make a change? \u00a0We identified six defects that drove pharmacy spend or health care spend up that we could identify by rerunning the claims engine. \u00a0The great thing about using the claims engine was that it could both identify and value non compliant defects. \u00a0We couldn’t actually run the program in real time because back then networks and data centers just weren’t reliably fast enough so we ran it 24 hours later. \u00a0When we did, the system would report specific defects – defects like using a branded drug when there was a cheaper generic available, having overlapping prescriptions from different doctors for multiple drugs in a therapeutic class and over prescription of a single drug, particularly controlled substances.<\/p>\n
This list of defects were then sent to a call center who telephoned patients at their homes, typically during the dinner hours, explained the situation and asked for their permission to contact the prescribing physician who would then change the prescription. \u00a0Obviously this was a less than ideal system because interventions were time consuming and expensive and we were targeting only six important defects rather than all of them. \u00a0But even this weak program generated over 2% savings net of all costs in the pharmacy spend of plans that used it. \u00a0It was an exceptionally valuable solution and to my knowledge the first of its kind in the industry.<\/p>\n
So the question is: \u00a0what can we learn from Eckerd’s experience that we can apply to P&C fraud\/defect management? I see six key lessons:<\/p>\n
It is these experiences fifteen years ago that led me to become so excited when I saw what VeracityID was doing with idFusion. \u00a0idFusion is a modern and much more powerful and evolved descendant of the our old 24 hour DUR solution that is tuned to the Automotive Insurance market. \u00a0The existence of superfast networks and massively scalable computing mean that idFusion can deliver real time insights and a cascade of automated interventions that can drive significant value for carriers. \u00a0It really is a major leap forward from the vision that we had in the dark days after 9\/11.<\/p>\n","protected":false},"excerpt":{"rendered":"
After September 11th, 2001 I went to work for the CEO of one of my old clients: \u00a0Eckerd Health Services responsible for […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-1336","post","type-post","status-publish","format-standard","hentry","category-blog"],"yoast_head":"\n