A 2016 report by the NationalInstitutes of Health estimated that electronic health records inthe U.S. will gather 25,000 petabytes of data annually by 2020.(Photo: Shutterstock)

Let's be honest: terms like “data analytics” tend to make manypeople's eyes glaze over. The idea of number-crunching health caredata sounds like a good way to improve benefit plans, but it alsosounds like a complex subject—and it is.

Brokers who have been dealing with data analytics say this iswhy a good, reliable partner is so important when delving into thisarea of technology. Consumer education and communication areimportant, but like retirement investing, most laypeople aren'tgoing to want to get into the weeds of data analytics and how itaffects health benefits. Having an expert who canexplain the concepts and strategies will do a lot to make dataanalytics truly useful to companies and their employees.

Related: Machine learning ready to rock the health careindustry

When people talk about Big Data in health care, they aren'tkidding: A 2016 report by the National Institutes of Healthestimated that electronic health records in the U.S. will gather25,000 petabytes of data annually by 2020. A petabyte is a milliongigabytes.

“The decrease in the cost of storage has enabled an exponentialdistribution of data collection, but the ability to analyze thisquantity of data is the center of gravity for 'big data' in healthcare,” the NIH report said. “Other industries such as astronomy,retail, search engines and politics have developed advanceddata-handling capabilities to convert data into knowledge. Healthcare needs to follow their lead so that decisions regardingorganizational objectives and goals can be met.”

Wrangling Big Data is a big job

“From our recent experience, I can tell you it's a daunting taskto evaluate this space,” says Rex Wilcox, a specialty health andanalytics consultant with IMA Financial Group. “Most employersdon't have the bandwidth to take this on in terms of implementingit, managing it, and knowing how to use it. That's why they shouldhire a broker or consultant.”

Rob Piazza agrees. “You have to partner with an expert,” hesays. “It gets really complex; if you're going to work with a PBM,for example, your broker can help you find the right one.”

Piazza, product manager of analytics at Charleston, SouthCarolina.-based Benefitfocus, says firms like his are helpingcompanies take a holistic view of health benefits by combiningeligibility, enrollment and claims data into a single source.

For those who do find the right fit, he says data analytics canimprove benefit plan design and save money. Piazza's company workswith a self-funded employer of more than 4,000 employees to offermore competitive benefits. By identifying cost drivers andinstituting disease management, combining high deductible healthplans (HDHPs) with voluntary benefits, and creating a program toprovide free diabetic medications and supplies, the employer wasable to save almost $5 million in claims costs.

“You have to know your numbers,” Piazza says. “The good brokersare good at that.”

Hitting your targets

Several analysts stress that companies should see data as a toolto achieve certain outcomes.

“Brokers, consultants and employers should identify goals priorto investigating health care analytics,” says Dan Ross, presidentof Med-Vision, a consulting firm based in Tampa, Florida. “Forexample, many consultants and brokers utilize analytics to createsimplified dashboards highlighting and benchmarking planperformance.”

Ross notes that for those trying to control health benefitscosts, there are few better places to start than with the data.“What other critical expenses do employers handle in the samemanner they do health care?” he asks. “An employer will hammer asales employee for overspending $50 on a client lunch; however, hewill not notice their health plan is purchasing MRIs at pricesvarying from $300 to $5,000.”

Chris Davis, director of health management and claimsinformatics, Regions Insurance, says when data is used to see wherethe cost drivers of a health plan are, it's much easier to addressthose costs. “It's not uncommon for up to 70 percent of your claimsto be driven by less than 10 percent of your population,” he says.“So, when you're making large plan design changes, it should beless focused on that other 90 percent and more focused on the 10percent driving the disproportionate amount of cost.”

Davis says by identifying the areas of spending, employers canwork on finding the right facilities and disease managementprograms to address specific issues. “The data allows us to createsteerage opportunities, communication opportunities and employereducation tactics,” he adds.

For years, health care researchers have known that there arewide disparities in the cost of services from state to state.Analysts are now talking about significant variance in quality andcost from facility to facility. In the past, employers had littleinformation on these variances. But that is changing, says KeithMcNeil, partner at Arrow Benefits Group, based in Petaluma,California. (Ross, Wilcox and McNeil are members of Health Rosetta,a health industry consulting consortium.)

“While the data analytics can be great for potentially findingnext year's large claim—the so-called 'ticking time bomb'—they canalso show the huge disparity in costs charged for the sameprocedure,” he says. “The variance can be over 2,000 percent! Ifthe plan knows that, it can set up ways to reward members who uselow-cost providers; as has been shown many times before, high costdoes not translate into better quality.”

Pushback from employers

It may seem that data analytics are most appropriate for largeemployers, but brokers also see benefits for self-funded companieswith relatively small workforces.

“Smaller companies may think there could be a HIPAA violation;they think that their data isn't relevant, they've never reallyused these tools before,” Davis says. “They've only been givenreports from their carriers, but those carrier reports oftenwithhold a lot of relevant information to make an informeddecision.” This data could be key to addressing cost and qualityissues, he adds.

Ross agrees. “Insurance company plan reports typically excludeany meaningful data considered actionable,” he notes. “Added tothis hidden data is the unfortunate fact that employer plansponsors sign contracts typically forbidding auditing.”

Analytics lead to creative health plandesign

Piazza notes that better data leads to health plan designs thatcan better fit the population of an employer. High-deductiblehealth plans, while seen as a way to save money by shifting somecosts to employees, can also discourage utilization, which can leadto more serious health costs down the road.

“HDHPs really do save money, but when I look at groups thatcontain costs well, they inevitably say they've increased otheroptions for plan members,” he says. “They invest in a hospitalindemnity plan for every HDHP member, or get a communication budgetfor a marketing campaign so people understand their benefit planbetter.”

That creativity—going the extra mile—can make a real differencein a complex field like health insurance, Piazza says. He notesthat many people on HDHPs don't understand that their preventivecare is covered at 100 percent, and that if members think only ofthe high deductibles with their plan, they will use the health caredelivery system very differently. Better education leads to betteroutcomes, he adds.

“Communication is one thing that really ties back to our space,”he says. “We want to get to the point where we're making goodrecommendations, based on the data that are right for you and yourcompany.”