Healthcare payer organizations can lower the cost of commoditized medical management functions via better and different processes, and invest the savings in member-centric care management services.

1. • Cognizant 20-20 Insights
Elevating Medical Management Services
to Meet Member Expectations
Healthcare payer organizations can lower the cost of commoditized
medical management functions via better and different processes, and
invest the savings in member-centric care management services.
Executive Summary
With the launch of healthcare exchanges and
intensified competition among payers, healthcare consumers are rapidly taking their place at
the center of healthcare transactions. Payers that
deliver rich, member-centric experiences that go
beyond mere claims processing will be positioned
to win — and sustain — market share.
Results from our recent Medical Management
Survey indicate that chief medical officers and
other medical management executives understand this new value proposition (see Figure 1,
next page). (See page 7 for a full description of
the survey.) These decision-makers identified care
management as the component of medical management that delivers the highest satisfaction to
members and consumers. Yet they continue to
invest one-third or more of their medical management budgets in utilization management (UM), a
service that is at best invisible to consumers and,
at worst, seen as a barrier to care.
This white paper examines how payers can
address the gap between the medical management services they know members want and
where their resources are being invested. We
review key survey findings and how these illustrate
where payer organizations must challenge their
traditional thinking about medical management
cognizant 20-20 insights | january 2014
priorities. Finally, we discuss better processes and
different approaches that payers are evaluating
to control costs and avoid unnecessary care while
delivering member-facing programs that achieve
and grow their competitive value.
Aligning Satisfaction Drivers with
Financial and Clinical Resources
Like most businesses, healthcare payer organizations must balance cost reduction mandates with
the need to offer more individualized services and
products delivered via current technologies. Our
survey results indicate that payers could achieve
the financial flexibility necessary to carry out
this dual mandate by rethinking how they apply
medical management resources.
Key Finding #1: Payer CMOs and clinical
directors say care management is a critical
driver of member satisfaction.
Of the chief medical officers and clinical directors
surveyed, 42% cited care management programs
as the leading factor in delivering satisfying
benefits, while 35% named disease management for the top spot. Taken together, 77% of
respondents agreed that member-facing case
and disease management programs deliver the
highest level of member satisfaction (see Figure
2, next page).

2. Survey at a Glance
Execs may need
to re-allocate
budget to member
satisfaction…
…however…
77%
34%
Many respondents believe
care management delivers
member satisfaction…
70%
…over one-third of the
budget continues to be
allocated to utilization
management.
Nearly
50%
Reforms
…as multiple industry
reforms continue to
be a challenge for
payers.
…as a majority of respondents
are not completely satisfied
with existing process
performance.
> 66%
…with almost half of
respondents evaluating
partners for medical
management.
Most plan to streamline
and automate
processes and use
analytics.
Global delivery models
are also
coming into play…
Respondents
are also keeping
an eye on legislation…
Source: Cognizant 2013 Medical Management Survey
Figure 1
Member satisfaction and “quality of outcomes”
are the two leading metrics by which decisionmakers evaluate the success of medical management efforts. Meanwhile, less than one-quarter of
respondents ranked utilization management as a
key member benefit.
Critical Satisfaction Drivers
Q: What provides the most benefit
to your members?
Case
M
anagement
Disease
M
anagement
Utilization
M
anagement
Source: Cognizant 2013 Medical Management Survey
Figure 2
cognizant 20-20 insights
Key Finding #2: Payers expect little change
in budget allocation for care management
and utilization.
Decision-makers surveyed predicted that more
than one-third of their medical management
budget will be allocated to utilization management in the next two to three years (see Figure
3, next page). Respondents do not expect any significant shifts in budget allocation to care management in this timeframe.
Clearly, payers’ budget priorities are not aligned
with what they say are key member satisfaction
drivers, i.e., care management programs. Utilization management is a commodity. It must be
done quickly and accurately, but those qualities
will not be an advantage for payers competing
for employer or healthcare consumer business.
Meanwhile, shifting budget resources away from
utilization management to care management
offers payers clear opportunities for creating
member-centric programs that create competitive differentiation.
Collecting more meaningful quality of outcome
metrics is a distinct area of differentiation that
2

3. Little Change in Budget Allocation
Q: In the next 2-3 years, what percentage of your medical management
budget do you foresee being allocated to support these programs?
30.8%
Utilization
M
anagement
36.1%
Case
M
anagement
31.9%
Utilization
M
anagement
35.5%
Disease
M
anagement
33.9%
Disease
M
anagement
32.6%
Case
M
anagement
Source: Cognizant 2013 Medical Management Survey
Figure 3
payers could achieve by shifting utilization management spend. Such metrics must go beyond
simple gaps in care, such as overdue procedures
or exams, and measure results in a timeframe
that is longer than the one-year period that satisfies most pricing actuaries. More comprehensive
metrics should be gathered on well-defined treatment groups and the cost and quality of the care
that members receive from specific physicians
and providers. These views can be achieved with
advanced analytics that can discover and analyze
patterns across a wide range of data sources.
“Member satisfaction” data also needs to go
beyond measuring plan member longevity. A more
telling measure is “likelihood to recommend.”
Reallocating administrative spending on utilization management must be done carefully.
Savings realized from utilization management
are more easily and quickly quantified than those
gained from care management programs. Utilization management also helps identify and prevent
unnecessary procedures, contributing to cost
reduction and control.
By adopting different processes and better
approaches, payers can spend less on utilization
management without sacrificing its efficacy. For
instance:
• Global
clinical resources can be used for
the vast majority of utilization requests and
reviews, enabling the reallocation of highly
trained, locally-based registered nurses and
other clinicians to more satisfying work.
• Analytics
programs can be used with large,
disparate data sources — such as financial
and clinical outcomes databases — to probe
for patterns, causes and effects that can help
payers quantify the savings gained from care
management programs, as well as new and
different utilization management processes.
Such data can help justify additional process
improvements and greater financial support
of care management and other member-facing
initiatives.
Building Better and Different
Member-Facing Programs
About 70% of survey respondents said they
were not completely satisfied with their current
medical management processes (see Figure 4,
next page). They intend to adopt a variety of
approaches that could streamline processes and
support more member-facing initiatives (see
Figure 5, next page).
Q: In the next 2-3 years, what percentage of your
medical management budget insights foresee being
do you
cognizant 20-20
3
allocated to support these programs?

4. Room for Improvement with Medical Management
Q: How satisfied are you with your organization’s current medical
management practices?
Not
Satisfied
Not
Satisfied
Slightly
Satisfied
Slightly
Satisfied
Completely
Satisfied
Completely
Satisfied
Not
Satisfied
Slightly
Satisfied
Completely
Satisfied
Source: Cognizant 2013 Medical Management Survey
Figure 4
Key Finding #3: Payers focus on process
improvement to reduce costs.
Almost all survey respondents expect to streamline and optimize existing processes in the next
two to three years to provide better cost manage-
ment. Nearly 75% expect to introduce more automation and new technologies, including social and
mobile, suggesting that payers want to alleviate
any inefficiencies experienced with their current
processes and systems.
An Array of Planned Improvements
Q: Which initiatives for cost reduction in clinical operations do you
expect your organization will implement in the next 2-3 years?
Process improvement
i
nitiatives
Technology and
p
rocess automation
(
social and mobile)
Global delivery
options (sourcing)
Analytics to create
better processes
90%
73%
69%
65%
Pay-as-you-go model
(
subscription-based)
61%
Source: Cognizant 2013 Medical Management Survey
Figure 5
cognizant 20-20 insights
4

5. Additionally, payers want to utilize more data
to make better decisions about members and
business through the use of analytics. Analytics
was cited by 65% of respondents as a means to
drive better processes.
survey results indicate that payers are examining a variety of medical management processes,
including routine discharge follow-up tasks, to
determine whether they are true core activities
or “commodity” processes.
Key Finding #4: Use of external partners and
creative sourcing for medical management is
likely to grow.
Streamlining commodity processes, such as
intake, pre-certification reviews and concurrent
reviews in utilization management, should give
payers the flexibility to focus on delivering services that build member loyalty and satisfaction.
These include case management and health and
wellness programs.
Respondents see utilization management intake
and review (60%) and case management (50%)
as two key areas for partnering with an external
service provider. Respondents said discharge
follow-up and managing readmission rates were
additional sourcing candidates, with nearly 40%
indicating these would be appropriate areas for
partnerships.
Almost two-thirds of payers said they are evaluating and are likely to turn to global service delivery
options and sourcing to reduce their clinical operations costs.
In our experience, payers that address dissatisfaction with existing medical management processes can open doors to greater automation
and other, better ways of delivering utilization,
disease and care management. These initiatives
are most likely to succeed if payers re-evaluate
their core competencies and processes to identify
which are commodities vs. competitive differentiators and allocate resources accordingly. Our
At least one leading health plan with which we
work realized savings of up to 60% per utilization management transaction by combining
more automation with less expensive yet highly
qualified global clinical resources delivering
routine reviews.
Furthermore, applying analytics to abundant
aggregated member data will improve a variety of
payer processes and deliver richer member experiences. Better and earlier risk stratification, personalization of case management programs and
behavioral economics-based member engagement models can be driven through the use
of member and core business analytics. These
analytics-derived insights enable payers to move
from process-centric to member-centric business
models.
Vast Majority Planning New Technology Platforms
Q: Has your organization implemented technology platforms
that help support care and medical management?
In place
20%
In preliminary stages
of evaluation
34%
Under active
consideration
92% under
various stages of
implementation
24%
Decided on
platform, but not
implemented yet
14%
Currently
not in plans
4%
Figure 6
cognizant 20-20 insights
5

6. Adopting technology that digitally savvy younger
consumers now rely on in their daily lives also
will enable payers to deliver richer experiences to
members, such as self-service mobile portals and
on-demand data delivery. Healthcare consumers
have said e-mail, text and voicemail can be as
helpful as in-person provider visits or phone
calls.1 Millennial consumers in particular already
use social technology regularly for healthcare
purposes.2 Savings that are achieved by streamlining noncore processes, including utilization
management, should be invested into digital
transformation.
Challenging Assumptions about
Utilization Management Efficiencies
Our research indicates that few payers are completely satisfied with their utilization management processes, with about 70% indicating room
for improvement. Payers working through the
following checklist can identify where utilization
management may be more expensive and less
efficient than it appears.
1. Evaluate your current spend on utilization
management. Are expenses high because of
an inefficient process? Are expenses too low,
indicating a potential loss of opportunity for
cost savings?
2. Create models that show ROI for all utilization reviews. Account for the “sentinel
effect,” i.e., treatments that are not requested
or ordered because they are unlikely to pass
a utilization request. This ROI model should
be adjusted at least once a year based on unit
costs and cost per utilization management
(UM) review.
3. Determine cost per UM review. This review
should also calculate the cost of appeals,
including the expense of sending cases to
independent review organizations and the
percentage of cases found in favor of providers
and/or members. Another cost to consider is
the impact of such reviews on provider and
member relations.
4. Evaluate utilization management automation
levels. Automation that can significantly
reduce utilization management costs while
improving its performance includes provider
self-service portals with decision support;
automated queues and workflows; automated
processing of routine requests; and auto-generated routine correspondence.
5. Evaluate “up to license” use of clinicians.
Using highly trained, locally-based registered
cognizant 20-20 insights
nurses to assemble records or conduct routine
reviews is an inefficient use of expensive
resources. More member satisfaction can be
gained by realigning these clinicians with highvalue, member-facing programs.
Our internal calculations reveal that many payers
are spending $1.50 to $2.30 per member per
month for utilization management. These costs
may be reduced to $1.00 per member per month
via global delivery models. Utilization management cost reductions vary depending on payer
automation levels (such as the availability of
physician self-serve Web portals) and the rate
of global service delivery adoption. In general,
cost saving are achieved by using offshore skilled
nurses to do routine utilization management
work. The more work a payer sends offshore,
the greater the savings. If a payer also has Web
portals, physicians and/or members can use it to
check pre-authorizations (vs. phone calls, letters,
etc.), which leads to additional cost savings.
Accepting the Challenge to Transform
Medical Management
Payers seeking to boost their competitiveness in
an evolving healthcare market must answer these
questions:
• How well does the organization’s clinical budget
align with member and consumer priorities?
• How will the organization create a differentiated experience for members?
• How
will process transformation and new
technology initiatives be funded?
It is a challenge to balance the dual requirements
of cost reduction and member satisfaction. That
said, many payers already have the resources to
achieve both goals locked within their traditional
approaches to medical management.
By challenging conventional wisdom about how to
derive value from utilization management, payer
organizations can transform a wide range of utilization review processes. The savings they gain
can be shifted to care management programs
that enable them to build more personal, customized relationships with their members. Such
relationships will build on payers providing tools
and information that members can use to better
manage their health as their life circumstances
change. These member-centric services deliver a
competitive advantage today and a firm foundation for additional future growth.
6

7. Footnotes
1
“Technology Beyond the Exam Room: How Digital Media is Helping Doctors Deliver the Highest Level of
Care,” TeleVox, October 2012, http://www.televox.com/downloads/technology-beyond-the-exam-room/
BC850054C4664748696D766F8BC9358C/TVX-TechnologyBeyondExam%28Screen%29final.pdf.pdf.
2
“2012 Survey of U.S. Healthcare Consumers: Five-Year Look Back,” Deloitte University Press, Dec. 14,
2012, http://dupress.com/articles/2012-survey-of-u-s-health-care-consumers-five-year-look-back/.
About the Survey
In August 2013, we conducted an online- and telephone-based survey of 50 clinical decision-makers,
including chief medical officers and clinical directors, at U.S. payer organizations with an average of 2.2
million members and annual revenues of $4.1 billion. Each respondent was verified as having budgeting/
purchasing authority for medical management activities.
About Cognizant Global Clinical Services
Cognizant GCS provides service across the value chain to more than 29 U.S.-based customers through
more than 2,000 clinical associates. It is the first and only offshore provider with multiple URAC accreditations, including a URAC accreditation specific to utilization management.
About the Authors
Gajen Kandiah is the Executive Vice-President and General Manager for Cognizant’s Business Process
Services (BPS) practice. As the Global Head of Markets, he is responsible for accelerating the growth
of the BPS business, developing services and solutions leveraging the synergies between ITO and BPO,
and extending Cognizant’s capability to become a leading provider of business services automation and
management solutions. These solutions include business process-as-a-service (BPaaS) and combine
new business, delivery and commercial models to help customers embrace the future of work. Gajen is
a proven entrepreneur and business leader who has demonstrated his ability to build winning businesses
within multinational corporations and startups for over two decades.
Anthony Nguyen is Cognizant’s Chief Medical Officer, responsible for setting the overall clinical direction
of the company’s Healthcare Business Process Services (BPS) Practice, while providing guidance to teams
developing solutions, technologies and global clinical services that enable healthcare professionals to
improve care delivery. In his previous role as Senior Vice President and Medical Director at WellPoint,
Anthony was responsible for all aspects of care delivery (utilization management, case management,
wellness and condition care) for 34 million members. He has extensive clinical global sourcing experience,
having pioneered work in this area. He received his M.D. from Tufts University School of Medicine and
M.B.A. from the Paul Merage School of Business. He can be reached at Anthony.Nguyen@cognizant.com.
About Cognizant
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