As the idea of reducing health insurance costs via disease management and wellness programs emerged early in the millennium, Kanawha HealthCare Solutions (KHS), a subsidiary of KMG America Corp. (Minnetonka, Minn.; $831.7 million in total assets), was inundated with requests for disease-based cost analyses. "Our customers were asking for details like, 'Of those who have asthma, what are we spending money on and how does that impact our insurance plan?'" recounts Pat England, VP of managed care. "Assembling an answer required hours of manually running queries in our claims database ... and preparing custom reports."
So the Lancaster, S.C.-based health and life benefit plan developer decided to automate the reporting process. "We wanted a solution that integrated numerous data streams and went beyond reporting to providing substantive predictive information," England says.
A formal project team evaluated six prospective vendors in 2002, and a pilot was conducted with the top two candidates. The D2Explorer healthcare analytics solution from D2Hawkeye (Waltham, Mass.) emerged as the clear choice, according to England. "Since D2's solution is an ASP model, it didn't require building or maintaining the technology," she explains. "Most important, D2's solution offered advanced features, such as integrating multiple dissimilar data sources, drilling down to individual patient records and early identification of potential high-risk individuals."
The process of defining business rules and mapping information began in November 2003. Throughout 2004, D2 delivered modules to KHS for assessment. "We didn't rush to implement in 90 days. We took the time to develop a system that would give us meaningful information," stresses England. Since D2 is Web-based, she adds, the only IT investments for KHS were some minor PC processor upgrades. "At month-end our database automatically drops data into a file and our LAN simply FTPs it to D2," England explains.
Ultimately, the biggest challenge was getting proprietary vendor data uniformly fed to D2, according to England. "For example, our clients use at least 10 different pharmacy benefits managers," explains England. "Since there's no industry standard for data exchange, it took time to train the many external data sources to ensure all feeds to D2 were consistent."
Final testing began in mid-2004. "For about six months D2 performed monthly reconciliations to ensure everything balanced to the penny," England says. "In the meantime, we conducted internal training, beginning with our medical management nurses."
KHS began adding customers onto the system in late 2004. In 2005, work began on implementing D2's predictive models, which calculate clinical outcomes based on an individual's actual history and the system's aggregate intelligence. Rollout was completed in October 2006.
To measure the solution's impact, KHS analyzed 156,000 health plan member months. "The annual cost trend for customers on the D2 platform decreased by 9.31 percent," reports England. "And ... we've improved people's health simultaneously." Further, the solution has fundamentally altered KHS' offerings. "Previously, our focus was paying claims and providing customer service," states England. "Using the D2 platform we've developed a range of clinical outreach, disease management and wellness products."
[Ed. Note: In September 2007, Louisville, Ky.-based Humana ($10.13 billion in total assets) announced its intent to acquire KMG America, with an expected completion date of Q1 2008.]
Lines of business:
Health and life
D2Hawkeye's (Waltham, Mass.) D2Explorer analytics solution.
Automate data mining to support wellness initiatives and reduce customer costs.
Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio