Medical Tourism for Group Health: Using Major Diagnostic Categories (MDCs) to Predict Medical Tourism Utilization – A Flawed Strategy that Can Lead to Unrealistic Expectations
The MDC is a very commonly used term, and widely misunderstood. All diagnoses or illnesses are put into one of the 25 Major Diagnostic Categories. With only 25 categories, a wide range of illnesses get lumped together. For example, anemia and heart attacks both are part of the Circulatory System category. Insurers often give clients a report of all claims dollars by MDC. So, you could see that your plan spent $500,000 on digestive system, $200,000 on nervous system and so forth.
One common misperception is about the term “major.” “Major” refers to the categories, not to the illnesses being summarized. Every medical claim will have a diagnosis and will fit into one of the categories, whether the claim is for a bruise or for a heart attack. MDCs give you a high level picture of where your plan dollars are going, but like any high-level picture, it is fuzzy at best.
When we work with brokers and MGAs and insurance agents who would like us to quote network pricing and ROI estimates for domestic or international medical tourism, often, they quote us past year expenses in MDCs.
Instead of using MDCs we tend to estimate utilization projections for a particular employers’ population using various predictive modeling tools. We can accept a flat file of employer claims data from the previous year, match this with pharmacy data and zoom in on who is using more pain medication, who is tapering off, and claims for office visits, diagnostic imaging, physical and occupational therapy, and other indicators and predict impending musculoskeletal, spine, and soft tissue surgeries which might lend themselves to medical tourism, assuming that the patient is willing and able to travel. We can use similar techniques to predictively model heart surgeries in adults, and in some cases, children. We can also use predictive modeling tools to stage cancer cases that may require resections, bariatrics cases that also intersect with other comorbid conditions, etc.
These generic numbers then must be critically evaluated to trim out cases that might be urgent or emergent in nature and not a candidate for medical tourism, those cases were the benefit design (e.g., participant has enrolled as an HMO member, and while part of the population, does not have the benefit option, participant has no desire to travel for care, participant is a union member and the union objects to utilization of a medical tourism benefit outside the USA, etc.).
For a hospital or healthcare provider to make use of this information when negotiating with a group health buyer such as Mercury Healthcare International on behalf of its employer clients, the hospital must review this information with Mercury and/or the employer and couple it with knowledge of incidence frequency rate or prevalence rate, to determine how likely it is for the population to utilize the medical tourism product. Only then can a reasonably sound expectation be made about steerage and rewarding said steerage with preferential pricing.
If you have successfully identified another way to reliably calculate anticipated medical tourism volumes in the group health setting, and can share some lessons learned, please continue the thread below.