Health plans use different kinds of measurements to determine utilization and quality. According to Kongstvedt (2016), most payers apply measures that utilize standard calculations. The average length of stay (ALOS) is one of the measures used. This measure is used to determine the average number of hospitalized patients who stay in the hospital. It is usually considered an efficiency indicator. Where everything else is equal, a short hospital stay reduces the cost for every discharge made. Besides, it reduces cost because care is shifted from inpatient to a less costly setting.
Other measures include the total number of health plan members. Such measures incorporate time on a daily, monthly, or yearly basis. According to Kongstvedt (2016), most health plans present their statistics on member per year (PMPY) or per month (PMPM) methods. These measures determine the average frequency an event occurs or cost distributed across membership for one year or month. For example, a health plan may identify doctor visits as 4.1PMPY. This means that the average number of times members visited a doctor’s office was 3.4 times throughout the year.
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An escalation of costs in PMPY for different health conditions is in some cases considered a positive thing because it indicates that doctors can diagnose an illness early and prescribe appropriate treatment (Rossi, 2009). The same can be reported every month. The metric considers all visits, whether the patient was given care or not. Per thousand metric provides an average for every 1000 individuals. In most cases, this type of measure is used for inpatient stays admissions and ambulatory services ( Kongstvedt, 2016 ). The calculations are made every year. However, the metric can be used for other times. The PMPY/PMPM metric is the most effective because it is able to accurately determine savings, which is important for a health plan, as well as show the level of healthcare services utilization.
References
Kongstvedt, P. R. (2016). Health insurance and managed care . Jones & Bartlett Publishers.
Rossi A. (2009). Can Higher PMPY Costs Be a Good Thing? Biotechnology Healthcare , 6 (4), 52.
