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Most Interesting Vendor: 3M At the Inflection Point Between Payer and Provider

May 27, 2014
by John DeGaspari
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Helping to transition the industry to a risk-shared environment
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At a time of uncertainty over ICD-10 deadlines—just one many examples of the rapid pace of changes that is redefining how healthcare is delivered and paid for in the U.S.—3M Health Information Systems (HIS) has distinguished itself by being at the very center of that transformation.

As an ardent ICD-10 proponent, Jon T. Lindekugel, CEO of 3M HIS, believes that the company’s strengths position it well to expand the value of data for both providers and payers. He explains that the company possesses a deep knowledge and domain expertise in the language of health, with a large team of medical informaticists and coders to expand its expertise in that space. “That’s at the core of what we do and our coding business is housed in that,” he says.

Jon T. Lindekugel

3M HIS has a long history of working directly with the Centers of Medicare and Medicaid Services (CMS), a factor that is indicative of its deep involvement with policy issues that have helped shape its business strategy. “One of the things that sets us apart from other vendors is that we’ve been involved with public policy for decades,” says Richard Averill, senior vice president and research director of 3M HIS. He says 3M HIS’ focus is on building tools and methodologies that the industry can use to facilitate behavioral change that will lead to more efficient care and care of a higher quality.” Its work with CMS has provided the company with the experience to convert its commercial solutions to be compliant with ICD-10 in an experienced fashion, he says.

Under contract with CMS, 3M HIS’ Clinical and Economic Research Group, which is headed by Averill, develops and maintains payment methodologies such as diagnosis related groups and ambulatory payment classifications. CMS has also contracted with 3M HIS researchers to develop the ICD-10 Procedural Coding System and the ICD-10 General Equivalence Mappings. In addition, it has developed proprietary classification systems that are now used by state Medicaid agencies and commercial payers to analyze provider quality performance. Increasingly, 3M methodologies are being adopted for payment-based outcomes.

Despite the Delay, a Focus On ICD-10

Averill says 3M was disappointed at the one year delay of ICD-10 implementation. “We are a big proponent for moving forward from ICD-9 and are one of the founding members of the Coalition for ICD-10 [advocacy group],” he says. “We are constantly faced with claims that come in and we are not even sure, based on ICD-9 codes, what was wrong with the patient and what was done to the patient. It makes no sense to run 17 percent of the gross domestic product with such a feeble and antiquated system.”

Nonetheless, when ICD-10 deadline is nailed down with a specific compliance date, the company will be well-positioned to help payers and providers make a smooth transition, Averill says. “We had a brand promise of having all of our core products ICD-10 ready one year in advance, so we were ready,” he says.

Richard Averill

One provider organization that is ahead of the curve in becoming ICD-10 compliant is University Health System, San Antonio, Texas. “The strong vendors got on this at the early onset and prepared for it, giving the end customer plenty of time to get their compliant versions ready,” says Bill Phillips, senior vice president and CIO, information services, of the health system. He says 3M HIS has worked closely with the hospital system in what he terms the “huge” project of upgrading its billing system and, more recently, its electronic medical record (supplied by Allscripts) to ICD-10. While he acknowledges that it has been a challenging project, becoming ICD-10 compliant was a necessary and worthwhile step in moving toward the accountable care environment, he says.

With Roots in Coding, Moving Ahead with Analytics

Based in Salt Lake City, Utah, 3M HIS traces its roots to 1983, when it began as a coding company. Translating clinical data into coded data that are used administratively by payers for payment purposes was, and still is, its core competency. Today nearly 5,000 healthcare organizations in the U.S. use its services to link clinical data with financial data.

Lindekugel says the company’s expertise in four distinct areas presents an unusual but powerful mix for the healthcare industry:

  • At the company’s core is expertise in the language of care, requiring deep knowledge and domain expertise in the language of health, both clinically in the form of medical terminology, and administratively in forms of codes of all types.
  • A history of working with CMS to define the ICD-9 code set in the U.S. and now with the ICD-10 code set.
  • A comprehensive suite of software, supported by a deep knowledge base, large staff expert and services such as hosting in the cloud environment.
  • The resources to capture, organize and analyze the “explosion of electronic healthcare data, in all of its forms,” which represents the direction that healthcare is now headed.
  • Those strengths are the foundation of the company’s formidable offerings in the analytics arena. In April, 3M HIS completed the merger of Treo Solutions, a provider of data analytics and business intelligence to payers and providers. Treo Solutions delivers analytics on data for more than 60 health plans, and uses data analytics to redesign payment structures and help payers and providers make the transition to value-based care models.

Lindekugel calls the acquisition key to 3M HIS’ ability to provide value to both payers and providers, enabling an accountable care organization by aligning all of the incentives. “We want to help both groups, payers and providers, which really means we want to help the whole industry succeed in making the transition to a more risk-shared environment that is going to lead to reduced costs and improved outcomes for everybody,” he says.

3M’s overall approach to analytics is four-fold, Lindekugel explains: compliance, eliminating preventable events, improving outcome quality, and, ultimately, improving population management. Today the healthcare industry is at the very early days of the analytics front, he notes. In his view, the real value of “Big Data” will come from marrying data and real-time information. The strengths of 3M HIS—domain expertise around the language of health, in the form of purpose-built applications to improve specific behaviors and outcomes, is the key to bringing value to payers and provider organizations, he says.

Phillips of University Health Systems agrees: “If you are not taking Big Data and analyzing it and training it for better outcomes, you might as well not have Big Data; it’s of no value,” he says.

“I have faith in the ability to combine the right things in a way that we are going to drive some big improvements in the healthcare system,” Lindekugel says. “That is what we are aiming for as a company and what we want to provide to the industry—solutions that really make a big difference in outcome quality and cost.”


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