Using claims data to monitor hospital utilization

Controlling provider use is a continuing problem for health care insurers. This paper describes a Blue Cross and Blue Shield of Michigan system that places primary responsibility for inpatient admissions on participating hospitals and uses a dual monitoring approach. Expensive annual samples that review medical records against published criteria constitute the basic test of compliance. An inexpensive indicator is developed quarterly using automated universal claims review. Statistical methodology, costs, and savings for both monitors are described. The claims monitor uses diagnosis related group (DRG) characteristics to estimate the percentage of inappropriate utilization from historical values for the patient group.