Optimize Narrow Network Performance – Identify Providers Driving Episodic Cost Variances

Comparative data can help improve the financial performance of value-based contracts.

Payer Value: Lower Cost of Care Through Stronger and More Transparent Provider Relationships

Market Challenge: Managing provider networks in a rapidly changing contract environment. Identifying top savings opportunities by procedure and by provider.


Analyze an entire episode of care holistically to uncover inflated fees. While contracted facility rates may be in line with average facility costs, other costs related to the episode may be inflated. For example, the anesthesiologist and/or the implant alone may be driving the higher overall cost.

Today, the shift to value-based contracting models is driving innovation in the way healthcare is delivered and paid for. These contract models foster collaboration by aligning incentives to improve clinical outcomes and the patient experience while improving cost efficiency.

How Comparative Analytics Can Help:

Profile providers based on episode of care costs.

  • Create a profile to define the criteria a provider will be upheld to as narrow networks are built.
  • A profile can highlight areas such as high-cost, high-volume providers by zip code, city, or region. This can be delivered in the form of a report card and can help determine the cost of the provider to the plan.
  • Leverage the provider profile data to determine the merit of that provider in reducing overall costs.

Internal Provider Profile

Negotiate hospital and health system costs with total episode costs.

  • Identify and evaluate overall episode costs. Component costs may seem low, but overall episode costs may be higher due to inefficiencies within the overall episode of care.

For example, payer-contracting teams often negotiate costs with the hospital and health systems. Many times these teams do not have access to the entire episode of care costs. Or, if they do, the time spent pulling together and analyzing the data is often very cumbersome. Contracting teams with access to comparative data have the ability to bring this information into existing processes and see the entire episodic costs.

Create bundled payment contracts using comparative analytics.

  • Define target reimbursement rates to create a process around which bundled contracts can be developed.
  • Compare the actual episode of care costs to target bundled contract and reimbursement rates.

Strengthen provider relationships.

  • Educate provider networks on referral patterns, cost variances and impact.
  • Share insights with provider networks to highlight the overall impact that episode of care costs are having on members.

Demonstrate savings opportunities for employer/ASO clients.

  • Generate projected savings reports outlining the episodic cost of care by procedure, member, and local lowest cost of care.
  • Demonstrate how the payer is trying to save the Employer/ASO money and the data will quantify the level of savings potential.


To learn more about how to leverage comparative data to redirect providers and members to lower cost locations, contact us today.

Download the Use Case: Optimize Narrow Network Performance – Identify Providers Driving Episodic Cost Variances PDF