More than a third of patients are referred to a specialist every year, at a cost of more than $75 billion annually. Specialty care is often necessary, but effective referral management can help payers control costs and ensure it is warranted, efficient, and high-quality. 

The key to all this: insights powered by data. Greater visibility into patterns and trends related to patient outcomes, provider performance, and costs can help health plans see where changes need to be made to optimize costs while enhancing healthcare delivery.  

These are a few main challenges health plans face in today’s healthcare landscape, and strategies for ensuring high-quality healthcare benefits while containing the total cost of care.  

Limited data on provider performance increases specialty care costs 

One of health plans’ biggest challenges health plans face is a lack of visibility into provider performance. Without access to robust data, health plans struggle to identify high-performing providers and evaluate their impact on the total cost of care. This blind spot often leads to suboptimal referrals, higher costs, and inconsistent patient outcomes, making it difficult, if not impossible, to adjust referral processes to support greater cost-efficiency.  

Implementing referral management systems that integrate healthcare data analytics allows health plans to collect and analyze critical provider performance metrics. These systems enable decision-makers to understand cost, quality, and outcomes across their provider network.  

With enhanced visibility, health plans can make informed decisions, promote strategic referrals, and reduce specialty care costs. This data-driven approach improves overall financial performance while ensuring members receive high-quality care.  

Inefficient referral patterns and the cost of care 

Primary care providers (PCPs) often have limited visibility into the performance of specialists. They often lack the tools to make data-informed referral decisions, leading to a high volume of referrals to specialists who do not practice cost-effective care. Over time, this can drive up the total cost of care. 

Referral management tools can help guide PCPs in making data-informed choices when they refer patients to specialists. These tools can incorporate metrics like patient wait times, patient satisfaction, and costs to assist PCPs in choosing the most appropriate provider.  

Health plans can reduce expenses, improve patient outcomes, and strengthen their financial position by steering members toward cost-effective providers. Efficient referral patterns also enhance the member experience by ensuring timely access to high-value care. 

Uncontrolled specialty utilization  

Unnecessary specialty referrals are on the rise, leading to more visits, tests, and procedures that drive costs higher. Long patient wait times for specialty providers can also impact patient outcomes among individuals who genuinely need specialty care.  

A framework for monitoring and managing the usage of specialty care providers gives health plans more control over their utilization. With more insights into patient referral patterns and outcomes, they can identify where specialty care is called for and where it is not.  

They can also identify PCPs with excessive referrals and advise them when primary care may be sufficient. This helps keep costs down and ensures specialty care and other healthcare benefits stay accessible and affordable.    

Competitive pressures necessitate efficient specialty care 

As competition for members grows and costs rise, employers and individuals continue to seek plans that are both affordable and offer reliable care. Greater concentration in the health insurance market means that health plans with less market share must distinguish themselves by maintaining high-quality care, including specialty care, while also managing costs. 

To ensure network adequacy and quality, health plans must balance the need to include a sufficient number of specialty providers with control over their associated costs. Using claims information and other data, they can identify high-performing providers to build and maintain a cost-effective, high-quality network of primary and specialty care.  

This can enhance member satisfaction and help plans build a reputation for affordable and superior care, which can boost re-enrollment rates and attract new members. Together, these can significantly increase health plan revenue over time while keeping the total cost of care down. 

Difficulty identifying and rewarding high-performing specialty care providers 

Without access to data on treatment outcomes, follow-up rates, and costs, health plans struggle to pinpoint specialty providers who deliver high-value care, which also affects their ability to reward those who do.  

Referral management tools that incorporate provider scoring based on clear, comparable metrics give health plans greater visibility into provider performance. They can then offer rewards to high performers, such as financial bonuses and official recognition.  

To incentivize other specialty providers in the network to mirror the practices of high performers, health plans can identify and share details on the practices and procedures that are most effective and cost-efficient. Doing so can also reduce variations in care delivery, leading to improved performance across the network and higher rates of member satisfaction.  

All of these can support lower costs and enhanced financial performance. 

A Lack of data-driven network optimization   

Network management is critical to financial sustainability. Since more than half of ambulatory care visits are to specialists, it makes sense for health plans to focus on specialty care as they optimize their networks. 

Data on provider rates, claims, and patient outcomes can help plans build and maintain networks with specialty providers who have proven histories of high performance. Since studies suggest up to 30% of referrals may be unnecessary, health plans can also analyze data to identify PCPs with a high rate of referrals, pointing to opportunities to advise them on offering primary care options instead.   

In addition, health plans can provide tools and resources to support in-network referrals, further reducing costs and supporting financial stability. 

Rising specialty care costs  

Medical expenses are growing steadily, driven by inflation, a shortage of healthcare workers, and innovative but pricey treatments. Specialty care tends to be more expensive than primary care, making it challenging for health plans to manage the costs of health benefits and maintain financial health over time. 

Here again greater visibility into provider performance can help. Referral management systems that benchmark provider performance against cost and quality metrics help health plans identify cost-effective providers. These can include factors like patient satisfaction, medical outcomes, readmission rates, mortality rates, postoperative complications, patient wait times, and clinical indicators relevant to different specialties.  

Strategic referrals enable sustained cost control and financial stability. By prioritizing high-value providers, health plans can ensure the long-term viability of their healthcare benefits while delivering improved member outcomes. Referral processes that aren’t aligned with value based care  

Under value-based care models, care is coordinated to ensure that treatments are appropriate and necessary, which helps keep costs in check. Unfortunately, it can be difficult to reconcile traditional referral management, which historically has used a fee-for-service model, with the VBC framework. 

Integrating value-based care metrics into referral management tools can make it easier for health plans to adapt to this model. Identifying the factors that contribute to the best outcomes for the lowest costs provides insights into referral practices that can be replicated across the network, leading to more coordinated, consistent, and cost-effective care. 

Control specialty care costs with referral management  

Given that almost 130 million Americans have at least one chronic condition, most members of health care plans will need specialty care at some point—which is why it’s important to proactively pursue strategies proactively to manage those costs. Referral management provides data-driven insights that health plans can use to optimize networks, incentivize provider performance, and support value-based care without sacrificing quality of care. 

As competition heats up and costs rise, health plans face challenges distinguishing themselves on the market and managing finances. Leveraging data for referral management is one way that payers can contain costs, ensure members are satisfied, and secure their ongoing financial health.