Overview

1. Overview Utilization Management Operations in Managed Care Contracts: Service Authorization, Concurrent Review, Denials, and Appeals Presented by Bill TenHoor, Senior Consultant

2. Background/Context Terms and Definitions Operations, Principles & Practices Qs & As Presentation Outline

3. Objectives Discuss the rationale for utilization management in health insurancecontracts Discuss the nature of prior authorization processes and its importance Discuss the nature of concurrent and retrospective reviews and their importance Discuss the nature of denials and appeals and their importance Review good practices & principles associated with these operations

4. The business of utilization management takes place in the context of a health insurance contract and plan – understanding your context is necessary to understand who does what, where, when, how and why Part 1: Background/Context

5. Patient Provider Insurer or TPA/Employer Care/Utilization Manager First Party Second Party Third Party – Risk w. insurer or employer Fourth Party – where UM/CM often happens in behavioral health – can include risk Key Parties to Health Insurance Contracts

6. Product Indemnity (typically 80-20% cost share) PPO (patient co-pay, deductible incentive in network) HMO Provider Any willing indemnity provider Out-of-network (AWP) In-network (contracted) Limited network, lower charge/reimbursement Benefit Design for Typical Insurance Products Cost Patient Choice NOTE: New parity law and Health Reform does/will continue to impact plans and their products!

7. Parity Already Impacting Plans Since passage of Mental Health Parity and Addiction Equity Act: EAPs cannot serve “gatekeeper” role MH and SUD benefits need to be on par with medical/surgical in terms of financial restrictions and coverage Single deductible Pre-authorization and other managed care strategies cannot be more stringent than for medical Standards and guidelines cannot be more stringent and – in event of denials – must be made available to patients and providers upon request Interim Final Rule went into effect among plans subject to parity renewing on or after July 1, 2010

8. Utilization Management Activities Pre-Authorization Concurrent Review Concurrent Review Retrospective Review Denials and Appeals Part 2: Terms & Definitions Service Episode Timeline

9. “Evaluation of the medical necessity, appropriateness, and efficiency of the use of health care services, procedures, and facilities under the provisions of the applicable health benefits plan” -- URAC “A set of techniques used by or on behalf of purchasers of health care benefits to manage the cost of health care before its provision by influencing patient-care decision making through case-by-case assessments of the appropriateness of care based on accepted . . . practices” -- from answers.com What is Utilization Management?

10. Utilization vs. care management vs. utilization review (evolving and ever more compelling techniques and processes originating with utilization review of indemnity products) Incorporates clinical, financial and administrative dimensions Benefit design strategy often directed at the provider more fundamentally than the insured Approach to controlling costs by controlling utilization of benefits or coverage - recognizes we’re dealing with finite financial resources and potentially infinite medical/health care demands and needs Strategy involving requirements for peer review and validation of individual treatment against standardized practice guidelines and medical necessity guidelines Defining Utilization Management

11. Defining Utilization Management • Fidelity to practice guidelines and peer review intended to produce better outcomes and maintain higher quality • Shared incentives designed to raise awareness and lead to shared sense of value (better outcomes, controlled costs) • Involvement of managed care plan intended to promote continuity of care, case management, and decrease sporadic treatment events Ideally.

12. What is Pre-Authorization? • Process (under several names) in managed care sector that requires prior managed care plan approval before services become eligible for coverage and reimbursement • Some exceptions for emergencies and certain procedures • Absolutely fundamental to getting paid, if required • Is necessarily linked with eligibility verification • Can be a burden on the provider and the insured • Successful process results in “Authorization Number” – code required for reimbursement

13. What is Concurrent Review? The periodic process of extending the insurer’s (or intermediary’s) authorization for continuing, reimbursable care by communicating treatment plans and progress An interaction between plan/intermediary and provider that is essentially clinical Successful process results in new/renewed authorization number/code and date to which the authorization is extended (when the next concurrent review is due) Fundamental for uninterrupted claim processing

14. What is Concurrent Review? • Elements in a typical concurrent review discussion (which should be documented for the record): • The specific interventions in the treatment plan • Evidence of best practices and practice guidelines fidelity • Changes in diagnosis and assessment scores • Change to impairments and symptoms

15. What Is Retrospective Review? A utilization management tool invoked after care has been rendered Usually used in cases of emergency hospitalizations today (historically was commonly used in an indemnity plan both for inpatient and outpatient care) Process includes reviewing claims against standards and guidelines Can include a review of discharge timing & foreseeable post discharge activities

16. What Are Denials and Appeals? Denials of claims are insurer/intermediary rejections of coverage of procedure(s) Insurers refuse access to benefits and reimbursement, but do not deny access to treatment, which only a provider can do – insurers simply don’t pay Denials are sometimes called Adverse Determinations Denials are a fact of life (some estimate as high as15% of all claims) High denial rates are costly and preventable

17. What Are Denials and Appeals? Common types of denials include: Administrative - patient or provider failed to follow plan rules and broke with required processes Clinical - plan deems recommended treatment is inconsistent with generally-agreed upon standards and guidelines Policy: plan has pre-determined exclusions and limitations on reimbursable procedures and providers

18. What Are Denials and Appeals? Appeals of insurer denials are provider initiated actions to redress a provider-perceived error, following the insurer’s established, published procedures Appeals are generally undertaken to contest a clinically-based denial, but they can also relate to procedure and policy interpretation Many denials for “easily correctable” administrative reasons can simply be resubmitted as a new claim, rather than undertaking the more elaborate appeals process Appeals can be time consuming and expensive

19. UM/CM Fundamentals: Eligible patient Eligible provider Covered diagnosis Covered service/procedure Medical necessity established Impairments and presenting symptoms assessed Severity/acuity and co-morbid complications assessed Previous attempts at treatment assessed Level of care consistent with above Services required for TX - not for patient or provider convenience Condition would worsen without requested treatment Other timing-process-administrative requirements met Part 3: Operations, Principles & Practices

20. Good UM Practices • Contracts and Agreements – understand the terms and conditions of all your provider contracts, and the implications for your UM processes. • Provider Manuals – read manuals and incorporate use of the key words and phrases used by insurers in your business discussions • Updates, Alerts and Newsletters – most plans release provider communications. Read them, call w. questions, adapt to and/or openly challenge changes. • Policies, Forms and Procedures – use plan-specific templates and follow their rules • Understand – your insurer counterparts are experienced MC professionals with practice guidelines and decision-support systems on their desk-tops + Medical Director back-up. They use these “advantages” & you have yours (learn them) • Peer to Peer – Try to assign role of utilization review and care management to sufficiently experienced, senior clinicians who are articulate, diplomatic and can be forceful – key personnel are an investment • Consult – colleagues in similar practices – group practices are not CMHCs • Refine - your process for managing UM must evolve, as policies are constantly changing and process improvements can yield meaningful returns

21. Good Preauthorization Practices • Eligibility Determination and Pre-Authorization should be accomplished at same juncture (before services are rendered) • Know who has to do whatwhen (patient, clinician and admin. staff) - eligibility can be determined by a non-clinical staff, but certain parts of pre-authorization require specific clinical knowledge • Most are telephonic but some payers have transparent website for this – automate when possible if it can possibly save time

22. Other Good PreAuth. (& CR) Practices • Be thorough and legible, and use terminology specific to plan (thereby promoting understanding) • Treat UM staff professionally, building relationships. • Document authorization numbers in your records. • Document start and end dates – treatment and claims must be consistent with this span of time. • Ask about expectations for the next concurrent review. • Document reviewer’s name and make a date/time for next call. Don’t miss it!

23. Good Concurrent Review (CR) Practices Key elements in a CR discussion (to document) The specific interventions in the treatment plan Evidence of best practice/guidelines fidelity Changes in diagnosis and assessment scores Change to impairments, symptoms, risks, stressors Communication/referral with other providers (primary care/AA/dental) Medication evaluations & issues Evidence of follow-up from previous CR meetings Progress to measurable treatment plan goals/dates

24. Claims Denials • The majority are administrative in nature • Missing information • Inaccurate information • Time span issues (dates of services, authorizations) • Ineligible patient, service or provider • Coding errors with diagnosis, patient identifier #, NPI (provider identifier), procedure code

25. Clinical Denials • When a plan doesn’t concur with admission or treatment • If possible, resubmit a corrected claim, but otherwise respond with an Appeal • Know and follow their written appeals process • Request (per Parity Law) the standards or guidelines on which they base their decisions • Review with your senior clinical staff and prepare your appeal

26. Working your Denied Claims • Reviewing, correcting and re-submitting denied claims is central to revenue management strategy • Assign dedicated staff person to denials if possible • Document receipt of denials, reasons for denied payment and deadline for re-submission

27. Working your Denied Claims • Always review denial reasons (read twice, act once) • Make corrections involving missing or inaccurate info • Review clinical reasons for denial (service, diagnosis, etc.) with treating clinician • Make any corrections possible • Re-submit claims in a timely manner • Measure, measure, measure!

28. Working your Denied Claims • Clinical reasons for denied claims may require an Appeal for reconsideration • Consult your contracts, provider manuals and the plan’s policies and procedures • Notify plan’s claims processing department of desire to appeal denials if you have a credible case (non-frivolous). • Follow their process and request the standards and guidelines plan used in making their determination

29. Lessons Learned • Reducing the incidence of clinical and administrative denials and improving revenue management and related cash flow results from: • Developing clinical appeals and denied claims correction and re-submission processes • Documenting and measuring key information • Modifying your procedures and forms to reflect lessons learned (in interest of quality & efficiency) • Relying on and modifying software and systems to reflect changes and corrections • Training your clinical and billing staff accordingly

30. Develop Your Performance Measures • Days/Visits Authorized/Approved • Days/Visits Denied • Reasons: clinical, administrative, other • Billed Amount Denied • Reasons • Denied Claims Re-Submitted within 30 days • Denied Claims Recovered ($) • Denied Claims Recovered as a % of Total • Number Appeals (total, won, lost) Measure above comparing periods of time and payers

31. Part 4:Thank You! Questions? Bill TenHoor Senior Consultant 888-898-3280 www.ahpnet.com www.behavioralhealthtoday.com