Utilization Management

Utilization Management Process of monitoring and managing the delivery of health care services. Assumes that a significant amount of health care services utilized is not necessary. Theoretically, unnecessary care will not benefit patients and can be even detrimental to patients… Inappropriate care = poor quality

Utilization Management Benefits Benefits to Health and Cost of Care Cost Benefits Minus Costs A B Useful Additions to Care

Utilization Management • MCOs manage the utilization of health care resources through prospective, concurrent and retrospective review. • Review Criteria • Referral Authorization • Pre-certification • Concurrent Review • Case Management • Provider Profiling

Utilization Management Review Criteria Assist the MCO in determining if proposed treatments are expected to benefit the patient. Most are developed in the form of guidelines, protocols and policies & procedures. These all represent medical standards that have been developed, documented and supported by medical societies, associations and advisory boards.

Post-menopausal women Program of preventive care: education, exercise, calcium, and vitamin D supplementation as needed Preventive treatment with estrogen, diphosphanates, or Fosamax Unable to take estrogen with significant number of osteoporosis risk factors such as fragility fracture or osteopenia discovered by BMD study or x-ray Axial BMD testing Bone mineral density (BMD) testing at 5 years post-menopause Results > 1 standard deviation -1 to -3 standard deviations < -2.5 standard deviations Re-check in 3-5 years Consider hormone replacement therapy or anti-resorptive therapy (Fosamax) Treat immediately and repeat BMD testing in 1 year Utilization Management Algorithm for Osteoporosis Prevention and Treatment

Utilization Management Standardization of Medical Care As MCOs identify, track and monitor utilization of medical services, they have concluded that patients are not getting consistent quality and consistent outcomes. Do consistent practice patterns = consistent care?

Utilization Management • Consistent practice patterns  consistent care • WHY? • 1) Patient demographics • 2) Case mix and acuity • 3) Compliance to prescribed regimens • The role of public health here is integral: • identification of risk factors/tailoring of care • preventive care and screening • education

Utilization Management Referral Authorization Usually the responsibility of the PCP - Gatekeeper Purpose: to manage the cost and quality of specialty and ancillary services Secondary referral debate… Administrative costs may be reduced through better integration of information technology

Utilization Management Pre-Certification Aims to reduce frequency of inappropriate hospitalizations and high cost procedures Components of the “pre-cert” process: 1) determine appropriateness of planned procedure 2) establish a target length of stay 3) identify members for case management 4) ascertain whether an alternative treatment or setting is more appropriate 5) verify member eligibility and benefit coverage

Utilization Management • Concurrent Review • Continued stay review • necessity of continued treatment • possibility of moving patient to less costly facility • Usually the responsibility of a nurse UM manager • Discharge planning

Utilization Management • Case Management • Ongoing management and planning for care of chronic illnesses • cancer • AIDS • diabetes • osteoporosis • Focuses on reducing case cost primarily on an inpatient basis and improving episodic care

Utilization Management • Retrospective Review • ER services • Provider profiling • Utilization data • Outcomes data • Patient satisfaction data • Quality of care • CME • Compliance with formulary and guideline use • Maintenance of medical records

Utilization Management

Utilization Management Provider Profiling The purposes of profiling depend on who or what is being profiled Profiling is conducted to compare hospitals, health plans, individual and group practices, to each other or to accepted standards or benchmarks Profiling of a MCOs health plans has been facilitated, sanctioned, and validated with the development of HEDIS - Health Plan Employer Data Information Set

HEDIS and Provider Profiling Although originally developed by employers, current versions of HEDIS are the responsibility of the National Committee for Quality Assurance (NCQA) NCQA is a non-profit organization based in Washington, DC that has become dedicated to providing information about health plans to both consumers and purchasers of health care. NCQA’s HEDIS evaluates health plans by requiring its MCO to “voluntarily” submit to an exhaustive scrutiny of processes that assure quality of care and outcomes

The Eight Focus Areas of HEDIS HEDIS is focused on eight areas of performance believed important to decide the ability of a health plan to deliver quality. 1) effectiveness of care 2) access to care 3) satisfaction with the experience of care 4) stability of the health plan 5) use of services 6) cost of services 7) informed health care choices 8) general information about providers of care such as percentage board-certified

Quality Management Quality can be defined in terms of three different dimensions: Structure Process Outcomes

Quality Management Structure This represents the ability of the health care system to meet the needs of its customers, and actually offer them the opportunity to obtain good care Depends on factors such as an appropriate mix of health care professionals, varying levels of care, convenient hours and locations, sensitivity to cultural concerns, and a system that is easy for the average consumer to navigate

Quality Management Process Examines the health care system’s ability to skillfully provide interventions to the people who need them Includes health promotionand disease prevention, making correct diagnoses, the availability of screening programs, appropriate use of specialists, and coordination and continuity of care “Technical Quality of Care” - that which is achievable based on current knowledge Therefore, quality in this sense is proportionate to its effectiveness

Quality Management However, “technical processes” alone are not sufficient… They depend on...“Interpersonal Processes” Interventions should be humane and responsive to the preferences of the patient Testing and treatment choices must be explained, patients must have an opportunity to participate in decisions, they must be able to see appropriate physicians, and their questions should be answered

Quality Management Outcomes NO health care system achieves high quality care unless it has good “outcomes” = the best possible results under the circumstances Organizations should be evaluated to determine whether they manage the biological status of patients appropriately, whether patients can function physically and emotionally, and whether patients are satisfied with the experience of their care

Quality Management NCQA An independent non-profit organization that plays a major role in evaluating health plans and other health care organizations. Conducts voluntary accreditation programs for health plans and maintains certification standards for physician organizations Quality Compass

Quality Management JCAHO Joint Commission on Accreditation of Health Care Organizations Focused on tying accreditation more closely to outcomes of care, while also giving providers flexibility to choose how they want to be evaluated Somewhat limited: only require health care institutions to select 2 of several hundred measures in order to evaluate at least 20% of the population served Issue of sampling

Quality Management FACCT Foundation for Accountability Founded in 1995 - is a coalition of major employers, government agencies and consumer groups “Informed consumers drive health systems accountability” - working to develop consumer-based, patient-centered, outcomes-oriented quality measures

Quality Management Methods of Measuring Quality 1. Was the process of care adequate? 2. Was the outcome of care acceptable? 3. Was the overall quality of care acceptable? 4. Were the processes of care that should have been performed for the specific patient condition actually performed? 5. Did the results of care conform with the expected outcome based on a scientific model?

Quality Management The Practice of Quality Assessment Today “Most often, those who assess quality are not interested in obtaining a representative, or even an illustrative picture of care as a whole. Their purposes are more managerial, namely, to identify and correct the most serious failures in care and, by doing so, to create an environment of watchful concern that motivates everyone to perform better.”  Focus is on frequent diagnoses and correctable deficiencies

Quality Management • Implicit versus Explicit Criteria • Implicit • Expert judgement • Developed after the fact • Allows individualized assessment = representative • Very costly • Imprecise • Explicit • Developed and specified in advance • Based on a particular diagnosis or disease course • Cannot usually be adapted to variability of cases • Costly to develop, but can be subsequently used at low cost • Highly detailed - precise… but is it accurate?

Quality Management • Quality Improvement Process Summary • 1) Identify need • complaints analysis • satisfaction surveys • focus groups • RFPs • 2) Identify potential for meeting need • treating disease • managing health • service quality

Quality Management • Quality Improvement Process Summary • 3) Access performance • appropriateness review • peer review • benchmarking • outcomes assessment • 4) Define indicators to measure performance • structure criteria • process criteria • outcomes criteria • case mix adjustment

Quality Management • Quality Improvement Process Summary • 5) Establish performance goal • understand what it takes to meet need • evaluate performance • compare performance • 6) Provide feedback and recommendations • profiling • report cards • 7) Implement needed improvements • practice guidelines • educational interventions • case management

Managed Care and the Government • Background • 1997 - U.S. General Accounting Office (GAO) calculated that 70.5% of Americans under the age of 65 had private health insurance coverage. • Of these, it is estimated that roughly 4 out of 5 are covered by a managed care organization (MCO). • By 2001, some experts predict that fewer than 1 in 10 employees will be covered by a traditional fee-for- service indemnity plan.

Managed Care and the Government • Managed Care is Dominating Public Health Care Sector • The Balanced Budget Act of 1997 changed both Medicare and Medicaid programs in order to speed up enrollment of beneficiaries in managed care organizations. • The proliferation of managed care coverage in public sector health care programs is making an impact on on the delivery of health services.

Managed Care and the Government • Managed Care is Dominating Public Health Care Sector • Managed care can create increased opportunities for all clinicians, and in greater access and in better patient care. • It can also result in providers getting shut out of health plans and in reduced access to care. • All health professionals must be familiar withmanaged care, and should become actively involved in state, federal, and private sector initiatives to ensure that managed care works for both consumers and providers.

Managed Care and the Government • Can Managed Care Impact on Costs be Sustained? • General agreement is that managed care does reduce costs • The question increasingly being asked by the public and by policymakers at the state and federal level is how those cost savings are achieved.. • Increased efficiency and quality of care? • Inappropriate denial of services and decreased payment?

Managed Care and the Government • Dominance of the Managed Care Organization • Managed Care Organization • Managed care's dominance has dramatically reduced the degree of control healthcare providers have over patient treatment. • The traditional provider-patient relationship has been replaced with a new configuration: PATIENT PROVIDER PAYOR

Managed Care and the Government • Private Sector Oversight of Managed Care • Employers have started paying more attention to what they are getting for their coverage dollar • In response, organizations have emerged to help gauge HMO's quality • JCAHO - focuses on hospitals and institutions • NCQA - 75% of all Americans covered by reviewed HMOs • HEDIS • AAHCC (formerly known as URAC)

Managed Care and the Government Impact of Private Sector Oversight Although helpful, private-sector accreditation of managed care plans has not eliminated "bad" managed care plan practices, nor should it be expected to. “A managed care version of the Better Business Bureau” -Can help smart consumers in purchasing quality health care via quality and outcomes research State and federal laws help maintain order and prevent abusive business practices in other areas of the economy...

Managed Care and the Government • Regulation of MC - State Legislation • Managed care plans are principally regulated by states, which under the McCarran-Ferguson Act of 1945 are given authority to regulate the business of insurance. • The Health Maintenance Organization Act of 1973 • Explicitly gave states responsibilities for overseeing HMOs • All states regulate HMOs to some extent, either through their department of insurance or through other agencies, such as health departments. • Concerns about managed care's impact on patients' access to care, on the quality of that care, and on the provider-patient relationship have helped spur the actions and dominant role of the state

Managed Care and the Government • State Responsibilities • Health Plan Licensure • Benefit Mandates • Direct Access • Consumer Rights • Rates and Forms • Certificate of Need

Managed Care and the Government • Most states regulate HMOs' protection against insolvency, consumer grievance systems, and marketing activities, and require that they cover a basic set of benefits. Types of laws designed specifically to protect consumer and providers from certain managed care plan practices include the following: • Access to providers - POS, AWP, Direct Access • Plan information - referral requirements • Provision of care - stop gag rule, timely review

Managed Care and the Government • Limitation of State Legislation by Federal Government • States laws are frequently overriden by federal preemption of their general authority to regulate insurance plans, under a law known as • "ERISA"- The Employee Retirement and Income Security Act (1974) • ERISA divides the private health insurance universe into two parts: • 1) Businesses who purchase health insurance coverage from a health plan • 2) Businesses which self-insure, using their own money to pay for health services • These self-insured plans-which provide coverage to millions of Americans-are not subject to state regulation. • Preempts the McCarran-Ferguson Act of 1945

Managed Care and the Government • The ERISA Wall: Why Federal Legislation is Important • Enacted to correct problems of fraud and mismanagement of employee benefit plans, and particularly pension funds. • However, while the law places many specific requirements on pension programs, it imposes few standards on other benefit plans, including health benefit plans. • States have traditionally held primary responsibility for regulating the insurance industry within their borders. Although federal laws usually permit states to regulate in areas where federal law is silent, ERISA contains language which virtually prohibits states from enacting laws regulating or affecting employee health benefit plans.

Managed Care and the Government Federal Interest in Regulation Growing Widespread public concern over managed care's impact on quality of care Federal lawmakers are beginning to follow state legislators down the path of managed care regulation Federal legislation in this area would have the added benefit of applying to all health plans, including self-insured plans immune to state regulation due to ERISA. In 1996, Congress for the first time passed legislation, later signed into law by the President, to specifically mandate certain managed care plan practices.

Managed Care and the Government EXAMPLE Under the Newborns' and Mothers' Health Protection Act (enacted as part of Public Law 104-204), all group health plans and individual insurers providing maternity benefits must cover no less than 48 hours of inpatient hospital care for mothers and their newborns. Inpatient stays for cesarean births must be covered for no less than 96 hours. That same law included the Mental Health Parity Act, which prohibits health insurance policies from providing different lifetime and annual dollar coverage limits for mental health services than are provided for general medical services Enactment of these laws demonstrates a new-found willingness on the part of the federal government to dictate private sector health benefit plan practices.

Managed Care and the Government • Anti-Trust Issues in MC • Issue of Applicability to Managed Care • - Anti-trust philosophy versus • Vertical Integration • Horizontal Integration • Sherman Anti-Trust Acts: restraint of trade/choice • Clayton Anti-Trust Acts: anti-competitive actions

Managed Care and the Government • Liability • Provider Contracting • Participation and performance evaluation • Quality Management • Malpractice • Compliance with standard medical practice • “Vicarious Liability”

Managed Care and the Government Fraud and Abuse The National Health Care Anti-Fraud Association (NHCAA) Medicare Anti-kickback Provisions (1977) The Stark Amendment and OBRA 1993 False Claims Act (1863) Health Insurance Portability and Accountability Act (1996) Self referral prohibition

Managed Care and the Government National Consumer Groups U.S. Public Interest Research Group 202 546-9707 www.pirg.org/pirg National Mental Health Association 703 684-7722 www.nmha.org National Alliance for the Mentally Ill 800 950-6264 www.nami.org A number of other state consumer organizations exist, under a variety of names. These can often be found by checking the phone book under "Consumer", trying one of the groups above, and/or asking the people you talk to for the names of other consumer organizations working on healthcare or managed care issues. National Provider Groups National Association of Social Workers 202 408-8600 www.naswdc.org American Chiropractic Association 703 276-8800 www.amerchiro.org American Physical Therapy Association 703 684-2782 www.apta.org American Nurses Association 800 274-4262 www.ana.org American Medical Association 312 464-5000 www.ama-assn.org American Psychological Association 202 336-5500 www.apa.org American Psychiatric Association 202 682-6060 www.psych.org

Utilization Management