There can be significant conflict when it comes to designing and implementing a utilization management (UM) program. UM is designed to ensure care is aligned with nationally recognized clinical standards and to minimize cost related to unnecessary care. It’s a primary cost-control strategy for commercial and government payers as well as some independent physician associations (IPAs) that may be at risk for a health care budget.

However, UM can place a significant burden on providers and, on occasion, delay needed patient care. UM can put all stakeholders in the health care environment in an adversarial position, undercutting efforts to forge closer collaborations needed to deliver value-based care.

By rethinking utilization management, payers can streamline all phases—prospective, concurrent and retrospective—to make it more effective and cost-efficient for themselves and for providers.

Prospective Improvement Opportunity: Rationalize prior authorization.

Prior authorization, which requires providers to obtain approval from insurers before performing a service, is a major flashpoint for doctors everywhere.

In a May 2021 Medical Group Management Association survey, 81% of medical group practices reported that prior authorization requirements had risen since 2020. The majority of practices surveyed by MGMA reported increased prior authorization requirements every year since at least 2016. “In addition to the sharp rise in prior authorization demands, practices report increased denials, delayed approvals for care, and constantly changing rules,” explained MGMA Senior Vice President of Government Affairs Anders Gilberg in the 2021 press release.

Reducing the prior authorization hurdles doctors must jump through would go a long way to improving efficiencies and relationships, with the added bonus of reducing operational costs associated with managing a UM department.

1. Reduce volume.

After peaking at more than 8,000 procedures and 14,000 charge codes, Emblem Health cut prior authorization requirements to 4,000. It did so by reviewing and designating the procedures and codes into three categories and eliminating prior authorization for the first two:

• Services that the plan/IPA does not need to know about. That included outpatient procedures performed in a physicians’ offices.
• Services that the plan/IPA wants to know but won’t object or deny. These conditions or treatments, such as brain tumors or heart valve replacements, were switched to physician notification vs. authorization.
• Services that the plan/IPA wants to know about and may do something about. In this category is assessing whether back surgery is the appropriate procedure before the patient tries more conservative management or whether a higher-cost facility is the appropriate site of service for a colonoscopy for a healthy 50-year-old.

2. Update processes and technology.

It’s long past time to ditch paperwork, faxes, and other manual steps for physician office staff seeking prior authorization in favor of physician portals. In fact, the U.S. Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (ONC) is seeking comments through March 25 on electronic prior authorization standards.

Payers can make other changes now. Make it easy to search online for codes and treatments that requirement prior authorization. Develop standardized electronic processes for submitting and responding to prior authorization requests. Invest in automation and artificial intelligence to expedite decisions, which will reduce operational costs significantly.

3. Improve transparency, especially on acceptable alternatives.

If a health plan denies a specific medication, don’t make the physician guess what else might pass muster, just to have that medication denied too. Automatically generate a list of other options along with the denial and denial explanation.

Concurrent Improvement Opportunity: Simplify and automate

This form of utilization management occurs while a patient is hospitalized. Like prior authorization, the requirements for concurrent review can vary by health plan contract, provider facility, DRG and type of physician. These inconsistencies make it difficult for physicians focused on caring for patients to easily understand and keep insurers properly informed as required.

1. Standardize requirements.

To clarify and simplify concurrent review, a growing number of health plans are looking to MCG (formerly Milliman Care Guidelines) or InterQual guidelines. These guidelines are widely accepted as the best evidence-based criteria for avoiding overuse or underuse of appropriate care and resources. Health plans and other entities use guideline targets to determine appropriate intervals in which to check on a patient’s progress. For example, a growing number of health plans are adopting MCG +1 day for managing hundreds of condition-specific hospital admissions, plus related care coordination, discharge planning, post-discharge care and other necessary services.

2. Tap into EHRs.

Although not common now, a best practice is for hospitals to let health plans access their electronic health record systems to track their members who are currently inpatients. This approach eliminates the need for physicians or hospital discharge planners to interrupt their work to electronically fax or email clinical notes or call the health plan at regular intervals for each admitted patient.

Retrospective Improvement Opportunity: Decrease frequency.

Conducted after care is delivered and claims submitted to the payer, these UM reviews examine coding, care settings, quality of care and related matters to confirm that the treatment was appropriate and billed correctly.

With effective prior authorization, concurrent reviews, and good communication, health plans should have little need for retrospective reviews for specific claims. So the best way to improve this UM phase is to strength performance of prospective and concurrent review processes.

However, retrospective UM offers a perfect opportunity to identify and address habitual out-of-network referral patterns as well as pinpoint opportunities for building network adequacy related to provider gaps. Payers and IPAs carefully build their networks based on quality and efficiency, so identifying outliers and other ways to enhance care and lower costs benefits all.

Alignment of value-based care and payments only makes utilization management more relevant and vital. It behooves all stakeholders in the health care process to be responsible for managing the total cost of care, reduce out-of-pocket expenses for patients, and to work together to improve quality and cost of health care while improving the experience for all involved.

For more information, please contact info@copehealthsolutions.com.