Utilization Management Operations in Managed Care
Contracts:
Service Authorization, Concurrent Review,
Denials, and Appeals
Overview
Presented by
Bill TenHoor, Senior Consultant
Presentation Outline
1.
2.
3.
4.
Background/Context
Terms and Definitions
Operations, Principles & Practices
Qs & As
Objectives
1. Discuss the rationale for utilization management in health
insurance contracts
2. Discuss the nature of prior authorization processes and its
importance
3. Discuss the nature of concurrent and retrospective reviews and
their importance
4. Discuss the nature of denials and appeals and their importance
5. Review good practices & principles associated with these
operations
Part 1: Background/Context
• 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
Key Parties to Health Insurance
Contracts
• 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
Benefit Design for Typical
Insurance Products
Product
• Indemnity (typically
80-20% cost share)
Provider
• Any willing indemnity
provider
• PPO (patient co-pay,
deductible incentive
in network)
• Out-of-network (AWP)
• In-network (contracted)
• HMO
• Limited network, lower
charge/reimbursement
NOTE: New parity law and Health Reform does/will continue to impact plans
and their products!
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
Part 2: Terms & Definitions
Utilization Management Activities
Pre-Authorization
Concurrent
Review
Concurrent
Review
Retrospective
Review
Denials and
Appeals
What is Utilization Management?
• “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
Defining Utilization Management
• 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
• 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.
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
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
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
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
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
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
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
Part 3: Operations, Principles &
Practices
UM/CM Fundamentals:
1.
2.
3.
4.
5.
Eligible patient
Eligible provider
Covered diagnosis
Covered service/procedure
Medical necessity established
•
•
•
•
•
•
6.
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
Good UM Practices
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8.
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
Good Preauthorization Practices
• Eligibility Determination and Pre-Authorization
should be accomplished at same juncture
(before services are rendered)
• Know who has to do what when (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
Other Good PreAuth. (& CR) Practices
1.
2.
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6.
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!
Good Concurrent Review (CR) Practices
• Key elements in a CR discussion (to document)
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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
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
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
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 resubmission
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!
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
Lessons Learned
•
Reducing the incidence of clinical and
administrative denials and improving
revenue management and related cash flow
results from:
1. Developing clinical appeals and denied claims
correction and re-submission processes
2. Documenting and measuring key information
3. Modifying your procedures and forms to reflect
lessons learned (in interest of quality & efficiency)
4. Relying on and modifying software and systems
to reflect changes and corrections
5. Training your clinical and billing staff accordingly
Develop Your Performance Measures
• Days/Visits Authorized/Approved
• Days/Visits Denied
– Reasons: clinical, administrative, other
• Billed Amount Denied
– Reasons
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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
Part 4:Thank You! Questions?
Bill TenHoor
Senior Consultant
888-898-3280
www.ahpnet.com
www.behavioralhealthtoday.com