Overview

Utilization Management Operations in Managed Care Contracts:

Service Authorization, Concurrent Review,

Denials, and AppealsPresented by

Bill TenHoor, Senior Consultant

Presentation Outline

1. Background/Context

2. Terms and Definitions

3. Operations, Principles & Practices

4. 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)

• 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

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

Pre-Authorization Concurrent Review

Concurrent Review

RetrospectiveReview

Utilization Management Activities

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

• 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.

Defining Utilization Management

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. Eligible patient2. Eligible provider3. Covered diagnosis4. Covered service/procedure5. 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

6. Other timing-process-administrative requirements met

Good UM Practices1. Contracts and Agreements – understand the terms and conditions of all your

provider contracts, and the implications for your UM processes.

2. Provider Manuals – read manuals and incorporate use of the key words and phrases used by insurers in your business discussions

3. Updates, Alerts and Newsletters – most plans release provider communications. Read them, call w. questions, adapt to and/or openly challenge changes.

4. Policies, Forms and Procedures – use plan-specific templates and follow their rules

5. 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)

6. 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

7. Consult – colleagues in similar practices – group practices are not CMHCs

8. 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. Be thorough and legible, and use terminology specific to plan (thereby promoting understanding)

2. Treat UM staff professionally, building relationships.

3. Document authorization numbers in your records.

4. Document start and end dates – treatment and claims must be consistent with this span of time.

5. Ask about expectations for the next concurrent review.

6. 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)– 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 re-submission

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

• 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 TenHoorSenior Consultant

888-898-3280www.ahpnet.comwww.behavioralhealthtoday.com