Controlling healthcare costs has been a primary focus of legislation and healthcare reform for nearly a decade. But, at what cost? Do the strategies intended to control health care spending negatively impact patient care? Are payers using the process of utilization review to their advantage to deny claims submissions?
Let’s discuss the topic of utilization management (UM) and take a look at industry news, studies, and polls to see how many claims are being denied, and how UM affects this trend. We also discuss a solution for providers that allows them to view claims denials in real-time in order to manage denials promptly and effectively for a healthier revenue cycle.
What is Utilization Management?
Utilization management is a process used by health insurers or pharmacy benefit managers to evaluate the appropriateness, medical necessity, and efficiency of healthcare services and procedures provided to a patient or group of patients. The purpose is to improve the quality of services and ensure efficient use of money. Utilization management is also referred to as ‘utilization review’.
The review process can take place before, concurrently, or retrospectively to the rendering of services and can be used to deny services that do not meet medical necessity or appropriate expenditure or use. However, with increased restrictiveness, the current trends show that appropriate medical care treatments are being denied at alarming rates.
Does Utilization Review Control Costs?
Published by NCBI, the Institute of Medicine (US) Committee conducted a study in 1989 that examined the role of utilization management, titled: “Controlling Costs and Changing Patient Care? The Role of Utilization Management.” The authors of the study examined the implementation of utilization management as a means to cut healthcare spending and control costs. They also evaluated the impact this had on how physicians were able to provide care to patients.
“With great rapidity and relatively little public awareness, a significant change has taken place in the way some decisions are made about a patient’s medical care. Many decisions like those just described, once the exclusive province of the doctor and patient, now have to be examined in advance by an external reviewer, someone who is accountable to an employer, insurer, health maintenance organization (HMO), preferred provider organization (PPO), or other entity responsible for paying all or most of the cost of the care. Depending upon the circumstances, this outside party may be involved in discussions about whether a service is needed, how treatment will be provided, and where care will occur.” – Controlling Costs and Changing Patient Care Study
While the study may have occurred decades ago, the findings and similarities are striking to the current challenges in healthcare today. The authors conclude that while the strategies for cost-containment are built with good intention, most of these policies eventually disappoint evaluators and supporters to a certain degree. They stated, “Even when these strategies seem to reduce costs initially, trend projections do not appear to show an appreciably lower increase in total costs over the longer term.” Furthermore, the point is made that much optimism and effort are needed to generate a new program from the government or a corporation, but that it “is not surprising that excessively high expectations often give way eventually to disillusionment.”
Rise in Denials for Essential Treatments for Chronic Disease
An August 2017 poll entitled, “Not What the Doctor Ordered” (full PDF), was conducted by the Doctor Patient Rights Project (DPRP). Information collected in this poll found that more than 50 million Americans with health insurance, were denied persistent or chronic disease treatment that was considered essential. Two of out three of those were denied several times.
As a follow up to that poll, the coalition released a new report on October 16 that detailed how utilization management can be used to block access to life-saving treatment. The question then arises, are payers using UM to their advantage to deny claims? According to an article in Detroit News, five specific UM techniques exist that have the potential of standing in the way of essential care, and they include:
- Overly Burdensome Prior Authorization Requirements. Many doctors are experiencing difficulty getting insurers to authorize several prescriptions.
- Overly Restrictive Step Therapy Programs. Often insurers require the patients to try a series of alternative treatments that are cheaper before agreeing to pay for the one prescribed by the doctor.
- Overly Expansive Formulary Exclusions. The article provides the example of CVS, who has doubled its list of treatments excluded from its formulary in the past three years. Also noted is Express Script, whose list has grown by 77 percent within the same time frame.
- Overly Aggressive Non-Medical Switching. Patients are often forced to switch to cheaper medications, even in the middle of a coverage year, because the formulary tiers have changed treatment coverage.
- Overly Inclusive Adverse Tiering. Patients with certain conditions are often discouraged to enroll in health plans because all or most medications that are used to treat a particular illness have been placed on the formulary tier with the highest co-pays.
President and co-founder of Global Healthy Living Foundation, a founding member of DPRP, Seth Ginsberg, had this to say:
“Insurers may have legitimate reasons to ‘manage’ utilization as a response to rising healthcare costs, but cost-saving methods often go too far, and block patients from accessing treatments or procedures their doctors conclude are critical to their health.”
Analytics Software Can Help You Stay on Top of Denials Management
With SSI’s Analytics product, providers have access pre-loaded, interactive dashboards that allow them to see their denials, from denials by payer and even so far as to by the patient. Access to this real-time data gives providers the tools needed to fix denied claims since the denial reason is included in the remit. This allows you to re-work the claim to collect on more claims and maintain a healthier revenue cycle. See our latest Analytics 2.0 in action!