Healthcare organizations’ success under risk sharing and value-based care relies on a well-oiled UM program.


Authored by Debbie Hill, MSN, RN

The rise of risk sharing in healthcare has brought providers and health plans closer together in recent years. They’re collaborating on a growing list of shared responsibilities in a combined effort to improve patient care, create healthier communities and reduce healthcare costs. One of those shared responsibilities is utilization management (UM). Historically seen as a payer-side initiative to determine pre-authorizations, the practice of utilization management is evolving to keep pace with the evolving demands of value-based care.

Today, utilization management covers so much more than the original definition that the Institute of Medicine developed in 1989, which called it “a set of techniques used by or on behalf of purchasers of health care benefits to manage health care costs by influencing patient care decision-making through case-by-case assessments of the appropriateness of care prior to its provision.”

Though the essence of utilization management remains the same, the stakes are much higher. Healthcare organizations’ success under risk sharing and value-based care relies on a well-oiled UM program. These organizations, both health plans and providers, also face an increasingly complex patchwork of state and federal regulations, standards and guidance governing everything from denials documentation to authorization turnaround times to reporting.

A recent survey by the Utilization Review Accreditation Commission (URAC) found that healthcare organizations are subject to a shocking number of state and federal laws and regulations related to utilization management. At the federal level, there are 26 laws and 110 regulations, while states have a combined 1,993 laws and 2,960 regulations. For health plans that are managing populations in multiple states or offer multi-state benefits, this is an alarming number indeed. Other sources of regulatory guidance come from government agency bulletins, federal and state court decisions, government research and other various sources. In addition to the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services (HHS), which oversee the federal regulations, the Office of Personnel Management (OPM), Agency for Healthcare Research and Quality (AHRQ), and associations such as the National Association of Insurance Commissioners (NAIC) have all added to the dizzying knowledge base of utilization management.

What’s more, healthcare organizations’ inability to abide by all the laws and regulations is not uncommon. In 2017, CMS levied nearly $3 million in civil monetary penalties against organizations that violated UM-related requirements. And this past year, penalties reached their highest level yet.

But the good news is, keeping up with current utilization management requirements and best practices doesn’t have to feel overwhelming. Here are four ways health plans can optimize their internal utilization management processes to reduce levels of inappropriate or unnecessary care, make the right coverage determinations, comply with CMS regulations, and improve patient and financial outcomes.

Forget us vs. them.

The proliferation of risk-sharing agreements, such as with Medicare Advantage plans, demand collaboration between payers and providers. But this can be a hard transition to make, especially when utilization management was historically seen as a cost-containment strategy for payers and a nuisance for providers and patients. It also doesn’t help that utilization management has existed for decades. It’s not a new process to learn; it’s just an old process to evolve. And part of that process is building trust between payers and providers, so that utilization management puts them—and patients—all on the same side.

A 2015 Becker’s Hospital Review article references a 2015 survey that found 39% of providers said trust with commercial payers needs to be improved. But it didn’t stop there; it also listed three ways to build that trust:

  • Identify opportunities for data sharing and transparency.
  • Be flexible.
  • Align goals and incentives.

Building trust isn’t a one-and-done activity. Staff need regular training and reminders that they can help forge a better relationship every time they interact with fellow risk-sharing organizations.

Look for easy automation opportunities.

A common gripe that providers have is the length of time it takes to work through various steps of a payer’s utilization management process. While state and federal regulations dictate specific turnaround times for determinations, a large portion could be authorized automatically.

With more readily available data now—including evidence-based guidelines and provider utilization patterns—payers can automate a growing number of coverage determinations. When you add in automated workflow solutions, providers can get a near real-time response while eliminating a lot of these traditionally cumbersome and manual steps. Automation tools also can help track the various turnaround-time deadlines that can change every time a payer requests information from a provider.

Although payers may need additional documentation or require an actual conversation with the provider to better understand the request, it doesn’t stop the clock—it just adds additional time based on the urgency of the request.

Take steps for better documentation.

Speaking of documentation, providers learn quickly what is necessary to process a request when they are bearing risk. That said, keeping the lines of communication open about documentation needs is always a good idea.

If providers are submitting requests electronically (most should be), payers can use the portal to send quick reminders about the documentation needed to process a request.

Sloan points to a new initiative that will help eliminate the need for this back-and forth. Created in 2018, the Da Vinci Project is an industry-driven initiative to improve clinical data sharing and metrics among providers and payers, in support of the Fast Healthcare Interoperable Resource (FHIR) standard.

“If payers send their documentation electronically and it meets the criteria set forth by Da Vinci, which includes standardized nomenclature and codes, then the request can be automatically approved,” explains Nan Sloan, vice president of compliance at Medecision. “When payers and providers are talking the same language, they can really come together.”

Recruit the right team.

For payers and providers, CMS dictates reviewer qualifications and licensure requirements for the personnel making UM determinations. For some positions, this is clear-cut, but in others, there’s more leeway. But having the wrong subject matter expert making even an initial coverage determination can limit the payer’s ability to make the right coverage determination in a timely manner.

It’s not required, but it’s a best practice to assign the most appropriate subject matter experts to any given request. Payers are doing a better job with this, even making sure first-level review nurses have the background and expertise in that specific area.

For example, if it’s an orthopedic request, an orthopedic nurse would be the one to review it. If the request is elevated to the next level, an orthopedic physician would be the one to review it, and so on.

To read more about utilization management, click here and here.

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