UM “Prospective Review” Continues to Demonstrate Value
Since the advent and expansion of utilization management (UM) systems in the 1980’s, many changes and enhancements have been implemented. Among other changes, many UM programs are now embedded in integrated medical management delivery models that often appear seamless to the patient or ordering provider. Of course, many of the fundamental tools used in UM interventions are still around, such as “prospective review.”
Prospective reviews, defined as “utilization review conducted prior to an admission or the provision of a health care service or a course of treatment in accordance with a health carrier’s requirement that the health care service or course of treatment, in whole or in part, be approved prior to its provision.”[i] Prospective reviews, including prior authorizations and pre-certifications are often used to confirm the medical necessity or appropriateness based upon clinical criteria at the beginning of a medical procedure or service.
Interestingly, as highlighted in the Utilization Management Regulatory & Market Trends: 2016 Annual Report, only about one third of the states have specific regulations that govern “prospective” review procedures (as compared to most states that govern UM operations).
Historically (and in some settings still), a prior authorization is generally a manual process. After a physician examines a patient, the physician will then order a medical service. The physician’s staff will then contact the payor to determine if prior authorization is needed, as every payor’s rules and policies vary in this regard. If prior authorization is needed, the staff will then transmit the patient’s details including medical records, lab test results, etc. The request is then reviewed by a nurse case manager who will either approve, deny, or request more information.
Some have criticized this process as it has not kept pace with technology – many prior authorizations are still completed via phone and fax.[ii] The good news is that there is a growing trend to use online provider portals to help automate this UM approval process. In fact, some health plans, larger employers and other sponsors of health care coverage are requiring these type of technology interfaces.
While prior authorizations and pre-certifications are an important tool for UM providers, physicians and their staff are generally less enthused about this practice. In a 2009 study conducted by Health Affairs, physicians reported spending three hours per week interacting with plans to obtain approvals for various services; clerical staff and nurses reported longer hours. While three hours per week may seem like a nominal amount, the equivalent dollar amount of time lost was estimated at between $23 billion and $31 billion nationally.[iii]
Prior authorizations may be an annoyance to providers, but as healthcare technology continues to advance, evidence suggests that prior authorizations may become less time consuming. A study conducted in 2014 in Central New York found that the average prior authorization time took 20 minutes and that the use of Electronic Health Records (EHR) reduced this time by around five minutes.[iv] As the use of EHRs and online provider portals become more widespread, the time, money and effort spent obtaining a prior authorization may decrease and the process may become more standardized.
Not only do prior authorizations help keep costs down which results in lower premiums for the population as a whole, payers must also continue to emphasize the need to promote evidence-based medicine. In addition, the use of prior authorizations, including pharmacy benefit management programs (PBMs), is being used to protect patient safety by ensuring clinical need and therapeutic rationale have been met.[v] While there are clear areas where the prior authorization process could be improved, the fact remains that this is an important tool used to ensure appropriate care is rendered at the right time.
Get the Latest Information about UM Systems
For more information regarding the UM Trend Report, including a complimentary six-page Executive Summary, click here. Copies of the full-length UM Trend Report are available to paid subscribers of RegQuest’s Utilization Management Module. Purchasers of the UM Module also have access to RegQuest’s comprehensive database of UM state laws and regulations. In addition to the UM Trend Report, subscribers have access to other industry resources and will be alerted to any updates that might affect the UM industry. To subscribe, please visit www.RegQuest.com.
[i] National Association of Insurance Commissioners. (April 2012). Utilization Review and Benefit Determination Model Act. Retrieved from: http://www.naic.org/store/free/MDL-73.pdf
[ii] American Medical Association. “Standardization of prior authorization process for medical services white paper.” (June 2011). Retrieved from:http://massneuro.org/Resources/Transfer%20from%20old%20sit/AMA%20White%20Paper%20on%20Standardizing%20Prior%20Authorization.pdf
[iii] Casalino, Lawrence P., Sean Nicholson, David N. Gans, Terry Hammons, Dante Morra, Theodore Karrison and Wendy Levinson. “What Does It Cost Physician Practices To Interact With Health Insurance Plans?” (July/August 2009). Health Affairs, vol. 28. Retrieved from:http://content.healthaffairs.org/content/28/4/w533.full#abstract-1
[iv] Epling, John W., Emily M. Mader and Christopher P. Morley. “Practice characteristics and prior authorization costs: secondary analysis of data collected by SALT-Net in 9 central New York primary care practices.” (March 2014). Retrieved from:http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3945478/
[v] Academy of Managed Care Pharmacy. “The Academy of Managed Care Pharmacy’s Concepts in Managed Care Pharmacy: Prior Authorization.” Retrieved from:http://www.amcp.org/prior_authorization/