Monitoring a Patients Prognosis for Recovery Becomes Important in Which Type of Utilization Review?

Prior to having the cholecystectomy recommended by her physician, Greta Harrison calls an 800 telephone number to notify the arrangement that does utilization management for her employer. That system gets in touch with the surgeon's function to discuss diverse aspects of the care that is proposed for her. Is hospitalization necessary or can the surgery be done equally an ambulatory procedure? How long volition the patient need to be in the infirmary? In this case, the reviewer agrees that inpatient intendance is clearly appropriate just questions the plan to acknowledge the patient two days prior to surgery. Since the patient lives in the same boondocks equally the hospital and can easily have preoperative tests performed on an outpatient basis, the surgeon agrees to admit her on the day of the surgery.

Subsequently Michael Travers is admitted to the hospital post-obit a myocardial infarction, the infirmary—aware of his benefit plan's requirements—notifies the appropriate utilization management organization. The length of stay is discussed, but no explicit target date for discharge is prepare. Nevertheless, the infirmary is then called every third twenty-four hour period by the arrangement, which evaluates data nigh the patient'south need for farther hospitalization. The calls keep until Mr. Travers, who has a difficult recovery, is improved enough to exist discharged to his home. The physician has not had to adjust the treatment plan but feels irritated at the "red tape" involved. And Mr. Travers has worried on some occasions that payment for part of his hospital stay might exist denied.

With their daughter depending on a ventilator to breathe and receiving other hospital intendance for muscular dystrophy, the parents of Patty Simon are contacted by a example manager for the insurance company that covers the family. The question is whether they and their doc would similar to explore arrangements for habitation care, which is possible in this case but considerably more than complex than usual. With the parents' and dr.'s cooperation, the example manager works out a plan for transfer that includes assessment of the abode's wiring (which is adequate for the equipment), provision for two shifts of home nursing care every 24-hour interval, and purchase of appropriate medical equipment and supplies. This requires some expenditures non normally covered past the do good plan, but the employer agrees with the insurer to make an exception in this case considering the arrangements will not only be less costly than hospital care but will as well improve the quality of life for the family.

With great rapidity and relatively little public awareness, a significant change has taken place in the manner some decisions are made almost a patient's medical care. Many decisions like those just described, once the exclusive province of the doctor and patient, at present have to be examined in advance past an external reviewer, someone who is accountable to an employer, insurer, wellness maintenance arrangement (HMO), preferred provider organization (PPO), or other entity responsible for paying all or most of the toll of the care. Depending upon the circumstances, this exterior political party may be involved in discussions most whether a service is needed, how treatment volition be provided, and where care volition occur.

This preliminary Institute of Medicine (IOM) report describes the nature of this alter in medical conclusion-making and assesses its impact on patients, providers, and purchasers of medical services. It focuses on the utilization management efforts of the private sector, which provides health benefits for most Americans under historic period 65.¹

Prior review of proposed medical care is non entirely new in the 1980s. Review organizations for Medicare were performing some preadmission review in the 1970s, and some private payers made limited use of the technique fifty-fifty earlier. However, widespread awarding of this arroyo to managing wellness care utilization is a phenomenon of the 1980s.

A survey conducted in 1983 reported that only xiv percent of corporate benefit plans required prior approval of nonemergency admissions to hospitals (Equitable Life Assurance Society of the United States, 1983). By 1988, another survey institute 95 of 100 big firms had such programs (Corporate Health Strategies, 1988). Perhaps half to three-quarters of employees nationwide are now covered by such programs, upwards from only 5 percent in 1984 (Foster Higgins, 1987; Gabel et al., 1988).

What accounts for this rapid spread of utilization management through external assessments of the need for proposed medical services? The well-nigh obvious cistron is rapidly rising health care costs. Purchasers' search for constructive ways to limit their fiscal liability for health benefits stems directly from their belief that costs are out of command.

The trends responsible for this view are painfully familiar to everyone concerned with health care financing. In 1987, the latest year for which statistics are bachelor, total spending on health care reached an estimated $500 billion, up from $234 billion simply 5 years before (Levit and Freeland, 1988). This spending has been increasing at a rate considerably above the charge per unit of full general inflation (Tabular array 1-i), and the share of the gross national production attributed to health services went from 5.9 percent in 1965 to xi.1 per centum in 1987. Spending for health intendance by business organisation as a percentage of the gross individual domestic production grew from ane.ane per centum in 1965 to 3.4 percent in 1987 (Levit et al., 1989).

Table 1-one

Consumer Price Index in the United States (Annual Average, 1967 = 100.0).

High wellness intendance costs for employers have been cited equally one factor impairing American competitiveness in globe markets and a reason why many small firms do not provide health benefits for workers. In 1987, spending for wellness intendance by business concern equaled about 6 percent of total labor compensation compared with virtually ii pct in 1965 (Effigy i-1) (Levit et al., 1989). A recent survey of most 800 employers of all sizes reported average premium increases from 1987 to 1988 of eleven per centum for conventional insurance plans and between 8 and ten percent for HMOs (Gabel et al., 1989). Another survey cited average increases from 1987 to 1988 of 14 percent for employers with insured programs and 25 percent for employers with self-insured programs (Foster Higgins, 1989). Companies that self-insure assume all or about of the financial adventure of paying for covered medical services used past employees and their dependents instead of paying an outside insurance to have that risk. In the private insurance sector, many commercial insurers, Blue Cross and Blue Shield plans, and HMOs have seen meaning underwriting losses—$3.6 billion for commercial carriers and $one.1 billion for Blue Cross and Blue Shield plans in 1988 (Donahue, 1989). Some commercial insurers, for case, Kemper, Provident Mutual, Allstate (for large groups only), and Transamerica Occidental, are withdrawing from the group health insurance market place (Meyer and Folio, 1988).

Effigy 1-ane

Expenditures by private industry for health services and supplies as a percent of total labor compensation, 1965-1987. Source: Levit et al. (1989, p. 9).

To the dismay over ascension wellness care costs has been added a growing perception that much medical care is unnecessary and sometimes harmful. The studies that have contributed to this perception take also produced some optimism that external review of physician practice decisions could detect unnecessary care, influence physician behavior, and reduce costs without jeopardizing access to needed services (Eisenberg, 1986; Schwartz, 1984; Wennberg, 1984; Wennberg et al., 1977). In addition, experience has suggested that review of some care prospectively—prior to its provision— would be more palatable and effective than retrospective review has been. This fix of perceptions and expectations is, in essence, the hypothesis of utilization management, a hypothesis of interest to patients, practitioners, purchasers, and policymakers.

The IOM Commission on Utilization Management by 3rd Parties has examined the utilization management hypothesis by asking several questions.

How constructive is utilization management in limiting utilization and containing costs?
Are there unintended positive and negative consequences of bringing an outside party into the process of making decisions most patient care?
Are utilization direction organizations and purchasers sufficiently accountable for their actions, or are new forms of oversight, perhaps government regulation, needed?
What are the responsibilities of wellness care providers and patients for the advisable apply of health services?

The committee'due south investigatory approach has been described in the preface. Chapters ii through v talk over the committee'south findings most why utilization management has become so widespread, how utilization direction actually operates and appears to exist evolving, and what is known about its effects. In Chapter half dozen, the committee assesses the current status of utilization management, including its strengths and shortcomings, and recommends well-nigh-term and longer-range actions that could aid utilization direction realize its objectives of controlling costs and reducing inappropriate services without undermining patient access to needed care.

What Is Utilization Management?

In its written report of utilization management, the committee found that the term has no single, well-accepted definition. As with the labels cost containment and managed care, different people may mean different things by the same term. In this study, the committee considers utilization management every bit a set of techniques used by or on behalf of purchasers of health intendance benefits to manage health care costs by influencing patient intendance controlling through case-past-case assessments of the appropriateness of care prior to its provision.

3 points nearly the committee's focus are worth underscoring. First, the committee examines methods that rely on example-by-case assessments of care. Second, the focus is on review prior to the provision of services. Third, this study stresses deportment taken to reduce costs for tertiary-party purchasers of care. The first characteristic distinguishes utilization management from methods that analyze amass utilization patterns to identify potential problems or that rely on across-the-board limits on wellness care benefits that have no account of individual patient characteristics. The second characteristic differentiates utilization management from the retrospective review of claims or medical records submitted later intendance has been provided. The 3rd feature directs attention to purchaser-sponsored—rather than provider-sponsored—utilization management efforts, except when providers explicitly share the financial chance with purchasers of care, as they do in HMOs.

The dominant utilization management strategy is prior review of proposed medical services, which includes several related techniques. A second, more focused, strategy is high-cost case management (come across Table i-2).

Prior Review

Prior review provides accelerate evaluation of whether medical services proposed for a specific person conform to provisions of health plans that limit coverage to medically necessary care.² About prior review programs include an integrated fix of review steps, non all of which will apply to any unmarried patient. The focus may be on the site of intendance, the timing or duration of care, or the need for a specific procedure or other service.

The first indicate of assessment, ofttimes called preadmission review, may occur before an elective hospital admission. This is what Greta Harrison and her physician experienced in ane of the vignettes that opened this affiliate. In this case, the review did not claiming the demand for the procedure itself or the need for infirmary care, simply it did challenge the proposed admission 2 days before surgery. The terms preservice review and preprocedure review are sometimes used to bespeak that the focus of review is the need for a procedure, regardless of whether it is to be performed on an inpatient or an outpatient basis.

For emergency or urgent admissions to the infirmary when prior review is not reasonable or viable, admission review may be required within 24 to 72 hours later on hospitalization to bank check the appropriateness of the admission equally early every bit possible. The vignette describing Mr. Travers involved this technique too equally continued-stay review or concurrent review, which assesses the length of stay for both urgent and nonurgent admissions. Reviewers may press for timely belch planning by infirmary staff and, in some instances, assist in identifying and arranging advisable alternatives to inpatient intendance.

In improver, a patient may be required to become a second opinion on the need for certain proposed treatments from a practitioner other than the patient's md. Increasingly, preadmission review or preservice review is used to screen patients so that referrals for second opinions are focused on patients for whom the clinical indications for a service are dubious.

To encourage patients covered by a health plan to cooperate in the prior review process, a financial punishment, such equally higher price-sharing, may apply when individuals neglect to obtain necessary certifications. Chapter 3 provides more details most the mechanisms of prior review.

Although terms like prior review, predetermination, precertification, and prior authorization of benefits are oft used interchangeably, the blessing of benefits in advance of service provision may be contingent rather than concluding. For example, if a retrospective claims review suggests that the data on which the predetermination was based was seriously flawed, payment of a claim may be denied upon farther investigation. Or if a utilization management firm does not have access to the details of the benefit plan for a group, it might authorize services not covered by the contract. A review of claims prior to payment might then outcome in denial of benefits. Since this latter practice commonly makes patients unhappy, many utilization management firms try to consider restrictions in a client'southward health plan in their determinations. Retrospective denials of claims following prior certification appear to be rare, equally are refusals to preauthorize services.

Loftier-Price Instance Direction

High-cost example management—also chosen large case management, medical case management, catastrophic case direction, or private benefits management—focuses on the relatively few beneficiaries in whatsoever group who have generated or are likely to generate very high expenditures. This pocket-sized percentage of individuals—maybe ane to seven percent of a group—may account for 30 to 60 percent of the grouping's total costs. For the United States every bit a whole in 1980, 1 percent of the population accounted for 29 percentage of full health care spending (Berk et al., 1988).

Instance direction for individuals with high-price illnesses is similar to other forms of social and wellness case management, in that it involves assessing a person's needs and personal circumstances and and then planning, arranging, and analogous the recommended services. It differs in its targets, those very expensive cases for which specialized attention may encourage appropriate just less costly alternative forms of treatment.

In contrast to prior review programs, high-toll case management programs are usually voluntary, with no penalties for patient failure to become involved in the process or comply with its recommendations. (In the third vignette, Patty Simon's parents could have refused the alternative form of care suggested for her.) In addition, more effort is generally devoted to reviewing the patient's particular condition and circumstances and exploring, fifty-fifty arranging, alternative modes of treatment. Finally, exceptions to limitations in benefit contracts may be authorized in advance if this will permit advisable merely less expensive care. For instance, additional home nursing benefits may be arranged so that an individual can avoid further hospitalization. In unusual cases, benefits may be provided for other than health intendance services, such every bit construction of a wheelchair ramp or rewiring a patient'southward dwelling house, if these expenditures will allow home care or self-care to be substituted for institutional services at a lower total cost. (The assessment of the wiring in Patty Simon's home would have been covered in this fashion.)

Retrospective Utilization Review

Utilization management techniques, particularly prior review methods, attempt to overcome the disadvantages and unhappiness associated with retrospective review and denial of claims after services take already been provided. Retrospective claims and medical tape reviews can, however, support and reinforce utilization management by

monitoring the accuracy of information provided during prior review and identifying trouble areas,
examining claims that are unsuitable for predetermination (by and large those with high book and low unit costs), and
analyzing patterns of practitioner or institutional care for utilize in provider education programs and selective contracting arrangements.

Retrospective utilization review methods accept a longer history of general application than do prospective methods (Blum et al., 1977; Congressional Budget Office, 1979, 1981; Constitute of Medicine, 1976; Law, 1974). Its strengths and weaknesses take been scrutinized in a number of studies before this one and are not explicitly considered in this written report. However, constraints on retrospective review have been a key stimulus for the development of prior review methods. Many of the concerns raised by the committee about the clinical soundness of review criteria, the fairness of procedures, and other matters described apply to both prospective and retrospective reviews.

Other Cost-Containment Methods

The techniques of prior review and high-cost case management are but a subset of the cost-containment methods that can influence decisions nigh patient intendance. Other methods, some of which are discussed in Chapter ii and Appendix B, include the following:

benefit pattern (including patient toll-sharing and coverage exclusions), consumer didactics, and other approaches that shape patient demand for care;
financial incentives (for example, capitation or bonuses) that are designed to reward physicians or institutions for providing less costly care;
contracts with wellness care practitioners and institutions that establish limits on payment for care provided to health plan enrollees;
utilize of gatekeeping, triaging, and other devices to manage patient flow to specialists and expensive services; and
medico didactics and feedback on standards of care and patterns of exercise.

Utilization management shares with the last iv strategies a recognition of the physician's central role as the player-manager of the health intendance team who is responsible for organizing and directing the product procedure and providing some of the productive input (Eisenberg, 1986). The different strategies for influencing decisions about patient intendance, even so, vary in their emphasis or reliance on different models of control (such as professional self-regulation, informed consumerism, or prudent purchasing), their techniques of influence (such equally education, financial incentives, peer pressure, or external oversight), and the parties involved (that is, patients, primary care practitioners, or specialists).

As will be described in Chapter two, unlike strategies for toll containment have been tried, abandoned, and revived equally tertiary-party financing of health intendance has expanded. This history reflects both the difficulties of the chore and an appreciation that there is no single solution to problems of health care costs, quality, or access. Many strategies have a place, each of which has different strengths and weaknesses and each of which needs monitoring and adjustment every bit circumstances change and people arrange to various attempts to shape their behavior.

Ii Notes of Circumspection

Obstacles To Evaluation

This report laments the limited evidence on utilization direction and calls repeatedly for more and better assessments. Nonetheless, the committee is well aware that sound evaluation of utilization management programs faces several obstacles. Some are intrinsic to the research problem, some reflect common organizational behaviors, and some involve particular pressures faced by market-driven organizations. Rigorous evaluation also tends to be quite expensive. In Appendix B of this report, the commissioned newspaper past Joan B. Trauner notes that evidence about the touch on of physician fiscal incentives on patient care decisions and quality of care is likewise quite limited.

Intrinsic Conceptual and Methodological Problems

A number of problems in evaluating utilization management and other cost-containment programs are predictable difficulties faced, to one degree or another, in much social and evaluation research (Boil and Billings, 1988; Wennberg, 1987). One such trouble is that there are no uniformly accepted and applied rules for measuring health intendance utilization or adjusting data for differences in the characteristics of groups existence compared. Other methodological difficulties involve (1) data quality and availability; (ii) definitions and measurements of program characteristics, group characteristics, outcomes, and other variables; (three) projections of what would have happened without the interventions; and (4) generalizations to other programs and settings.

Mutual Behavioral Biases Against Evaluation

Under this heading come obstacles to systematic evaluation that are typical of organizations whether they be public or private, for-profit or not-for-profit, big or small (Eddy and Billings, 1988; Hatry et al., 1973; March and Simon, 1958; Suchman, 1967). They include preferences for

action over evaluation, for example, developing, selling, and running a program rather than seeing if information technology works;
quick payoff rather than long-term products or results;
piece of cake rather than difficult actions (for case, using data on inputs and procedures that are simpler to collect rather than data on outputs or outcomes);
compelling anecdotes, consensus, or tradition over careful and complex analyses; and
positive rather than negative results.

In addition, faced with limited resources, managers are oftentimes reluctant to allocate funds for evaluation instead of wages and benefits, shareholder dividends, or other activities. The committee has no data most what utilization management firms spend on evaluation (for internal apply or for clients) or how much dissimilar employers invest in systematically assessing the touch of prior review or other price-containment strategies.ⁱⁱⁱ

Contest and Evaluation

The normal private and organizational biases against systematic evaluation may be both mitigated and intensified in competitive environments. Certainly, competition tin exist a powerful stimulus for internal evaluation of how well a product is working and what makes it work meliorate. Too, clients of utilization management organizations have a stiff interest in obtaining reports on results and in shifting their business to other firms if they cannot get such reports.

Counterbalanced confronting these forces are several threats posed by evaluation. Near plainly, an evaluation may be negative and thereby reduce a firm's chances for retaining clients or winning new clients.⁴ Moreover, when an evaluation is publicly available, a firm's competitors proceeds data that could assistance them build a case to inform potential clients that the competitor could provide better results or, at least, ameliorate reports. Farther, evaluations of utilization management programs may provide competitors with statistical norms or even provider-specific information that would non be readily bachelor to them otherwise. Too, if firms that invest in relatively sophisticated inquiry and development reveal their work, they may give a gratis ride for competitors to copy or build on the resulting review criteria, analytic methodologies, or other products. In a new and speedily evolving industry, this can seem a significant issue for more than experienced organizations.

Forces Behind Rising Wellness Care Costs

The Commission on Utilization Direction past Third Parties also recognizes that the forces backside ascension health care costs are uncommonly strong and difficult to constrain through moderate means. Many believe that, for the foreseeable future, health care costs volition continue to increment faster than costs in the rest of the economy.

Clinical judgments about the value of handling for various categories of patients are irresolute as new treatments or new evidence of treatment impact emerges. For example, women who underwent mastectomy for breast cancer and had no evidence that the cancer had spread were until recently not expected to benefit from chemotherapy, simply some new analyses suggest such treatment does increase survival rates. It likewise increases initial treatment costs (Early Chest Cancer Trialists' Collaborative Group, 1988). Contempo guidelines for the use of mammography screening could profoundly expand the amount of such screening but some professional sources question whether the guidelines are clinically warranted (McIlrath, 1989).

New tests may reduce diagnostic uncertainty simply not add together whatsoever information that aids in treatment decision-making (Kassirer, 1989). Advances in screening techniques may catch individuals much earlier in the course of disease and reduce the numbers who will receive later expensive treatments. The question is, will the costs of screening and early on treatment get-go the savings? Volition existent survival rates increment? Researchers involved with cancer point to methods under development to screen for very early on traces of dozens of dissimilar kinds of cancer, not all of which are more successfully treated if they are detected earlier.
The work force and the full general population are aging, and the apply of both astute-care and long-term-care services is higher for people in the older age groups.
Between 1980 and 2000, the number of physicians has been projected to increase from 171 to 260 per 100,000 population (Graduate Medical Didactics National Advisory Committee, 1981; U.S. Section of Health and Human Services, 1985). Whether this will bring a surplus of physicians is a matter for fence (Ginsburg, 1989; Schwartz et al., 1989). Nevertheless, one judge, now many years out of date, is that every additional md results in $400,000 in additional yearly expenditures for medical services.
The concern about the millions of Americans who accept no routine health insurance coverage is generating various proposals to protect these individuals through, for example, land-sponsored insurance pools, mandated employer-based insurance, expansions of Medicaid, and universal federal health insurance (Congressional Research Service, 1988). What are the short-term costs (and for whom) of increasing access? What long-term costs and benefits can be expected?

Reducing increases in health care costs such that they are much closer to the level of full general aggrandizement would appear to need radical changes in American health policy, either major restructuring of the financing and commitment systems or major cutbacks through large shifts in costs to patients, severe limitations on patients' choices of hospitals and physicians, and explicit rationing of some technologies for all or some individuals. Society may not exist willing to brand such changes, particularly in the short run (Curran, 1987). It may go on the search, described in the next affiliate, for more moderate strategies to command wellness intendance expenditures. Utilization management is i such strategy.

Information technology is an unfortunate reality, withal, that almost cost-containment strategies somewhen disappoint their supporters and evaluators to some degree. Fifty-fifty when these strategies seem to reduce costs initially, trend projections do not appear to show an appreciably lower increase in full costs over the longer term (Prospective Payment Assessment Commission, 1989). Given the effort and optimism it generally takes to commit a corporation or a authorities to a new program, it is not surprising that excessively high expectations often give manner eventually to disillusionment. Unwarranted or excessive negativism can, in turn, be counterproductive and lead to premature abandonment of small-scale but yet helpful strategies.

Cognizant of these hazards, the Commission on Utilization Management by Tertiary Parties has tried to approach its initial evaluation of utilization direction with reasonable expectations. To this stop, the commission has reviewed the development of third-political party financing of health intendance in the U.s. and the ways in which various strategies to manage costs have evolved. The next chapter summarizes this review.

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1: Public programs have been the subject of several reports in recent years (for example, General Accounting Office, 1983, 1988a, 1988b; Health Care Financing Administration, 1979; Doc Payment Review Commission, 1988, 1989, and Project HOPE, 1987).
2: Medical necessity is another term that is used differently by different people in dissimilar contexts. Some employ it generally to cover assessments of the site and elapsing of care as well as the clinical need for a item process, whereas others use information technology only in the latter sense. Those who utilise the term more restrictively tend to apply the term appropriateness to the former assessments. For a discussion of legal interpretations of medical necessity, encounter the paper by William A. Helvestine in Appendix A of this report.
3: The private sector is not alone in providing meager resource for program evaluation. The utilization and quality review components of Medicare'due south peer review organization (PRO) programme have not been very rigorously examined (General Accounting Part, 1988a; Doc Payment Review Commission, 1988). The Health Care Financing Administration does have performance standards for PROs, but they tend to emphasize process rather than outcome and tend to involve measures of bear on that are more appropriate for ongoing monitoring rather than systematic evaluation of the review techniques.
four: Fifty-fifty when the reported results were positive, the commission encountered considerable reluctance past review organizations to have their analyses published.

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Source: https://www.ncbi.nlm.nih.gov/books/NBK234995/