AHM Medical Management

AHM Medical Management- An Introduction: Overview

Page 1 to 17

Overview

Healthcare Management: An Introduction, (AHM 250) has been written for participants in the Academy for Healthcare Management’s self-study examination-based program. The objective of this introductory course is to provide a survey of health insurance plans —their fundamentals, philosophy, and terminology. The course describes the major types of health insurance plans and their products, and it provides an introduction to the major operational areas of health plans. The course concludes with an overview of the impact of legislation and regulation on health plan and a brief discussion of some of the ethical issues impacting the health plan industry.

The study materials for AHM 250 include:

Healthcare Management: An Introduction, Third Edition, which serves as the Course Manual for AHM 250

Test Preparation Guide for AHM 250, which is a separate study aid designed to complement the material presented in the Course

To aid your self-study of the lessons, this Course includes additional features such as:

Learning objectives Figures that illustrate important concepts Insights that provide a real-world perspective on topics presented Glossary

The Test Preparation Guide (TPG)This study aid contains tips to help you prepare for the examination, a course outline,

and a sample examination. The sample examination is similar to the official examination in structure and content and is designed to give you a measure of your mastery of the course material. The sample examination is presented in two formats:

a paper version, with an answer key and text references, and a computerized version. The computerized version of the examination allows you to take the sample examination in either a “feedback mode” or a “timed mode.” In the feedback mode,

you’ll receive immediate feedback on each answer choice you select. The timed mode allows you to emulate a real test-taking experience by giving you two hours to complete the examination. At the end of the sample examination, you will receive a grade report that indicates the number of questions answered correctly, along with a grade summary that shows how well you did on the questions from each lesson. The grade summary will help you identify the lessons on which you need to focus your

additional studies.

The Course ExaminationAn examination for this course is offered by the Academy for Healthcare

Management. Please check the Academy’s website http://www.e-ahm.com for more specific information about registration and examination availability. Examination questions for this course will be based on information in the assigned materials.

Additional information about the course examination and how to prepare for it are found in the Exam Preparation lesson. Participants are advised to begin their study

by reading the Exam Preparation lesson.

CE for Nurses

If you are taking this course for physicians or Continuing Education (CE) credit for nurses, please read the following section. If not, please skip to screen 8 to learn more about the Academy for Healthcare Management.

Course Goals and Objectives

AHM 540 Medical Management, 2005 Edition, will help you meet your goals for completing and reinforcing your knowledge of medical management activities in a health plan by describing the:

Scope of medical management, the important legislative and regulatory issues that affect medical management, and the impact of consumer, purchaser and provider expectations.

Ways health pans perform technology assessment, develop medical policy and establish clinical practice guidelines.

Use of quality management including accreditation, quality assessment, quality improvement, benchmarking, and the impact of laws and regulations.

Roles of and processes utilization review and case management. Roles of preventive care, self-care, decision support, and disease

management in a health plan health management strategies. Medical management strategies and considerations for different levels of care

(i.e. acute and post-acute.) Medical management issues that affect the delivery of pharmaceutical

services. Medical management issues related to the delivery of specialty services. Medical management activities for government-sponsored programs, such as

Medicare, Medicaid, TRICARE, FEHBP and workers' compensation.

CME for Physicians/CE for Nurses

The Test Preparation Guide (TPG)This study aid contains tips to help you prepare for the examination, a course outline, and a sample examination. The sample examination is similar to the official examination in structure and content and is designed to give you a measure of your mastery of the course material. The sample examination is presented in two formats: a paper version, with an answer key and text references, and a computerized version. The computerized version of the examination allows you to take the sample examination in either a “feedback mode” or a “timed mode.” In the feedback mode, you’ll receive immediate feedback on each answer choice you select. The timed

mode allows you to emulate a real test-taking experience by giving you two hours to complete the examination. At the end of the sample examination, you will receive a grade report that indicates the number of questions answered correctly, along with a grade summary that shows how well you did on the questions from each lesson. The grade summary will help you identify the lessons on which you need to focus your additional studies.

The Course ExaminationAn examination for this course is offered by the Academy for Healthcare Management. Please check the Academy’s website http://www.e-ahm.com for more specific information about registration and examination availability. Examination questions for this course will be based on information in the assigned materials.

Additional information about the course examination and how to prepare for it are found in the Exam Preparation lesson. Participants are advised to begin their study by reading the Exam Preparation lesson.

Academic Requirements

To receive CE credit for nurses, a participant must

Enroll for the course and study from the required course materials Complete the CE for nurses Evaluation/Request for Credits Form and return it

to the Academy Receive a minimum passing score of 70 on the examination

A letter or certificate of credit will be awarded to nurses/allied healthcare professionals by the America's Health Insurance Plans after all requirements are met.

Common Questions about CE Credit

AHM programs offer the added benefit of continuing education credit. Whether you're a case manager, nurse, military officer, student, or life/health insurance agent, AHM may be able to help you earn important continuing education or academic credits. Only individuals who pass exams are eligible to earn continuing education credit.

Please visit our website at http://www.e-ahm.com.

Disclosure of Significant Relationships with Relevant Commercial Companies and Organizations

AHM 250 Healthcare Management: An Introduction, Third Edition

The America's Health Insurance Plans (AHIP) endorses the Standards of the Accreditation Council for Continuing Medical Education which specify that sponsors of continuing medical education activities disclose significant relationships with commercial companies whose products or services are discussed in educational activities.

For sponsors, significant relationships include educational and research grants, institutional agreements for joint initiatives, or other relationships that benefit the institution. For writers, significant relationships include receiving from a commercial company research grants, consultancies, honoraria and travel, and other benefits, or having a self-managed equity interest in a company.

Disclosure of a relationship is not intended to suggest or condone bias in the activity, but is stated to provide participants with information that might be of potential importance in their evaluation of the activity.

A significant relationship exists with the following individual and/or organization(s):

The Academy for Healthcare Management is a Limited Liability Company owned by America's Health Insurance Plans, and the Blue Cross and Blue Shield Association (BCBSA).

The Academy and Its Education Program

The Academy for Healthcare Management was established in 1997 to offer an industry-wide educational program recognizing the unique challenges, complexities, and opportunities associated with the health insurance plan industry. Formed by three leading healthcare associations, the Academy is committed to providing leading-edge education and professional credentials that recognize healthcare professionals who demonstrate educational excellence.

The formation of the Academy represents a partnership among two organizations: the America's Health Insurance Plans and the Blue Cross and Blue Shield Association. These organizations collectively represent more than 1,000 health plans caring for more than 200 million people, and they offer decades of experience in providing continuing education opportunities for insurance and healthcare professionals.

Course materials for the Academy for Healthcare Management’s Education Program are written at the college level and are designed for self-study. The complete program consists of two levels of study: an Introductory Level and an Advanced Level. Participants who satisfactorily complete each level will attain respected professional designations described in the following sections.

Introductory Level (Level 1)

Successful completion of the Introductory Level (Level 1) leads to the Professional, Academy for Healthcare Management (PAHM) designation. The Level 1 program is designed to benefit a broad audience at a variety of levels and consists of a single

self-study course, Healthcare Management: An Introduction (AHM 250). There are no prerequisites for this course. The curriculum covers

Basic concepts of health insurance plans Types of health plans and providers Major operational areas of health plans Legislative, regulatory, and ethical issues

Advanced Level (Level 2)

The Fellow, Academy for Healthcare Management (FAHM) designation, will be earned upon successful completion of both the Introductory Level and the entire Advanced Level (Level 2) curriculum. The FAHM professional designation is the premier credential for anyone working in or with the health insurance plan industry.

Participants in Level 2 will be required to display comprehensive knowledge of important functional areas of health plan management, including the following:

Governance and Regulation Network Management Health Plan Finance Medical Management

There are no prerequisites or corequisites required for Level 2 courses, and lessons can be taken in any order.

Information on Continuing Education credits for the Advanced Level courses may be found in the Academy’s website at http://www.academyforhealthcare.com/Content/NavigationMenu/Registration/CE_Credit/CE_Credit.htm.

What Can the Academy for Healthcare Management’s Education Program Do for You?

The Academy for Healthcare Management’s Education Program can provide you with knowledge and skills you need to succeed in the rapidly changing and evolving healthcare industry. The program is designed to benefit a broad audience at a variety of levels—from administrative to executive staff—from a variety of different organizations including health plan organizations, indemnity insurers, provider networks, government agencies, employers, vendors, etc. By participating in the Academy’s program, you will learn about the unique complexities associated with health plans, and you will stay abreast of the latest trends, developments, and practices. A unique feature of the Academy’s program is its focus on cutting-edge business issues.

By enrolling in Healthcare Management: An Introduction, you will be participating in a new and exciting course. Your participation will signify your commitment to professionalism. Completing the Academy’s program—whether at the Introductory or

the Advanced Level—will give you a sense of personal accomplishment and the respect of colleagues in your organization and throughout the industry. Not only will you add a new dimension to your career experience, you will also distinguish yourself as a person who is knowledgeable about the environment, products, operations, and issues of the health insurance plan industry.

Academy for Healthcare Management Headquarters:Academy for Healthcare Management601 Pennsylvania Ave., NWSouth Building, Suite 500Washington, DC 20004(202) 955-4386

Sponsoring Associations:America's Health Insurance PlansContact: Charles W. Stellar (202) 778-3201Blue Cross and Blue Shield AssociationContact: Kathy Wall (312) 297-5969

Acknowledgements

The development of study and examination materials for a course that covers the broad range of topics covered by this course requires a true team effort. The wide range of topics, as well as the frequent changes in laws and health plan practices, necessitate the contributions of many individuals in order to ensure that the material presents a balanced, accurate portrayal of the managed healthcare industry. The Academy would like to thank the many people who contributed their time, energy, and considerable talents toward the development of this course and its study materials.

Curriculum Committee

Special thanks go to the members of the Academy’s Curriculum Committee. Each of the Academy’s three sponsoring organizations chose leading experts from member organizations to help guide the direction and development of the curriculum for all the Academy’s courses. These industry leaders have demonstrated remarkable vision and insight in shaping the curriculum for the health insurance plan leaders of tomorrow. The individuals on the Curriculum Committee served as text reviewers for the first edition of this Course Manual. The following members of this committee also participated as reviewers for subsequent editions of this course manual: Steven L. Coulter, M.D., Patricia A. Armocida, R.N., Don W. Bradley, M.D., Annette C. Duclos-Watson, R.N., M.B.A., CCM, Sam Havens, J.D., CLU, Suzanne Scroggins, R.N., Cheryl C. Stacey, R.N., CMCE, and Bonnie Suminski, R.N., M.B.A., CPHQ, HIA, MHP, PAHM.Click here for a list of Curriculum Committee members.

Project Staff

Course Manual DevelopmentPatsy L. Heil, Ph.D., FLMI, ALHC, ACS, AIAA, ARA, PAHMSenior Associate, Education and TrainingLOMA

Miriam A. Orsina, FLMI, ACS, ARA, PAHMSenior Associate, Education and TrainingLOMA

Manuscript EditorMonica Maxwell, J.D., FLMIAssociate, Education and TrainingLOMA

GlossaryMamunah CarterAdministrative Assistant, Education and TrainingLOMA

CopyeditorSally FarnhamConsultant

IndexBecky HornyakConsultant

PermissionsIris F. Hartley, FLMI, ALHCConsultant

Text and Cover DesignDenise Dorage WagnerConsultant

ProductionMichelle Stone Weathers, ACSProduction ManagerLOMA

Kathleen Ryan, FLMI, PAHM, ACS, AIAA, AIRC, ARAProduction CoordinatorLOMA

Amy SouwanProduction Coordinator II/Scheduling CoordinatorLOMA

Audrey M. HiersInventory & Product Sourcing AdministratorLOMA

Academic Advisor

We are greatly indebted to Peter R. Kongstvedt, M.D., FACP, Partner, Accenture Health & Life Sciences Peter R. Kongstvedt, M.D., FACP, Partner, Ernst & Young, for serving as academic advisor to the Academy. We have benefited from his wisdom and guidance.

Project Staff

Working closely with the Curriculum Committee was a highly effective team of technical writers, editors, curriculum designers, text production experts, and other contributors. The members of this hard-working group, which took the committee’s suggestions and developed and produced the lessons in this Course, are listed here.

Project Staff

Course Manual DevelopmentPatsy L. Heil, Ph.D., FLMI, ALHC, ACS, AIAA, ARA, PAHMSenior Associate, Education and TrainingLOMA

Miriam A. Orsina, FLMI, ACS, ARA, PAHMSenior Associate, Education and TrainingLOMA

Manuscript EditorMonica Maxwell, J.D., FLMIAssociate, Education and TrainingLOMA

GlossaryMamunah Carter

Administrative Assistant, Education and TrainingLOMA

CopyeditorSally FarnhamConsultant

IndexBecky HornyakConsultant

PermissionsIris F. Hartley, FLMI, ALHCConsultant

Text and Cover DesignDenise Dorage WagnerConsultant

ProductionMichelle Stone Weathers, ACSProduction ManagerLOMA

Kathleen Ryan, FLMI, PAHM, ACS, AIAA, AIRC, ARAProduction CoordinatorLOMA

Amy SouwanProduction Coordinator II/Scheduling CoordinatorLOMA

Audrey M. HiersInventory & Product Sourcing AdministratorLOMA

Special Reviewers and Contributors

In addition to the Curriculum Committee members who reviewed the material for this course, we are also indebted to several other industry experts who offered their time and knowledge to the development of specific portions of this Course Manual. Their names are listed here.

Special Reviewers and Contributors

Daniel L. Cohen, Col., USAF, MC, FSChief Medical Officer and Director, Clinical OperationsOffice of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Charles M. Cutler, M.D.Chief Medical OfficerAmerican Association of Health Plans

Francine Forestell, LTC, AN, USADeputy Director, Regional OperationsOffice of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Elizabeth E. Friberg, R.N. PAHMRegional Manager, Healthcare Regulatory GroupPricewaterhouseCoopers, LLP

Marion Gosnell, R.N., J.D.Deputy Director, Clinical OperationsOffice of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Heidi Bradish King, M.S., CHEProject Manager, Education DivisionOffice of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Melanie Prince, Capt., USAF, NCDirector, Condition Management ProgramsOffice of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Eleanor Valentin, CDR, MSC, USNDirector, Regional OperationsOffice of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Clifford R. Waldman, M.D.Medical Director, Western RegionHealthAmerica

Peggy Williams, CDR, NC, USNDirector, Education Division

Office of the Assistant Secretary of Defense (Health Affairs)TRICARE Management Activity

Gary Wolfe, R.N., CNAEditor-In-ChiefThe Journal of Care Management

Exam Review Committee

We would also like to thank the members of the Exam Review Committee who offered their time and knowledge to the development of the course examinations. This group of people is listed here.

Exam Review Committee Members

Richard Bone, M.D.Clinical DirectorAdvocate Medical Group

Don W. Bradley, M.D.Vice President, Medical ManagementBlue Cross and Blue Shield of North Carolina

Karyn GlogowskiRegional Vice PresidentFirst Health Group Corp.

Cindy Miller, FSA, MAAAVice President and Chief ActuaryAnthem Insurance Companies, Inc.

Cheryl C. Stacey, R.N., CMCEChief Health Plan OfficerMethodist Medical Group, Inc.

Reviewers and Technical Advisors from the Academy’s Sponsoring Associations

Numerous staff members from the Academy’s sponsoring associations— America's Health Insurance Plans (AHIP), and Blue Cross and Blue Shield Association (BCBSA),

have worked diligently under very tight deadlines to provide extremely helpful comments, technical assistance, and review. These staff members are listed here.

Reviewers and Technical Advisors from the Academy’s Sponsoring Associations

American Association of Health PlansGeneral Thanks and Appreciation to:

Karen Ignagni — President and CEOCharles W. Stellar, CMCE, PAHM — Executive Vice PresidentDiana Dennett, PAHM — Executive Vice PresidentSteven R. Gardner, CMCE, PAHM — ConsultantAcademy Liaison and Advisor:Charles W. Stellar, CMCE, PAHM — Executive Vice PresidentReviewers and Contributors:Erin Carlson, PAHM — Director, Health Information and Library ServicesAndrew Cosgrove — Manager, Public ProgramsMerilyn Francis, R.N. — Director, Quality Management and Health Services ResearchSteven R. Gardner, CMCE, PAHM — ConsultantTimothy Hrynick — Director, Private Market RegulationGalen Miller — Vice President, Professional ServicesJean Riedlinger — Research LibrarianKristin Stewart — Executive Director, Private Market IssuesDeborah Wheeler — Senior Manager, Accreditation and Industry Standards

Blue Cross and Blue Shield AssociationGeneral Thanks and Appreciation to:

Scott P. Serota — President and Chief Executive OfficerMaureen E. Sullivan — Senior Vice President, Strategic ServicesRobert C. Heird — Senior Vice President, Anthem Insurance Companies, Inc.Academy Liaison and Advisor:Paul Canchester, PAHM — Managing Director, Education and Training Services

LOMAGeneral Thanks and Appreciation to:

Thomas P. Donaldson, FLMI, CLU — President and CEOWilliam H. Rabel, Ph.D., FLMI, CLU — Senior Vice PresidentAcademy Liaison and Advisor:

Katherine C. Milligan, FLMI, ALHC — Second Vice PresidentContributors and Technical Assistance:Mark Adel, FLMI, ACS, AIRC, PAHM — Senior AssociateNicholas L. Desoutter, FLMI, ACS, PAHM — Senior AssociateRobert Hartley, FLMI, ACS, ALHC, CLU, ChFC, RHU, PAHM — Senior AssociateDavid A. Lewis, FLMI, ACS — Senior AssociateMarion Markus — Administrative AssistantElizabeth A. Mulligan, FLMI, ACS, AIAA, ALHC, PAHM — Senior AssociateMartha Parker, FLMI, ACS, AIAA, ALHC — Senior AssociateDean L. Polk, FLMI, ALHC, ACS — Director, ExaminationsJanet Smith — Researcher, Information Center

Academy for Healthcare Management Board of Directors

Finally on behalf of the Academy and project staff, we wish to recognize the executives who serve on the Academy’s Board of Directors.

Academy for Healthcare Management Board of Directors

Chair of the Board:Charles W. Stellar, CMCE, PAHMExecutive Vice PresidentAmerica’s Health Insurance Plans601 Pennsylvania Ave, NWSouth Building, Suite 500Washington, DC 20004

Secretary/Treasurer:Maureen E. SullivanSenior Vice PresidentStrategic Services BlueCross BlueShield Association225 North Michigan AvenueChicago, IL 60601-7680

Jody VossExecutive Director of Business DevelopmentBlueCross BlueShield Association225 North Michigan Avenue - 2nd FloorChicago, IL 60601-7680

James BaldaVice President Member Services and Professional DevelopmentAmerica's Health Insurance Plans601 Pennsylvania Ave, NWSouth Building, Suite 500Washington, DC 20004

Without their vision, wisdom, and support, this course and the Academy’s program would not be possible.

The Role of Medical Management in a Health Plan

Pg 1 to 71

Introduction

When you read or hear about health plans, you may encounter the term medical management or references to specific components of medical management, such as disease management, case management, preventive care, or utilization review. You may have wondered what these terms mean and how they are related, as well as why and how health plans conduct medical management. These issues are the focus of this course.

Because health plans integrate the financing and delivery of healthcare, a health plan must effectively manage both the cost and the quality of healthcare services. Without adequate cost-management measures, a health plan's financial viability may be jeopardized. However, a health plan cannot focus on cost alone. The delivery of high-quality care and service is one of a health plan's core goals, and this quality goal is typically a component of a health plan's mission statement.

In a managed care context, quality consists of two major components: healthcare quality and service quality. <STRONGHealthcare quality is "the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge."1

High-quality care is appropriate care provided in an appropriate amount at the appropriate time and for an appropriate duration. Service quality generally refers to the success of a health plan and its providers in meeting the nonclinical needs of plan members. Quality service is reflected in a high degree of satisfaction among a health plan's members.

Many states have specific laws regarding healthcare quality, and some health plans are subject to federal laws and regulations on quality. In addition, health plan members and purchasers and healthcare providers all expect a health plan to set and meet high standards for quality care. We discuss expectations and regulations regarding quality further in lesson, Environmental Influences on Medical Management.

Achieving the goals of quality care and cost-effectiveness simultaneously presents an ongoing challenge for health plans. This course explores how health plans use medical management programs to achieve and maintain both high quality and cost- effectiveness. First, we describe the primary medical management processes and programs that are used by health plans. We then consider how a health plan can apply these programs for different types of healthcare services and different member populations.

What is Medical Management?

Before we introduce the specific types of medical management programs, we will first define some basic terminology. Throughout this entire course, keep in mind that medical management terminology and the definitions of these terms vary greatly

among different health plans. Medical management, also known as care management, encompasses all the activities that health plans and their providers conduct to (1) maintain or improve the quality of service healthcare received by members; (2) meet budget projections for medical services; (3) achieve member satisfaction; and (4) respond to accreditation and regulatory requirements.2

Medical management attempts to integrate and improve healthcare services from various providers to maximize the benefit to the plan member while avoiding both inadequate and excessive utilization of healthcare resources. One important purpose of medical management is the improvement of a member's overall health over time by coordinating care across the different healthcare services that a member receives and the different providers who treat the member.3

Two main categories of medical management activities are quality management and utilization management. Quality management (QM) , also called quality assurance (QA), is an organization-wide process of measuring and improving the quality of the healthcare and services provided to the members of a health plan. For example, a health plan periodically measures member satisfaction with the healthcare services rendered by the health plan's providers and takes action to address any areas of dissatisfaction. Utilization management (UM) refers to health plan programs that manage the use of medical services so that a patient receives appropriate care in a cost-effective manner in an appropriate setting. UM typically includes a variety of programs, such as utilization review, case management, and disease management. Many medical management programs, such as case management and disease management, serve to increase both quality of care and the efficient use of healthcare resources.

Medical management frequently involves issues of medical necessity or medical appropriateness. The contract between the health plan and a purchaser (sometimes called the benefit plan) usually contains a definition of what constitutes medically necessary services, medically appropriate services, or both. Some organizations in the healthcare industry distinguish between medically necessary services and medically appropriate services, while other entities consider the two terms synonymous and use them interchangeably. For the purpose of this course, however, medically necessary services and medically appropriate services will be addressed as related, but distinct, concepts.

The following description of medically necessary services is used by many health plans in their benefit plan documentation. Medically necessary services are services or supplies as provided by a physician or other healthcare provider to identify and treat a member's illness or injury, which, as determined by the payor, are

Consistent with the symptoms of diagnosis and treatment of the member's condition.

In accordance with the standards of good medical practice. Not solely for the convenience of the member, member's family, physician, or

other healthcare provider.

Furnished in the least intensive type of medical care setting required by the member's condition4.

As a general rule, medically necessary services should be effective and not experimental. A diagnostic service is deemed effective when it yields the expected information, and a therapeutic service is effective when it results in the intended health outcome. A medically necessary service has been proven through clinical evidence to be effective when compared to the best alternative service for a given medical condition or to no service, if no alternative method of diagnosis or treatment exists.

Medically appropriate services are diagnostic or treatment measures for which the expected health benefits exceed the expected risks by a margin wide enough to justify the measures.5 Generally, questions of medical necessity apply to the needs of particular plan members, while questions of medical appropriateness concern a plan's population. In other words, medical necessity drives case-by-case quality and utilization decisions, while medical appropriateness is the basis for decisions that affect a segment of the member population.

For example, although liver transplantation is often an appropriate treatment for patients with liver failure, liver transplantation may or may not be medically necessary for a particular patient with this condition. The determination of medical necessity depends on medical information from the patient's physician, such as a confirmed diagnosis of liver failure, how advanced the failure is, and any patient characteristics indicating that the patient is or is not a good candidate for this surgery.

Health plans often specify which medical treatments are appropriate in an attempt to reduce the variation in the medical services rendered by different providers. Consistent treatment from different providers effectively reduces inequitable treatment among plan members and enables a health plan to compile data in a uniform manner to track quality measures.

The following section of this lesson provides an overview of the scope of activities typically included in medical management. We then describe how the medical management function of a health plan is organized and staffed. We also discuss variations in the approach to medical management based on health plan characteristics, the type of care, and the nature of the member population. Finally, we explain how and why a health plan may contract with other entities to perform medical management on behalf of the health plan.

The Scope of Medical Management

A health plan develops and implements medical management programs in an attempt to see that each member receives medically appropriate, cost-effective care in the most appropriate setting. Achieving both high-quality care and the most efficient use of medical resources is a complicated task, given the vast array of health problems that members may experience and other circumstances that may

affect members' access to healthcare services. Because medical management is multi-faceted and complex, this function typically includes many different activities and often goes beyond the traditional boundaries of QM and UM.

The types of programs that a health plan includes under the umbrella of medical management vary from plan to plan, largely depending on applicable laws, regulations, accrediting agency standards, and the expectations of purchasers, members, and providers. Beyond these external considerations, a health plan sets its own goals and priorities for medical management and tailors its programs accordingly.

Another influence on the basic approach to medical management is a health plan's arrangement for the delivery of healthcare services. The majority of health plans arrange for the delivery of care by contracting with providers. Health plans rely on their contracted providers to perform many of the basic activities that are necessary to achieve healthcare quality. However, some health plans, such as staff model health maintenance organizations (HMOs), that deliver healthcare services directly to their members are also providers. Health plans that are also providers must have programs for improving the quality of care rendered by their own professional staff. For example, a staff model HMO must develop and implement measures to support the safe, effective delivery of medical care. We discuss how contracted providers may assume more responsibility for medical management activities later in this lesson.

Medical management programs generally include QM, UM, the management of clinical service delivery by providers, and the resolution of member appeals of authorization decisions. Medical management is often closely linked to provider network management, and in some health plans, network management is classified as a medical management program. For the purposes of this course, however, our focus will be on quality and utilization, with network management discussed as a related function. Figure 1A-1 lists some of the most common medical management programs and activities. The next sections provide a brief introduction to many of these activities, with more detailed information in the following lessons.

FIGURE 1A-1. COMMON MEDICAL MANAGEMENT ACTIVITIES.

Clinical practice management Evaluation of medical technologies Development of policies on the appropriate use

of medical services, including prescription medications

Development of guidelines for providers to use when delivering clinical services

Quality standard development

Preventive care and self-care initiatives Health risk assessment Immunizations and health screening activities Health education Services to assist members with healthcare decisions

Utilization Review Precertification Second surgical opinion Concurrent review

Accreditation

Performance measurement Measurement of healthcare service outcomes,

including clinical results, cost, and member satisfaction

External measures of plan performance, such as the Health Plan Employer Data and Information Set (HEDIS®), ORYX®, and report cards

Performance improvement Quality improvement studies Provider profiling

Member education

Discharge planning Retrospective review, including appropriateness

evaluation Authorization of services and referrals

Case Management

Disease Management

Compliance with regulations

Oversight of medical management activities performed by other entities on behalf of the health plan

One key component of a medical management program is clinical practice management. Clinical practice management is the development and implementation of parameters for the delivery of healthcare services to a health plan's members. Clinical practice parameters provide a foundation for a health plan's QM and UM programs. Among the parameters for clinical practice management are medical policies and clinical practice guidelines. Clinical practice guidelines (CPGs) are statements of recommended medical practices that help providers make decisions about the most appropriate course of treatment for specific patients.7 Definitions of the term medical policy vary in the healthcare industry, but in the broadest sense, a medical policy provides information to guide the health plan staff who recommend or decide which healthcare services are medically necessary for a particular patient. For example, a medical policy usually describes situations in which a particular healthcare service is an appropriate intervention for a member. We discuss the role of medical policy further in lesson, Clinical Practice Management.

Increasingly, health plans rely on evidence-based medicine for decisions about medical necessity and clinical practice management. Evidence-based medicine is the practice of medicine according to:

The findings of clinical trials and other scientifically valid research as reported in the current body of medical literature.

Opinions from unbiased expert clinicians.

A foundation in evidence-based medicine holds the medical policy and CPG development processes to a higher standard and typically improves the quality of care. The use of evidence-based medicine during medical policy development, evaluation of new medical technology, and the development of CPGs also increases the credibility of these clinical practice management tools to providers.

Quality Management

Quality management has traditionally been a cornerstone of medical management within health plans. In fact, most health plans have a formal program for QM and undertake a wide variety of activities to support the delivery of high-quality healthcare services by their providers. QM is a continuous process to which a health plan typically dedicates substantial human, technological, and financial resources. For selected healthcare services covered in the benefit plan, a health plan develops quality goals, measures its performance against those goals, implements corrective action as needed, and monitors the impact of its actions.

One way for a health plan to demonstrate its quality and accountability for healthcare services is through accreditation by an external agency. Accreditation is an evaluative process in which a healthcare organization voluntarily undergoes an on-site examination of its policies and operating procedures to determine whether they meet the criteria as defined by the accrediting body. Accreditation implies that the organization meets a specified level of quality.8

Most health plans also have internal quality programs to measure the appropriateness of specific types of care and identify areas with opportunities for quality improvement. For example, a health plan may notice an increase in the utilization of resources and cost of care for diabetes patients. That health plan may decide to conduct a study to determine the effectiveness of its efforts to manage diabetes. Health plans must carefully evaluate which issues to study and how to study them before deciding the focus of a quality initiative.

In many instances, health plans use outcomes as a measure of quality. Within a healthcare context, outcomes are defined as the measurable results of health-related interventions. Health plans often examine outcomes for both individual members and for groups of members. For example, did a particular stroke patient show a positive change in medical condition or ability to perform everyday activities following a course of physical and occupational therapy? In an example of outcomes for a group, how many emergency department visits were made in the past year by asthma patients who participate in an asthma disease management program? By studying outcomes and linking those outcomes to specific medical interventions, a health plan can determine which approaches to healthcare service delivery typically yield the best clinical and economic results.

Other sources of information about health plan quality are periodic assessments of provider performance, member satisfaction surveys, and evaluation of specific health plan performance indicators by external entities.

Preventive Care, Self-Care, and Decision Support Programs

Many health plans also include in their medical management strategy programs to keep members as healthy as possible (preventive care) and to help them manage their needs for care when they do experience illness or injury (self-care and decision

support). Such programs are sometimes collectively known as demand management or demand-side management.

Preventive care programs that address the causes of disease and injury can improve members' health and prevent illness and injury, thus reducing their needs for services. By assessing health risks, a health plan may identify members' physical characteristics and lifestyle factors that indicate an increased risk of experiencing certain types of illness or injury. For instance, an evaluation of health risks would point out that overweight members who smoke and rarely exercise are at greater risk of developing heart disease than plan members who do not have these characteristics. Once such at-risk members are identified, their chances of developing heart disease can be reduced through preventive care programs.

Some health plans have telephone information lines that are staffed by nurses who may determine the urgency of a member's medical problem and recommend the most appropriate type of service and care setting for a member's condition.

Health plans also design health education programs to help members make informed decisions about their needs for healthcare and, in some cases, to perform certain aspects of their care. For example, suppose that a health plan has identified its members who have non-insulin-dependent diabetes. If the health plan provides these members access to instruction on nutrition, activity, and blood glucose monitoring, they will be better able to manage their diabetes on a day-to-day basis.

Utilization Review

Utilization review is one of the most frequently used medical management approaches. Utilization review (UR) is the process for evaluating the medical necessity, efficiency, and appropriateness of healthcare services and treatment plans for a given patient.9 The goal of UR is the most appropriate use of medical resources and treatment in the most appropriate setting. UR may enhance both the quality and cost-effectiveness of care. Traditionally, health plans have used UR primarily for cases involving hospital care, costly procedures, and referrals for specialty care; however, its use for outpatient services and pharmaceutical treatments is expanding.

Because a health plan's determinations of whether or not a particular service is appropriate sometimes conflict with provider recommendations and member preferences, an appeals process is critical to protect the interests of all parties involved. The steps and timing of the appeals process vary from plan to plan and may be mandated by regulatory requirements; however, health plans typically strive to design appeals procedures that will provide a timely resolution to member and provider appeals of authorization decisions. Consumers have indicated that understandability, timeliness, and ease of use are important characteristics of any appeals process. Many health plans have established processes for external review of appeals in addition to their internal appeals systems.

Case Management

For individual members with conditions that require complex care and/or treatment from multiple providers, health plans often employ case management as a means of achieving optimal outcomes and resource usage. Case management, also known as large case management, catastrophic case management, or complex case management, is the process of identifying plan members who require extensive, complex healthcare; developing an appropriate treatment strategy; and coordinating and monitoring the care.10

Most members who are selected for case management have a chronic medical condition, see multiple providers in different specialties, or have experienced a catastrophic illness or injury. Examples of conditions appropriate for case management include AIDS, multiple trauma, head injury, spinal cord injury, stroke, burns, premature birth, and mental illness. Candidates for organ or bone marrow transplant may also benefit from case management. By incorporating self-care, care by the member's family, and community services with the services of the health plan's providers, case management can enhance the quality of care without exhausting the financial resources of the benefit plan or the member.

Disease Management

A large proportion of healthcare service utilization is the result of long-term medical conditions such as heart disease, diabetes, low-birth-weight babies, chronic back pain, depression, and asthma. In addition, many patients who experience these medical problems are subject to serious complications and further deterioration if their conditions do not receive proper treatment. Concerns about the quality and the cost of care for these individuals have led many health plans to establish disease management programs.

Disease management, also known as disease state management, is a coordinated system of preventive, diagnostic, and therapeutic measures intended to provide cost-effective, quality healthcare for a patient population who have or are at risk for a specific chronic illness or medical condition.11

Disease management focuses on comprehensive care across different providers and healthcare delivery settings to improve members' long-term health status. Disease management seeks to integrate various medical management approaches including CPGs, case management, evaluation of health risks, and health education with the services of a carefully selected multi-disciplinary team of providers who are most appropriate to treat a particular condition.

By creating a disease management program that focuses on a specific condition, a health plan may lessen the risk of complications and progression of the condition, treat complications and deterioration more effectively when they do occur, and generally improve the quality of life for its members. The improved health status of members may result in cost savings for the health plan.

Integration of Medical Management Programs

As the components of medical management programs vary from one health plan to another, so does the level of interaction and collaboration among the different components. Many health plans developed each of their medical management initiatives individually over time as needs evolved and plan resources permitted. Consequently, such components evolved as separate functions, even though the goals of these components overlapped. When quality and cost-effectiveness goals overlap, duplication of activities and wasted health plan resources are the likely result.

In contrast, many health plans have achieved some integration of their medical management functions and information management systems for those functions. Although the initial costs of integration are considerable, long-term costs for integrated medical management activities may be reduced. Improvements in technology for information management have facilitated integration by allowing the shared use of databases and more sophisticated analysis of medical management information.

Enhanced communication and coordination of medical management activities should optimize the use of medical resources and may improve the overall quality of care. For instance, by evaluating health risks, a health plan can identify members in the early stages of a chronic illness such as diabetes. In a well-integrated medical management system, the health plan can place these members into an appropriate disease management program. On a more basic level, collaboration between UM and QM can facilitate the timely delivery of medically appropriate care and prevent members from being subjected to the inconvenience, discomfort, and potential risks of treatments that are not medically necessary.

Organization And Structure Of The Medical Management Function

Organizational structures for medical management vary among health plans primarily because, over time, each organization has developed a structure that works well for its own circumstances. Health plans usually have a separate division dedicated to medical management programs. This division goes by different names, such as Healthcare Management, Medical Services, Patient Management, Healthcare Services, or Healthcare Policy and Operations. The medical management division typically has separate departments for various medical management components. The number and types of components vary, but generally include both QM and UM.

Some plans place network management together with medical management while other health plans consider network management a separate function. The medical management division may also have a risk management component. We discuss the influence of network management and risk management on medical management programs in lesson,The Relationship of Medical Management to Other Health Plan Functions.

The UM section of medical management includes UR and case management, while typical activities conducted under QM programs are quality improvement initiatives

and performance reporting activities, such as reports to state and federal agencies and accreditation agencies. Some health plans classify clinical practice management, preventive care, self-care, and disease management as subcategories of either UM or QM, but other organizations have separate departments for these programs.

The size (based on the number of members), geographic scope, and the types of services delivered by a health plan can affect the structure for medical management. A large health plan often divides its service area into geographic sections that are sometimes known as medical service areas (MSAs) and establish regional or local offices.12

A health plan with multiple offices may decentralize some or all medical management activities. Consider quality improvement initiatives as an example. The health plan may establish the standards and procedural guidelines for a quality improvement study at a central location and then have local medical management staff implement the study and measure the results. After the local staff reports its results to a centralized data input unit at the health plan's state, regional, or national headquarters, the medical management personnel at the headquarters location can prepare comprehensive reports that show aggregate results across the entire service area and compare results among different MSAs. Decentralized data collection requires extensive efforts directed at data definitions and staff training since much of what is measured has a subjective component and may be interpreted differently by different observers.

The size and products of a health plan can affect medical management operations in other ways. For instance, small health plans typically have more integration among activities and less specialization of roles than larger health plans. Large health plans often have separate medical management programs for different types of services (such as hospital care or pharmacy services) and products (such as Medicare or Medicaid managed care plans).

The medical management division develops a written program for medical management that includes an evaluation of previous monitoring activities and actions and goals for the coming year. In most cases, health plans have separate programs for UM and QM. Medical management personnel review this program annually and update it as needed. The program is then passed upward to the board or to the appropriate executive committee for approval, and downward through the entire organization for implementation.

Staffing for Medical Management

Because each health plan develops its own plan for medical management programs, it is not surprising that there is no standard approach to staffing for medical management. However, most health plans have the following four categories of medical management personnel: medical directors, program directors, clinical staff, and administrative staff. In some companies, the medical management division has a vice president or other administrative officer who oversees the operational aspects of the division. In other health plans, the medical director performs this function. Figure

1A-2 depicts a simplified example of an organizational structure for medical management. Keep in mind that the different medical management components may be combined and organized into any number of combinations.

Medical DirectorsA senior medical director, also known as a chief medical officer, is the health plan physician executive who oversees the medical care delivered by the health plan's providers and is responsible for the quality and cost-effectiveness of that care. The senior medical director may also have a vice president's title. The role of the senior medical director varies, depending on the health plan. In some instances, the senior medical director participates in day-to-day operations such as authorization decisions on non-routine cases and provider education. At other health plans, the senior medical director develops policies and procedures for medical management, but is not involved on an operational level. A senior medical director of a small plan is more likely to have direct responsibility for the implementation of programs and provider performance than the senior medical director of a medium-sized or large plan.

Medical Directors

A senior medical director who primarily focuses on policy issues often has additional medical directors to assist with various aspects of medical management operations and oversight. Although the actual titles vary from one health plan to another, for the purposes of this course, these additional medical directors will be called associate directors.

Health plans that divide their service areas geographically usually have associate medical directors who supervise the medical management activities for a particular region. A health plan may also have associate medical directors who assist the senior

medical director with certain duties (such as appeals processes) or who oversee medical management for specific types of care (such as cardiology, oncology, or geriatrics).

The associate medical directors follow the health plan's general medical management policies and procedures, although specific activities may be modified according to the type of care or the local member population's needs. Associate medical directors typically report directly to the senior medical director.

The responsibilities of a senior medical director vary from plan to plan, but often include

Developing medical management strategy that is in alignment with the health plan's goals and mission

Guiding medical policy development and implementation, technology assessment, and development of CPGs for providers

Prioritizing medical management program needs (e.g., selecting which disease management or preventive medicine programs to offer)

Overseeing QM and UM programs Participating in network management activities such as strategy development and

contract negotiation Serving as the health plan's medical liaison to its provider networks, government

agencies, and large purchasers Collaborating with the health plan's sales and marketing department

Figure 1A-3 lists more specific operational activities that either senior medical directors or associate medical directors may perform, depending on the health plan's organizational structure.

To meet the demands of the position, a senior or associate medical director must possess the following skills and qualifications:

Health plan philosophy and ability. The medical director should believe that a health plan can achieve healthcare quality and cost-effectiveness simultaneously. Relevant experience with UM, QM, and provider management is also essential, as is the ability to integrate medical issues with business concerns.

Clinical credibility. A medical director must be a licensed physician with relevant clinical experience, although a medical director does not typically maintain a clinical practice. In many cases, medical directors have primary care backgrounds. To be effective, the medical director must have the respect of the providers in the network. Medical directors are virtually always certified by one of the examination boards of the American Board of Medical Specialties.

Analytical skills. A medical director needs the ability to analyze and integrate data, clinical information, and laws and regulations into meaningful, workable programs.

Communication skills. The medical director should be able to communicate effectively, both verbally and in writing, with providers, members, purchasers, regulators, various levels of health plan staff, and the general public. In many instances, medical directors must also negotiate agreements and resolve conflicts.

Leadership skills. A medical director must have the ability to motivate and influence plan personnel and providers and, on occasion, to challenge the opinion of the majority within and outside the health plan.

Program Directors

Each of a health plan's medical management programs has a director or manager who is responsible for the operations of the program. Working in conjunction with the medical director and personnel from other related health plan functions, the program director develops program-specific policies, procedures, and processes to accomplish the plan's QM and UM goals. In addition, the program director sees that the program's activities adhere to any applicable laws, regulations, or accreditation standards.

Program directors are often clinicians (such as physicians, nurses, or pharmacists), especially in larger health plans. In addition to relevant clinical knowledge, medical management program directors also need health plan experience, communications skills, analytical abilities, and leadership skills similar to those described for medical directors. A program director oversees a variety of clinical and nonclinical staff members who conduct the day-to-day activities of the program.

Clinical Staff

A health plan's medical management programs employ a variety of clinicians whose responsibilities involve managing the quality or cost-effectiveness of some clinical aspect of patient care. For example, nurses often perform the initial clinical review of providers' requests for precertification of a hospital admission or other clinical services such as ambulatory surgery. Other medical management activities that require the services of clinical staff are telephone information lines that help members manage their healthcare needs, concurrent UR, quality improvement studies that focus on healthcare quality, and case management.

In addition to having appropriate clinical training and experience, clinical staff may need some or all of the following qualifications:

Basic knowledge and understanding of health plan medical management programs.

Ability to communicate and coordinate activities with varying levels of health plan personnel, providers and their staffs, and external entities such as regulatory agencies and community services.

Analytical ability to identify problems, develop solutions, and implement the chosen course of action in a timely and effective manner.

Computer and information management experience. Ability to contribute to the generation of cost analysis and other documentation

necessary to report departmental activity.

Administrative Executives and Staff

A health plan's medical management division usually employs various administrative personnel who supervise or conduct operations that do not directly involve clinical aspects of patient care. The types of administrative personnel in medical management range from a vice president who oversees all of the division's business practices to a UR intake coordinator who checks basic information such as members' eligibility status. The higher levels of administrative staff may report directly to a senior or an associate medical director or even to the company's chief executive officer (CEO). The responsibilities and qualifications of administrative personnel vary with the nature of each position.

Medical Management Committees14

Each health plan has one or more organizational committees whose purpose is to approve and perform oversight of medical management programs. In addition to tracking overall trends in quality and utilization, these committees also evaluate and make recommendations on specific questions and problems related to the delivery of healthcare services. A medical management committee typically conducts an annual review of past program activities, current initiatives, and work plans for future activities. Based on the annual review, the committee makes recommendations for change.

A health plan's senior medical director participates on and often serves as the chairperson for medical management committees. The medical director has the responsibility to see that oversight activities are coordinated across committees and that recommendations for change are communicated promptly between committees. However, the depth and breadth of the issues addressed by these committees often require clinical expertise beyond the contributions of the medical director and other clinicians who are employed by the health plan. Accordingly, health plans frequently solicit their providers to participate on medical management committees.

Health plans have several other reasons for including providers on medical management committees. In addition to contributing clinical knowledge, these providers can draw upon their daily involvement with healthcare delivery to plan members and bring a significant real-world perspective to QM and UM programs. Providers who participate on medical management committees also serve as a communications conduit to and from other local providers. Further, provider participation in the design and oversight of medical management programs lends increased credibility to these activities in the eyes of the provider community and may enhance provider cooperation with these programs. Finally, accrediting agencies often require active participation of providers on medical management committees.

Committee membership has advantages for providers as well. One of the main benefits for a provider who participates on a health plan committee is the opportunity to help shape the programs and activities of the health plan. In addition, such a provider can become more familiar with health plan operations. To encourage provider participation on committees, health plans may reimburse providers for the time they serve on committees. To maintain continuity of provider participation on

committees, some health plans attempt to carry over at least 50 percent of a committee's provider members from one year to another.

The number and types of medical management committees vary from one health plan to another. Health plans generally have committees for UM, QM, and pharmacy issues, and may have other committees specifically for clinical practice management, provider credentialing, and peer review. Small health plans may have a single medical management committee that addresses all of these issues. In the next sections, we briefly describe several common types of medical management committees.

Quality Management Committee

The quality management committee generally oversees the health plan's quality improvement activities in both clinical and nonclinical areas.

The quality management committee:

Identifies appropriate issues for monitoring Evaluates the results of quality studies to determine the need and opportunity for

performance improvement Prioritizes improvement opportunities Develops action plans for improvement Provides oversight of action plan implementation Monitors the effectiveness of the action Performs an annual evaluation of program effectiveness

The QM committee also reviews and updates the health plan's QM program for approval by the health plan's board of directors and recommends policy decisions to the board.

Health plans may separate the QM committee into two components: a clinical QM committee composed primarily of providers and a corporate QM committee that may or may not include contracted providers. When the QM committee is divided in this way, the clinical component often serves as an advisory board or subcommittee of the corporate committee. For example, when the clinical QM committee develops action plans that involve increased costs or policy changes, these action plans are submitted as recommendations to the corporate committee for its approval or rejection of the plans.

Medical Advisory Committees

The medical advisory committee oversees the establishment of medical policies and CPGs, although many health plans have a separate committee to direct clinical practice management. Health plans have different names for the committee in charge of clinical practice management, and the scope of oversight for this committee may also include network management activities such as credentialing

and recredentialing. One common name for this committee is the medical advisory committee, which is the terminology that we will use in this course.

The medical advisory committee evaluates proposed policies and action plans regarding clinical practice management parameters. For example, health plan staff who assess new medical technology gather and analyze data and draft proposed medical policies for the medical advisory committee's examination.

The extent of the medical advisory committee's influence varies across health plans. Often this committee's role is advisory in nature and it does not have the authority to finalize the health plan's medical policies or CPGs. In this situation, senior management and ultimately the board of directors has the responsibility to adopt, approve, or reject the committee's recommendations.

The size and composition of the medical advisory committee is also variable. In addition to the health plan's medical director, this committee may include the plan's directors of medical policy, pharmacy services, utilization management, quality management, and other medical service areas as well as physicians, pharmacists, nurses, and other healthcare personnel from the plan's provider network. In some health plans, the committee also includes a consumer representative (a plan member) and/or a purchaser representative (usually a human resources employee from a major employer).

Utilization Management Committee

The UM committee reviews and updates the health plan's UM program description and establishes utilization review protocols. In many health plans, the UM committee also

Reviews and evaluates referral and utilization patterns for over- or under-utilization

Reviews medical appropriateness for utilization decisions that are under appeal Provides oversight of all UM activities

Some health plans have a separate committee to handle member appeals.

Pharmacy and Therapeutics Committee

The pharmacy and therapeutics (P&T) committee is responsible for developing, updating and administering a health plan's formulary. A formulary is a listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given health plan population and that are to be used by a health plan's providers in prescribing medications.16 The formulary should include safe, effective drugs that are cost-effective. In order to manage the formulary, the P&T committee reviews the following types of information:

Medical literature including reports on clinical trials Drug utilization reports

Current therapeutic guidelines and reports on the need for revised or new guidelines

Economic data on drugs Provider recommendations

Peer Review Committee

Peer review is the analysis of a clinician's care for patients by a group of that clinician's professional colleagues.17 The peer review committee reviews cases of healthcare service delivery in which the quality of care is questionable or problematic. Such cases are identified through utilization review processes, complaints and grievances, or clinical monitoring activities. This committee formulates, approves, and monitors corrective action plans for providers as needed. Generally, the only members of this committee who have voting rights are the providers.

The health plan also draws from its other committees for peer advisors. Peer advisors are providers who are consulted when the expertise of a certain specialty is needed to review a question on utilization, quality of care, or provider performance. State laws on peer review determine the structure and functions of the peer review committee. In some health plans, the QM committee conducts peer review.

Variations in Approaches to Medical Management

No single approach to medical management can meet the needs of all health plans, so each health plan must determine its own combination of programs and activities. When designing medical management programs, a health plan's management team must consider a variety of factors specific to the health plan, its services, and its member population. A health plan's contractual arrangements with its providers and mechanisms for provider compensation may also influence medical management programs, as we will discuss in lesson, The Relationship of Medical Management to Other Health Plan Functions.

Characteristics of the Health Plans

The use and organization of medical management can vary significantly depending on the type of product (e.g., HMO, preferred provider organization, or point of service option) offered by the health plan. Each product has characteristics that affect the way the health plan implements medical management.

HMOs typically have a variety of medical management programs in place. Many HMOs contract with provider organizations or medical groups rather than with individual providers. In many cases, HMOs work closely with their provider organizations or groups to develop and implement medical management programs. HMOs may delegate medical management activities to providers or adapt a provider organization's medical management programs for the plan's use for all its members.

In preferred provider organizations (PPOs), however, medical management across the entire member population is more difficult because, unlike HMOs, these health plans usually contract with individual practitioners, pay for out-of-network services, and do not have a designated primary care provider (PCP) to coordinate care. As a result, a PPO may not have access to complete information about member care. PPOs generally have fewer types of medical management programs than HMOs and structure their programs more loosely than those of HMOs.

In the past, PPOs have typically focused on UM activities for the types of care that result in the greatest costs for the plan, such as precertification for hospital care and case management for catastrophic cases. Most PPOs do not have programs that focus on long-term health status (such as preventive care or disease management). However, the majority of PPOs have some quality initiatives (such as credentialing) in place and many are working to strengthen the number and scope of their QM activities.

Compared to HMOs, PPOs generally have fewer types of medical management programs and structure their programs more loosely.

True

False

Answer = A

Although point of service (POS) products generally utilize the same types of medical management programs as HMOs, these plans may also encounter difficulty obtaining information in a timely manner about services rendered by out-of-network providers.

Health plans with multiple products (such as an HMO and a PPO) may use different approaches to medical management for the different products, or they may adopt the same programs for all products. Using the same medical management programs for all products helps to simplify the administration of the programs. Some purchasers request or even require that medical management be consistent across the products that they purchase from a health plan. For example, an employer that offers an HMO and a POS product to its employees may want all employees to have access to the same telephone healthcare information lines and preventive care. In addition, having different medical management programs for different products may create the appearance of inequity or even discrimination.

Type of Care

A health plan's approach to medical management should address all of the different types of care and services that are included in the benefit plan. Medical management personnel may need to design their programs according to

The type of care (e.g., preventive measures, primary care, acute care, subacute care, or rehabilitation)

The nature of the service (e.g., traditional medical and surgical services or specialty services such as behavioral healthcare or dental care)

We will discuss variations in medical management according to the type of care in more detail in later lessons.

Member Population

The needs of a health plan's members are a driving force behind a health plan's approach to medical management. A member population may have additional distinguishing characteristics, but the health plan should always consider the population's income level, age mix, and gender mix.

The income level has a direct impact on the healthcare services needed and the manner in which these services should be delivered. For example, low-income populations have a higher incidence of chronic illnesses such as asthma, diabetes, and heart disease, and are more likely to need disease management programs than the general population. Further, low-income populations tend to have relatively low levels of education, so complicated authorization procedures may deter them from obtaining the services they need.

The age and gender mix of the population also affects the delivery of services. In general, members' healthcare needs increase with age, so a health plan with a significant number of senior members may tailor medical management programs for this population segment. For example, a Medicare plan is likely to have health risk assessments that focus on health issues associated with aging and geriatric case management that addresses the healthcare needs of patients with multiple medical problems.

Although a younger population requires a smaller volume of healthcare services than senior members, a younger population also has specific needs. For example, women of child-bearing age often need ready access to obstetrical services. A health plan that covers women in this age group may establish an authorization system that allows members to obtain obstetrical services directly, that is, without receiving a referral from another provider or authorization from the health plan.

Cultural characteristics such as race, ethnic origin, and religion may also affect medical management. For example, language barriers may hinder members' understanding of the potential benefits of a preventive care initiative or the requirements of a health plan's authorization system. In addition, members' expectations about the nature and delivery of healthcare services may vary according to racial, ethnic, or religious backgrounds. For instance, in some cultures, patients believe that injectable medications are far superior to oral treatments and strongly prefer to receive an injection. In other cases, patients may want to

incorporate folk remedies or spiritual healing into the treatment plan. Some groups resist certain types of medical services, such as blood transfusions or birth control.

A health plan must also consider the possible effects of racial, ethnic, and religious diversity on members' medical needs. For instance, regardless of economic status, African Americans have a higher incidence of low-birth-weight babies than the general population. Consumers of Asian descent have a relatively high incidence of osteoporosis.18 health plans should recognize racial and ethnic differences in the design of medical management programs. For example, a health plan may target preventive care and disease management programs toward the medical problems commonly experienced by members of a particular race or ethnic group.

Government-sponsored programs, such as Medicare, Medicaid, and workers' compensation, have unique requirements for UM and QM. We explore medical management for these populations further in Medicare, Medicaid, and Other Covernment Sponsored Programs.

At this point, you should have a basic understanding of the most common medical management activities and some of the variables that can affect the design and implementation of these activities. It is important to note that health plans do not always perform all aspects of medical management functions within their plans. In many instances, health plans contract with their providers or other external entities for the delegation of selected medical management activities, as we will discuss in the following section.

Delegation and Medical Management19

In the context of health plans, delegation is a formal process through which a health plan transfers to another entity the authority to conduct certain functions on behalf of the health plan. The entity that contracts with the health plan to perform the specified function is the delegate, and the health plan that transfers the authority is the delegator. The delegator remains accountable for the functions being performed by the delegate.

In addition to delegating medical management activities, health plans often delegate various aspects of other functions, such as network management, member services, medical records review, and claims administration. The list of potential delegates includes hospitals and other healthcare facilities, provider organizations, case management companies, claims administrators, management service organizations (MSOs), credentials verification organizations (CVOs), and independent utilization review organizations (UROs). With so many delegation options available, health plans face ongoing challenges in determining the appropriate use of delegation, selecting qualified delegates, and overseeing the delegated functions.

The use of delegation for an activity changes a health plan's requirements for staffing, systems, and processes. Rather than maintaining the personnel and systems necessary to perform the activity, the health plan must develop organizational

structures and programs to provide oversight of a delegate's performance of that activity.

Delegation by health plans is governed by various regulatory agencies and by state laws. Accrediting agencies also have standards for the use of delegation. We discuss laws, regulations, and accrediting standards that affect delegation in Environmental Influences on Medical Management.

Why Delegate?

Decisions on whether to delegate a function and which aspects of a function to delegate depend on several factors including a:

The health plan's available resources for the function. A proposed delegate's willingness and ability to perform the function

according to the health plan's standards. The costs of performing the function internally versus the costs of delegating

the function. The health plan's philosophy about delegation. The expected effect of the delegation on the satisfaction of providers,

members, and purchasers.

A health plan might choose to delegate because it does not wish to dedicate internal resources to perform the activity or because its staff seeks additional expertise for the activity. Many delegates focus on a limited number of activities, rather than on the entire spectrum of medical management. As a result, a delegate often possesses greater knowledge and experience with a specific activity than a health plan. Also, the health plan may realize that its current information system cannot handle the demands of a particular function. If another organization already has the necessary systems and personnel in place to perform an activity, the health plan may find it more efficient in terms of time and money to delegate to that entity than to conduct the activity with its own staff.

Some health plans find delegation to be a particularly useful option for services that are utilized by a relatively small number of members or for specialty services that require a different knowledge base, such as behavioral healthcare or chiropractic care. For instance, many health plans that contract with a managed behavioral healthcare organization (MBHO) for behavioral healthcare services also choose to delegate quality-related activities for behavioral healthcare to the MBHO. These health plans believe that the MBHO's expertise in behavioral healthcare will result in more clinically appropriate performance of UM, QM, credentialing, member services, and medical records review activities than the health plan could achieve.

Delegation often occurs because the network's providers request the responsibility for certain activities (such as utilization review and case management), especially when the provider shares financial risk with the health plan. Financial risk is the possibility that the actual costs of a health plan member's care will be greater than projected costs. Hospitals and provider organizations that accept financial risk for the

delivery of healthcare services may even require that the health plan delegate functions such as credentialing or UM to them as a condition for contracting with the health plan. However, the delegation of functions to providers can also occur without the transfer of financial risk, and the transfer of financial risk does not in and of itself equal delegation. If the provider already has satisfactory systems for an activity in place and the health plan does not, the health plan may simply find it more practical for the provider organization to assume responsibility for the function, at least on a temporary basis. Over time, the health plan may choose to develop its own mechanisms to conduct functions that have been previously delegated.

A health plan typically compares the expected costs with the expected benefits of delegation before entering into a proposed delegation arrangement. A cost/benefit analysis examines the costs of payment to the delegate as well as the costs of oversight of the delegated function by the health plan. The cost/benefit analysis also considers any expected improvements in utilization, cost, or quality that may result from the delegation. The oversight of delegated functions is typically a complex, time-consuming process for a health plan, especially if the health plan delegates several different functions or delegates a function to more than one entity. In some cases, health plans find it easier to perform the function within the health plan than to conduct the oversight process. These organizations typically delegate few functions or delegate no functions at all.23

In addition, when a health plan delegates a function, it relinquishes some control over the delegated function. A health plan that is uncomfortable with diminished control is unlikely to delegate.

Types of Delegated Activities

Credentialing, pharmacy benefits management, utilization review, case management, and disease management activities are among the most frequently delegated functions. Member services, medical records review, and claims administration functions are also commonly delegated. Depending on the particular health plan and the situation, the delegation agreement may or may not include all activities for a particular function. For example, Health Plan A delegates to a disease management company all of the activities necessary to implement a diabetes disease management program, while Health Plan B contracts with a disease management company only for services to identify plan members who have or are at risk of having diabetes. Health Plan B conducts the rest of the diabetes disease management activities within the plan.

Virtually all medical management activities are subject to delegation; however, the number and types of medical management functions that are actually delegated vary among health plans. Figure 1A-4 shows some examples of specific activities that health plans delegate. Regardless of which medical management activities are delegated, the health plan is responsible for ensuring that access to care and the quality of care are comparable for all plan members.

In addition to delegating medical management activities, health plans often delegate various aspects of other functions, such as network management, member services, medical records review, and claims administration. For health plans, the most frequently delegated activities include:

pharmacy benefits management

quality management

preventive health services

all of the above

Answer =A

In many instances, the delegation arrangements for utilization review, case management, credentialing, member services, and medical records review activities are made between the health plan and provider organizations such as physician groups, independent practice associations (IPAs), hospitals, or MBHOs. When the delegate is a provider organization, the delegation arrangement sometimes includes two or more major functions. For instance, a health plan might delegate to a network hospital the credentialing of hospital practitioners, as well as the utilization review and medical records review functions for services provided by the hospital.

Many health plans also contract with CVOs for one or more aspects of their credentialing function or with UROs for utilization management activities. While the delegation agreement between a health plan and a provider applies only to the

healthcare services rendered by that particular provider, CVOs and UROs can assume responsibility for a function across many or all providers in the network. Delegation is less common for quality management and preventive health services, possibly due to the more complex processes required for these activities.24

Quality management activities and preventive health services should be performed across a health plan's entire member population. If network providers are widely dispersed or not affiliated with a provider organization, the health plan may be unable to coordinate QM activities or preventive health services across providers.

The Delegation Oversight Programs

Delegation can be a complicated process for a health plan. Careful planning and continuous monitoring are essential to the successful management of a health plan's delegation arrangements. To comply with regulatory and legal requirements and accreditation standards, and to decrease the health plan's legal risk associated with delegation, health plans usually establish a formal program for the oversight of delegated functions. This program outlines the health plan's processes for evaluating proposed delegation arrangements, reviewing the performance of delegates, and providing delegates with corrective action plans as needed.

The ultimate goal of the delegation oversight program is to see that delegated functions are performed at or above the standards of the health plan and the applicable accrediting and regulatory agencies. Another objective for the delegation oversight program is to integrate any delegated activities into the health plan's overall programs for medical management and other functions. A health plan is accountable for equal and consistent treatment of plan members across the health plan's entire network. Coverage of services, access to care, the quality of care, and member service should be comparable for all members, regardless of which activities are delegated.

The delegation oversight process generally includes the following steps:

1. Proposal for delegation. 2. Evaluation of the candidate(s) for delegation. 3. Selection of a delegate by the committee responsible for delegation oversight. 4. A written document describing the delegation arrangement. 5. Continuing oversight of the delegated activity, with corrective actions, follow-

up evaluations, and application of sanctions when indicated.

Figure 1A-5 illustrates the steps involved in a health plan's delegation oversight process.

Ideally, all documents related to a delegation arrangement contain precise language describing the activities to be delegated and the time period for which the delegation agreement will be effective. The use of broad terms such as "key activities for utilization management" or the omission of specific dates can create confusion about the scope and duration of the delegation. For example, the health plan and its delegate (or potential delegate) may interpret differently which activities are

included in credentialing, member services, or quality management. In addition, the activities viewed as most important by the health plan may seem only incidental to the delegate. Terminology must be clearly explained so that both organizations understand the exact nature of the delegation arrangement. Clarity is especially critical when delegating functions to network providers who may be less aware of the health plan's expectations than a CVO, a URO, or another organization specifically dedicated to performing delegated functions.

The Proposal for Delegation

The written proposal generally consists of a letter of intent, an application, and, perhaps, a draft of the delegation agreement. The letter of intent is a preliminary agreement that indicates the health plan's and the candidate's intentions to enter into a delegation arrangement. The letter of intent typically outlines the delegation oversight process. It also establishes a mutual agreement about the confidentiality of patient information and the policies and procedures of the health plan and the potential delegate. However, a letter of intent is not a contract and does not create a legally binding relationship. Figure 1A-6 lists the typical components of a letter of intent.

The plan's delegation oversight program and the nature of the proposed delegation determine the amount and type of information that a health plan requires the delegate to submit prior to the site visit. In addition to requiring the candidate to complete a standard application, health plans often request some or all of the following documents:

Health plans often request some or all the following documents:

The candidate's policies, procedures, and program descriptions for the delegated activity.

Evidence of any certification or accreditation by external agencies.

The candidate's QM plan. Historical information about the entity (such as the date of formation, the names

and titles of officers, and an organizational chart). Evidence of experience with the delegated activity, such as references, sample

activity reports, previous audit results, and any corrective action plans. Information on any activities that the candidate plans to delegate to another entity.

When the health plan receives the completed application and the requested supporting documentation, the health plan can begin to evaluate the candidate.

The Malachite Health Plan has indicated an interest in delegating its medical records review activities to the Turquoise Group and has forwarded a typical letter of intent to Turquoise. One true statement about this letter of intent is that it:

is a contract that creates a legally binding relationship between Malachite and Turquoise

cannot include a confidentiality clause

serves as a delegation agreement between Malachite and Turquoise

outlines the delegation oversight process

Answer =D

Evaluation of the Candidate

The main purpose of the evaluation is to determine if the candidate can perform the delegated function as well as or better than the health plan at an acceptable cost. Ideally, the system for selecting delegates thoroughly explores a candidate's understanding of both the activity to be delegated and the health plan's standards for that activity. The evaluation process must also consider the adequacy, qualifications, and capabilities of the candidate's staff. In most cases, a site visit to assess the candidate's operations is a necessary component of the evaluation.

In addition, the health plan determines if the candidate plans to delegate any of the delegated activities to another entity and, if so, how the candidate plans to manage this delegation arrangement. We discuss delegation by delegates (known as subdelegation) in more detail later in this lesson.

Decision on the Proposed Delegation

Based on the results of the evaluation of the candidate, the health plan either approves, denies, or pends the delegation. In cases where the candidate does not fully meet the health plan's standards but does not have significant deficiencies, the health plan may pend the delegation and send the candidate a letter outlining

recommended changes, expected completion dates for the changes, and a date for a repeat site visit. The candidate's request for delegation will be approved or denied based on the second evaluation.

The Delegation Agreement

A delegation agreement is the contractual document that describes the delegated functions and the responsibilities of the health plan and the delegate. The delegation agreement may be in the form of a contract (the form generally preferred by health plans), a letter, or some other written document. For a delegation arrangement with a provider organization, the delegation agreement may be included in the contract for the delivery of healthcare services or it may be a separate document. Many health plans prefer to keep the delegation agreement separate to allow for termination or modification of the delegation arrangement without affecting the contract for healthcare services.

The Delegation Agreement

An agreement that lists the individual services to be delegated and then defines the components of these services reduces the chance for misinterpretation. When a health plan contracts with more than one delegate for a particular function, a clear and detailed agreement can help ensure that all delegates perform the function in the same consistent manner. The health plan can further lessen the chance for confusion by describing in detail the responsibilities retained by the health plan and the responsibilities transferred to the delegate.

Although the delegate is responsible for performing the function according to established standards, the health plan is ultimately accountable for any deficiencies. The health plan, therefore, must oversee the quality of the delegate's work and propose corrective action if the need arises. To assist the delegate in meeting the health plan's requirements, the performance objectives for conducting the activity and the methods of measuring performance should be clearly stated in the delegation agreement. Other specific elements typically included in the delegation agreement are the required format for reports from the delegate, the schedule for submitting reports, and the dates on which the delegation begins and ends.25

Delegation agreements usually specify contingencies for potential problems associated with the delegated function. One type of contingency clause allows the health plan or the delegate to terminate the agreement under certain circumstances, that is, with cause. For example, if a delegate with poor performance fails to implement corrective action as directed by the health plan, the health plan may end the arrangement with appropriate written notice. In other agreements, either party may end the delegation arrangement without cause after giving adequate written notice to the other party.

Continuing Oversight

Diligent oversight of a delegation arrangement is just as important to ensuring quality, cost-effective care as the initial selection process. A health plan must regularly audit a delegate to see that the delegate is following the health plan's

guidelines for the function. During an audit, a representative from the health plan revisits the delegate at least annually to observe operations, check documentation, and attend committee meetings related to the delegated function.

Continuing Oversight

After comparing the delegate's results and processes to the goals and standards established in the delegation agreement, the health plan sends its comments back to the delegate. When there are deficiencies in the delegate's performance, the health plan may send a corrective action plan to the delegate, or the health plan may work with the delegate to develop a corrective action plan. Continued poor performance may indicate the need for the health plan to select a different delegate to conduct the activity or to conduct the activity using its own resources.

If the delegated function is QM or member services, one important report that the delegate regularly submits to the health plan is an account of adverse events and consumer complaints regarding the delegated function. This document identifies the number of complaints (often reported as the number of problems per 1,000 members), the type of complaints, and an overall assessment of quality.26

Subdelegation

As part of the delegation process, the health plan also monitors any use of subdelegation. Subdelegation is the process that occurs when the health plan's delegate contracts with a third entity to perform activities that were originally delegated by the health plan. For example, a health plan may delegate utilization management to an IPA that, in turn, transfers the authority for case management to an organization that specializes in that activity. The case management company becomes the subdelegate, and its performance is subject to the same standards as the original delegate. Either the health plan or the delegate may conduct the oversight of the subdelegate. Once again, however, the health plan is ultimately accountable for the performance of the subdelegate.27

The delegation agreement between the health plan and the delegate should clearly define any limitations that the health plan places on subdelegation. For example, the agreement may forbid the delegate to subdelegate activities without informing the health plan and obtaining the health plan's express written approval prior to subdelegation, or it may specify certain activities that may not be subdelegated.

Many health plans inquire about the delegate's plans for subdelegation on the original application. Figure 1A-7 lists typical questions that health plans might ask a potential delegate about subdelegation.

Since subdelegation removes the delegated activity further from the health plan's control, health plans are generally cautious about subdelegation. As a result, the health plan may prefer to conduct its own initial and continuing oversight of the subdelegation rather than leaving this responsibility solely to the delegate.28

Conclusion

Ideally, a health plan's overall approach to medical management is proactive and includes initiatives to preserve and improve members' health, such as preventive care and disease management. The goal of all medical management programs should be to maintain members' health and reduce the incidence and severity of health problems by delivering the right care. Appropriate, high-quality care will improve members' level of function, quality of life, and satisfaction with the plan, as well as reducing the level of medical resource usage.29

Resources for medical management are limited, so a health plan must examine the available options and decide how much of its resources to devote to each initiative. For each program under consideration, the health plan should examine how the program will (1) affect costs and (2) change clinical outcomes, functional status, and satisfaction for members.

A health plan must also consider how each medical management program will affect and be affected by other health plan functions, as we discuss in the next lesson.

The Relationship of Medical Management to Other Health Plan Functions

Pg 1 to 51

Course Goals and Objectives

After completing The Relationship of Medical Management to Other Health Plan Functions, you should be able to:

Explain the relationship between medical management and each of the following health plan departments:

o Network management o Risk management o Legal affairs o Claims administration o Finance o Sales and marketing

Understand the role of information management in medical management operations and reporting

Describe some of the technologies that health plans use to manage information

The Relationship of Medical Management to Other Health Plan Functions

Introduction

Medical management personnel have regular interactions with many other health plan departments, including network management, risk management, legal affairs, claims administration, member services, finance, and sales and marketing. Further, the health plan's information management function plays a key role in the overall design and day-to-day operations of medical management programs. All of these other functions exchange information with medical management and they may provide services specifically for medical management.

In this lesson, we explore the relationship of medical management to each of these health plan functions.

Network Management

Effective management of the quality and cost of healthcare services is possible only if the providers of those services understand and cooperate with a health plan's medical management programs. Therefore, medical management is very closely linked to network management. Network management includes all of the activities that a health plan conducts to design, assemble, monitor, and maintain a provider network.1

A provider network typically includes primary care providers (PCPs), specialists, hospitals and other healthcare facilities, pharmacies, and ancillary service providers, as shown in Figure 1B-1.

The Origami Health Plan has authorized the following providers to furnish preventive and routine healthcare services directly to its members without a referral from another provider or authorization from Origami:

Provider A, Abigail Smyth, is a general practitioner Provider B, Gregory Allen, is a physician assistant (PA) Provider C, Oliver Ulrich, is an obstetrician/gynecologist (OB/GYN) Provider D, Liza Kaplan, is a nurse practitioner (NP)

Of providers A, B, C, and D, those who most likely serve as primary care providers (PCPs) in Origami's network are:

All of these providers

Providers A, B, and C only

Providers A and C only

Providers B and D only

Answer =A

To support the consistent delivery of high-quality, cost-effective care to plan members, health plans conduct credentialing and recredentialing, and monitor the performance of providers. A health plan's processes for provider selection often rely on quality, utilization, and cost information from the various medical management programs. In fact, a health plan's contracts with its providers typically require

cooperation with the health plan's utilization management (UM) and quality management (QM) programs. For example, a provider contract may describe the steps a provider is expected to follow for authorizing referrals for specialty care. Health plans that contract with provider organizations may delegate the responsibility for conducting selected medical management activities to the provider organizations.

Some providers who meet a health plan's standard clinical requirements for network participation have little experience with health plan medical management. These providers may need more tightly structured UM and QM programs to aid them in following a health plan's medical management procedures, at least until the providers have demonstrated that their practice patterns are consistent with the health plan's approach to medical management.

Medical management programs must not only result in quality care and cost-effectiveness, but must also be acceptable to providers. Provider satisfaction is important to overall plan performance and long-term success, and provider satisfaction with a health plan depends in great part on satisfaction with the medical management programs. Collaboration with providers on medical management can improve these programs as well as enhancing provider satisfaction.

A medical director's involvement with network management varies, depending on the structure of the medical management function in a particular health plan. Senior and associate medical directors often participate in provider contract negotiation, the development of network management strategies, and the oversight of credentialing and other network management activities. Associate medical directors and senior medical directors of smaller plans may have more involvement in day-to-day network operations, such as accompanying provider relations representatives on visits to providers. In return, provider relations representatives support medical management functions by helping to implement new medical management programs and conveying information from providers to medical management staff.

Because medical management is closely related to network management, these two functions must coordinate efforts in order to avoid conflicts and achieve the most efficient use of health plan resources. In addition, the contributions of network providers who have daily personal contact with plan members can prove invaluable to the creation and maintenance of efficient, effective medical management programs.

Provider Compensation and Medical Management

The compensation method specified in the provider contract has a strong influence on the nature of medical management programs. The main issue for a health plan to consider about compensation and medical management programs is what the compensation method rewards. Is the compensation method based on more pay for more services? Does it include rewards for the efficient use of resources? Does the compensation system take into account the quality of healthcare services rendered, the maintenance of overall health status, or member satisfaction?

Fee-for-service (FFS), discounted fee-for-service, and straight salary compensation approaches generally do not reward providers for efficient use of resources or for maintaining health through preventive care or disease management. In a fee-for-service (FFS) payment system, the health plan reimburses the health plan member or the provider an amount based on the actual amount of medical services delivered.5 A discounted fee-for-service (DFFS) payment system is a payment system in which the health plan negotiates with the provider a percentage discount from the usual FFS charges.6 In fact, DFFS compensation may actually increase utilization if providers try to make up for the percentage discount with a greater volume of services.

A case rate is a single fee that the health plan pays a provider for all services associated with an entire course of treatment for a condition, such as cardiac surgery or the delivery of a baby. Under a case rate system, providers have an incentive to manage cost and utilization because they stand to gain or lose financially on each case based on their use of resources such as tests, treatments, specialty care, and hospital care.7

Capitation is a method of paying in advance for healthcare services on the basis of the number of patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided. The per member per month (PMPM) capitation rate may be adjusted to account for age or gender.8 A capitated provider receives a set payment per patient regardless of the actual services delivered, so capitation generally encourages UM by providers and may give incentives for preventive care and maintenance of health status. As a result, a health plan may have less need for utilization review (UR). However, because capitation may influence a provider to under-treat a patient, a health plan that uses capitation must have a QM program designed to detect underutilization.

In addition, unless the PMPM capitation payment is adequate, providers may be tempted to accept too many patients in order to increase their total monthly capitation payment. A provider with an overload of patients may have insufficient time to deliver appropriate care and, as a result, may omit or delay indicated services. To develop capitation rates, a health plan must gather utilization data and then use it to make assumptions about future utilization. Accurate utilization assumptions enable the health plan to set realistic capitation rates.

A health plan may use financial incentives-such as withholds or bonuses-to influence provider behavior and thereby achieve desired clinical and financial outcomes. For example, if incentives reward appropriate utilization, providers will likely exercise restraint in ordering tests and procedures. A quality basis for incentives encourages providers to strive for good clinical outcomes, improvement in overall health status, and high levels of patient satisfaction. Many health plans have determined that a mix of UM and QM requirements is the best basis for setting financial incentives.

Risk Management

Risk management includes all the activities that a health plan undertakes to protect the plan against financial loss associated with the delivery of healthcare services and to protect its members against harm from medical care. The purpose of risk management is to (1) identify and evaluate actual or potential exposures to risk and (2) prevent or at least minimize any financial loss to the plan or physical harm to a member that may result from such an exposure.9

A health plan, its medical directors, and any other physician executives may be liable for any cost-management programs that have the potential to compromise the quality of care or provide incentives that could cause providers to act in a manner that is not in the best interest of the members.10

For example, suppose that a health plan establishes inappropriate standards for the quality of care or clinical practice guidelines (CPGs) that fail to make allowances for variations in individual members' conditions. If a patient suffers harm as a result, the health plan may be subject to charges of failure to fulfill its duty to act in good faith. The term duty to act in good faith refers to a health plan's legal responsibility to consider members' best interests and not act maliciously, recklessly, or purely in its own economic self-interest.11

In some situations, the courts may hold a health plan liable for negligence by the health plan's employed or contracted providers. Negligence is failure to exercise the amount of care that a reasonable person or entity would exercise under similar circumstances. Medical malpractice is a type of negligence that occurs when a patient is harmed because a provider failed to exercise reasonable care in providing medical treatment.12

Health plans can reduce the risk of negligent care through UM and QM activities designed to support the appropriate level and amount of care. For instance, to reduce the likelihood that providers may fail to diagnose breast cancer in a timely manner, a health plan may develop and implement a CPG for the screening and diagnosis of breast abnormalities. QM programs can reduce a health plan's exposure to liability by identifying and addressing the cause(s) of poor-quality care. The lesson Quality Management provides further information on health plan liability.

Health plans must also manage the risk of diminished financial performance that may result if the actual total cost of healthcare services exceeds the budgeted cost. The medical management measures shown in Figure 1B-2 may help health plans avoid incurring unnecessary costs and simultaneously improve the quality of healthcare services.

Legal Affairs

A health plan's legal advisors see that the health plan's policies, procedures, and programs for medical management are in compliance with applicable federal and state laws and regulations. They also advise the health plan on the legal aspects of implementing these policies, procedures, and programs. For example, health plan lawyers develop the language, including the sections pertaining to clinical practice management, UM, and QM, for the contracts that a health plan makes with its providers and purchasers.

The legal affairs staff must stay abreast of new laws and regulations that affect medical management and see that any applicable changes are incorporated into the health plan's medical policies and UM and QM initiatives. A health plan's lawyers may represent the organization in any legal actions concerning the delivery of care, such as lawsuits alleging negligent care or failure to act in good faith. The legal staff also act as consultants to the UR department in the event of an appeal of a UR decision.

Claims Administration

In most health plans, medical management programs send information to and receive information from the claims administration department or the vendor providing claims administration services. Claims administration is the process of receiving, reviewing, adjudicating, and processing claims for full payment, partial payment, or denial of payment.15

Providers compensated through a capitation arrangement do not submit claims. Instead, capitated providers often send encounter reports to supply the health plan with information about members' healthcare visits, diagnoses, and services performed. Alternatively, some capitated providers submit "no-pay" claims, that is, claims that are for information tracking only and do not involve payment. Encounter forms and "no-pay" claims provide crucial data for the health plan's measurement of preventive care and provider performance and for external entities' assessment of the plan's quality.

The relationships between claims administration and medical policy and between claims administration and UR are especially important. A health plan is contractually obligated to pay only for covered services that are determined to be medically appropriate. Therefore, for each claim received, claims administration personnel must ascertain if the listed services (1) were covered benefits for the member at the time the services were delivered and (2) if subject to UR, were authorized by the UR department as medically necessary for the member. The UR department sends regular reports on authorizations of payment (such as an authorization of a referral for specialty care or a precertification for a hospital admission) to claims administration. The UR department should also keep the claims administration department up to date on the type of authorization (if any) required for specific services. In addition, the claims administration department and the UR program sometimes coordinate efforts on questionable claims where the services listed differ from or exceed the original authorization for payment. These cases require additional clinical review to determine if payment should be authorized for the services as listed.16

For example, does a referral for a member with congestive heart failure cover only a single visit to a cardiologist or does the referral provide for follow-up visits to adjust the patient's medication for the heart condition if the PCP feels that such visits are indicated?

By examining claims and encounter report information, medical management managers can determine the number and types of healthcare services actually delivered to plan members. This information allows the health plan to understand levels of utilization for each provider. as well as for the entire network. The evaluation of claims also helps medical management staff identify members who are candidates for services such as case management or home healthcare.

Member Services

Member services is the department responsible for:

Giving members information about the health plan, benefits, and network providers.

Helping members with any problems. Handling member grievances and complaints. Tracking and reporting patterns of problems encountered.

Enhancing the relationship between the members of the plan and the plan itself.17

Member services also monitors overall member satisfaction with care. Through its processes for assessing member satisfaction and addressing member complaints and grievances, member services can identify trends that may indicate problems with medical management programs.18

Figure 1B-3 lists complaints and problems tracked by member services that are of particular interest to medical management personnel.

In addition to providing information about medical management programs to members, member services may directly affect utilization and member satisfaction through member education on such topics as

Member Education Topics

The meaning and scope of covered benefits and applicable cost-sharing requirements.

Provider listings and PCP selection. Prescription programs, including the use of formularies. The health plan's system for authorizing referrals, procedures, and hospital care. The health plan's procedures for appeals of nonauthorizations of payment. Telephone information lines to assist members with healthcare decisions. Health promotion or preventive care programs offered by the health plan. Access to emergency care.

Finance

Payment to providers for healthcare services rendered to members represents a large proportion of a health plan's total expenses. Without adequate processes to manage the costs of medical services, actual costs for care may exceed budgeted costs, leading to diminished financial performance for the health plan and possible failure of the health plan. Medical management personnel who manage costs communicate regularly with the finance department to exchange information on the expected and actual costs of care.

The finance department's staff also uses utilization information to project the costs of providing healthcare services to a specific member population. These cost projections are factored into the calculation of the premium rates that purchasers pay for healthcare coverage.

Sales and Marketing

Medical management programs that address quality or cost-effectiveness are important to a health plan from a marketing perspective. Unless medical management can adequately contain healthcare utilization and costs, the health plan will be unable to offer premium rates that will be attractive to purchasers. In addition, members and purchasers alike are concerned about the quality of healthcare services, so marketing personnel often use quality measures or other medical management programs as a means of differentiating a health plan from its competition. For example, documentation of improved clinical outcomes or member satisfaction can be a useful marketing tool. Purchasers and members may favor plans that include health promotion initiatives such as programs for weight loss or smoking cessation.

QM and UM programs are important to members and purchasers, so a health plan's medical management personnel must promptly communicate any medical management program changes to sales personnel. In many instances, sales and marketing personnel can relay purchaser and member input on quality and utilization problems to aid medical management personnel with program improvements. For example, sales staff may suggest the modification of the authorization system to allow members access network specialists without a PCP referral as long as they are willing to pay a higher copayment. The sales staff is also likely to learn of new benefits that members would like to add to the benefit plan.

The Role of Information Management in Medical Management

Because medical management programs typically require the collection, analysis, and reporting of many different types of data, a health plan needs an accurate, efficient method for information and data management. Information management is the combination of systems, processes, and technology that a health plan uses to provide the company's information users with the information they need to carry out their job responsibilities. Having current, accurate information at the right time in the right format is critical to the effectiveness of medical management programs. Another purpose of information management is to see that only authorized parties have access to the data.

Ideally, the information management approach for medical management should take into account the needs of each medical management program, the need for links between the programs, and the need to exchange information with other health plan functions and external entities. For example, network management personnel need information about provider performance to calculate performance-based incentives and to coach providers on performance deficiencies. Utilization reviewers need access to information about covered benefits, patient diagnoses, previous care, and proposed care to make authorization decisions. Disease management personnel need information about medication usage and specialty referrals to help determine which members may be appropriate for a particular disease management program. Pharmacists need access to information about members' use of medications to assess drug utilization and prevent dangerous drug interactions. QM program directors need information on healthcare and service quality to include in reports to external parties such as purchasers, providers, members, state and federal governments, regulatory agencies, and accrediting bodies.

To accommodate all of these needs and many others related to medical management, health plans have two types of information management systems: (1) systems to assist medical management personnel with day-to-day operations and transactions (e.g., processing requests for authorization of services) and (2) systems to support the analysis of accumulated data and information and to report the results of that analysis (e.g., measuring provider performance or evaluating different medical management initiatives). The next section provides more information on some basic considerations for establishing and maintaining both types of information management systems.

Challenges in Managing Data and Information

Effectively managing data for medical management programs involves several challenges. First, the health plan must be able to manage large volumes of data from internal and external sources. A health plan generates tremendous amounts of internal data including documentation of its business operations and detailed records of the services it delivers to purchasers, providers, and plan members. Providers generate additional data in the course of treating plan members. The health plan also

receives external data from purchasers who maintain records on plan members and from a wide variety of state and federal agencies.

Second, the health plan must be able to manage different types of data. Providers generate clinical data related to healthcare services and outcomes. Regulators and accrediting agencies provide operational information about legal requirements and quality standards. The health plan generates customer satisfaction data and financial data related to revenues and expenses. The health plan must be able to understand all of these types of data and the relationships between them.

Third, health plans often experience difficulties acquiring accurate, complete data in a timely manner, and data is often inconsistent from one source to another. Medical management activities frequently rely on coded information in the claims administration database. However, for medical management purposes such as the evaluation of provider performance or specific programs, the codes do not always provide adequate information about services rendered. Also, inconsistencies may arise because different providers sometimes use different diagnostic codes for similar types of patients or different procedural codes for the same procedure. Further, providers' staffs may make errors when inputting the diagnostic and procedural codes.

Coding is also subject to abuses such as upcoding and unbundling, usually as an attempt to increase the total compensation under an FFS or DFFS payment system. Upcoding is a type of false billing in which a provider submits a code for a service with a higher level of reimbursement than the service actually performed. For example, a provider might submit the code for a comprehensive office visit, when the office visit was actually an intermediate level of service. Unbundling is submitting separate charges for the different components of a service rather than one charge for the service as a whole. For instance, a surgeon might unbundle care for a patient who underwent gall bladder removal by submitting three separate codes for the preoperative physical examination, the surgical procedure, and the postoperative care, which should all be included in the code for the surgical procedure itself.20

Finally, the health plan must be able to manage different data formats. For example, data from providers and plan members is frequently recorded in the form of paper documents. Much of the data generated by a health plan is in electronic form, but this data is often distributed in separate databases (such as a provider database, a member database, and a claims database) that may have different organizational structures and use different software. In many cases, the approach to information management varies among the individual medical management programs of a health plan. The lack of coordination and compatibility among information management processes typically results in higher costs and less efficiency for this function.

Information management for medical management can be a complex process; however, not all aspects of information management are completely or even partially automated. In many instances, health plan personnel manually perform some or all of the steps necessary to obtain and use information.

The automation of information management for health plans require technical expertise and is generally expensive and time-consuming. In addition, the security and privacy of sensitive medical information is of special concern for health plans, members, providers, and purchasers alike. The Department of Health and Human Services (HHS) has established federal regulations for the confidentiality and security of electronic medical information. Entities that maintain or transmit patient care information electronically must be in compliance with these HHS standards. We discuss these standards further in Environmental Influences on Medical Management.

Despite the costs and complexity of establishing and maintaining automated systems, the use of computerized systems for information management in health plans is growing overall. Next, we discuss some specific approaches to the automation of information management.

Information technology

The use of information technology varies greatly among health plans. Information technology refers to the wide range of electronic devices and tools used to acquire, record, store, transfer, or transform data or information. The devices and tools used by health plans and their providers for medical management purposes include:

Electronic commerce (eCommerce) Electronic data interchange (EDI) Decision support systems (DSSs) Data warehouses Electronic medical records (EMRs) Health information networks (HINs)

Electronic Commerce

In a health plan context, electronic commerce (eCommerce) refers to a health plan's use of computer networks as a means to perform business transactions and to facilitate the delivery of healthcare services to the health plan's members. Many health plans use eCommerce to communicate both within the health plan and with plan members, purchasers, providers, regulators, accrediting bodies, and potential members and purchasers.

Although the automation of information exchange processes generally requires a significant up-front financial investment, in the long term, eCommerce often results in cost savings. eCommerce also offers other advantages over manual systems. The transmission of data and information through eCommerce typically speeds the information exchange process. Faster access to information allows health plans and providers to avoid delays in determining the appropriate care and in delivering that care to members.

The majority of health plan eCommerce occurs via the Internet, although a small number of health plans have implemented proprietary computer networks for this purpose. The Internet is a public, international collection of interconnected computer networks. The most common means of accessing information on the Internet is the World Wide Web, also known as WWW or the Web, which is an Internet service that links independently owned databases containing text, pictures, and multimedia elements.

The development of the Internet has provided health plans with a cost-effective means of transmitting and obtaining information. Many health plans have their own Internet Web sites. A Web site is a specific location on the Web that provides users access to a group of related text, graphic, and, perhaps, multimedia files. Health plans use Web sites for a variety of purposes, such as those listed in Figure 1B-4.

Because the Internet is already established and is so far-reaching, many health plans find it to be a cost-effective tool for information management. Another advantage is that many people are familiar with the Internet and find it easy to use. However, the Internet does have some potential drawbacks. No single entity has responsibility for managing the Internet or correcting malfunctions, so concerns about network reliability persist.

In addition, the Internet is publicly available, so the potential exists for unauthorized access to the proprietary systems of a health plan. To provide a higher level of security than presently exists with the Internet, some health plans have established intranets and secured extranets. An intranet is an internal (private) computer network built on Web-based technologies and standards. Access to the intranet is available only to members of the computer network. An extranet is similar to an intranet in that it incorporates Web-based technologies; however, the extranet links selected resources of a health plan to external entities or individuals. The external parties (e.g., providers, members, regulatory and accrediting agencies) need a password in order to gain access to the health plan's information.

The Starburst Health Plan hired an external vendor to establish a computer network for Starburst. This network, which incorporates Web-based technologies, links selected resources of Starburst to Starburst's providers and members, as well as to regulatory and accrediting agencies. Each of these entities must use a password to gain access to Starburst's information. This information indicates that Starburst used an arrangement known as:

outsourcing to establish an intranet

outsourcing to establish an extranet

drilling down to establish an intranet

drilling down to establish an extranet

Answer= B

Electronic Data Interchange

Electronic data interchange (EDI) is the computer-to-computer transfer of data between organizations using a data format agreed upon by the sending and receiving parties. EDI may be useful for the following medical management activities:

Medical management activities:

Transmission of claims and encounter reports from providers to the health plan. Transmission of data from the claims database to various medical management

departments. Transmission of data among different health plan departments or geographic

locations. Exchange of data between a health plan and regulatory or accrediting bodies. Transmission of member eligibility data from a health plan to its providers. Exchange of information between a health plan and its providers regarding

requests for authorizations of services and referrals.

Two advantages of EDI over manual data management systems are speed of data transfer and improved data integrity. Each manual step in a process introduces the possibility of human error. For example, if a health plan receives paper-based claims or encounter reports, then the claims or encounter report processing personnel must enter the data into the health plan's system and may make mistakes. On the other hand, if the health plan receives the data electronically and can transfer it automatically into its system, these potential data errors can be minimized.

EDI requires a data communication link between the participating departments or organizations. In many instances, the Internet serves as the communication link. EDI differs from eCommerce in that EDI is the transfer of data (typically in batches), while eCommerce involves back-and-forth exchanges of information concerning individual transactions, and, often, the performance of some type of service.

The devices and tools used by health plans and their providers for medical management purposes include electronic data interchange (EDI) and electronic commerce (eCommerce). EDI differs from eCommerce in that EDI is the transfer of data (typically in batches), while eCommerce involves back-and-forth exchanges of information concerning individual transactions, and, often, the performance of some type of service:

True

False

Answer=A

Decision Support Systems

In addition to improving access to data and information, information technology may also support problem-specific decision-making. A decision support system (DSS) uses databases and decision models to enhance the decision-making process for health plan executives, managers, clinical staff, and providers.22

A DSS can help providers and health plan personnel make decisions by analyzing data from a database and reporting the results of the analysis. For example, health plans may use a DSS to analyze the effect of healthcare services on members' health. This information can then be used to identify the most effective medical interventions. Another common use for decision support systems is to evaluate the performance of network providers in order to identify the providers whose performance does not meet the health plan's expectations for quality or cost-effectiveness. Based on this type of analysis, the health plan can target providers for coaching on performance improvement. A health plan may also use a DSS to identify providers who consistently deliver high-quality, cost-effective care in order to recognize their superior performance and, perhaps, reward them with financial incentives or nonmonetary benefits, such as relaxed requirements for service authorization.

Used prospectively, a DSS may help a health plan determine how it can best use its medical management resources. For example, a DSS may show that a certain type of preventive care initiative is needed. A clinical DSS assists providers with diagnosis and/or treatment selection for patients.

Health plans sometimes use a type of DSS called an expert system to assist with medical management decisions, although such systems are still primarily used for claims administration. An expert system is a knowledge-based computer system whose purpose is to provide expert consultation to end-users for solving specialized and complex problems23. Expert systems apply general rules to data to determine the answer to specific questions. For example, an expert system can apply the general rules for authorizing a specific procedure (such as a mammogram) to the characteristics of a particular plan member to determine if that member is eligible for

that procedure24. Advantages of this type of expert system are the ability to store and recall extensive sets of rules and consistency in applying those rules.

A health plan may also use an expert system that incorporates artificial intelligence. Artificial intelligence (AI) refers to computers that can simulate the function of a human brain, that is, the computers can think and learn from previous knowledge.25 An AI system may be used to detect relationships among different data elements and then apply the knowledge of those relationships to new data.26 An AI system could be running within an electronic patient record system, for example, and alert a clinician when it detects a contraindication to a planned treatment. It could also alert the clinician when it detected patterns in clinical data that suggested significant changes in a patient’s condition. AI systems have the capacity to learn, leading to the discovery of new phenomena and the creation of clinical knowledge. For example, a computer system can be used to analyse large amounts of data, looking for complex patterns within it that suggest previously unexpected associations. AI systems are now being used in the development of predictive modeling programs.

Decision support systems require timely access to accurate data in order to be effective. In the next section, we discuss the role of data warehouses in providing the needed data.

Data Warehouses

All health plans have various legacy systems that have evolved over time. A legacy system is a combination of computer hardware and software that a health plan has used for a long time to perform specific tasks. Typically, legacy systems are no longer state-of-the-art, but they have not been replaced because they perform a necessary function and because costs of replacement may be high. Often, unique combinations of hardware and software are used for different health plan functions because the best system for one function is not the best approach for another function. In addition, virtually no health plan has the financial resources to replace all of their legacy systems at once, even if such large-scale replacement were desirable.

As a result of legacy systems, information is often divided among distinct, unlinked databases. A health plan manager seeking organization-wide information may have to search more than one database within each functional area as well as across several different functions. Multiple database searches not only increase the time it takes to acquire information, they also increase labor costs. In addition, the data from the various databases may be in different, incompatible formats. In some instances, the manager may not have ready access to all of a health plan's different databases.

To address the problems associated with multiple data management systems, many health plans have begun to use data warehouses. A data warehouse is a specific database (or set of databases) containing data from many sources that are linked by a common subject (e.g., a plan member)27. The data from the various sources is integrated through a process that transforms data captured from otherwise

incompatible databases and operational systems so that the data is nonrepetitive and in a standard format.

With a data warehouse, health plan personnel are better able to prepare complete, accurate reports because they can merge data from various separate sources (e.g., claims administration and utilization review). A consistent format for data also enables the comparison of data (1) across different types of health plan products (e.g., HMO versus PPO) and (2) against data from other health plans.

Data warehouses typically store large amounts of historical data, as well as current data, which facilitates the analysis of information over time. A data warehouse also addresses the problem of having multiple databases that are not linked.

A data warehouse may contain data from both internal and external sources. Information users can analyze the data in the warehouse through the use of query applications.

Advantages and Disadvantages of Data Warehouses. Data warehouses simplify the process of extracting useful information from data that is gathered independently by different health plan functions or external sources. A warehouse approach also relieves individual databases from having to store large amounts of data that is not needed for daily operations. Decreasing the amount of data in an individual database typically speeds the response time of the database to a query.

Data warehousing also facilitates data mining, which is an automated process that analyzes variables to help detect patterns and relationships in the data. For example, data mining can reveal not only which providers have higher than average costs associated with childbirth, but may also suggest why those providers' costs are higher. The data mining process does this by providing answers to questions that depend on a number of different types of data. Does the provider perform a higher than average percentage of cesarean sections? Is the provider practicing in a geographical area in which medical costs are higher than average? Is the provider serving a population with an unusually high number of health problems that cause difficulties before and after pregnancy? Is the provider focusing on very difficult cases, but managing those cases well?

Several different functional areas might gather the data necessary to answer these questions. Marketing, for instance, might supply provider demographic information. Claims administration might supply the provider's claims costs as well as information concerning the types of medical problems present among the provider's patients. The data warehouse can provide a means of storing and accessing these types of information over time. The answers to these questions may suggest ways to both lower costs and improve care. If the population of women that the provider serves has a high incidence of health problems that can complicate childbirth, perhaps a health education program that targets the characteristics of that population would lower costs for the plan and improve members' health.

Data warehouses can help medical management personnel answer questions that rely on trends that are not immediately obvious. For instance, suppose that a medical management program director wants to know if the average age of the population covered by the health plan in a geographic region is increasing. Some databases may be able to supply the current average age of plan members, but may not be able to show how that average age has changed over the past five years. A data warehouse that has historical data would be able to do so. Further, the data warehouse could supply information on whether the change in average age correlates with changes in the frequency and cost of care for cardiac disease, for example.

The principal disadvantages of data warehouses are the complexity and cost of implementing them. Typically, the construction of a data warehouse is very time-consuming and requires significant technological expertise and financial resources. Even though a data warehouse may make health plan operations more efficient and improve the quality of healthcare, the return on the financial investment in a data warehouse may not be realized for several years.

Electronic Medical Records

One important source of information to support quality and cost-effectiveness of care for a health plan's members is the data contained in medical records. Traditionally, these records have been in the form of paper documents and were kept at the site where the care was provided. Some providers, however, are beginning to document their patients' care in an electronic form. An electronic medical record (EMR), also sometimes called a computer-based patient record (CPR), is a computerized record of a patient's clinical, demographic, and administrative data.

Depending on the design of the EMR system, an EMR can be composed of a number of different types and formats of data. For example, clinical data would include, but would not be limited to, the plan member's medical history, current and past medications, diagnoses of illnesses, test results, and current treatment status. Similarly, demographic data would include the member's name, address, age, gender, and perhaps, information about race, ethnic origin, or religion, if this type of information is relevant. Administrative data may include plan type (HMO, PPO, etc.), plan sponsor (the purchaser), membership number, and the names of providers who have rendered treatment to the member.

While the exact types of data in an EMR vary, they all include medical information and are organized around an individual plan member, rather than by the type of treatment or by provider. They are designed to supply information at the site of care. In contrast, many other databases and data warehouses that health plans and providers use are designed to supply UM or QM information. EMRs also include some level of clinical decision support for providers. For example, EMR software can be designed to alert a provider to possible drug interactions in the case of a patient receiving multiple medications.

Health Information Networks

Although an EMR system in a clinic, physician's office, or hospital has the potential to improve the quality of healthcare at the site of care, even more advantages can be achieved if medical records can be transferred across an entire network of providers. One method of transferring this data is for a health plan to develop a health information network (HIN), which is a computer network that provides access to a database of medical information. In one type of network arrangement, a health plan's HIN, also known as a health data network (HDN), is linked to a data warehouse that stores the very large amounts of data that reside in the medical records of an entire provider network. The HIN makes the data in the warehouse available online to a defined set of users, such as health plan physicians and pharmacists, and medical management personnel. A health plan may also use a secured extranet design or a distributed database approach for the HIN. With a distributed database approach, a database system (including either the whole database or only the relevant portion) is located at more than one site. For example, the EMR database might be available at several different hospitals and at large provider groups' locations.

Most HINs are Internet-based rather than built on proprietary computer networks. Whatever the network infrastructure, the health plan typically houses a central database or data warehouse that accepts, organizes, and stores EMR information as it is entered, and then makes EMRs available to authorized users.

HINs have the potential to increase the quality of medical care because all the information in a patient's medical history is readily available to that patient's provider at the point of treatment. For example, suppose that a plan member is seriously injured in an accident and is brought to a hospital that is linked to the health plan's HIN. The HIN would allow medical personnel at the hospital access to the member's complete medical history, even if the member were unconscious or otherwise unable to respond to questions. Thus, the hospital physicians would know whether the patient had been taking prescription medication, was allergic to specific drugs, or had any other medical conditions, such as diabetes or heart disease, that might influence emergency treatment decisions. The hospital physicians would also know the names of the member's PCP and any specialists who had treated the member, as well as the names of family members to contact.

HIN-supported EMRs have a distinct advantage over non-networked forms of medical record keeping, particularly the common practice of using paper documents. With paper records, if a plan member receives care from providers at different physical locations, either the paper records must be copied and faxed or carried between locations, or the providers themselves must discuss the details of the chart. Further, with paper records, the possibility exists that records may be lost or at least temporarily misplaced.

The capacity of HINs to capture a large amount of data about healthcare services and outcomes in a uniform format also affords health plans the following benefits:

Health Plan Benefits

Improved outcomes measurement. Health plans can extract outcomes trends from the HIN data warehouse using computer software designed for this purpose.

This outcomes information can be used for developing clinical practice management parameters such as medical policies or clinical practice guidelines.

Better measurement of provider performance. Using data partly gathered through its HIN, a health plan can identify providers who have superior outcomes and who comply with UM and QM programs.

Increased efficiency and accuracy of information about healthcare services rendered to members. Most HIN systems present providers and their staffs with computer screens that list standard options for entering data about patient care. Rather than type in this data or record it on paper, the provider or staff member can simply click on the appropriate option, which saves time and reduces the possibility for clerical error.

Reduced exposure to liability for poor care. Just as EMRs and HINs give providers a means of documenting their work to show compliance with quality programs, HINs assist health plans in demonstrating that quality care is being uniformly rendered to plan members.

Improved ability to meet reporting requirements. HINs give a health plan a vehicle for capturing information that may be required by regulatory agencies or accrediting bodies.

Although HINs offer a number of advantages, HIN development involves significant costs and risks for a health plan. Figure 1B-5 summarizes challenges faced by a health plan that wishes to develop such a network.

Currently, only a minority of health plans operate HINs that are capable of transferring medical records among the providers in a health plan's provider network.

Reporting Medical Management Information

In most cases, health plans need many different types of reports on medical management activities. Report needs vary according to the focus of the activity, the

level of detail desired, and the type of analysis that has been performed on the data. For example, case management staff may need to examine the complete set of data about the cases they are managing, while the case management program director needs a concise summary of the current case data along with notations of trends or problems.

Medical management program directors must often examine a series of reports, each showing a different level of detail, in order to analyze a particular issue. The process of examining multiple layers of increasingly detailed information and data to improve understanding of a particular issue is sometimes called drilling down.

For example, suppose that a health plan's total costs for ambulatory care are higher than expected for a given period. The utilization review staff may be able to determine the source or sources of the excess costs by drilling down through data on ambulatory care utilization by the type of care, the diagnoses or other characteristics of patients receiving that care, and the providers ordering or delivering the care. If the source is a particular provider or a particular type of patient, the health plan can investigate the reasons for the excessive utilization of resources and, if indicated, formulate a plan to correct the problem. Figure 1B-6 illustrates the concept of drilling down to determine the cause of excess costs resulting from greater than expected utilization.

Even when the total results of a report are within acceptable limits, medical management personnel may drill down to identify any specific areas for which actual results are noticeably different from the projected results. Drill down reports are also valuable for tracking changes from one time period to another.

Outsourcing Information Management

The technical demands of designing, setting up, and maintaining systems and processes for information management can be considerable. In most regions of the country, external vendors offer a wide variety of information management services and products. Health plans often purchase computer equipment and software programs from these vendors, especially for medical management activities that

benefit from sophisticated analysis. They may hire vendors to help them design and establish new systems such as data warehouses or HINs.

Health plans may also choose to outsource some or all of their information management activities to an external vendor rather than conduct the information processes within the health plan. Outsourcing involves hiring external vendors to perform specified functions, such as data and information management activities. In an information management outsourcing arrangement, the health plan specifies its information management requirements and provides data to a vendor that designs an appropriate system and conducts the information management activity on a day-to-day basis. The vendor also creates the reports that the health plan requires.

The purchase of information management products and outsourcing arrangements are typically long-term commitments for a health plan. Information management outsourcing often requires a significant financial investment, as well as complex legal and administrative arrangements. Because the information management function is so critical to a health plan's operations, any disruption in the relationship between the health plan and the vendor may be very costly for the health plan. Therefore, a health plan should select a vendor that is financially stable and that has a reputation in the healthcare industry for high-quality products and technical support.

Conclusion

At this point, you should have a basic understanding of the purpose of medical management, the typical components of medical management, medical management staffing, and the relationship of medical management to other health plan operations. In the next lesson, you will learn about the impact that external forces have on a health plan's approach to medical management. Other Government-Sponsored Programs explores how laws, regulations, accreditation standards, and the expectations of purchasers, consumers, and providers affect medical management.

AHM Medical Management: Environmental Influences on Medical Management

Pg 1 to 61

Environmental Influences on Medical Management

Course Goals and Objectives

After completing Environmental Influences on Medical Management, you should be able to:

Describe the types of environmental factors that affect medical

management of health plans Discuss the expectations of purchasers, providers, and plan members for

medical management Describe the major federal and state regulatory requirements that affect

medical management Describe how environmental factors influence a health plan's delegation of

medical management functions

Identify the main accrediting agencies and explain the impact of accreditation on medical management

Introduction

Health plans operate within an increasingly complex environment that consists of both internal and external factors. A health plan's internal environment includes all those elements within the company that affect the company's business functions and over which the company has control. A health plan's external environment includes all those elements that are outside the company's control. Figure 1C-1 shows some of the elements that constitute a health plan's external and internal business environments.

Environment factors have a direct impact on a health plan's medical management policies, strategies, and decision making processes. For example, consider the situation facing a health plan that is trying to decide whether to add a disease management program to its medical management function. In order to make a decision, the health plan must not only satisfy its medical management goals, it must also accommodate a variety of external demands. Purchasers, providers, and health plan members all have expectations related to healthcare services and to the health plans that deliver those services. Competitive pressures influence how plans develop and market their products. Federal and state laws and regulations specify how plans must operate, the kinds of benefits they may or must offer, and even the quality standards with which they must comply. Accreditation organizations direct how plans measure and improve the quality of their services. Media coverage often determines the health plan's public image. As Figure 1C-2 illustrates, the issues that affect the health plan's decision can be complex.

In this lesson, we will describe how a health plan's external environment influences its medical management decisions. We will focus our discussion on the following factors: (1) purchaser, provider, and plan member expectations; (2) legal and regulatory requirements; and (3) accreditation standards.

Medical Management and Expectations of Purchasers, Providers, and Plan Members

Purchasers, providers, and plan members all have expectations related to the healthcare services they want and need and to the health plans that arrange the delivery of those services. Some expectations are shared by all of these customer groups; others are not. All have an impact on a health plan's medical management decisions.

Purchaser Expectations

The major purchasers of health plan services are private employers and federal and state government programs. As a group, these purchasers want to see that all health plans under consideration:

Provide quality healthcare benefits that are accessible, yet affordable. Operate efficiently so that administrative costs are minimized. Maintain satisfactory member service patterns. Comply with applicable laws, regulations, and industry standards.

Employers, federal governments, and state governments also have their own individual expectations.

Employers

Employers-especially large employers-are key purchasers of healthcare benefits, and their ability to recruit and retain competent employees often depends on the type and level of healthcare benefits they offer. Although cost is an important part of their purchase decision, employers are also concerned with the quality of care and services the plan delivers. For example, one large employer is requesting that health plans comply with specified clinical goals for preventive care, such as prenatal care, mammography screenings, and child immunization rates1. Employers consider employee satisfaction as well. No employer wants to be inundated with employee complaints about inadequate treatment, long wait times for appointments, lack of access to appropriate specialists or preferred providers, poor quality of provider/patient interactions, and the share of costs they must pay.

Employers can address these concerns, in part, by evaluating and comparing quality data from all health plans under consideration. For HMO plans, accreditation by one of the major accrediting organizations provides evidence that the plan meets certain quality and customer satisfaction standards. Performance measurement programs provide additional information. These sources may be less helpful in evaluating the quality of non-HMO plans because fewer non-HMO plans currently seek accreditation or report specific performance results.

If employers are not satisfied with the quality or cost of services available through health plans, they can minimize or even eliminate the role of health plans by contracting directly with providers or by establishing self-funded plans. Direct contracting allows employers to reduce administrative costs and see that employees have a sufficient level of provider choice. However, it also requires employers to manage complex provider relationships. So far, the challenges of this role have prevented direct contracting from becoming a dominant model. Under self-funded arrangements, employers assume the financial risk associated with providing healthcare benefits. In some cases, employers also assume responsibility for administering the program; in other cases, employers contract with health plans to provide administrative support through administrative services only (ASO) agreements.

In all self-funded programs, directly in the delivery and financing of healthcare benefits and have a voice in determining the type, quality, and cost of healthcare services.

Federal Government

The federal government serves as both a regulator and a purchaser of healthcare benefits. As a regulator of health plans, the federal government exerts regulatory and legislative influence over health plans and expects health plans to fully comply with all applicable laws and regulatory requirements. In addition, the federal government seeks input from health plans when drafting legislation or developing

regulations to implement laws enacted by Congress. For example, as we will discuss later in this lesson, many health plans have participated in the federal government's efforts to develop regulations implementing electronic data security and privacy standards as required by the Health Insurance Portability and Accountability Act of 1996.

As the largest purchaser of healthcare benefits in the United States, the federal government has an impact on the medical management functions of individual health plans. Through programs such as Medicare, the Federal Employee Health Benefits Program (FEHBP), and TRICARE, the federal government sets standards for the quality and types of benefits it expects health plans to offer to qualified beneficiaries. Many of these standards and expectations are eventually adopted by purchasers and consumers in the private sector as well.

In the following sections we discuss some of the federal government's expectations related to Medicare, FEHBP, and TRICARE programs. We will discuss the programs in more detail in later assignments.

Medicare. As you recall from Healthcare Management: An Introduction, Medicare+Choice expanded the types of entities that are allowed to offer managed healthcare plans to Medicare beneficiaries. During the last few years, the federal government's major quality and cost initiatives have been to encourage Medicare beneficiaries to enroll in managed healthcare plans as part of Medicare+Choice.

The federal government expects Medicare+Choice plans to:

Medicare+Choice Plans Should

Offer a variety of specialty care providers Accommodate the special access and healthcare needs of the Medicare population

(e.g., transportation, disability coverage) Accommodate the unique utilization patterns of the Medicare population (e.g., use

of emergency departments) Provide services and plan information in a linguistically and culturally sensitive

manner

In order to see that health plans satisfy these expectations, the federal government has implemented a variety of quality assessment and improvement initiatives. The government has also revised reimbursement methods for managed healthcare plans in an effort to reduce costs. However, as a result of these cost-cutting efforts, some health plans have withdrawn from the Medicare program.

On December 8, 2003, President George W. Bush signed into law the Medicare Modernization Act of 2003 (MMA), creating short-term reforms to designed to both improve benefits and reduce out-of-pocket costs for millions of Medicare beneficiaries who are covered by health plans in the Medicare Advantage program, previously known as the Medicare+Choice programs, and to effect payment reform to encourage more health plans to offer medicare Advantage programs.

See Editor's Note.

Editor's NoteThe Medicare Modernization Act of 2003

On December 8, 2003, President George W. Bush signed into law the Medicare Modernization Act of 2003 (MMA), taking steps to expand private sector health care choices for current and future generations of Medicare beneficiaries. The MMA proposes short-term and long-term reforms that build upon more than 30 years of private sector participation in Medicare.

The centerpiece of the legislation is the new voluntary prescription drug benefit that will be made available to all Medicare beneficiaries in 2006. Additional changes to the M+C program include:

M+C program’s name is changed to Medicare Advantage (MA); Increased funding is provided for MA plans in 2004 and 2005; MA regional plans are established effective 2006.

On January 16, 2004 CMS announced new county base payment rates for the MA program. Beginning March 1, 2004, all county MA base rates received an increase which plans are required to use for enhanced benefits. Plans may use the extra money in one of four ways:

Reduce enrollee cost sharing; Enhance benefits for enrollees; Increase access to providers; Utilize the stabilization fund.

The short-term reforms have already improved benefits and reduced out-of-pocket costs for millions of Medicare beneficiaries who are covered by health plans in the Medicare Advantage program, previously known as the Medicare+Choice program. These coverage improvements became effective on March 1, 2004.

On June 1, 2004, beneficiaries saw additional improvements in Medicare under another important MMA initiative, the Medicare-Endorsed Prescription Drug Discount Card Program, which will remain in effect through the end of 2005. This program gives beneficiaries the option of purchasing prescription drug discount cards—sponsored by private sector entities and endorsed by Medicare—which offer discounted prices on prescription drugs. Furthermore, the discount card program is providing low-income Medicare beneficiaries with up to $600 annually in assistance, in both 2004 and 2005, to help cover their prescription drug costs.

Beginning in 2006, the MMA will provide beneficiaries with a broader range of private health plan choices similar to those that are available to working-age Americans and federal employees. In addition to the locally-based health plans that currently cover more than 4.6 million Medicare beneficiaries, regional PPO-style plans will be available as a permanent option under the Medicare Advantage program.

Beginning in 2006, all beneficiaries will have the option of choosing prescription drug coverage delivered through private sector entities. This coverage will be available as a stand-alone drug benefit or, in other cases, as part of a comprehensive benefits package offered by Medicare Advantage health plans.

Other important provisions of the MMA address Medigap choices and specialized Medicare Advantage plans for beneficiaries with special needs.

Public comments on the regulations are currently in review, and changes to the draft regulations are anticipated. Final regulations are expected in the spring of 2005, and content updates will be made after the release of the final regulations.

The Federal Employee Health Benefits Program. The Federal Employee Health Benefits Program (FEHBP) is a voluntary health coverage program for federal employees, retirees, and their dependents and survivors.3 The Office of Personnel Management (OPM) oversees the FEHBP, which offers plan members a choice among fee-for-service (FFS) plans and HMOs. Because of its size and membership, plan design requirements for the FEHBP often influence plan design in the private sector. The OPM has generated several requirements for mandated benefits, including no limits on annual coverage for behavioral health benefits. Some healthcare analysts have proposed the FEHBP as a model for a national healthcare plan. It has already been used as a model for various quality assessment and improvement initiatives.

Tricare

TRICARE is the healthcare benefit program offered by the federal government to active and inactive military personnel and their families. It is the result of the federal government's conscious decision to incorporate health plans into its traditional FFS program. TRICARE offers eligible members three plan options:

1. TRICARE Prime-a capitated HMO; 2. TRICARE Extra-a PPO; and 3. TRICARE Standard-a fee-for-service plan.4

Coordination of services between civilian and military providers is an important focus of TRICARE because civilian providers now deliver many healthcare services to the military population.

State Governments

Like the federal government, state governments serve as both healthcare regulators and purchasers. For example, states act as purchasers of healthcare coverage for state and local government employees. Expectations for these populations parallel expectations established for federal programs. The influence of state governments as purchasers, however, is focused on two major programs: Medicaid and workers' compensation. This section provides a brief description of Medicaid and workers' compensation. More detailed discussions are presented later in the text.

Medicaid is a joint federal/state program designed to provide healthcare benefits to low-income families, children, and certain other groups of disabled and medically needy individuals. The federal government determines minimum eligibility standards, benefits, and provider reimbursement rates. It also provides funding for state programs. State governments provide additional funding and oversee the administration of Medicaid at the state level. Currently, all but one of the states offers a health plan option to Medicaid recipients. A growing number of states are making enrollment in health plans mandatory.

Health plans participating in state Medicaid programs are expected to accommodate the unique access needs of the Medicaid population, including locating appropriate providers at sites convenient to program recipients. In addition, states expect participating plans to address the special language, culture, education, and health/disability needs of the Medicaid population.

Workers' Compensation

Workers' compensation, often referred to as workers' comp, is a state-mandated insurance program that provides benefits for medical expenses that are incurred and wages that are lost by workers who suffer work-related injury or illness.5 Purchasers expect health plans participating in workers' comp programs to address both of these issues.

An effort is underway in several states to combine healthcare coverage with disability income coverage and on-the-job accident coverage into one program, called 24-hour coverage. Whenever health plan principles are applied to this combined coverage, the resulting plan is called 24-hour health plan. The main effect of 24-hour health plan programs on a health plan's medical management function is that coverage for work-related injuries or illnesses and income replacement for the time period out of work are mandatory.

Provider Expectations

Providers working with health plans have three major concerns. First, providers want the healthcare services that they deliver to meet proper medical and quality standards. In a traditional FFS system, providers determine which services are provided and under what conditions. In a health plan environment, health plans may influence some of these decisions. For example, a health plan may establish standards for the types of tests authorized under certain circumstances or for certain conditions.

Providers sometimes perceive that health plans make such decisions on the basis of cost rather than appropriateness of care and fear that this practice will have a detrimental effect on quality. Providers sometimes also perceive that nonmedical personnel are involved in making medical decisions and that health plans are practicing medicine without a license-a practice referred to as the corporate practice of medicine. Health plans can alleviate these concerns, in part, by encouraging provider participation in defining what constitutes best medical practices and in developing clinical practice guidelines for medical services.

Second, providers want to retain a certain level of authority and autonomy in providing medical care. Providers feel that they, and not the health plan, should be the final authorities for medical decision making. Providers also want to have access to due process procedures in the event of a conflict between a provider and the health plan. Timely, well-documented, and objective procedures in an appeals process are critical to allaying providers' concerns about their participation in health plans.

Finally, providers want to know that health plans can provide necessary financial and administrative support for their practices. For example, providers want health plans to establish easy claims submission and reimbursement procedures, to provide timely payment of their fees, and to require providers to follow as few administrative procedures as possible. Ideally, providers would welcome an integrated information system that would enable them to expedite correspondence and administrative record keeping. Providers want ready access to plan member records, medical journals and research studies, and laboratory results. Providers also want their health plan contracts to result in a steady stream of plan members and dependable income results.

Because of their growing negotiating power and their ability to articulate concerns and expectations, providers can exert substantial influence over a health plan's medical management function. For example, physicians and other providers may choose not to contract with a health plan that does not meet their needs. A significant reduction in the number of providers in the network can force a health plan to reduce the number of services it offers, which can, in turn, cause plan members and purchasers to look elsewhere for healthcare, perhaps following the providers who have left the plan.

Plan Member Expectations

Plan members' expectations for health plans have evolved as members have become better informed about healthcare issues and have refined their ideas about what constitutes quality, affordable, and accessible healthcare benefits. Today, health plan members expect health plans to offer the following benefits and services:

Benefits and Services

Provider choice. Plan members want freedom of choice with respect to the primary care provider (PCP) network, hospitals, specialists, and ancillary service providers, such as pharmacies, laboratory services, and behavioral health services. In some cases, plan members desire direct access to specialty care providers without obtaining a PCP referral.

High quality care. Plan members expect providers to be competent and to deliver appropriate, quality healthcare.

High quality service. Plan members expect health plans to provide courteous and prompt responses to requests for information, quick resolution of coverage issues, and customer-service-oriented providers at all levels.

Low cost. Plan members expect plans to minimize the amount of out-of-pocket expenses members are required to pay for care and services.

Information on plans. Plan members expect their health plans to provide information about covered healthcare services, treatment options, and network providers and locations.

Medical information. Members are becoming interested in obtaining information via the Internet, including information on illnesses, medical procedures, and chronic conditions, online health assessments, e-mail addresses of network providers, and prescription refills.

Healthcare benefit options. Members often want healthcare options that include complementary and alternative medicine choices (for example, chiropractic services, acupuncture, biofeedback, and therapeutic massage).

Confidentiality of medical records. Confidentiality is becoming increasingly important as healthcare information is transmitted and stored electronically and as plan members demand instant access to their medical records and to information concerning various illnesses and conditions.

Grievance and appeals processes. Members want health plans to provide explicit processes for resolving disputes over nonauthorization of payment for specified medical services or providers, and appropriate medical treatment. Health plans that fail to provide plan members with appropriate avenues of due process leave themselves potentially liable for breach of fiduciary duty under ERISA at the federal court level, civil lawsuits for negligence or medical malpractice at the state court level, and increased pressure by consumer groups for Congress to pass a patients' bill of rights concerning healthcare services.

Health plans are responding to increased awareness and expectations of plan members by adjusting their medical management functions to meet members' needs. In the past, health plans looked to employers and government programs as their primary market for purchasers. Recently, health plans have begun to see individual plan members as purchasers. As plan members seek more customization in their healthcare benefits and as their employers become more willing to allow it, individual healthcare plans within a group environment become a possibility.

For example, an employer can allot a specified dollar amount for healthcare benefits for each employee and then allow employees to contract for their own coverage. If the cost of an employee's selected healthcare coverage exceeds the dollar amount of the employer allotment, then the employee makes up the difference. In this way, the employee's coverage shifts from a "defined benefit" (i.e., employer contribution depends on the number and type of benefits included in the plan) to a "defined contribution" (i.e., employer contributes a specified dollar amount and employee contributes any additional dollar amounts to pay for healthcare coverage).

Other trends in meeting plan member expectations include: (1) a shift in marketing efforts toward women, who utilize healthcare services more frequently than men and who often make the healthcare decisions in a family; (2) more emphasis on long-term, chronically disabling illnesses in a population that is growing older; and (3) an increased awareness of the language, cultural, and economic barriers that affect healthcare in a culturally diverse population.

Legal and Regulatory Requirements That Affect Medical Management

Purchasers, providers, and plan members influence the perceived need for laws and regulations to support the quality of medical care available through health plans. Over the years, public interest in healthcare has increased dramatically. Consumers, many of whom have been enrolled in health plan programs without choice and are unfamiliar with the system, have expressed concern over the quality of healthcare services available to them. Because of the human interest appeal of healthcare issues, media coverage of health plans have also grown. As a result, a number of laws and regulations designed to support quality medical care have been enacted at both the federal and state levels. Many of these laws and regulations have a direct impact on medical management.

To see that their interests are properly represented and that legislators are adequately educated about health plan principles and practices, health plans must be aware of and participate in the legislative process. Health plans must also comply with all applicable federal and state regulatory requirements.

In the following sections, we will look first at laws and regulations that apply at the federal level and then at state requirements and case law requirements. Keep in mind that federal and state governments often share jurisdiction over health plans and that regulatory requirements may overlap, or even conflict.

A variety of federal laws and regulations affect medical management. Those laws related to employee benefits, health insurance, budget reconciliation, and patient protection, are especially important.

Employee Retirement Income Security Act of 1974

Employee health benefit plans, except those maintained by government employers, are currently subject to regulation under a federal law called the Employee Retirement Income Security Act (ERISA) of 1974, which is designed to maintain the proper funding and administrative management of pension and employee welfare benefit plans.6 The Act includes a preemption provision which states that ERISA takes precedence over any state laws that regulate employee welfare benefit plans.

Employee Retirement Income Security Act of 1974

ERISA has important implications for medical management, especially in cases in which an employee raises questions of noncoverage of benefits related to medical appropriateness. Plan members and their families who obtain healthcare benefits through employee benefit plans must file legal challenges involving coverage issues or administration of the plan at the federal level, and ERISA is generally the governing law for such cases.

Unlike most state laws, ERISA limits damage awards in lawsuits to the cost of denied treatment; it does not allow plan members to obtain compensatory or punitive damages. For example, a plan member who brings a lawsuit for nonauthorization of payment based on the health plan's decision that the service was not medically necessary can recover benefits that a court of law determines were inappropriately denied. However, the plan member cannot recover monetary amounts for pain and suffering or awards designed to deter employers or health plans from making inappropriate decisions in the future. As a result of these ERISA provisions, it is in a health plan's best interest to have a case tried at the federal level.

Currently, plaintiffs are challenging ERISA's preemption provision in many cases in the federal courts. Such cases question the intent of the U. S. Congress to preempt state laws via federal laws such as ERISA. The judicial system has not yet defined a clear direction regarding whether litigation against ERISA plans is to be pursued through federal or state court. The system has also not defined the remedies that are available to members of managed healthcare plans covered by employee benefit plans subject to ERISA regulation. Some recent court decisions on ERISA preemption, however, indicate that ERISA may not provide health plans with automatic protection from damages, especially in cases dealing with the quality of care arranged by the plan.

Also, federal legislators are considering changing ERISA, particularly its preemption clause. If legislation is passed to eliminate the ERISA preemption, then plan members may sue health plans and group purchasers in state court for remedies that include compensatory and punitive damages.

Health Insurance Portability and Accountability Act

The Health Insurance Portability and Accountability Act (HIPAA) of 1996, which increases the continuity and portability of healthcare coverage in the group and individual health care markets, specifies that a group health plan may not deny coverage or discriminate against individuals on the basis of their health status.7

HIPAA provides additional patient protections through the following standards:

HIPAA's patient protections through amendments and standards.8

Provisions for long-term care coverage, which define insurance contracts that contain long-term care coverage as accident and health plans and specify that premiums paid and benefits received are medical care expenses that are excluded from the insured's gross income for tax purposes.

Standards for privacy of individually identifiable health information, which prohibit healthcare organizations from releasing identifiable patient health information for purposes other than medical treatment, payment, quality assurance, or utilization review, without the patient's consent. Standards apply only to electronically transmitted information, and regulation is, in some cases, superseded by pre-existing state and federal laws.

Standards for electronic data security, which define the security measures health care organizations must take to protect the confidentiality of electronically stored and transmitted patient information. Measures endorsed by HIPAA regulations include access controls, callback procedures to verify the identify of users, passwords, authentication procedures to verify the identity of entities using the system, automatic logoffs after periods of inactivity, and recording audit trails.

HIPAA provisions and standards affect both the benefits health plans provide to their members and the ways in which those benefits are administered. For example, health plans are required to inform plan members about HIPAA provisions and to issue certificates of creditable coverage to all plan members. Plans may not delegate this responsibility to a third party administrator. Health plans must also establish special open enrollment periods for individuals who lose other health coverage or who become eligible for coverage as dependents. In addition, health plans must develop information systems that support electronic claims processing and comply with confidentiality and information security standards.

Complying with HIPAA mandates requires not only planning, but additional allocation of resources, especially in the area of information management. Some health plans worry that HIPAA requirements will create administrative nightmares and make the collection of quality data expensive or even impossible. Noncompliance, however, is likely to result in serious sanctions. Violators face the possibility of civil penalties of up to $25,000 and criminal penalties of up to $250,000 and up to 10 years in prison per violation.

Balanced Budget Act of 1997

The Balanced Budget Act (BBA) of 1997 facilitated the enrollment of beneficiaries of government-sponsored health programs in health plans and allocated funding for health insurance for uninsured children.

The BBA established the Medicare+Choice program, the social health maintenance organization (SHMO) program, and the Programs of All-Inclusive Care for the Elderly (PACE). Each program has specified coverage, solvency, and organizational requirements that directly affect a health plan's medical management function. The BBA also requires health plans to develop quality improvement programs in areas such as healthcare outcomes, utilization review, and coordination of care. The Balanced Budget Refinement Act (BBRA) of 1999 modifies some of the requirements and implementation schedules established in the BBA for these programs. The impact of the BBA on Medicare and Medicaid programs is discussed in more detail in the lessons Medicare and Medicaid.

Federal Agency Requirements

Health plans are also subject to a variety of requirements established by regulatory agencies. The following sections highlight the impact that several key federal agencies have on medical management. A more complete discussion of these programs is included in later assignments.

Department of Health and Human Services

The Department of Health and Human Services (HHS) oversees many government healthcare programs. In addition to Medicare and Medicaid, HHS has authority over Programs of All-Inclusive Care for the Elderly (PACE), a joint federal-state program designed to provide persons aged 55 or older who require a nursing-facility level of care with an alternative to institutional care, and the State Children's Health Insurance Program (SCHIP), a federal-state program designed to enable states to initiate and expand child health assistance to uninsured, low-income children by providing initial and matching funding over time. The Centers for Medicare and Medicaid Services (CMS), a division of HHS, is responsible for administering these programs.

The Centers for Medicaid and Medicare Services (CMS), a division of the Department of Health and Human Services (HHS), is responsible for certain government healthcare programs. Of the following programs, CMS has authority over:

Programs of All-Inclusive Care for the Elderly (PACE)

the Medicare and Medicaid programs

the State Children's Health Insurance Program (SCHIP)

all of the above

Answer=D

Department of Health and Human Services

One important goal of CMS' administration of the Medicare and Medicaid programs is to support the delivery of quality healthcare services to eligible beneficiaries. Toward this goal, CMS requires Medicare health plans to document improvements in clinical procedures and to collect and report on quality measures for comparison purposes. CMS has developed a quality initiative called the Quality Assessment Performance Improvement that is designed to strengthen health plans' efforts to protect and improve the health and satisfaction of Medicare and Medicaid enrollees. Compliance with QAPI is mandatory for Medicare+Choice plans. For Medicaid, QAPI standards serve as a model that states can use at their discretion to develop quality requirements for Medicaid health plans. QAPI standards cover the following broad domains:

Quality assessment and performance improvement

Enrollee rights Health services management

In addition, CMS establishes delegation guidelines with which health plans that serve a Medicare population must comply. The CMS requirements for delegation oversight are similar to those of two prominent accrediting agencies, NCQA and URAC, which we discuss later in this lesson. In general, delegated functions are held to the same CMS standards as the functions actually performed by the health plan, and CMS will hold the health plan accountable for any deficiencies in the delegate's performance. CMS is also directly involved in the development of standards for electronic medical record (EMR) transactions as they relate to the Medicare and Medicaid programs.

The healthcare needs of medically underserved populations are also addressed through such programs as the National Health Service Corps, Federally Qualified Health Centers, and the Indian Health Service. These programs are administered by the Health Resources and Services Administration (HRSA) division of HHS. Decisions of agencies such as the CMS and HRSA directly affect health plans that serve these populations.

Department of Defense

The Department of Defense (DOD) oversees all military healthcare programs, which are among the largest in the United States. In addition, the DOD frequently establishes minimum benefit and administrative requirements that health plans must meet if they want to serve the military market. The DOD's decisions regarding quality, access, and program choice directly influence how a health plan designs and implements its medical management activities. The evolution of healthcare benefit programs for active and retired military personnel and their dependents from the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), which was an indemnity-based plan, to TRICARE, which offers an indemnity plan but also a PPO plan and an HMO plan, has also affected medical management. We discuss healthcare benefits programs for the military in Other Government Programs.

Office of Personnel Management

The Office of Personnel Management (OPM) conducts human resources functions on behalf of federal government employees. One of its major functions is to oversee the Federal Employees Healthcare Benefits Program (FEHBP), which is the largest group healthcare plan in the nation. Healthcare benefits under the FEHBP are generally broader than those of most employer-sponsored group health plans.

Coverage decisions established for the FEHBP often set a precedent for coverage in the private sector as well. For example, as a result of an executive order issued by the president, health plans that serve federal employees must be in compliance with the Consumer Bill of Rights and Responsibilities recommended by the Advisory Commission on Consumer Protection and Quality in the Health Care Industry. This directive is likely to have a significant effect on medical management in both FEHBP plans and private sector plans.

Federal Trade Commission

The Federal Trade Commission (FTC), along with the Department of Justice, enforces federal antitrust statutes. These statutes have a direct effect on health plans' provider contracting activities. For example, in contracting with providers, a health plan must avoid creating tying arrangements, which require a provider to purchase the health plan's healthcare benefits in order for the provider to participate in the health plan's network. Health plans must also guard against engaging in horizontal group boycotts, in which two or more competing health plans decide to exclude a particular provider because the provider also contracts with another health plan.

Department of Justice

In addition to its involvement in antitrust matters in conjunction with the FTC, the Department of Justice (DOJ) also oversees fraud and abuse matters as they relate to medical management. Because the costs associated with fraud and abuse can be extremely high, health plans actively focus on reducing the occurrence of fraud and abuse of healthcare benefits.

Health plans have noted two medical management conditions in particular that may signal potential fraud and abuse: (1) purposeful underutilization of medically necessary healthcare services in health plans that capitate their providers, and (2) purposeful overutilization of, and inappropriate billings for, services in plans that pay their providers on an FFS basis. Although utilization management of healthcare services helps reduce a health plan's medical service costs, underutilization of medically necessary services is detrimental to members' health and will likely lead to higher costs over the long term.

A number of other federal agencies also influence medical management. For example, the Office of the Inspector General (OIG) is often involved along with the Department of Justice in dealing with fraud and abuse issues. The Federal Drug Administration (FDA) and National Institute of Health (NIH) are important contributors to the development of medical policy. The Office of Minority Health, a division of HHS, has proposed standards addressing the development of culturally and linguistically appropriate services.

State Laws and Regulations

State governments typically regulate health plans through the state department of insurance and/or department of health. Like federal laws and regulations, state laws and regulations and the requirements of specific organizations have a significant impact on a health plan's medical management programs. For example, many states have laws that require health plans to

Laws Require Health Plans to:

Arrange for adequate access to healthcare providers and facilities Have specific quality management programs and take appropriate action to

improve quality deficiencies Follow specified guidelines, procedures, and registration requirements for

utilization review Report specified utilization and grievance information Provide plan members with adequate information about covered benefits, how to

obtain those benefits, and how to pursue grievances Have formal grievance processes in place for members and providers

In the following sections, we describe some of the areas in which state laws and regulations have the greatest impact on medical management.

Benefit/Provider Mandates

One way in which state governments impact medical management is through mandated benefit laws. Mandated benefit laws are state laws or federal laws that require health plans to arrange for the financing and delivery of particular benefits, such as coverage for a stay in a hospital for a specified length of time.10 The Newborns' and Mothers' Health Protection Act (NMHPA) is an example of a federal law that mandates benefits. State laws have been enacted that require health plans to provide for benefits including

Direct member access to certain specialists, such as OB/GYNs, dermatologists, or doctors of chiropractic, without first going through a primary care provider

Coverage for emergency department visits, even if a subsequent diagnosis determines that the condition was not an emergency, if the presenting symptoms that caused a plan member to go to the emergency department appeared to be an emergency, such as chest pains

Hospice and home health benefits Mental health and chemical dependency services (behavioral healthcare) Benefits for specialized services such as post-mastectomy reconstructive surgery,

transplants, temporomandibular joint treatment, and infertility treatment

These mandates not only require that the benefits be covered, they also imply that particular types of providers such as behavioral healthcare professionals must be included in the network.

In some cases, federal and state mandated benefit laws conflict with a health plan's goals for managing the costs of delivering healthcare services. For example, mandated length-of-stay laws for maternity and mastectomy patients increase the costs of providing those healthcare benefits and may not actually be medically beneficial in all cases.

Access to Quality Care and Service

Many of the state laws related to the quality of healthcare services are based on model laws developed by the National Association of Insurance Commissioners (NAIC), an organization of state insurance commissioners established to encourage uniformity in insurance regulation. In 1996, the NAIC introduced a series of Health Plan Accountability Models. The following NAIC Models specifically address the issue of quality in health plans:

Health Care Professional Credentialing Verification Model Act: specifies the requirements health plans must satisfy to see that network providers meet minimum standards of professional qualification

Quality Assessment and Improvement Model Act: requires health plans to establish and report on systems for assessing the quality of care and services

Network Adequacy and Accessibility Model Act: specifies standards health plans must meet in developing and managing provider networks

Health Carrier Grievance Procedure Model Act: requires health plans to establish written procedures for handling member grievances

The NAIC has also developed model laws on health information privacy and state licensure. State laws and regulations based on these model acts apply to all health plans operating in those states.

Delegation

State governments and regulatory agencies have developed a variety of laws and regulations that apply to the use of delegation by health plans. These regulations and laws help determine which activities, if any, a health plan may delegate and the nature of the delegation arrangement. For example, more than half the states have laws-based in whole or in part on the NAIC's HMO Model Act-requiring HMOs to include a description of their contractual arrangements for delegation in their written quality improvement program. As we discuss later in this lesson, health plans that seek accreditation must also meet the delegation-related standards of the relevant accrediting agency. Because health plans are accountable for all delegated activities, regardless of the terms of the agreement for delegation, a high level of review and monitoring by the health plan is required for all delegated activities.

Some states have more specific requirements for the delegation of medical management functions by health plans. For instance, in Alabama, credentialing activities may be delegated only to entities that have been approved by the state for this purpose. Fourteen states require health plans to maintain oversight of delegated utilization review activities.11 Because state laws on delegation vary, a health plan must monitor the requirements of each state in which the health plan operates and adjust its delegation programs accordingly.

Patient Protection

Patient protection has become an important issue at the state as well as the federal level. Figure 1C-6 summarizes some of the major issues addressed by recent state legislative and regulatory efforts.

Proposed patient protection bills also include provisions for the use of an external review board to serve as a second medical opinion or, in cases of claims denials or nonauthorization of payment for treatment, as an arbitration review panel. Most health plans currently require plan members to exhaust internal review processes offered by the health plan before seeking an independent review.

Federal law already grants Medicare patients automatic access-at no cost to the patient-to an external review board for appeals of decisions by a health plan. Many states are now requiring external review board appeals for health plan denials as well. Self-funded ERISA plans are typically exempt from state requirements; however, if patient protection legislation passes at the federal level, self-funded plans will also be required to provide recourse to an external review board.

Coverage for Underserved and Unserved Populations

Underserved or unserved populations pose a significant challenge for both federal and state governments. These underserved and unserved populations (for example, rural residents who have limited access to healthcare services, the unemployed, the uninsurable, minor children, recent immigrants) are least likely to obtain routine, affordable, accessible, consistent healthcare coverage. As a result, these populations are the most likely to overutilize hospital emergency departments for urgent care or other non-emergencies. Such care is expensive and not necessarily the best quality in terms of continuity of care.

Historically, federal or state legislation, such as Medicare, Medicaid, or SCHIP, has driven the requirement for at least minimum healthcare coverage to underserved populations. Because of the legislative thrust, mandated benefits and a minimum

level of benefits are usually required if a health plan expects to serve these populations. Also, because of language or economic barriers, members of these populations tend to have unique access needs. Many health plans that serve these populations have translators available or bilingual providers and staff for specified ethnic groups. They also make transportation arrangements and incur other expenses to see that these plan members understand their benefits and observe the appropriate procedures for obtaining care and appealing denials related to these benefits. All these additional customer-service items increase a health plan's administrative expenses but are necessary to support compliance and affordable, accessible healthcare for plan members.

Case Law

The laws outlined in the previous sections were developed and passed as federal and state statutory laws. Case law also influences medical management. Case law, also called common law, is a body of law that consists of federal and state court decisions.13 Monitoring case law is critical because the outcome of a court case may clarify ambiguous sections of a particular statute. Court decisions may also establish precedents that must be followed if a health plan is to comply with the law. For example, the outcome of specific court cases under consideration in various state courts may determine whether plan members can directly sue their health plans in those states. Insight 1C-1 describes some of these cases.

Environmental Influences on Medical Management

Insight 1C-1. Recent Challenges to ERISA Preemption of State Law.

Herdrich v. PegramPlaintiff Herdrich brought medical negligence and state law fraud claims in Illinois state court against Defendants Carle Clinic, Health Alliance Medical Plans (HAMP), and Dr. Pegram. The suit alleged that Dr. Pegram delayed treatment of Ms. Herdrich for eight days so that Ms. Herdrich could undergo a necessary procedure at a Carle-staffed facility 50 miles away, rather than at the local hospital, and that the delay caused further injuries.

The state court awarded $35,000 to Plaintiff on medical negligence counts, but Defendants removed state fraud claims to federal court, alleging that they were preempted by ERISA. The United States District Court dismissed the state fraud claims.

Plaintiff amended the ERISA claim, alleging that Carle Clinic and HAMP had breached their ERISA fiduciary duty. Defendants filed a motion to dismiss the amended ERISA claim. The district court granted Defendants' motion to dismiss, and Plaintiff appealed. The U.S. Court of Appeals reversed, finding that Plaintiff had sufficient grounds for a claim for a breach of fiduciary duty under ERISA. Defendants then filed a petition for rehearing. On March 8, 1999, the petition was denied. The dissenting opinion was extremely critical of the majority's condemnation of health plans and proposed that the majority's opinion could be interpreted to conclude that all health plan incentive plans represent a potential breach of fiduciary duty under ERISA.

On June 4, 1999, Defendants filed a petition for a writ of certiorari with the United States Supreme Court. An amicus brief was filed with the Supreme Court in support of the petition. The Supreme Court granted certiorari on September 28, 1999. A second amicus brief was filed on the merits of the case. On June 12, 2000, the Supremem Court unanimously reversed the U.S. Court of Appeals ruling and said that patients may not sue HMOs in federal court for giving physicians a financial incentive to reduce treatment costs.

Bauman v. U.S. HealthcarePlaintiffs Mr. and Mrs. Bauman brought suit in New Jersey state court against Defendants U.S. Healthcare, Dr. Nemah, their daughter's treating physician, and Kennedy Hospital, alleging that the death of their daughter a day after she and her mother were discharged from the hospital was due to U.S. Healthcare's 24-hour pre-certified discharge policy.

Defendants removed the action to federal court on the basis of preemption under Section 502 of ERISA. Plaintiffs filed a motion to remand, arguing that there was no federal jurisdiction over any of the claims. The United States District Court remanded three of the counts to state court, but concluded that a count concerning U.S. Healthcare's denial of an in-home visit by a pediatric nurse was completely preempted as a claim to recover benefits due. Both parties appealed.

The United States Court of Appeals ruled that U.S. Healthcare was subject to the prevailing state standard of care, as is the case in medical malpractice actions. In arriving at its decision, the Court relied on its decision in Dukes v. U.S. Healthcare, which created a distinction between state law claims directed to the quality of benefits provided and claims that the plaintiff was entitled to, but did not receive, the appropriate quantity of benefits under the ERISA plan. The Court in Bauman expanded the concept of quality, concluding that the Plaintiffs' claims were related to the HMO's actions as a "healthcare provider," rather than a "healthcare administrator." The Court found that the HMO's action regarding the pediatric nurse claim also stemmed from its role as a healthcare provider. Accordingly, the Court sent the action back to state court. (Bauman v. U.S. Healthcare, No. 98-5222, 1999 U.S. App. LEXIS 22464, 3rd Cir. Sept. 16, 1999.)

Pappas v. U.S. HealthcarePlaintiff Pappas brought suit in Pennsylvania state court against Defendant Dr. David Asbel, Plaintiff's primary care physician, for medical malpractice, and against Defendant Haverford Community Hospital for delay in transferring Plaintiff to a facility equipped to immediately handle his neurological emergency.

Haverford filed a third party complaint against Defendant U.S. Healthcare for refusing to authorize the transfer of Plaintiff to a hospital selected by the Haverford physicians. U.S. Healthcare filed a motion for summary judgment, arguing that the third party claims were preempted by ERISA.

The trial court granted the motion, and Plaintiff appealed. The state superior court reversed the decision, finding that ERISA did not preempt the state law claims. U.S. Healthcare appealed to the state supreme court, which ruled that negligence claims against an HMO do "relate to" an ERISA plan and are, therefore, not preempted. A petition for a writ of certiori was filed with the U.S. Supreme Court. On June 19, 2000, the Supreme Court granted the petition. The Supreme Court vacated the judgment and remanded the case to the Pennsylvania Supreme Court for further consideration in light of the decision on Herdrich v. Pegram. (Pappas v. U.S. Healthcare, No. 98-1996, 1998 Pa. LEXIS 2718, Pa. Dec. 23, 1998.)

Health Plan Liability and Medical Management Activities

As a result of federal and state regulation of health plans and other laws and regulations that affect the daily operations of service businesses, health plans have legal obligations to plan members and providers. These legal obligations often impact medical management activities.

Plans that violate these obligations can be held directly liable for any harm that results from their actions. This would be the case if a court ruled that a health plan had made an inappropriate utilization management or provider credentialing decision and that decision had resulted in harm.

Plans may also be held accountable for the actions of other parties through vicarious liability. Vicarious liability is a kind of liability that arises when one party is held responsible for the actions of another party because of the existence of a special relationship between those two parties.14 A claim for vicarious liability may arise in connection with a health plan's delegation of certain medical management activities.

For example, suppose that a health plan contracts with a utilization review organization (URO) for utilization review services and that URO improperly recommends denial of payment for services to a plan member. The health plan can be directly liable if the health plan failed to adequately investigate the quality of the URO's services and the qualifications of its personnel prior to establishing the delegation arrangement or to provide proper oversight of the delegated activities.15 The health plan may also be liable for the URO's actions under state law if the URO is determined to be an agent-that is, the authorized representative-of the health plan or if the URO is determined to be an apparent, or ostensible, agent of the health plan.

Under the legal doctrine of apparent agency, also called ostensible agency, a health plan may be liable for the actions of a delegate if the following three conditions are true:

Health plan may be liable for actions of a delegate if

1. The health plan fails in some way to establish that the delegate is not the health plan's agent.

2. A plan member perceives the delegate as an agent.

3. In relying on this perception, the member suffers physical or financial harm.

To avoid the appearance that the delegate is an agent of the health plan, any documents that refer to the delegation arrangement, including marketing materials and written agreements between the health plan and the delegate, should specify that the delegate is an independent contractor and not an agent.16

Vicarious liability may also arise in connection with medical malpractice committed by a plan physician or other healthcare provider against a plan member if the health plan is deemed liable because of the contractual relationship between the health plan or plan and the provider.

One way that health plans can protect themselves from the prospect of litigation based on the liabilities discussed above is to structure utilization review, case management, and disease management programs so that the cost of treatment has no bearing on what is considered medically appropriate. In subsequent lessons, we discuss Utilization Review, Case Management and Disease Management.

Impact of Accreditation on Medical Management

Accreditation organizations independently evaluate the quality of a health plan's services. The information provided by the accreditation process is intended to help purchasers and possibly consumers make well-informed decisions when choosing and contracting with a health plan. However, the process itself presents challenges for health plans.

Participation in the accreditation process is voluntary, and health plans are responsible for gathering and submitting the data needed for accreditation purposes. For most plans, the process of gathering accreditation information is both time consuming and expensive. For example, the decentralized structure of some managed healthcare plans makes it necessary to collect data from separate physical locations including administrative offices, physician offices, labs, and hospitals. In many cases, the costs of obtaining the information technology needed to amass extensive performance data can be prohibitive.

The following statements are about the use of accreditation programs by health plans. Select the answer choice containing the correct statement:

Most health plan purchasers and consumers review the results of accreditation in making decisions to purchase or enroll in a specified health plan. For health plans, participation in the accreditation process is voluntary, and health plans are responsible for gathering and submitting the data needed for accreditation purposes. For health plans, accreditation is typically conducted by for-profit organizations affiliated with federal or state governments.

The primary accrediting agency for health maintenance organizations (HMOs) is the American Accreditation HealthCare Commission/URAC (URAC).

Answer=B

In addition, despite the value of accreditation ratings for the comparison of quality among health plans, few purchasers and fewer consumers review the results of accreditation in making decisions to purchase or enroll in a specified health plan. Instead, purchasers tend to make health plan choices on the basis of cost, which is easier to measure than quality. Plan members often rate plan quality on the basis of whether a particular provider is in the plan's network and whether a specified healthcare benefit is covered.

As a result, many health plans elect not to participate in the accreditation process. However, as quality standards and accreditation results increasingly focus on evidence-based medicine-for example, positive outcomes realized from disease management programs-as an indicator of quality, purchasers and plan members may rely more on the reported results of the accreditation process. As purchaser demand for comparative quality data increases, more health plans-particularly plans that serve the large employer market-may find it necessary, despite the costs, to participate in the accreditation process.

Accreditation Organizations

Accreditation is typically conducted by independent, not-for-profit organizations, which are not affiliated with federal or state governments. The following sections introduce several key accreditation organizations in the health plan industry. These organizations and their standards and guidelines are discussed in more detail in lesson Quality Management.

National Committee for Quality Assurance

The National Committee for Quality Assurance (NCQA), an independent, not-for-profit organization, serves as the primary accrediting agency for most HMOs and similar health plans, managed behavioral healthcare organizations (MBHOs), credentials verification organizations (CVOs), and physician organizations. NCQA's accreditation is a rigorous and comprehensive evaluation process through which the quality of all key systems and processes that make up the health plan are assessed. Accreditation and certification results are available through NCQA's Web site. NCQA also has developed the Health Plan Employer Data and Information Set (HEDIS), which is used as a factor in the accreditation process as we discuss later in this lesson.

National Committee for Quality Assurance

NCQA reports health plans' accreditation results publicly using the following five categories, all of which have a direct impact on a health plan's medical management functions:

Access and service Qualified providers Staying healthy Getting better Living with illness17

The NCQA also surveys the systems and processes of health plans against the following six categories:

Quality improvement Utilization management Credentialing Member rights Preventive health Medical records

Results in these categories are not publicly reported.

CVOs are evaluated on the basis of such categories as malpractice insurance, liability claims history, and sanctions concerning Medicare, Medicaid, and the appropriate medical board.

American Accreditation HealthCare Commission/URAC

The American Accreditation HealthCare Commission/URAC (URAC) is an accrediting agency that promotes consistent standards in the application of utilization procedures and provider network standards. URAC's standards focus on five key areas:

Network management Utilization management Quality management Credentialing Member participation and protection18

URAC has also developed accreditation programs for case management programs, CVOs, health plan telephone call centers, and workers' compensation services.

The following statements are about the use of accreditation programs by health plans. Select the answer choice containing the correct statement:

Most health plan purchasers and consumers review the results of accreditation in making decisions to purchase or enroll in a specified health plan.

For health plans, participation in the accreditation process is voluntary, and health plans are responsible for gathering and submitting the data needed for accreditation purposes. For health plans, accreditation is typically conducted by for-profit organizations affiliated with federal or state governments. The primary accrediting agency for health maintenance organizations (HMOs) is the American Accreditation HealthCare Commission/URAC (URAC).

Answer=B

Accreditation Standards for Delegation

NCQA and URAC all consider a health plan's management of delegated activities when evaluating a health plan for accreditation. These three agencies have established specific standards for the oversight of delegated activities. Although all three accrediting agencies' standards have the same intent-to see that the delegated activities are performed in accordance with the delegating health plan's standards-the specific requirements of their standards are somewhat different. For example, URAC place no restrictions on the types of functions that can be delegated. NCQA allows health plans to delegate authority for almost all functions, but requires that the health plan itself conduct all delegation oversight activities rather than delegating the responsibility for oversight to another entity.21

Although health plans that seek accreditation typically design their delegation oversight program according to the standards of the relevant accrediting agency, most programs include provisions related to accountability and documentation.

Accountability

Accountability is the process by which one party is required to justify its actions and policies to another party. When a health plan delegates authority for a function, it transfers the power to conduct the function on a day-to-day basis, but not the ultimate accountability for the function. Although the delegate assumes the authority to plan and carry out the function within specified parameters, the health plan retains the responsibility for making sure that the delegate acts in accordance with the health plan's standards and those of NCQA or URAC. If the delegate's performance fails to meet these standards, the health plan is responsible for developing corrective action requirements to guide the delegate in making a plan to remedy the deficiencies. The health plan is also accountable for maintaining coordination and continuity between the delegated functions and the functions that are conducted by the health plan.

Documentation

All three accrediting agencies require documentation showing that the health plan is conducting appropriate oversight of the delegated function. Such oversight typically includes regular reports from the delegate to the health plan and formal site visits and audits by the health plan on an annual basis or more frequently. In addition, both

URAC and NCQA require written documentation of the agreement between the health plan and the delegated entity.

In some cases, accreditation standards for delegation oversight are reduced if the delegate has already been certified or accredited by the health plan's accrediting agency. For example, if the delegating health plan adheres to NCQA standards and the delegate is an NCQA-accredited health plan or MBHO or an NCQA-certified CVO or physician organization, the delegating health plan's oversight obligations are reduced. Although NCQA still requires an appropriate written agreement between the health plan and the delegate, the health plan is not obliged to conduct a formal, annual oversight review of the accredited entity on any elements for which the delegate has been certified.23 Similarly, if a health plan accredited by URAC delegates activities to a URAC-certified CVO or utilization management organization, URAC does not require the health plan to perform annual oversight reviews of elements already certified for that delegate.

Additional Quality Initiatives

Besides the quality measures from accreditation organizations discussed in the previous sections, various other attempts to measure quality have been developed. The following sections discuss several of these additional quality initiatives.

Health Plan Employer Data and Information Set

NCQA developed the Health Plan Employer Data and Information Set (HEDIS), which is a performance measurement tool designed to help healthcare purchasers and consumers compare the quality offered by different health plans.23 Since 1999, NCQA has integrated HEDIS measures into its accreditation standards, and CMS now requires Medicare plans to report NCQA-audited data on HEDIS performance measures.

Health Plan Employer Data and Information Set

HEDIS measures comprise eight domains as listed below. Note that not all of these domains are considered in the accreditation process.

Effectiveness of care (e.g., cancer screening, childhood immunizations) Access/availability of care (e.g., prenatal care, adults' and children's access to

preventive and primary care services) Satisfaction with the experience of care (e.g., plan member satisfaction) Health plan stability (e.g., financial strength, provider and plan member

turnover) Use of services (e.g., hospital utilization, mental health utilization) Cost of care (e.g., premium rate trends) Informed healthcare choices (e.g., language translation services, information

provided during enrollment, plan member education services) Health plan descriptive information (e.g., board-certification of physicians,

case management, quality improvement)

The National Forum for Health Care Quality Measurement and Reporting

The National Forum for Health Care Quality Measurement and Reporting, also called the Quality Forum, is a not-for-profit organization that was established to develop and implement a national strategy for quality measurement and reporting. The Quality Forum develops standards for measuring healthcare service quality. Although initially established as a result of a presidential advisory commission recommendation, the Quality Forum's funding is obtained from the private sector. A secondary objective of developing quality standards is for the benefit of providers, who can use standard measures of quality to improve their performance. The presidential advisory commission originally proposed the following categories for the Quality Forum:

Objectives for the Quality Forum25

Identify core sets of quality measures for standardized reporting by all sectors of the healthcare industry

Establish a framework and capacity for quality measurement and reporting Support the focused development of quality measures that enhance and improve

the ability to evaluate and improve care Make recommendations regarding an agenda for research and development

needed to advance quality measurement and reporting See that comparative information on healthcare quality is valid, reliable,

comprehensible, and widely available in the public domain

Agency for Healthcare Research and Quality (AHRQ)

The Agency for Healthcare Research and Quality (AHRQ), formerly the Agency for Health Care Policy and Research (AHCPR), is an organization that performs research functions for HHS. In 1999, Congress changed the focus of the agency from medical treatment research and the collection of health statistics to research on healthcare delivery and quality measurement and improvement. This new focus, along with an increased budget, expands the agency's impact on improving healthcare quality.

One of AHRQ's major contributions to healthcare quality is the Consumer Assessment of Health Plans Survey (CAHPS™), which gathers comparative data on healthcare service quality across populations. CAHPS measures consumer satisfaction with specified aspects of health plan services, including access to care and the relationship between consumers and their physicians. Specific questions address consumer experiences with treatments for chronic conditions or with Medicare or Medicaid managed plans26. NCQA and AHRQ recently merged CAHPS with the HEDIS Member Satisfaction Survey.

Conclusion

As you can see, medical management goes far beyond a health plan's internal considerations regarding the quality and cost of healthcare services. It is a complex

process that requires health plans to understand the needs and expectations of its purchasers, providers, and plan members as well as the requirements of various legislative, regulatory, and accrediting bodies. In order to develop successful medical management programs, health plans must understand the dynamics of the environment in which they operate and consider how the environment affects the delivery of healthcare services.

AHM Medical Management: Clinical Practice

Pg 1 to 42

Clinical Practice Management

Course Goals and Objectives After completing lesson Clinical Practice Management, you should be able to:

Describe the components of a health plan's coverage policy List several types of services that health plans typically limit or exclude Describe the types of coverage issues typically addressed by medical policy Explain the importance of technology assessment as it relates to medical

policy

Explain the role of clinical practice guidelines

Introduction

In The Role of Medical Management in a Health Plan, we began our discussion of medical management by presenting quality and cost-effectiveness as the two main objectives of the medical management process. You also learned about the primary methods for achieving these important objectives and the influence of various environmental factors on a health plan's medical management decisions.

Now, in Clinical Practice Management, we will turn our medical management focus to the delivery of healthcare and, within that context, more specifically to the development and implementation of parameters for the delivery of healthcare services to a health plan's members-a process known as clinical practice management. Clinical practice parameters include:

Clinical Practice Parameters include:

1. A health plan's medical policies concerning the appropriate use of medical services

2. Clinical practice guidelines (CPGs) used by healthcare practitioners when delivering clinical services and also used by health plans to develop medical policy

Figure 2A-1 provides additional information on the roles of these two types of parameters.

In this lesson, we examine medical policy, its relationship to a health plan's overall coverage policy, and the role of technology assessment in medical policy development. We also explore the use of clinical practice guidelines and how such guidelines are developed and implemented. In addition, we discuss risk management as it relates to clinical practice management.

Please note that medical policy content sometimes overlaps with the content of CPGs. For example, a health plan's medical policy on hysterectomies might indicate specific clinical criteria, such as the size of the uterus, symptoms, and/or failure of conservative therapy, that must be present to support the appropriateness of the hysterectomy. Similar clinical criteria might be specified in clinical practice guidelines.

It is also important to note that the use of terminology varies in the health plan industry. In this course, we use the term coverage policy to refer to all the rules and processes that a health plan develops and implements in conjunction with its purchaser contracts to determine covered healthcare services and supplies. This definition broadly includes both clinical and nonclinical issues. Some health plans use the term medical policy in this broader sense; others use medical policy, as we do in this lesson, to more narrowly refer to a subset of coverage policy. Medical policy, in this narrower sense, refers to the rules and processes health plans apply when making coverage determinations that require an interpretation of the contract's medical necessity and appropriateness provision and experimental/investigational provision. Regardless of terminology, however, virtually all health plans use the types of policies and guidelines described in this lesson.

Medical Policy and Other Components of Coverage Policy

A health plan finances and arranges the delivery of healthcare according to the terms of a contract issued to the purchaser. In this section, we examine how health plans develop and use policies to help support the consistency of activities related to the financing and delivery of healthcare with (1) the terms of the purchaser's contract and (2) available evidence-based medical information.

As Figure 2A-2 illustrates, there are three general categories of coverage policy: (1) medical policy, (2) benefits administration policy, and (3) administrative policies governing processes and procedures used in conjunction with coverage decisions.

Medical Policy

As we noted earlier, medical policy is a type of coverage policy used to determine the medical necessity and appropriateness of services. Medical policies rely as much as possible on the use of evidence-based medicine, which typically comes from peer-reviewed medical literature reporting the results of clinical trials of medications, tests, procedures, treatments, and devices. For a new treatment or test to be included as an appropriate intervention in the health plan's medical policy, the studies must show an improved outcome resulting from the treatment or test under consideration. However, because many currently accepted healthcare services do not have the evidence necessary to meet this standard, many health plans also rely on current community standards and expert provider opinion when determining medical policy.

Medical policies typically address a specific test (such as bone densitometry tests for osteoporosis) or treatment (such as chiropractic) and the situations in which that test or treatment is considered medically necessary and appropriate. In some cases, a medical policy focuses on a specific medical condition (such as urinary incontinence) and identifies applicable tests or treatments considered medically necessary and appropriate for that condition. Medical policies also describe situations in which the

test or treatment is typically not considered medically necessary and appropriate and, therefore, will not be covered. Other elements often included in a medical policy are billing and coding information for providers, definitions of key medical terms, references, and dates for policy implementation and updates.

In addition to using medical policies for coverage decisions, health plans distribute their medical policies to providers to help them determine whether a treatment approach is appropriate for a particular patient's situation. Some health plans have begun making their medical policies available to the public. For instance, BlueCross BlueShield of North Carolina was one of the first health plans to provide access to its medical policies on its Web site. Figure 2A-3 shows one such medical policy.

Figure 2A-3. An Example of a Medical Policy.

Corporate Medical Policy

Growth Hormone

File Name: Growth HormonePolicy Number: DRU4080Origination: 8/1996Last Review: 12/1999Next Review: 12/2001

Description of Procedure or Service

Growth hormone (GH), also called somatotropin, is a hormone produced during sleep by the pituitary gland. When the gland fails to produce enough of the hormone, a child is short in stature and has bone growth problems. Occasionally, the gland is damaged by radiation, trauma, or disease, in which case the result is the same: the child fails to achieve a normal height. Growth hormone treatment is indicated for children who fail to grow because they have a growth hormone deficiency. The growth hormone covered by this policy is an artificially produced version of the natural hormone, which must be injected under the skin either daily or several times a week. GH has been marketed under the following names: Humatrope®, Nutropin®, somatrem®, Protropin®, Serostim®, and Saizen®.

Policy

BCBSNC will provide coverage for growth hormone (GH) when it is determined to be medically necessary because the medical criteria and guidelines shown below are met.

Benefits Application

Please refer to certificate for eligibility of benefit. See Professional Services. This drug is prior approved for PCP only.

When Growth Hormone (GH) Is Covered

The following conditions are FDA-approved labeled indications for growth hormone (GH) therapy. (See Policy Guideline section for specific requirements.) For each of these clinical situations, GH is considered medically necessary:

o Children who have growth failure, defined as having fallen 2 standard deviations off his/her predicted growth curve (as defined under Policy Guidelines) due to inad- equate secretion of normal endogenous growth hormone

o Children with chronic renal insufficiency before renal transplant o Children with Turner's syndrome, i.e., a 45, XO genotype o Adults with congenital or acquired GH deficiency (e.g., pituitary dwarfism) o Patients with AIDS wasting o Turner's Syndrome

In addition, recombinant human GH therapy is medically necessary for the following FDA off-label use:

o Promotion of wound healing in burn patients

When Growth Hormone Is Not Covered

The use of GH is contraindicated in children with active malignancies- FDA off-label applications for human growth hormone therapy considered

investigational are not covered. They include the following: o Non-GH deficient short stature, except for Turner's Syndrome o Constitutional delay (lower than expected height percentiles compared with

their target height percentiles) and delayed skeletal maturation when growth velocities and rate of bone age advancement are normal. (Height is measured in percentiles of average height; for example, people in the 25th percentile are shorter than 75% of the general population.)

o Therapy for geriatric patients o Anabolic therapy, except for AIDS, provided to counteract acute or chronic

catabolic illness (e.g., surgery outcom~s, trauma, cancer, chronic hemodialysis) producing cata- bolic (protein wasting) changes in both adult and pediatric patients

o Anabolic therapy to enhance body mass or strength for professional, recreational, or social reasons

o Glucocorticoid-induced growth failure o Intrauterine growth retardation o Short status after renal transplantation o Short stature due to Down, Noonan's, or Prader-Willi syndromes

Diagnostic tests that are considered investigational are not covered. These include:

o 24-hour continuous monitoring of growth hormone levels

o Serum levels of insulin-like growth factors (IGF) or insulin-like growth factor binding protein (IGFBP)

Policy Guidelines

All claims for growth hormone (GH) will be subject to medical review. The following guidelines should be followed in use of the growth hormone:

o In use for children and adults with proven growth hormone deficiency, proof is defined as an abnormal response of less than 10ng/ml to two provocative stimulation tests (e.g., L-dopa, clonidine, glucagon, propranolol, arginine, or insulin challenge test). Both responses must be abnormal.

o Chronic renal insufficiency is defined as a serum creatinine of less than 30 mg/dl or a creatinine clearance between 5 and 75 ml/min per 1.73 m2.

o AIDS wasting, defined as greater than 10% of baseline weight loss that cannot be explained by a concurrent illness other than HIV infection. Patients treated with GH must simultaneously be treated with antiviral agents. Therapy is continued until this definition is no longer met.

o GH therapy for burn patients should be limited to those patients with third-degree burns.

o In children, GH therapy is typically discontinued when the growth velocity is less than 2 cm per year, when epiphyseal fusion has occurred, or when the height reaches the 5th percentile of adult height. In patients with chronic renal failure undergoing renal trans- plantation, GH is discontinued at the time of transplant.

Billing/Coding/Physician Documentation Information

BCBSNC may request medical records for determination of medical necessity. When medical records are requested, letters of support and/or explanation are often useful, but are not sufficient documenta- tion unless all specific information needed to make a medical necessity determination is included.

Policy Key Words

Human growth hormone, growth hormone, GH, GHD, Humatrope, Nutropin, Somatrem, Somatotropin, Protropin

Medical Term Definitions

Epiphyseal

the end of a long bone, usually wider than the shaft and comprised primarily of cartilage

Pituitary gland gland in the head responsible for producing the growth hormone (somatotropin)

Scientific Background and Reference Sources

1995 AMA Dry Information2/96 TEC BulletinLawson Wilkins Ped. End. Soc., Guidelines for the use of growth hormone in children with short stature, The journal of Pediatrics, 1995; 127:857-67.11/97 BCBSA Medical Policy Reference Manual1999 USPDI1999 AHFS Dry Information3/99 BCBSNC Corporate Pharmacist3/99 Independent Consultant Review12/99 Medical policy Advisory croup

Policy Implementation Update Information

8/96 Original policy issued

3/99Revised, Included approved adult indications. Changed policy guidelines for adults to include one provocative stimulation test instead of two.

5/99 Reformatted; description of service changed and medical term definiti.ons added. 12/99 Medical Policy Advisory Group

Medical policy is not an authorization, certification, explanation of benefits or a contract, Benefits and eligibility are determined before medical guidelines and payment guidelines are applied.. Benefits are d~termined by the group contract and subscriber certificate that is in effect at the time services are rendered. This document is solely provided for informational purposes only and is based on research of current medical literature and review of common medical practices in the treatment and diagnosis of disease. Medical practices and knowledge are constantly changing and BCBSNC reserves the right to review and revise its medical policies periodically.

Benefits Administration Policy

Often, coverage decisions do not require clinical interpretation of medical necessity or appropriateness or a determination as to whether a particular service is experimental or investigational. Decisions such as these are guided by a health plan's benefits administration policy. A health plan's benefits administration

policy evaluates clinical services against specific benefits language rather than against scientific evidence.

In some cases, benefits administration policy does provide clinical input to see that services are appropriate, but the purpose of this information is to facilitate coverage decisions by interpreting the contract language and not to evaluate medical evidence. For example, when health plan personnel consider coverage of durable medical equipment, they might consult the applicable benefits administration policy to determine if a particular type of medical equipment is covered by the contract. The benefits administration policy might provide a list of equipment to indicate that certain "basic" models are covered, but specific "deluxe" models are not. Benefits administration policy may also include

Benefits Administration Policy may include:

Information used to determine dependent eligibility, continuation of coverage, or coordination of benefits with other benefit plans

A database of current procedural terminology (CPT) codes and the usual, customary, and reasonable (UCR) fees for each code

A list of services for which the member must obtain preauthorization from a primary care provider (PCP), such as services from specialists

For health plans, the general categories of coverage policy are medical policy, benefits administration policy, and administrative policy. One characteristic of benefits administration policy is that it typically:

focuses on nonclinical coverage issues

governs the day-to-day implementation of a health plan's medical policy

determines how coverage decisions are made

is established by a health plan with little, if any, input from purchasers

Answer=A

Administration Policy

In addition to medical policies and benefits administration policies, both of which address what is covered, health plans maintain policies that provide guidance on how to administer the processes for making coverage determinations. These administrative policies outline processes and procedures for the development, application, and revision of medical and benefits administration policies, including a reconsideration and appeal process for providers and members to resolve disputes with the health plan. Administrative policies are often based on specific regulatory requirements or, in the case of health plans that obtain private accreditation, specific accreditation standards.

Administrative policies govern day-to-day implementation of medical and benefits administration policies. For instance, administrative policies specify timeliness requirements for review of medical necessity, such as 20 days from the date of the complaint for reviewing medical necessity questions on non-life-threatening conditions. Administrative policies also document which medical management activities may be delegated to providers or other entities and the degree of oversight needed to monitor such delegated services.

A health plan's administrative policy on appeals contains the guidelines to be followed when handling member and provider complaints and disputes, which can pertain to a wide variety of issues ranging from questions of medical necessity to the courtesy of health plan personnel. We discuss the member appeals process in more detail in the lesson, Utilization Review.

Figure 2A-4 summarizes the characteristics of the three types of coverage policy.

Purpose and Scope of Medical and Benefits Administration Policies

Health plans use medical and benefits administration policies to improve the likelihood that

Members receive medically necessary and appropriate care within the framework of the contract and are protected from unnecessary and unproven services

Coverage decisions are consistent with the purchaser's contract Coverage decisions are legally defensible and in compliance with all

applicable regulatory requirements

While benefits administration policy is generally established by health plans in collaboration with purchasers, medical policy is established in accordance with evidence-based medicine and input from relevant expert providers, with little, if any, input from purchasers. Both must be in accordance with applicable state and federal laws.

Contract provisions and benefits administration policies vary from one health plan to another. For example, different health plans may have different positions on covering certain types of care such as behavioral healthcare, rehabilitative care, and reproductive therapy. A health plan may also have different contract provisions and benefits administration policies for its different purchasers.

A number of factors help a health plan determine whether to cover a particular service. Such factors include (1) state mandates, (2) safety and effectiveness, (3) cost-effectiveness, and (4) the preferences of purchasers and members.

Benefits administration policy usually addresses the entire continuum of care, including

Preventive services, such as wellness programs, prenatal care, immunizations, routine examinations, and disease screening

Primary care Services from healthcare specialists Mental/behavioral healthcare Acute care, such as inpatient hospital care and emergency care Inpatient care at other types of healthcare facilities, such as skilled nursing

facilities Prescription drugs Vision care, dental care, and other ancillary healthcare services, if applicable Follow-up care, such as rehabilitation and home healthcare

Medical policies, on the other hand, are confined to an evaluation of whether specific services, procedures, medical devices, or drugs are medically necessary and appropriate and neither experimental nor investigational.

Considerations for Medical Necessity and Appropriateness

Health plans must consider a number of factors when determining if services are medically necessary and appropriate. For example, defining medically necessary and appropriate services strictly according to evidence-based medicine effectively eliminates coverage for some treatments that have not undergone rigorous clinical studies but that may be effective treatments nonetheless. The lack of studies in some cases is because the procedure is so widely used with good effect that to design an experiment with a control group (i.e., patients who do not receive the treatment under study) would result in individuals in the control group being denied treatment that common medical knowledge considers safe and effective.

Considerations for Experimental and Investigational Services

Experimental services are services that have not been tested for safety and effectiveness or are being tested outside standard clinical trials. Investigational services are services that are being tested in humans for safety and effectiveness in accordance with standard clinical trials and for which conclusive results are not yet available.1 The two terms are sometimes used in conjunction (experimental/investigational services) to refer to interventions for which the safety and effectiveness have not been established.

Sometimes, patients are willing to try new or unproven treatments for medical conditions that have not responded to conventional treatment. In addition, the medical and scientific communities may embrace new medical technologies before research has been completed. Because of these factors, most contracts exclude experimental and investigational procedures. In addition, medical policies indicate which procedures are considered experimental or investigational for specific conditions.

Typically, health plans rely on peer-reviewed medical studies and opinions from nationally recognized medical experts to develop policies concerning services that are considered experimental or investigational. Also, health plans often use an internal review process that includes network providers. Some health plans have a team dedicated to evaluating new medical technology.

Proving the effectiveness of a new medical technology may require a research period of several years or more. The wait sometimes frustrates patients who are anxious for a cure, while also creating difficulties for health plans seeking to apply medical necessity and appropriateness provisions based on a requirement that the treatment meet an evidence-based standard of proof.

A prominent example of a controversial experimental treatment is the use of autologous bone marrow transplants (ABMT) for various medical conditions. Although clinical research has proven bone marrow transplantation effective in some diseases, for other conditions, the evidence on the benefits and drawbacks of this approach is inconclusive. When evidence-based medical data is not sufficient to guide clinical decisions, as is the case with emerging technologies, a variety of factors (some not medically related) can influence what is considered an appropriate course of treatment. As Insight 2A-12 illustrates, the widespread use of a particular medical treatment, consumer demand, public opinion, and government mandates all have the potential to affect a health plan's medical policy.

Insight 2A-1. ABMT and Late-Stage Breast Cancer.

The procedure known as autologous bone marrow transplant (ABMT) has been proven effective in treating certain types of cancer, such as leukemia and lymphoma. However,

clinical science has not yet demonstrated that this painful, expensive, and high-risk procedure is successful in either curing or prolonging the life expectancy of late stage breast cancer patients. In the case of breast cancer, several factors combined to delay the process of evaluating the effectiveness of ABMT.

For new procedures, such as ABMT, evidence-based data is often obtained through clinical trials. In clinical trials, patients are randomly assigned to either (1) a group that receives the treatment being studied or (2) a control group that receives conventional therapy. Patients do not know which group they are assigned to, so they cannot be sure that they are receiving the treatment that is being studied.

At the time ABMT first started receiving attention as a potential treatment for late stage breast cancer, many patients were unable to obtain coverage because their health plans excluded ABMT as an investigational procedure. In addition, many patients were unable to enroll in ABMT trials because their health plans typically did not provide coverage for clinical trials. However, even when breast cancer patients did have access to clinical trials, they were reluctant to participate in the ABMT trials because they did not want to take the chance of being given the conventional therapy.

Various factors combined to convince breast cancer patients that ABMT was their last best hope. A number of physicians recommended it and soon the media began to run stories that touted it as a promising new procedure. Public pressure quickly mounted for health plans to cover ABMT and, in response, government programs and a few states mandated coverage. In addition, some patients filed lawsuits to force health plans to provide coverage. Consequently, health plans were compelled to treat ABMT as a medically appropriate procedure for breast cancer even though recent clinical studies have shown that it is no more effective than less risky conventional procedures.

In part to avoid problems like those that surrounded the use of ABMT and breast cancer, a growing number of health plans now provide coverage for clinical trials. Also, America's Health Insurance Plans (AHIP)and the National Institutes of Health (NIH) have entered into an agreement intended to make clinical trials available to more health plan subscribers and their families. AHIP encourages its member plans to cover the costs associated with NIH-sponsored clinical trials, provided the cost does not substantially exceed the amounts that would have been incurred for the conventional course of treatment on an in-network basis.

Once a particular drug has received approval from the Food and Drug Administration (FDA), it is no longer considered experimental or investigational. However, even after the FDA approves a drug, questions of medical appropriateness may arise if that drug is prescribed for off-label use. Off-label use refers to a situation in which a healthcare practitioner prescribes a drug for clinical indications other than those stated in the labeling approved by the FDA. For example, using a drug to treat prostate cancer when the FDA originally approved the drug to treat lung cancer is an off-label use. The FDA's long-standing policy has been not to interfere with off-label uses, citing a reluctance to interfere with the practice of medicine.3

Impact of the Purchaser Contract on Coverage Policies

As we saw in The Role of Medical Management in a Health Plan, an essential provision in the contract between the health plan and the purchaser is the coverage requirement that healthcare services be medically necessary and appropriate to support the (1) safety, (2) clinical effectiveness, and (3) cost-effectiveness of care. Medical policies guide a health plan's personnel in making these types of decisions.

Because medical policy and benefits administration policy are closely linked to the purchaser's contract, it is important to understand how the contract works. Figure 2A-5 describes some common provisions contained in the contract between a health plan and a purchaser.

Determining whether a particular service, medical device, or drug is covered under the contract can be a complicated process. Medical and benefits administration policies expand upon coverage provisions in the contract and provide guidance for decision-making. For example, a health plan may rely on such policies to determine whether the custodial care exclusion in the contract applies to a particular service. The gradations of services between skilled care (which is typically covered) and custodial care (which is typically excluded) are often subject to dispute. Benefits administration policies can help health plan personnel consistently evaluate if specific services are actually covered according to the purchaser's contract.

As Insight 2A-2 explains, it is impractical to specifically address all the criteria for all coverage decisions in a contract.

Insight 2A-2. The Need for Medical and Benefits Administration Policies.

Theoretically, a health plan could include in its contract every piece of information that is used to make coverage decisions. However, health plans maintain information in medical and benefits administration policies outside the contract for several reasons.

First, if all the information included in medical and benefits administration policies (see Figure 2A-3 for an example of just one uncomplicated medical policy) were included in the contract, the sheer volume and complexity would be overwhelming.

Second, the contracts would require constant amendments to keep pace with the extremely dynamic, rapidly changing healthcare environment.

Third, medical and benefits administration policies provide decision-making guidelines, rather than legally binding contract provisions, thus allowing the health plan to make exceptions based on individual circumstances. If all these policies were included in the contract, there would be little contractual leeway for exceptions.

Consequently, health plans rely upon medical and benefits administration policies to provide the additional information that is sometimes needed to make coverage determinations. These policies are typically approved, documented, organized, and made available in manuals, a collection of memos, an electronic database, or a combination of these formats.

If the contract contradicts a specific medical or benefits administration policy, then the contract, which is a legally binding document, takes precedence. Similarly, if a medical or benefits administration policy addresses a benefit or exclusion that is not included in the contract, then the medical or benefits administration policy does not apply. The contract takes precedence in all situations, except when it fails to reflect applicable state or federal requirements. Ideally, all such requirements are

incorporated into the contract, medical policy, and benefits administration policy; but if not, then regulatory requirements govern.

In general, if the contract between a health plan and a purchaser contradicts a specific medical or benefits administration policy, then the policy, and not the contract, takes precedence.

True

False

Answer=B

Health plans that have different product lines need to specify in their medical and benefits administration policies any variations in covered benefits across product lines. For example, a particular healthcare service may be a covered service under the health plan's point of service (POS) contract, but may be excluded under its HMO contract. Or coverage for physical therapy may be unlimited under a health plan's HMO contract, but may be limited to a certain number of days under its PPO contract. In making coverage determinations, health plan personnel must be aware of these types of product differences. Medicare health plans must cover all services allowed by the Medicare program and, therefore, health plans must note where Medicare differs from their coverage for their commerical products. Furthermore, health plans must be careful to see that their contracts, medical policies, and benefits administration policies are consistent in their definitions of medical necessity and appropriateness across product lines.

Health plans sometimes provide extra-contractual coverage, also called administrative coverage, when they wish to authorize a particular service or supply that, although not covered by the contract, might provide a significant benefit to a member. In this situation, the health plan's administrative policy establishes the procedure for evaluating the value of noncovered services, while the plan's utilization review program is used to guide the health plan in choosing the proper course of action in each particular case.

Health plans usually implement administrative coverage when they believe that the additional expenditure for the noncovered service will be offset by lower long-term costs of care for a member. For example, suppose that a plan member with severe arthritis has difficulty getting in and out of the bathtub and needs handrails installed to assist with this activity. Even if the benefit contract does not cover the cost of the rails and installation, the health plan may decide to authorize payment for the rails and installation to reduce the likelihood of the member falling and possibly experiencing a serious injury. In addition, the coverage of benefits outside the contract may serve to improve the quality of life for the member.

A certain amount of risk is involved in providing administrative coverage because it may set a precedent for the health plan to pay benefits for other noncovered services in the future. One approach that health plans take to reduce this risk is to include an alternative care provision in their contracts. An alternative care provision is a contractual provision or a rider that states that, at the discretion of the health plan, noncovered services are considered to be covered, provided they are medically appropriate and comparable in cost to the applicable covered services. Similarly, a health plan may prepare a letter, as needed, to document that services are being covered on an exception basis. Both the health plan and the member sign this letter, which is not a part of the contract, to indicate their understanding and agreement.

The health plan should be aware of any applicable laws or regulations regarding care alternatives. For example, in Washington, if a patient who meets the criteria for inpatient hospital care requests care in another setting (e.g., in a skilled nursing facility or in the patient's home), the health plan must cover the care in the alternative setting.

Quality-of-Life Considerations for Medical and Benefits Administration Policies

One issue that health plans have to contend with is coverage determinations related to care that may be classified as quality-of-life services. Typically, quality-of-life services are not associated with a specific disease or injury, but with diminished function, such as infertility or impotence. Sometimes, however, the line between disease and function is blurred. Usually, the contract or benefits administration policy states whether or not coverage is provided for treatments for hair loss, impotence, infertility, weight management, memory loss, birth control, and incontinence. Further, the benefits administration policy might state which therapies for quality-of-life issues are covered, and the medical policy might list the clinical circumstances under which a specific quality-of-life therapy is covered. For quality-of-life services, some health plans apply unique authorization systems or contract provisions, such as a case-by-case review of need or specific benefit limits.

Monitoring Medical and Benefits Administration Policies

Because of rapid changes in healthcare technology and the regulatory environment, a health plan must closely monitor and modify its medical and benefits administration policies. If a health plan fails to keep its medical and benefits administration policies current, then functions such as quality management (QM), utilization management (UM), and claims administration might become inconsistent with each other, as well as with the contract, current medical evidence, current medical practice, and legal and regulatory requirements. Health plans that have lengthy policy resources may review part of the policy each year, with a goal of routinely reviewing all these resources every two to three years.

In addition to conducting ongoing or periodic reviews of its medical and benefits administration policies, a health plan performs reviews and makes modifications on an as-needed basis. For example, whenever an existing medical policy no longer

reflects current medical practice, the medical policy needs to be revised. Factors that could prompt a review of medical policy include

New scientific evidence Significant changes in medical practice Matters of safety for plan members or providers New legal or regulatory agency requirements for the delivery of medical services Changes in accrediting agency standards Medical services that are new from a technological standpoint (for example, a

new magnetic resonance imaging scan) Medical services that are new from a procedural standpoint (for example, a new

surgical technique)

Health plans must incorporate newly mandated benefits and other laws and regulations into their medical and benefits administration policy resources on a timely basis, which often presents a challenge, especially when trying to comply with the multitude of state requirements. In addition, health plans that seek accreditation must have medical and benefits administration policies that meet applicable accreditation standards. For example, the National Committee for Quality Assurance (NCQA) uses Health Plan Employer Data Information Set (HEDIS) measures, such as preventive care measures pertaining to childhood immunizations, flu shots for older adults, and breast cancer screenings, to evaluate a health plan's effectiveness of care.

One critical aspect of maintaining current, appropriate medical policies is technology assessment, as we will discuss in the next section.

Medical Policy Development

Technological advances in medicine have contributed to the U.S. population's longevity and its quality of life. Many providers, purchasers, and consumers tend to assume that new medical technology means more effective medical care. Often, however, the effectiveness and safety of a new treatment or procedure has not been established at the time of its introduction, as we saw in Insight 2A-1. Further, advances in medical technology have also contributed to the increased costs of healthcare. Careful development of medical policies is necessary to address concerns about safety, effectiveness, and cost-effectiveness.

To make informed decisions about the safety and effectiveness of medical technologies, health plans rely on technology assessment, a process that evaluates the clinical aspects of new medical procedures, devices, drugs, and tests (as well as new applications of existing medical technology) to determine which approaches should be incorporated into the plan's medical policy. Technology assessment may also be applied to older tests and treatments that scientific evidence suggests may be obsolete or to nontraditional approaches to healthcare, such as acupuncture or herbal remedies, that are becoming increasingly popular. The use of technology assessment for evaluating currently accepted practices is sometimes controversial since many of these practices are based on accumulated experience without formal scientific evidence.

Technology assessment provides the scientific rationale for covering or not covering a service and for the medical policy section that specifies when the service is appropriate and when it is not. Examples of technology assessment include evaluations of

Tests, such as a new prostate-specific antigen (PSA) test, for screening prostate cancer

Treatments, such as bone marrow transplants for various types of cancer or other diseases such as sickle cell anemia

Devices, such as coronary artery stents and lasers for various applications Procedures, such as minimally invasive (laparoscopic) heart surgery

Evaluation of New Treatments

The medical policy development process varies by health plan. Health plans may conduct technology assessment on a national, regional, or (in the case of small plans) local level. Typically, technology assessment is conducted internally by a health plan, although many health plans obtain safety and effectiveness information from other organizations to accelerate the assessment process. Several external organizations offer technology assessment services. Health plans also collectively pool resources needed for high level assessments. In all cases, the final assessment decisions are made by the health plan.

In many health plans, either the quality management committee or the medical advisory committee oversees medical policy development for new procedures, devices, and tests. Other health plans have committees specifically dedicated to the oversight of this activity. The pharmacy and therapeutics (P&T) committee usually oversees the evaluation of new drugs.

A health plan needs to see that its medical policy development follows a logical progression to the accept-reject decision and that technology assessment is neither too narrowly focused nor too inclusive. If a health plan's technology assessment is too strict, it will reject technologies that are effective medical services. On the other hand, less stringent assessment may result in waste of health plan resources on services that are not effective or that may endanger plan members.

Medical Policy Development

Although each health plan tailors medical policy development according to its own goals, resources, and limitations, the process generally includes the following four steps:

1. Identification and research of promising new technologies 2. Clinical review of the research findings and the proposed medical policy 3. Operational review of the proposed policy's impact on the health plan 4. The decision to accept or reject a proposed policy

Identification and Research of New Technologies

The purpose of the first step is to gather information on a new technology and draft a proposed medical policy. The technology evaluation staff in a health plan monitor new developments and gather evidence regarding the most promising technologies. Staff members may learn about new technologies from a variety of external sources, such as medical literature, general media reports on healthcare issues, providers, members, purchasers, and pharmaceutical and device manufacturers' sales representatives. Internal sources (e.g., medical directors, provider relations representatives, and sales representatives) may also provide leads about new medical approaches.

To gather information about the safety and effectiveness of new technology, staff members review information from a variety of research sources, including

Published information in peer-reviewed medical journals Position statements and technology assessments from specialty medical

societies Policies of federal health agencies such as the FDA, the Centers for Medicare

and Medicaid Services (CMS), and the Agency for Healthcare Research and Quality (AHRQ)

Opinions of experts not affiliated with the health plan, often physicians from academic medical centers

The staff may also consult external resources that specialize in medical technology assessment. Figure 2A-6 briefly describes several professional organizations whose recommendations may influence a health plan's medical policy development.

Many of these and other organizations provide Web site access to information on technology assessment. Consulting these resources is not a one-time event. Health plans need to monitor the safety and effectiveness of medical technology and obtain access to independent reviews of experimental or unproven technology on an ongoing basis.

The staff members then prepare an evaluation report, which summarizes their findings on safety, effectiveness, and any problems with the technology, and draft a proposed medical policy. The staff report may also include information on the costs of the technology and any special considerations for implementation. Typically, the next step in the assessment process is a clinical review of the proposed policy and evaluation report.

Clinical Review

In some health plans, an internal review panel, composed of a health plan's medical directors and other physician employees, reviews a proposed medical policy and makes recommendations on whether to accept, modify, or reject the policy. In other health plans, a standing committee that addresses clinical issues, such as the medical advisory committee (for new devices, procedures, or treatments) or the pharmacy and therapeutics committee (for new medications) performs the clinical review. Recall from The Role of Medical Management in a Health Plan that such standing committees typically incorporate community providers as well as health plan personnel. Regardless of the panel structure, the focus of the clinical review is on the impact of the medical policy on clinical outcomes.

A health plan may develop its own clinical review criteria for assessing technology, or it may use existing criteria, such as the assessment criteria developed by the Technology Assessment Committee of the Institute for Clinical Systems Integration (ICSI), which is presented in Figure 2A-7.

The clinical review often occurs prior to the operational review, although some health plans perform the two types of review simultaneously. In some cases, a single multidisciplinary panel performs both types of review.

Operational Review

The operational review panel may include representatives from finance, claims administration, legal affairs, member services, marketing, quality management, and network management. This panel analyzes the expected impact of a proposed medical policy on financial outcomes, member and provider satisfaction, and operating efficiency.

The financial analysis considers both the cost-effectiveness of a new technology compared to existing interventions and the potential cost impact of a medical policy

on health plan premiums and provider reimbursement. Since premiums are based on actuarial forecasts of the cost of care, a new technology that substantially impacts healthcare delivery costs must be taken into consideration when premium rates are developed. In addition, if a health plan pays providers on a capitated basis, the financial impact of a new technology might impact provider reimbursement arrangements. For example, if covering an expensive new technology places an undue burden on certain providers because of the equipment required, the health plan might decide to adjust the capitation rate to take into account the increased cost of care. Unfortunately, data for in-depth financial analysis is often lacking, especially early in the life of a new technology.

The operational review panel determines whether the plan's existing delivery system of network providers and facilities can deliver the care described in the proposed policy. The panel also considers the capabilities of the health plan's medical management and claims administration processes to accommodate the proposed policy as it is written. For example, does the current claims coding system cover the technology? If not, how should providers code it? Another consideration for this panel is any impact that the proposed policy may have on the health plan's compliance with laws, regulations, or accrediting standards.

The Accept-Reject Decision

Following the clinical and operational reviews, the health plan makes a decision on whether to adopt a proposed medical policy. Depending on the structure of the health plan and its medical policy development process, the committee overseeing the development process (e.g., the medical advisory committee), a higher level committee (e.g., the quality management committee), or the board of directors may make the actual decision. If a higher level committee or the board of directors makes the final decision, then the committee overseeing medical policy development typically plays an advisory role and submits its recommendations.

The accept-reject decision often depends on how a new technology compares to currently used interventions. Generally, when compared to an existing technology, a new approach may be rejected because of

Inferior safety or effectiveness Few or no clinical advantages Higher costs coupled with no significant clinical advantages Insufficient information about benefits and/or drawbacks

If a proposed policy is accepted, then the new medical policy is distributed to the various health plan departments affected by the change (e.g., utilization management, quality management, claims administration, and marketing) and to network providers

Clinical Practice Guidelines

Recall from The Role of Medical Management in a Health Plan that a clinical practice guideline is a clinical practice management tool intended to guide providers in the delivery of care to individual patients. Through CPGs, health plans encourage providers to follow standards of care and, thus, deliver consistent, efficient, and high-quality healthcare.

The documents and resources that we refer to as clinical practice guidelines in this course are also known as clinical guidelines, practice guidelines, practice parameters, practice policies, or clinical criteria. Regardless of what they are called, however, these documents and resources are intended to state, clearly and systematically, the appropriate care for a specific type of patient in specified clinical circumstances, providing a framework for care while also allowing for patient-specific variations, based on physician judgment.

In addition to providing guidelines to healthcare practitioners, CPGs have a number of other uses. They are frequently integrated into medical policies to guide health plan decision-making about medically appropriate services, and they often form the basis for health plan activities intended to influence the quality of care delivered to plan members. CPGs are an integral part of QM and UM programs, such as disease management. In some health plans, CPGs serve as the basis for evaluating whether providers are practicing in accordance with accepted standards. Some health plans even include CPGs in their member education programs. Finally, CPGs enable health plans that seek accreditation to satisfy applicable criteria for quality management of medical service delivery. For example, NCQA states that a health plan has a responsibility to adopt or develop CPGs for acute and chronic care services that are relevant to the member population.13

CPGs usually take the form of guidelines that are intended to provide healthcare practitioners with an outline of the accepted standard of care based on a summary of the current medical evidence. Many of a health plan's CPGs focus on the prevention or early detection of a particular condition. For example, to help detect breast cancer, CPGs might recommend a single baseline mammogram for women ages 35 through 39, followed by one mammogram every one to two years for women ages 40 through 49, and one mammogram every year for women ages 50 through 69.

CPGs may outline the course of care in sequential order for a given condition. They are often presented in a clinically detailed, step-by-step plan for delivering care. For example, in the case of a patient with suspected congestive heart failure, the CPGs might initially indicate that an electrocardiogram (EKG), specified blood tests, and a chest X-ray be done, followed by treatment with oxygen and diuretics as indicated by the tests.

CPGs indicate the approach that can generally be expected to work best with respect to a particular medical condition. A health plan establishes CPGs to achieve the best possible outcome in the most cost-effective way by increasing consistency of care for

routine, uncomplicated cases. With this objective in mind, some health plans audit and track compliance with CPGs. However, a health plan needs to temper this standardization of medical procedures with the flexibility to accommodate the needs of different plan members. CPGs are guidelines, not strict policies, and are intended to be flexible. The only requirement for a provider to vary from the guideline is the documentation of a sound clinical reason for the variation.

In addition, a health plan's CPGs must be regularly reviewed and updated to reflect medical advances and changes in the legal and regulatory environment. Insight 2A-4 shows the essential characteristics of an effective CPG, according to AHRQ.

Insight 2A-4. Characteristics of an Effective CPG.

According to the Agency for Healthcare Research and Quality (AHRQ), an effective CPG should have the following eight characteristics:

1. Credibility - a degree of scientific grounding in evidence-based medicine

2. Full disclosure - a development process that is outlined in detail

3. Validity - explicit discussion of the strengths, areas of conflict, weights of consensus of expert opinion versus scientific evidence

4. Reliability/reproducibility - proof of proper applicability in different settings and practices

5. Clinical adaptability - clear description of the population to which the guideline applies

6. Flexibility - the degree to which exceptions are identified

7. Clarity - the language must be unambiguous

8. Scheduled review-a plan for regular review and reevaluation

Source: Adapted from William G. Carnett, "Clinical Practice Guidelines: A Tool To Improve Care," Quality Management in Healthcare (Fall 1999): 19-20. Used with permission.

A health plan's covered services must also be consistent with the CPGs that it uses. For example, if a health plan's benefits administration policy indicates that positron emission tests for coronary artery disease are not covered, then the CPGs for coronary artery disease should generally not include this test as a recommended option.

A clinical practice guideline (CPG) that the Azalea Health Plan has developed to aid in the detection of cervical cancer identifies a number of exceptions to its use. This information indicates that, according to the Agency for Healthcare Research and Quality (AHRQ), Azalea's CPG for cervical cancer possesses the characteristic of an effective CPG known as:

reliability

clinical adaptability

credibility

flexibility

Answer=D

Development of Clinical Practice Guidelines

Often, the first step in developing CPGs occurs when the health plan identifies an area in which new or modified CPGs are needed. The sources of information about the need for new CPGs or modifications include medical literature, network providers, health plan medical directors or other medical staff, and provider relations representatives.

The health plan then decides whether to develop their own CPGs or adopt existing guidelines. Many health plans adopt existing, nationally valid CPGs to reduce the likelihood that providers will be overburdened by a variety of CPGs from different health plans pertaining to the same condition. Figure 2A-8 lists various sources that health plans may use when developing CPGs. Many health plans also solicit network providers' input into the development or selection process.

Once the appropriate CPGs have been developed or identified, the health plan's medical policy director submits the recommendations to the appropriate health plan committee (typically the medical advisory committee or quality management committee) for review. The committee in turn may present its CPG recommendations to the health plan's senior management or board of directors for approval.

Implementation Strategies for CPGs

It is essential for health plans to bridge the gap between developing CPGs and making sure that CPGs are put into practice. Successful implementation is accomplished by attempting some or all of the following measures:

Establishing guideline credibility by incorporating information from resources that providers know and respect

Involving local providers in the development process and allowing some customization of the guidelines according to the medical practice conventions in the area

Recruiting opinion leaders that the providers trust to assist with dissemination of CPGs

Measuring and reporting improvements in outcomes that result from the use of CPGs

Introducing CPGs gradually into the provider community, with the initial focus on clinical conditions that providers consider most important or encounter most frequently

Presenting CPGs as decision support tools (recommendations) rather than requirements

Dividing lengthy guidelines into interrelated modules to facilitate usage Making CPGs available in an interactive computerized format Providing preprinted patient education information and flowsheets that are

consistent with CPGs for common health problems Keeping guidelines current with changes to generally accepted medical

practices Working with other health plans in the region, state, or locality to develop

guidelines that are consistent across health plans and relevant to the needs of the member population

Giving members health education guidelines that are based on and consistent with current CPGs to help members understand their conditions, comply with recommended treatment, and ask their providers appropriate questions

Risk Management Issues for Clinical Practice Management

For clinical practice management, risk management focuses on developing and implementing clinically sound and clearly presented policies and guidelines that comply with all applicable regulatory requirements. As we have seen, health plans strive for clinical practice parameters that are scientifically sound. Rigorous examination of the available scientific evidence when assessing new medical technology or developing CPGs demonstrates due diligence and good faith on the part of the health plan.

Furthermore, the involvement of network providers and other healthcare experts in clinical practice management activities increases the likelihood that the plan's policies will reflect both current standards of medical practice and any special considerations for particular member populations. Well-crafted benefits administration and medical policies, which form the basis of a health plan's UM programs and claims administration, help demonstrate that decisions are made in good faith, thereby reducing the risk of litigation.

In addition to scientific trends, health plans continuously monitor new legislation and court decisions that might affect clinical practice management. They then incorporate relevant changes into their policies and programs.

Also, health plans should see that all documentation of covered services-such as marketing brochures, contracts with purchasers, certificates of coverage, and

contracts with providers-are consistent and accurate. These documents must all present the same benefits, exclusions, and limitations as described in the plan's benefits administration and medical policies. These documents must be

Reviewed and updated on a regular basis Readily available during the course of member or provider appeals In compliance with all applicable state and federal regulations such as benefit

mandates and process requirements

Finally, it is essential for health plans to inform members and providers of their right to appeal coverage decisions. A consistently administered appeals process can resolve disputes in a fair, open, and timely manner and reduce the likelihood that a court will decide that a plan has been negligent or operating in bad faith.

AHM Medical Management: Quality Management Pg 1 to 60

Quality Management

Course Goals and Objectives

After completing the lesson Quality Management , you should be able to:

Describe the major steps in the quality management process Describe the role of outcomes in quality management Identify the characteristics, uses, and sources of quality standards Describe the differences between traditional healthcare and population-

based healthcare

Describe how quality management relates to risk management and information management

Quality Management

Introduction

When managed healthcare first appeared, it offered a way to control the spiraling costs of healthcare and to improve access to healthcare services. While these goals remain important, they are no longer the only factors consumers and purchasers consider when they make healthcare decisions. Quality has also become an important consideration.

Much of the impetus for this shift toward a quality perspective comes from employers whose commitment to quality management and continuous quality improvement is often reflected in the requirements and expectations they set for health insurers and health plans. A recent poll of more than 200 benefits managers in large companies indicated that the majority of employers (56 percent) view quality as an important issue in selecting a health plan.1 Consumers are also concerned with quality. A Wall Street Journal/NBC News poll taken in 1998 reported that 23 percent of consumers felt that quality was the most important issue in healthcare, up from only 8 percent in 1993.2

In this lesson, we will describe the concept of quality and present some of the tools health plans use to measure, monitor, and improve the quality of their services. We will also describe the impact of quality management on current and future health plan operations.

Defining Quality

Developing a single definition of quality healthcare that will be acceptable to patients, providers, purchasers, and health plan administrators is nearly impossible. Each of these groups tends to define quality in terms of individual needs and expectations, and because their perspectives are different, their definitions of quality are also different. The following dimensions, however, are essential to quality services:

Accessibility: services are available when and where they are needed Effectiveness: services produce expected healthcare outcomes Efficiency: services result in the best care for a given cost or the lowest cost

for a given level of care Acceptability: services satisfy needs and expectations

Health plans generally focus on two types of quality: the quality of the health plan's administrative services and the quality of the healthcare services the health plan makes available to its members. Administrative services encompass all of the nonclinical services a health plan delivers to plan members, providers, purchasers, and employees. Healthcare services are clinical services that affect the health of plan members.

Administrative Quality

HMOs typically provide their customers with a full range of administrative services, including medical management, assistance with PCP selection, enrollment processing and distribution of identification cards, claims processing, member services, and systems and operational support. Health plans that offer a PPO or clinical management on a contract basis provide more limited services. Because the most visible of a health plan's administrative services are customer services delivered to plan members by the health plan and its providers, our discussion will focus on this aspect of administrative quality.

As you recall from The Role of Medical Management in a Health Plan, service quality refers to the success of a health plan and its providers in meeting the nonclinical

needs of plan members. In assessing service quality, the health plan is concerned with the following issues:

The attitude, competence, availability, and efficiency of the member services staff

The speed and accuracy with which claims, if any, are processed and benefits are paid

The ease with which members can obtain information and resolve problems The availability of appropriate and understandable educational materials

Service quality is important at the provider level as well. Office staff are responsible for scheduling appointments, processing referrals, obtaining authorizations, and maintaining patient files. Physicians provide treatment information and address patients' concerns. The following considerations are important in assessing the quality of customer services delivered by providers:

The ease with which patients can schedule appointments and obtain referrals The amount of time patients must wait at the office before being seen by a

physician The attitude, competence, and efficiency of the office staff The manner in which the clinician handles patients' concerns, answers

questions, and explains clinical findings and treatment options

Health plans measure service quality primarily through member feedback gathered from customer satisfaction surveys and member complaints and grievances. Data regarding after-hours availability, telephone wait times, the percentage of calls that are abandoned before they are answered, the percentage of calls that are resolved on the spot, the number of contacts per day, and the length of time needed to complete each contact provide additional service quality measures.

Health plans are also concerned with the quality of services, such as processing authorization requests and providing education and training on plan policies and procedures, that they offer to their providers.

In a health plan context, quality consists of two major components: healthcare quality and service quality. The following statement(s) can correctly be made about service quality:

A. Service quality typically does not refer to any of the services supplied by a health plan's providers

B. health plans measure service quality primarily through member feedback gathered from customer satisfaction surveys and member complaints and grievances

Both A and B

A only

B only

Neither A nor B

Answer=C

Healthcare Quality

Plan members receive a variety of healthcare, or clinical services, as illustrated in Figure 3A-1.

A plan's primary prevention efforts are designed to keep plan members healthy. Screening services, such as mammography and cholesterol testing, allow physicians to detect disease conditions before they result in acute episodes. Acute care, post-acute care, chronic care, and long-term care focus on treating patients who are sick, helping them live with their illness, and preventing future acute episodes. Palliative care focuses on delivering care and support to patients who are dying.

Plan members receive healthcare services from a variety of providers, including physicians, nurses, therapists, medical groups, or other healthcare professionals in

hospitals, nursing homes, and other healthcare facilities. Quality is an important aspect of care at each of these points in the delivery system.

Health plans generally assess healthcare quality in terms of the structure, process, and outcome measures proposed by Dr. Avedis Donabedian.3 Although most of the measures currently used to assess healthcare quality are structure and process measures, an increasing number of health plans are beginning to focus their attention on outcome measures. We will describe these measures in more detail in the lesson, Quality Assessment.

What Quality is Not

Perhaps as important as the definition of quality, is an understanding of what quality is not. For example, quality is not equated with quantity. Excessive, unnecessary, or inappropriate services have been shown to affect quality adversely by exposing patients to unnecessary risks. For example, a 1997 study of patients admitted to a large teaching hospital reported that 17.7 percent experienced at least one adverse event. The longer patients remained hospitalized, the higher their chances were of experiencing adverse events.4 Quality services are appropriate, medically necessary, and provided in the most efficient manner, using available resources. (We will discuss the issue of patient safety in more detail later in this lesson.)

Quality is not an intangible attribute. From a patient perspective, quality often depends on patient goals and expectations, which are very personal and differ according to age, gender, race/ethnicity, and health status. Healthcare, however, is also a system defined by structures, processes, and outcomes, all of which have quantifiable, measurable elements. Analyzing those elements and comparing them to established standards or to similar elements in other organizations provides an indication of the quality of a health plan's services.

Quality is not expensive over the long term. Delivering quality services does generate costs-not just for preventive services, but for training personnel, expanding networks, increasing benefits, monitoring performance, upgrading information systems, and improving care. Over the short term, these costs can be very high. Quality, however, is a long-term investment designed to produce long-term results.

Critics of the cost-effectiveness of providing quality care argue that maintaining healthy populations through disease prevention and other quality initiatives costs more than it saves. As proof, they compare the costs of providing preventive services such as immunizations and mammograms to large numbers of healthy patients with the costs of treating diseases that occur naturally. For example, one commentator, analyzing data from a health plan's study of the effects of infant immunization against pneumonia, asserted that the $197,600 it would have cost the plan to treat 38 nonimmunized control-group infants who contracted pneumonia was far less than the estimated $950,000 it cost to immunize the 19,000 infants in the study group.5

To a certain extent, such assertions have merit. Concluding that quality is not worth these costs, however, ignores equally important facts. Assuming a one-to-one relationship and comparing short-term costs with short-term savings, as the critic in our example does, can produce misleading results. A more accurate picture develops when the costs of providing quality care are compared with the costs of not providing quality care.

Treatment costs are the short-term results of lower-quality care. The long-term costs of not providing quality care result from internal failures such as waste, duplication, and mistakes, and from external failures such as malpractice and liability actions. To assert that "a few runaway breast-cancer cases are a lot cheaper than 100,000 mammograms for healthy women"6 appears dangerously short-sighted.

Quality is not the responsibility of a single employee or department. Quality is achieved when the organization provides policies, procedures, tools, and methods for making changes proactively and when every individual within the organization recognizes improvement opportunities and accepts responsibility for putting quality-based policies, procedures, and tools to use when providing services to plan members.

History of Quality Management

The use of quality as a management tool began in the 1950s when W. Edward Deming showed Japanese manufacturers how they could use quality improvement to reduce process variability and improve productivity. Quality management (QM) was introduced into healthcare in the 1960s when Congress amended the Social Security Act to create Medicare and Medicaid. Although these amendments were designed primarily to increase access to healthcare services, they also established mechanisms to monitor the quality of care that beneficiaries receive. By the 1980s, QM had become an integral part of managed healthcare. The terms used to describe the quality efforts of healthcare organizations vary and include such labels as total quality management (TQM), total quality improvement (TQI), performance management, and continuous quality improvement (CQI).

In simple terms, QM is a process designed to coordinate and facilitate a health plan's efforts to define, measure, monitor, and improve quality. Although QM is a continuous process consisting of interrelated activities, for the purposes of our discussion, QM activities are divided into two broad categories: quality assessment activities and quality improvement activities. In the following sections, we will provide a brief description of QA and QI activities. A more detailed discussion is presented in the lessons, Quality Assessment and Quality Improvement.

Quality Assessment

Quality assessment (QA), which is also referred to as quality assurance, encompasses a health plan's efforts to define and measure quality. It includes the following activities:

Developing quality goals and objectives based on key customers, services, and processes

Establishing quality standards and indicators

Collecting and analyzing performance data relevant to standards Reporting performance results to interested parties

QA has been an important issue in healthcare since the mid-nineteenth century when practitioners began to notice a positive correlation between improvements in patient care and decreases in mortality rates. By the early twentieth century, research studies had documented a similar correlation between physician education and the quality of patient care. These studies generated a series of medical education reforms, including the use of education, licensing, and certification as criteria for "qualifying" physicians and educational institutions.

In the 1950's, the focus of QA expanded from assessing structures to evaluating the processes involved in healthcare delivery. Studies conducted during this period looked at the processes and procedures used during patient examinations and follow-ups, the level of ambulatory care given by physicians, and the performance of physicians in acute care facilities compared to predetermined criteria. These studies concluded that deficiencies in patient care existed across the healthcare industry and that quality could be assessed only through continuous monitoring and improvement.

Quality Improvement

Whereas QA focuses on identifying areas in which the quality of a health plan's performance varies from established standards, quality improvement (QI) involves planning and implementing actions to reduce that variance. Because improved care produces improved results for plan members, QI represents a shift in focus from structures and processes to outcomes. Because improvements must be generated from within the organization, QI also represents a shift from the external evaluations provided by accrediting organizations and government agencies to a system of self-measurement by the health plan. The combination of quality assessment and quality improvement constitutes the quality management process, as illustrated in Figure 3A-2.

Although QM programs vary according to the specific needs of the health plan, successful programs typically exhibit the following characteristics:

Management commitment and leadership. Successful QM programs are built into a health plan's strategic framework and are supported by company leaders at all levels. Management does not simply give lip service to these programs; it is actively involved in seeing quality initiatives through to completion.

A company-wide vision. In order to succeed, a QM program must be visible, achievable, and accepted by the entire organization. It must be openly communicated in the health plan's vision, mission statement, and goals and accepted by employees throughout the organization.

A competent, knowledgeable, and motivated workforce. Management should identify the organization's educational needs and should meet those needs through formal and informal training and education. Like the quality improvements they are designed to support, training and education should be part of a continuous process.

A system of measurement and feedback. Decision making in a quality environment demands a continuous flow of data related to quality issues. Quality measures must be applied regularly and consistently, and the results must be communicated back through the organization in clear, actionable terms.

A focus on customer satisfaction. The goal of QM is to maximize both the quality of the services a health plan provides to its members and the plan members' perceptions of that quality. To achieve that goal, the health plan must pay attention to what its customers need, what they expect, and what they think they get. Ultimately, it is customer satisfaction that determines the quality of a health plan's services.

Continuous improvement. Quality is not achieved through one-time, "quick fix" efforts. Successful QM programs remain flexible to allow for adjustments and improvements as the environment changes.

The Role of Outcomes in Quality Management

Although the public typically associates healthcare outcomes with specific clinical interventions and results, health plans are concerned with all the outcomes associated with healthcare processes. These outcomes can be divided into three categories: organizational outcomes, provider outcomes, and customer/patient outcomes.

Organizational outcomes are based on system-wide clinical and financial data such as mortality rates, hospital length-of-stay averages, drug and laboratory use, and operational efficiencies. Provider outcomes focus on clinical procedures, utilization rates, and performance of individual physicians and other healthcare professionals. Customer/patient outcomes provide information about patient satisfaction, functional status, quality of life, emotional well-being, and compliance. Each of these types of outcomes has both quality and cost components. Quality management attempts to maximize the quality of all these outcomes through outcomes research and outcomes management.

Outcomes Research

Outcomes research has been defined as the "scientific study of the outcomes (results) for patients receiving different treatments for a single disease or illness." 7 In other words, outcomes research examines the effect on outcomes of a specific treatment for a given condition, usually compared either to no treatment or to an alternative treatment. Although outcomes research is built on the same model as traditional clinical research-that is, the relationship between diagnoses, interventions, and outcomes-it serves a very different purpose. Whereas clinical research focuses on the efficacy of treatment, outcomes research is intended to determine which interventions are most effective.

Treatment efficacy refers to the strength of a particular treatment under ideal conditions, such as those found in controlled clinical trials. Because diseases and treatments are examined in isolation, free from external influences, efficacy provides an absolute measure of results. Treatment effectiveness refers to the strength of a particular treatment under average conditions such as those found "in the field" of clinical medicine. Effectiveness is a relative measure that takes into account changes in both health status and quality of life. Health status is the degree to which a patient is able to function physically, emotionally, and socially, with or without assistance from the healthcare system. Quality of life is a patient's perception of and satisfaction with his or her functional ability.

The following statement(s) can correctly be made about outcomes research and outcomes management as they apply to quality management (QM) in health plans:

A. The goal of outcomes research is to maximize both treatment efficacy and treatment effectiveness

B. Both outcomes research and outcomes management represent attempts by health plans to balance quality with cost

Both A and B

A only

B only

Neither A nor B

Answer=D

The difference between treatment efficacy and treatment effectiveness can be illustrated by looking at the findings reported by clinical research and outcomes research on a procedure such as surgical hip replacement. Clinical research, in this example, would focus on the degree of improvement in range of motion achieved by the procedure. Outcomes research would assess both the degree of improvement in mobility and the patient's perceptions of the physical, emotional, and social benefits associated with that improvement.

The goal of outcomes research is to measure the quality of medical care by collecting and analyzing outcomes data. Outcomes research can take a variety of forms, including patient-based studies, records-based studies, and process assessments. Patient-based studies rely on an extensive systematic analysis of health status, quality of life, and disease-specific clinical information. Projects such as the Patient Outcomes Research Teams (PORTs) initiated by the Agency for HealthCare Research and Quality (AHRQ) are examples of patient-based outcomes research. PORTs follow a standard research methodology and are designed to provide information that can be used to support decision making and to develop strategies for improving the quality of healthcare.

Records-based studies gather information from existing clinical, financial, and administrative databases. Records-based studies are more widely used than are patient-based studies because they are typically easier, faster, and less expensive to design and conduct. Process assessments, which focus on how a treatment is delivered rather than on which treatment is delivered, provide important information related to evidence-based outcomes.

Outcomes research can be a challenge for health plans because outcomes often require long-term evaluation and analysis. For example, outcomes for diabetes care are generally measured by the presence or absence of peripheral vascular disease, heart disease, retinopathy, and stroke. These conditions may not appear until long after patients have left health plans. To account for such situations, health plans often focus on intermediate, rather than long-term, outcomes.

Outcomes management can perhaps be defined best as a systematic analysis of outcomes applied to improving the quality of patient care and services. In other words, outcomes management takes what is known about the outcomes of a given condition using various treatments and develops and implements an approach to care that seeks to maximize the outcome.

Outcomes management differs from outcomes research in several ways. Perhaps the most important of these differences involves goals. Whereas the goal of outcomes research is to determine treatment effectiveness, the goal of outcomes management is to identify and implement treatments that are cost-effective and deliver the greatest value. For outcomes management, cost-effectiveness refers to the strength, or benefit, of a treatment in achieving desired outcomes with the least use of resources. Outcomes management, therefore, is an effort to balance quality with cost.

Outcomes Management

A second difference between outcomes research and outcomes management involves scope. Outcomes management incorporates three separate but interrelated processes:

A systematic, quantifiable evaluation of healthcare outcomes at a single point in time

Repeated measurements of outcomes over time to determine causal relationships between treatments and outcomes

Implementation of programs designed to improve outcomes by reducing unintended variations and managing resources

A final difference between outcomes research and outcomes management is the introduction of performance as a critical factor in the measurement and management of outcomes. Performance evaluation is not a new concept; peer review models, for example, are widely accepted among clinicians. Subjective reviews based on expert opinion, however, are rapidly being replaced by objective performance measurement based on specific evidence-based criteria that cover both quality and cost.

The same attributes that set outcomes management apart from outcomes research form the basis of the link between outcomes management and quality management. The emphasis on managing rather than simply measuring outcomes requires health plans to evaluate the combined effect of clinical, financial, and satisfaction factors rather than the individual effects of specific variations in treatment. The emphasis on management also introduces the concept of value, which represents the relationship between quality and cost.

Quality Standards

Health plans typically rely on standards to assess the quality of the services they provide. Standards are defined by the Institute of Medicine as "authoritative statements of: (1) minimum levels of acceptable performance or results, (2) excellent levels of performance or results, or (3) the range of acceptable performance or

results." Standards represent what the healthcare system as a whole expects in terms of resources, delivery processes and procedures, and outcomes.

Standards are an important part of a health plan's QM program because they provide a vehicle by which the health plan can translate quality into operational terms and measure how well the system's performance meets expectations. Standards also provide a means of holding everyone within the organization-providers, support staff, and management-accountable for providing quality services. We will discuss the development and use of standards in more detail in the lesson, Quality Improvement.

Sources of Standards

Standards can be developed internally or externally. Internal standards are developed inside the health plan and are based on the health plan's own historic performance levels. External standards are based on outside information such as published industry-wide averages or best practices of recognized industry leaders. Health plans often use standards developed internally to assess the quality of administrative services. They rely primarily on external standards to evaluate healthcare services.

The majority of the external standards used to evaluate managed healthcare come from accrediting agencies. These agencies confer accreditation status on a health plan or its component parts following an extensive review of the health plan's operations and performance. Health plans also use standards developed by government agencies and professional societies, published data, and aggregate data from provider networks.

In order to qualify as valid measures of health plan or health network quality, standards must relate to conditions that are important to the plan and its members, that can be influenced through quality improvement initiatives, and that are under the control of the organization. Standards are also affected by such factors as the availability of reliable data, the availability of evidence regarding treatment improvements, and the need for risk adjustment. In this section, we will describe the major accrediting programs and other agencies that provide managed healthcare standards.

The following statement(s) can correctly be made about the use of internal and external standards by health plans:

A. In order to assess the quality of their own administrative services, health plans typically must use external, rather than internal, standards.

B. In evaluating their healthcare services, health plans rely primarily on internal standards.

Both A and B

A only

B only

Neither A nor B

Answer=D

Accrediting Agencies

Health plans deliver administrative and healthcare services to their customers through a complex healthcare delivery system that includes various prepackaged health plans and various types of providers. A health plan can seek accreditation for its entire delivery system; for particular components of the system such as specific health plans or products, provider networks, or individual providers; or for both the system and its individual components. We introduced the major accrediting agencies in Environmental Influences on Medical Management. In this section, we will describe these agencies and the types of quality standards they offer in more detail.

National Committee for Quality Assurance (NCQA)

The National Committee for Quality Assurance (NCQA) began accrediting HMOs in 1991 and is now the primary source of accreditation for health plans. NCQA's original accreditation program based accreditation decisions on an HMO's compliance with NCQA standards related to the quality of the organization's systems and processes. In 1992, NCQA developed a second set of measures-the Health Plan Employer Data and Information Set (HEDIS)-which provides a measure of an organization's actual performance in the areas of clinical quality and member satisfaction. In 1999, NCQA began combining traditional NCQA accreditation standards and HEDIS results to form a performance-based accreditation program. The introduction of HEDIS results into the accreditation process represents a significant shift in focus from structure and process to outcomes.

Under Accreditation '05, organizations must undergo an on-site survey of clinical and administrative systems and processes at least every three years. During these surveys, evaluators conduct a comprehensive review of written documents and medical records, interview key plan personnel, and assess customer service practices to verify that plans comply with established standards. NCQA measures performance on the following standards related directly to quality management and improvement:

Program Structure (QI 1.1-1.8) Program Operations (QI 2.1-2.3) Health Services Contracting (QI 3.1-3.2) Availability of Practitioners (QI 4.1-4.4) Accessibility of Services (QI 5.1-5.5) Member Satisfaction (QI 6.1-6.7) Health Management Systems (QI 7.1-7.2) Clinical Practice Guidelines (QI 8.1-8.6) Continuity and Coordination of Care (QI 9.1-9.4) Clinical Measurement Activities (QI 10.1-10.3) Intervention and Follow-Up for Clinical Issues (QI 11.1-11.2) Effectiveness of the QI Program (QI 12.1-12.3) Delegation of QI Activity (QI 13.1-13.2)

Plans must also submit audited HEDIS results on selected effectiveness of care and consumer satisfaction measures.

Consumer satisfaction is measured by the CAHPS® 2.0H survey, which is a combination of the original HEDIS Member Satisfaction Survey and the Agency for Healthcare Research and Quality's (formerly the Agency for Health Care Policy and Research) Consumer Assessment of Health Plans Survey (CAHPS). The core survey is administered separately to commercial, Medicare, and Medicaid populations. All plans participating in the Federal Employee Health Benefits Program (FEHBP) are also required to use CAHPS. Health plans must contract with an NCQA-certified survey vendor to administer the survey according to HEDIS protocols.

National Committee for Quality Assurance (NCQA)

The core survey questions cover specific aspects of customer service and overall measures of consumer experience with the plan. Customer service questions are divided into the following six categories:

Claims Processing (three questions) Courteous and Helpful Office Staff (two questions) Customer Service (three questions) Getting Care Quickly (four questions) Getting Needed Care (four questions) How Well Doctors Communicate (four questions)

Consumer experience questions cover four areas: (1) rating of all healthcare, (2) rating of health plan, (3) rating of personal doctor, and (4) rating of specialist seen most often. Health plans must submit results on all HEDIS Consumer Survey questions for all product lines under evaluation.8

The accreditation decision is based on the results of both the on-site survey and the HEDIS measures. Plans can earn one of five accreditation levels.

Excellent. The plan consistently delivers outstanding care and service, and its clinical and administrative systems far exceed NCQA standards for consumer protection and quality improvement

Commendable. The plan delivers high quality care and service and its systems for consumer protection and quality improvement exceed NCQA standards.

Accredited. The plan delivers sound care and service, and its systems for consumer protection and quality improvement meet NCQA standards.

Provisional. The plan meets some, but not all, of NCQA's requirements for consumer protection and quality.

Denied. The plan's systems for consumer protection and quality improvement contain serious flaws.

National Committee for Quality Assurance (NCQA)

The public reporting framework organizes plan results into five categories based on the Consumer Information Framework created by the Foundation for Accountability (FACCT). These reporting categories include (1) access and service, (2) qualified providers, (3) staying healthy, (4) getting better, and (5) living with illness. NCQA publicly reports the accreditation status and performance results in each framework category for each of the health plan's product lines.

NCQA continually updates standards that address the increasing concern for consumer protection. For example the 2000 Accresditation stNew Accreditation 2000 standards include the following requirements

An independent, external review process for evaluating medical appeals An evaluation of appeals by a physician in the same specialty or a similar

specialty during at least one stage of the internal review process An extension of care for up to 90 days for plan members undergoing an active

course of treatment from a provider that leaves or is removed from a plan's network

American Accreditation HealthCare Commission/URAC

The American Accreditation HealthCare Commission/Utilization Review Accreditation Commission (URAC) was originally organized to provide accreditation for stand-alone utilization review programs. In 1996, URAC expanded its accreditation programs to include provider networks, HMOs, PPOs, POS products, IPAs, and other integrated delivery systems. It is now one of two agencies that provide comprehensive accreditation for PPOs. URAC also offers accreditation for health plans that provide workers' compensation services, credentials verification organizations (CVOs), health plan call centers, and case management organizations.

URAC offers health plans two accreditation options: health plan accreditation, which primarily targets HMOs, and health network accreditation, which targets PPOs. Although the standards used for these options are fundamentally the same, certain designated standards apply to health plans only. Networks that do not meet URAC's definition of "health plan" should not address these standards. In addition, standards covering the scope of the credentialing program are different for the health plan and health network options.

URAC's quality management standards address such areas as

QM structure, organization, and staffing (four standards) Scope of the network's QM program (three standards) QM plan (two standards) QM complaints, corrective action, and disciplinary action (four standards)

URAC does not currently include performance data as part of the accreditation process. However, standards for quality management do require health plans and

health networks to engage in quality improvement projects, at least one of which must be related to clinical quality improvement. Plans that administer the CAHPS survey to enrollees are considered to have met URAC's requirement for one quality improvement project.

URAC classifies its standards as either "shall" standards or "should" standards. "Shall" standards identify issues that are essential to heath plan or health network quality and define minimum levels of acceptable performance. "Should" standards identify desirable levels of performance. Over time, "should" standards often become "shall" standards. To receive full accreditation, a health plan must satisfy 100 percent of the applicable "shall" standards and 60 percent of the applicable "should" standards.

The accreditation process consists of a "desktop" review of an organization's policies and procedures and an on-site visit by URAC reviewers to verify compliance with the accreditation standards. Once granted, URAC accreditation remains in effect for two years.

Joint Commission on Accreditation of Healthcare Organizations (JCAHO)

The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) began offering accreditation of hospitals in 1951. Since then, it has expanded its accreditation programs to include healthcare networks, which include health plans, integrated delivery systems, provider-sponsored organizations, specialty networks, and physician-hospital organizations. PPOs that assume financial risk, manage benefits, and/or assume responsibility for integration of healthcare services are also eligible for accreditation under the Standards for Health Care Networks. PPOs that offer providers' services to insurance companies, employers, or other purchasers and that do not assume financial risk or responsibility for integrating services are eligible for accreditation under a program designed specifically for PPOs-the Accreditation Manual for Preferred Provider Organizations (AMPPO).

The accreditation process for health plans and other healthcare networks consists of on-site visits conducted every one to two years. During these on-site visits, reviewers evaluate the following operational components:

The health plan's central office and any network services not already accredited by the Joint Commission

All high-risk services performed by the organization A sample of low-risk services Key documents A sample of practitioners' offices

The results of the on-site surveys are measured against established performance standards and rated on a five-point scale. Standards are organized into eight functional areas that focus on the processes and activities of the network and its member services. Figure 3A-4 provides a brief description of each of these functional areas.

Accreditation is based on compliance with JCAHO standards at the network, component, and practitioner levels. Organizations that comply with all JCAHO standards are awarded full accreditation status in the form of Accreditation with Commendation or Accreditation without Type 1 Recommendations. Organizations that fail to satisfy standards in one or more specific performance areas are granted Accreditation with Type 1 Recommendations or Conditional Accreditation, depending on the degree of noncompliance. Networks that have successfully completed the first of two surveys under the Early Survey Policy-Option 1, receive Provisional Accreditation. Significant noncompliance or withdrawal of accreditation by either JCAHO or the network results in Provisional Nonaccreditation or Not Accredited decisions.

Two years ago, the Origami Health Plan underwent accreditation through the National Committee for Quality Assurance's (NCQA's) Accreditation program, and Origami was found to meet some, but not all, of NCQA's requirements for protection and quality. Last year, however, NCQA's accreditors found that Origami consistently delivered outstanding care and service, and its clinical and administrative systems far exceeded NCQA standards for consumer protection and quality improvement.

With respect to the accreditation levels set by NCQA two years ago, Origami was assigned a rating of:

denied, and Origami was assigned a rating of excellent last year

denied, and Origami was assigned a rating of accredited last year

provisional, and Origami was assigned a rating of excellent last year

provisional, and Origami was assigned a rating of accredited last year

Answer=C

In response to the demand for outcomes measures, JCAHO introduced the ORYX® system, which incorporates outcomes and other performance measures into the accreditation process. Performance measures for ORYX are listed according to type of care in JCAHO's Indicator Measurement System (IMSystem) and cover such areas as preoperative, obstetrical, and cardiovascular care; oncology; trauma; medication use; and infection control. Networks that fail to meet ORYX requirements receive a Type 1 recommendation and have one month to provide proof of corrective action. Continued failure to comply with ORYX requirements results in possible loss of accreditation.

JCAHO accredits hospitals and long-term care facilities every three years. All facilities undergoing accreditation must select at least two clinically focused performance measures for inclusion in the accreditation review. Facilities that wish to develop or purchase computer software to measure performance on these measures must obtain JCAHO approval.

The Value of Accreditation

Accrediting agencies, regulators, and most health plans believe that accreditation is a critical element in improving the quality of healthcare. The NCQA report "State of Health Plan Quality 1999," which was compiled from HEDIS results, noted the following:

HMOs with NCQA accreditation outperformed HMO plans that had not received NCQA accreditation on every performance measure. Scores on clinical and service measures were from 3 percent to 16 percent higher for NCQA accredited plans.

Members of accredited plans reported higher levels of overall satisfaction with their health plan and better customer service than did members of nonaccredited plans.

Plans that publicly reported data to NCQA consistently scored higher on performance measures than did plans that did not report data, often by as much as 10 percent.

Plans that reported data for two consecutive years improved more quickly than first-time reporters and outperformed the industry as a whole9.

Accreditation is evidence of the quality of health plans as well as the quality of healthcare services. Plans that monitor and publicly report their performance are considered more accountable to the public than are plans that do not disclose performance information.

A health plan can also seek accreditation for individual parts of its delivery system, such as individual products or provider networks. This type of focused accreditation allows the health plan greater flexibility in positioning and selling its services. For example, enrollees tend to base their healthcare decisions on the services that affect them directly-the quality and availability of primary care physicians or specialists or the quality of hospital care available through the network. Accreditation of a health plan's provider network applies more detailed standards and involves a more in-depth review of particular providers than does a process that evaluates an entire system.

In addition, even in plans that have achieved overall accreditation, significant quality variations can exist among individual providers. An employer whose employees are concentrated in a particular geographic area is likely to be far more concerned with the quality of network hospitals and other facilities that serve that area than it is with the quality of facilities that are outside the area.

Finally, contracting with health plans does not always involve contracting for comprehensive services. Self-funded groups often contract only for specified services such as prescription drug services or behavioral healthcare. In such cases, the employer or contracting health plan is likely to focus on the quality of the carved out services rather than on the quality of the health plan as a whole.

Accreditation, however, also presents challenges. As part of its quality management efforts, a health plan gathers an enormous amount of data about its services from a number of different sources. To assess its structures and processes, the health plan gathers information about provider credentials, the locations of providers and facilities, and compliance with applicable state and federal regulations. To assess healthcare services and outcomes, the health plan collects information on key performance measures. It reviews medical records, claim forms and encounter reports, utilization reports, quality reports, customer complaints, and consumer surveys. Translating this information into the formats required for accreditation is often time consuming and costly. The effects are magnified when a single organization seeks more than one type of accreditation. The key factor in determining the cost-effectiveness of this process is how the organization uses the data it collects.

Although reporting data and obtaining accreditation are important from an organizational perspective, the usefulness of accreditation to purchasers and consumers has been questioned. One study by KPMG Peat Marwick showed that only 11 percent of 1,502 employers polled considered NCQA accreditation important in

selecting a health plan. Only 5 percent of those employers considered HEDIS data important. Some small employers were not even familiar with HEDIS.10 This kind of feedback has led a number of plans-some of them very large plans with high ratings on past evaluations-to withdraw from accreditation programs and adopt alternative methods of measuring quality. As Figure 3A-5 indicates, the most commonly used assessment tool among hospitals, health plans, and physician groups is the patient satisfaction survey.

The number of plans willing to publicly report performance data has also decreased. The main reason plans cite for not going public is the tendency among media sources to focus on below average performance and to use published information to judge plans unfavorably. In spite of these drawbacks, however, accrediting agencies stress that reporting performance data, even if it does not meet expectations, is better than not reporting at all.

Additional Sources of Quality Standards

Information designed to improve the quality of healthcare and enhance consumers' ability to make informed healthcare choices is also available through other programs. Some of these programs apply to a broad base of health plans and health networks. Other programs relate to specific types of healthcare systems. This section presents a brief description of additional sources of quality standards and measures.

Agency for Healthcare Research and Quality (AHRQ)

The Agency for Healthcare Research and Quality (AHRQ), originally known as the Agency for Healthcare Policy and Research (AHCPR), is the primary research arm of the U.S. Department of Health and Human Services. In addition to the CAHPS consumer surveys discussed earlier in this lesson, AHRQ has initiated a series of projects designed to develop quality measures and improvement strategies for medical care. These projects include the following:

Computerized Needs-Oriented Quality Measurement Evaluation System (CONQUEST): A program designed to assist health plans, practitioners, and employers identify and compare alternative quality of care measures. The program consists of 1,200 clinical performance measures related to 52 clinical conditions.

Quality Measurement Network (QMNET): A partnership between AHRQ, The Joint Commission, NCQA, and FACCT that adds a technical assistance network to the CONQUEST program to help users implement quality measures.

Expanding Quality of Care Measures (Q-SPAN): A series of eight projects designed to strengthen the science base of quality measurement as it applies to quality of care in health plans.

Accreditation Association for Ambulatory Health Care (AAAHC)

The Accreditation Association for Ambulatory Health Care (AAAHC) focuses primarily on accrediting ambulatory surgery centers. It also accredits HMOs. The AAAHC uses two types of standards in its evaluations: core standards, which are applied to all organizations, and adjunct standards, which are applied as appropriate. Core standards cover patient rights and responsibilities, governance, administration, quality of care, quality management and improvement, clinical records, professional improvement, and facilities and environment

.

Community Health Accreditation Program (CHAP)

The Community Health Accreditation Program (CHAP) is a specialized accreditation program that focuses on providing accreditation for home healthcare and community healthcare programs.

Population-Based Healthcare

As a result of their efforts to measure and monitor quality, health plans have gathered enormous amounts of data about patients and treatment options. Recent advances in technology and increases in the number of providers grouped into centralized organizations and the number of patients merged into population groups are likely to expand health plan's data-gathering capabilities even farther. Armed with this wealth of information, health plans have begun to shift their view from traditional, patient-based healthcare to population-based care.

The premise of population-based healthcare is that patients within a population share certain characteristics and that healthcare services can be designed to address those commonalities. By analyzing population characteristics, health plans can.

By analyzing population characteristics, health plans can:

Identify those individuals within a given patient population who are at risk for specific disease states

Predict which individuals identified as high risks are likely to turn into high resource users in the future

Intervene with both at-risk and high-risk patients to implement lifestyle changes Prevent disease and dysfunction and promote wellness Establish pricing structures for their products

The assumption driving the move toward population-based healthcare is that early intervention targeted at preventing disease will reduce the demand for healthcare services and the financial burden on providers, purchasers, and health plans of providing those services. For example, a health plan analyzing the individual characteristics of all patients in a population with coronary artery disease might find that high-risk patients within the population all share a particular characteristic. Knowing that a correlation existed between that characteristic and the risk of future acute episodes would allow the health plan to target its efforts toward early

intervention and prevention. Reducing the number of future episodes would reduce the number of services needed, lower the cost of treating the disease, and improve the general health of health plan members.

There is clear evidence that population-based healthcare offers significant benefits. Research studies show that increasing numbers of deaths are attributable to environmental and behavioral factors such as domestic violence, unsafe sexual practices, and substance abuse. Many of these deaths can be eliminated through prevention efforts. Improvements in the health status of the population, in turn, have a positive impact on employee productivity and quality of life.

How such benefits are to be achieved is not quite so clear. Before the healthcare industry can move forward into population-based care, it must address a number of important issues, such as conflicts of interest, organization and coordination of effort, expanded responsibility, and allocation of resources.

Conflicts of Interest

Current medical practices place a high value on the individual provider and the individual patient. Shifting this focus to the healthcare status of entire populations of patients creates immediate conflicts of interest. Providers, who were traditionally considered agents of their patients, now serve as agents for their healthcare systems as well. In the future, they will also become agents of the community. As a result, providers in a population-based system may be required to balance the immediate interests of individual patients with the future interests of the community as a whole and to balance the medical welfare of their patients with the economic welfare of the organizations with which they contract. Health plans must balance costs with outcomes. Patients must balance their "rights" as individuals with their responsibilities as members of the community.

So far, this conflict has proven to be a major obstacle to the development of population-based healthcare programs. For example, although clinical trials have demonstrated the benefits of preventive efforts, interventions targeted at high-risk segments of the patient population remain at low levels in many systems. In the long term, the increased demands that have triggered current objections to population-based healthcare may also resolve those objections. As health plans and providers move out into the community, they will have an opportunity to build healthcare partnerships that can reduce the impact of health threats and destructive behaviors.

Traditional healthcare is physician driven. Population-based healthcare combines the efforts of physicians-both generalists and specialists-and non-physicians. In fact, some of the most successful interventions have been applied by nurses, physicians' assistants, case managers, public health personnel, and wellness program sponsors. Population-based healthcare also relies heavily on information technology to track population health status and to develop systems for managing disease. Studies are being conducted to determine the proper roles of all these players.

Expanded Responsibility

Population-based healthcare is based on the needs of individuals as well as the population as a whole. In order to provide the best and most effective care for populations, physicians need to move beyond their offices to work with schools, churches, public health departments, businesses, employers, and social welfare agencies. Health plans need to use their infrastructure and data systems to address their entire membership, whether they see a physician regularly or not. Some physicians may see these additional activities as a threat to their autonomy. Others will recognize them as an opportunity to serve their patients better. In most cases, plans are not asking physicians to handle outreach activities on their own. These are competencies that health plans bring to the table.

Allocation of Resources

One of the fundamental questions that arise from population-based healthcare is how to serve individual patients and provide care for populations at a fixed cost. Market forces, competitive pressures, an analysis of potential health status and outcomes, and politics will all have to be considered in formulating an answer.

How far and how fast the healthcare industry will move toward population-based healthcare remains to be seen. Such a move requires fundamental changes in the way healthcare is defined and delivered. At present, it has generated more questions than answers. The process, however, is clearly underway.

Perhaps the most compelling evidence of the move into population-based healthcare is the increasing number of healthcare partnerships being established between health plans and local and public health programs. These partnerships range in scope from multi-year research projects designed to promote enhanced access to care and community-wide health and quality of life, to targeted efforts to improve childhood and adult immunization, control adult tobacco use, and improve healthcare delivery to specific patient populations.

Integrating Quality into Health Plan Operations

So far in this lesson, we have focused our discussion on the tools health plans use to measure, monitor, and improve the quality of their administrative and healthcare services. QM, however, is not an isolated function; it both depends on and contributes to other important functional areas. The relationships between QM and risk management and between QM and information management are especially strong.

Quality Management and Risk Management

As you recall from The Role of Medical Management in a Health Plan, risk management includes a health plan's efforts to identify and evaluate exposure to risk and to prevent or minimize any harm that may result from such exposure. QM, which focuses on improving the quality of the health plan's services, is an important part of the risk management process.

Quality Management and Risk Management

Risk management activities serve to focus a health plan's QM programs, especially when efforts to reduce the risk of negligent care reveal inadequate or inappropriate quality standards or when liability actions against the health plan can be traced back to a provider's failure to adhere to practice guidelines. QM has a similar impact on the context and direction of risk management activities. For example, QM efforts to ensure that health plan members receive quality care and achieve quality outcomes often have a direct impact on cost-management programs proposed by risk managers.

One of the most important links between risk management and QM programs is patient safety. Research studies conducted over the past 25 years have documented a disturbing rise in the incidence and consequences of medical errors, and examples of botched surgery, death or disability caused by improper medication, and other medical errors have appeared in the media in increasing numbers. On November 29, 1999, the Institute of Medicine (IOM) issued a report confirming these findings. In the report, the IOM stated that "at least 44,000 and perhaps as many as 98,000 Americans die in hospitals each year as a result of medical errors." The IOM estimated the cost associated with medical errors at between $17 billion and $29 billion.11

The following factors contribute to medical errors:

The complexity of modern medicine and healthcare delivery systems. Healthcare is no longer delivered by family doctors who carry everything they need in a black bag, but rather by healthcare systems that include large numbers of professionals with a wide variety of skills and sophisticated, high-tech equipment. This complexity increases patients' chances of obtaining satisfactory medical outcomes, but it also increases patients' exposure to risks.

The lack of a consistent quality oversight system. Although states all have boards responsible for licensing various healthcare professionals, these boards tend to operate independently and focus on a single profession. The system for regulating and accrediting healthcare organizations and facilities is equally diverse. This lack of consistent oversight and accountability increases the potential for substandard care.

The following factors contribute to medical errors:

The ineffectiveness of mechanisms designed to ensure the continuing competence of individual practitioners. Federal law requires hospitals to notify the National Practitioner Data Bank (NPDB) of any disciplinary action that affects a physician's clinical privileges for 30 days or more. Studies show that, during the first three years of the NPDB's operation, 75 percent of hospitals did not report any disciplinary action and that reporting levels are still low.12 Compliance with internal incident reporting requirements is also low. For example, research shows that as many as 95 percent of adverse drug

events go unreported. The main reasons given for the lack of incident reports were (1) they take too much time, (2) they get people in trouble, and (3) nothing happens.13

The reliance on individual observations in medical decisions. Studies on the error rates of various observation-based processes report a 28 percent error rate on readings of angiograms, a 17 percent error rate on interpretations of electrocardiograms, and a 15 percent error rate on readings of chest X-rays.14

In an effort to reduce the effects of these factors, the IOM recommended a series of actions to be taken by Congress and the healthcare industry. These recommendations are outlined in Figure 3A-6.

In response to the IOM report, the president announced that health plans participating in the FEHBP will be required to institute quality improvement and patient safety initiatives and that agencies administering other federal health programs, including Medicare and Medicaid, will be required to implement strategies for reducing medical errors. Furthermore, the AHRQ announced that it would conduct research on patient safety and medical errors and support an initiative to reduce adverse events resulting from prescription drug errors.

The interaction between quality management and risk management has generated a variety of changes in job responsibilities and reporting relationships. In addition, a

number of functions once handled independently by risk management or quality management personnel are now handled jointly. These integrated functions include such activities as incident reporting, compliance, complaint resolution, board reporting, data management, resource management, policy development, and training. Some activities, such as incident reporting, require minimal interaction. QM regularly reviews patient records as part of its quality assurance efforts. If those records are in order, no further action is necessary. If the review uncovers an adverse event involving a patient, QM personnel report the event to risk management, which then takes over to investigate the incident and follow through. Functions such as policy coordination and training, on the other hand, require maximum cooperation. For these functions, QM and risk management work together to collect information, analyze results, and develop policies and procedures that will affect the entire organization.

Quality Management and Information Management

As you can see from Figure 3A-7, HMOs have access to a wealth of information to support quality initiatives, including details about the patients enrolled in their health plans, the providers who treat them, and the services they receive.

HMOs also receive a continuous flow of data from external sources regarding regulatory activity, accreditation standards, best practices, and research studies. Gathering quality data is more difficult for PPOs and other non-HMO plans that often have sparse data about subscribers and limited information systems.

Turning data into usable information to improve quality can be a challenge for all health plans. Much of the data that health plans need to support QM activities is recorded on paper in the form of patient records, claim and encounter reports, customer satisfaction surveys, and management reports. Health plans often do most of their data analysis on paper as well. The more data the health plan receives in paper form and the more extensive its QM efforts become, the more sluggish, labor intensive, and costly this approach becomes.

Information frameworks offer benefits to patients, providers, and health plans. Maintaining patient records electronically helps keep important clinical information current and immediately accessible to all the professionals involved in a patient's care. It also supports continuity of care by facilitating the transfer of information from

provider to provider and from health plan to health plan. Access to a patient's entire program of care is likely to enhance providers' treatment options and improve outcomes. Access to performance information can help health plans monitor and improve the quality of their administrative and healthcare services.

Information frameworks involve challenges, too. A major concern facing health plans is the cost of developing the information systems necessary to support frameworks. Sophisticated computer-based systems are expensive, and resources are already being stretched. Establishing information frameworks also requires commitment and cooperation of the entire healthcare community. The success of information frameworks, therefore, will depend on the ability of health plans to find ways to share responsibility for implementing the framework among all stakeholders and to balance short-term costs against the long-term benefits of improved clinical care and service.

Conclusion

Quality is receiving more attention today than ever before, as health plans strive to ensure that their services satisfy the needs and expectations of their customers. As the healthcare environment continues to change, and consumers, purchasers, and regulators continue to demand better care and service, quality is likely to become even more important.

AHM Medical Management: Quality Assessment

Pg 1 to 69

Course Goals and Objectives

After completing the lesson Quality Assessment , you should be able to:

Describe the major components of a quality assessment program Describe the methods health plans use to identify and prioritize key services

and processes Identify the types of standards and indicators used in performance

measurement Identify the three main types of performance measures and describe their

advantages and disadvantages Explain the importance of case mix/severity adjustment Describe the types and sources of data needed to measure performance Describe the use of plan and provider report cards

Identify some of the major issues and barriers in performance measurement

Quality Assessment

Introduction

In the lesson Quality Management, we introduced the concept of quality and described how efforts to address healthcare quality can be divided into quality assessment activities and quality improvement activities. We also described the relationship between quality and performance. In this lesson, we will examine the major components of performance-based quality assessment programs.

Developing a Performance Assessment Plan

In order to assess the quality of their administrative and healthcare services, health plans need to have a clear understanding of the following performance components:

The customers who are most affected by healthcare processes and outcomes The range of services that the health plan offers to its customers The critical processes involved in delivering those services The standards of performance the health plan expects to meet

The relationships between these components are illustrated in Figure 3B-1.

Identifying the Customer Base

A health plan's customer base consists of all the organization's network providers and other medical professionals, employees, plan members and their families, accrediting agencies and regulators, and third party payors such as employers, insurance carriers, and government purchasers. Because it is directly impacted by the performance of its providers and staff, the health plan itself is also a major customer.

From a medical management perspective, the health plan's primary customers can be divided into three main groups: patients and families who receive healthcare services, providers who deliver healthcare services, and employers and other third party payors who purchase healthcare services. These are the groups most affected by healthcare processes and outcomes.

Identifying the Health Plan's Range of Services

Once the health plan has defined its customer base, it can identify the major services it provides and the key processes that underlie those services. For example, one of the primary services a health plan offers to patients and their families is the system of care that we introduced in the lesson Quality Management. At each of the entry points into this system, patients receive a variety of specialized services. Patients receive primary care, for example, in the form of

Preventive services, such as annual physical examinations and childhood immunizations, designed to keep people healthy

Screening services, such as mammography and prostate screening, to detect disease early

Treatment of routine illnesses or injuries

Additional services are provided to other customer groups.

Health plans gather information from all their providers in all care settings to produce an inventory of organizational services. From this inventory, the health plan can identify services that are provided routinely, services that are provided as needed or by request, and services that are provided in emergency situations.

In order to provide a base for performance measurement and improvement, a health plan generates a list of the processes associated with the services it offers. It then eliminates from the list any duplicate or less important processes. The remaining key processes must then be prioritized for each customer group.

From a performance perspective, the processes that health plans measure can be divided into four broad categories: high-risk processes, high-volume processes, problem-prone processes, and high-cost processes.

High-risk processes are activities that expose patients to the risk of adverse outcomes. High-risk processes most often involve medical interventions or treatment plans for acute illnesses or case management processes for complex conditions. High-volume processes are processes that are performed frequently or that affect large numbers of people. Administrative processes such as scheduling appointments or billing patients are examples of high-volume processes. Problem-prone processes are processes that have produced problems for clients or the health plan in the past. Non-coverage of benefits and liability issues often fall into this category. High-cost processes are activities that require large financial expenditures or significant human, physical, or technological resources. Activities that involve the use of very expensive equipment are obvious examples of high-cost processes. Relatively inexpensive processes, if performed in high volume or if associated with serious problems, can also qualify as high-cost processes.

These four categories are not mutually exclusive, and it is not uncommon for a single process to fit into more than one category. For example, medication administration is often a high-risk, high-volume, and problem-prone process. If medication is administered incorrectly, the process also becomes a high-cost process.

Once the health plan has categorized key processes, it can prioritize them in terms of their importance. Processes that fit into all four categories are considered critical processes. These are the organization's top priority from a performance perspective. Extremely important processes are those activities that fit into three of the four categories. Processes that fit into two categories are classified as very important processes; those that fit into a single category are labeled important processes.

From a performance perspective, the processes that health plans measure can be divided into four broad categories:

High-risk processes High-volume processes Problem-prone processes High-cost processes

These four categories are not mutually exclusive, and it is not uncommon for a single process to fit into more than one category. For example, medication administration is often a high-risk, high-volume, and problem-prone process:

Medication administration is a high-risk process because it exposes patients to the risk of adverse outcomes. Medication administration is a high-volume process because it requires large financial expenditures or significant human, physical, or technological resources. Because medication administration fits into three of the four broad categories listed above, a health plan would most likely classify it as a critical process rather than an extremely important process.

All of the above statements are correct.

Answer=A

Categories can also be prioritized according to their importance. High-risk processes are typically ranked highest because of the harm they can cause to plan members and to the organization. Following high-risk processes are high-volume processes, problem-prone processes, and high-cost processes.

The frequency with which processes are measured depends on both the importance of the process and on the health plan's need for performance information. Processes that are in a steady state-for example, preventive screenings-may need only annual or semiannual measurement. New processes that the health plan implements to improve quality may need to be monitored on a quarterly or even monthly basis.

Processes, such as telephone wait-time, that require regular feedback for internal reports may demand weekly or even daily measurement.

Prioritized lists of key processes are submitted to management. Management then organizes these lists into a composite profile of critical performance activities. The composite profile serves as the basis for the development of performance standards and indicators. It also serves as the starting point for the health plan's performance measurement program.

Developing Quality Standards

The kinds of standards a health plan uses depend on the nature of the services being evaluated and on the intended use of the information that the health plan obtains from its evaluation. Quality standards come in a variety of formats. They can be expressed as statements, algorithms, formulas, case management plans, or critical paths. They can be presented in the form of lists of steps, flow charts, or decision trees. They also serve a variety of purposes. Figure 3B-2 describes some of the more commonly used types of quality standards.

Benchmarks describe what a health plan has achieved on a given service dimension relative to the best performance that has been achieved on that same service dimension by another entity. Benchmarks can be internal, competitive, or generic. Internal benchmarks are based on the performance of individuals or units within the health plan, such as individual practitioners within a given specialty or different hospitals in the plan's provider network; competitive benchmarks are based on the performance of the organization's best external competitor; generic benchmarks are based on the performance of leading organizations in other industries. By comparing its performance on a given service dimension to a benchmark, the health plan can identify relative strengths and weaknesses, track performance over time, or evaluate the success of quality improvement initiatives.

Benchmarks also provide a strong incentive for individuals and work groups to improve their performance.

The Westside HMO and the Eastside PPO are both using benchmarking in their quality assessment programs:

Westside is comparing the performance of all the cardiologists in its provider network to the performance of the best cardiologist in the network

Eastside is comparing its performance in the customer service area to that of the leading organization in the health club facilities industry

From the answer choices below, select the response that correctly indicates the type of benchmark used by Westside and by Eastside:

Westside: generic benchmark;   Eastside: internal benchmark

Westside: generic benchmark;   Eastside: competitive benchmark

Westside: internal benchmark;   Eastside: generic benchmark

Westside: internal benchmark;   Eastside: competitive benchmark

Answer=C

Prescriptive standards, accreditation standards, and standards of care describe the levels of performance an organization should achieve on a given performance dimension. Most often, these standards define minimum levels of performance associated with various degrees of excellence. Performance that falls below the minimum acceptable level may trigger further investigation and may lead to changes in the health plan's structures or processes.

The standards that health plans use in performance-based quality assessment programs serve the following purposes:

To help individuals, departments, and provider groups adhere to generally accepted practices.

To eliminate ambiguity by providing specific definitions and specific measurement parameters for concepts such as "quality" or "quality of life."

To replace subjective comparisons based on "norms" with comparisons based on objective criteria or benchmarks. For example, a procedure that meets established criteria for that procedure and produces expected outcomes is considered appropriate and acceptable even if it does not use the latest technology.

To provide organizational stability by expressing shared values. To create consistent approaches that are necessary to implement

organizational change.

Each of the quality standards adopted by the health plan is associated with quality indicators, which are factual statements of existing conditions that are used to measure the variance between actual performance and the expected performance expressed in a standard. For example, a health plan might set as a standard that physicians participating in the plan's network should be board certified. An indicator of the plan's performance on this standard would be the percentage of network providers who are board certified.

Performance indicators help the health plan quantify performance in terms of structures, processes, and outcomes. We will describe these performance categories later in this lesson. Health plans also develop indicators related to specific aspects of performance. For example, health plans use specialized indicators to measure performance related to sentinel events. Sentinel events are events that lead to serious, undesirable, and often avoidable outcomes such as trauma or death. Because the outcomes of sentinel events are severe, they typically trigger immediate individual case review. The use of sentinel event indicators, however, is limited, because sentinel events represent performance extremes rather than normal conditions.

Aggregate data indicators are specialized performance indicators that are used to measure outcomes related to groups of cases rather than individual cases. The variables measured by aggregate data indicators can be either discrete or continuous. Discrete variable indicators, or yes/no indicators, limit measurement results to specified options, such as "greater than" or "less than" a defined quantity. For example, a discrete variable indicator might measure whether laboratory results were available in more than or fewer than two days. These indicators are used to show whether a plan has or has not met a standard. Continuous variable indicators produce results that fit within a specified range, such as the length of time to schedule an appointment, or the number of patients referred to a specialist. Results are typically presented as a mean or average.

The paragraph below contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the paragraph. Then select the answer choice containing the two terms you have selected. Performance indicators help health plans to quantify performance in terms of structures, processes, and outcomes. By definition, specialized performance indicators that are used to measure outcomes related to groups of cases rather than to individual cases are known as (sentinel event / aggregate data) indicators. The variables measured by these indicators can be either continuous or discrete. (Continuous / Discrete) variable indicators produce results that fit within a specified range, such as the length of time to schedule an appointment, or the number of patients referred to a specialist:

sentinel event / Continuous

sentinel event / Discrete

aggregate data / Continuous

aggregate data / Discrete

Answer=C

In order to provide a true measure of quality, indicators should exhibit the following characteristics:

Relevance. A strong, demonstrated relationship should exist between the indicator and the standard it is designed to represent. An indicator designed to measure clinical performance, for example, should be important to clinical outcomes and should trigger action if the results fall below the standard.

Validity. The data collected by the indicator should accurately represent the service dimension being measured.

Reliability. The information collected by the indicator should be reproducible. The health plan analyzing information from multiple sources across the organization should reach uniform conclusions.

Clarity. The indicator should be expressed in clear, unambiguous terms in order to avoid misinterpretation.

Feasibility. The health plan should be able to collect and analyze information required by an indicator and make necessary changes to structures, processes, or outcomes using available human, technological, and financial resources.

Insight 3B-1 provides an example of how health plans use quality indicators to measure plan performance. This example describes the quality indicator, the method and results of data collection, comparisons of current plan performance with internal and external standards, and improvement initiatives.

Measuring Performance

Assessing the quality of healthcare and administrative services requires health plans to ask three important questions: (1) How are we doing? (2) How do we know? and (3) Can we fix problems we identify? Performance measurement can help health plans answer all of these questions. Performance measurement can also provide information the health plan needs to improve its services and effectively allocate resources. Outside the organization, performance measurement provides members, purchasers, regulators, and the media with objective reports about how well a plan is meeting expectations.

Designing a Performance Measurement System

Establishing a performance measurement system requires a health plan to make decisions regarding the following factors:

Purpose of the measurement Entity, or service unit, being measured Proposed user of the information Quality dimension being measured

The value of performance measurement depends on how well the health plan addresses each of these factors.

The Purpose of Performance Measurement

Performance measurement systems can be designed to address one of the following three primary purposes:

Performance measurement systems can be designed to address one of the following three primary purposes:

To measure the current status or result of administrative or clinical treatment processes. This purpose, which forms the basis of quality assessment programs, is typically the easiest to implement because it requires a single measurement taken at a specified time and because it requires no comparisons across time or providers.

To measure changes in outcomes caused by modifications in administrative or clinical treatment processes. This purpose requires two measures, one before a service change is implemented and one at the end of a specified interval after implementation. All factors, other than the specific service change, that might affect outcomes must remain constant during the interval. The results of these measures can be used as evidence of quality improvement. Although this purpose requires more complicated measures, the process is still relatively simple because measurement and comparison of results remains in-house.

To compare the quality of service or care a health plan delivers with the quality of service or care delivered by other entities. This purpose is the most

difficult to achieve because outcomes are only partially controlled by the health plan and its providers and because differences between plans and member bases can affect outcomes independently of quality of care.

A fourth purpose of performance measurement, which is part of the first two purposes described here, is to stimulate interest in and support for specific service changes targeted at specific disease states or patient populations.

The purpose a health plan chooses to address determines the type of data that are collected and the way those data are collected, analyzed, and reported. Purpose also affects the usefulness of the data because the methods used to achieve one purpose do not necessarily work for other purposes. For example, data collected to describe current performance levels (purpose #1) are not sufficient to describe performance improvements that result from modifications in treatment processes (purpose #2).

The Entity or Service Unit Being Measured

Performance measurements can be designed to address the level of service provided by the health plan as a whole or the service provided by specific components of the system, such as individual physicians, nurses, hospitals, and ancillary care providers. Organizational performance is usually measured in terms of service and includes such factors as satisfaction, utilization, access, coverage, and cost. Specific measures can address fundamentals of performance such as efficiency and cost, or they can examine more complex elements such as the organization's ability to implement appropriate changes in a timely fashion, to communicate changes effectively, and to motivate employees and providers to adopt and support new programs.

At the provider level, performance is measured in terms of clinical care and member service. Clinical care measures can describe single episodes of care, such as hospital length of stay or procedure-based success rates. Alternatively, clinical care measures can describe a continuum of care beginning with preventive interventions for patients known to be at risk and including utilization rates, patient recovery and outcomes following in-patient care, ongoing management of chronic diseases, and patient perceptions. Service measures include patient satisfaction, accuracy of medical records, and access.

As in the case of purpose, measures designed to assess the performance of one entity are not applicable to other entities. Measures used to evaluate the administrative services of the organization, for example, are not appropriate for assessing the clinical performance of a health plan's providers.

Proposed Users of Performance Information

The potential audiences for performance information include providers, patients, employers, payors, accreditation agencies, professional societies, government regulators, and the health plan itself. Each of these groups has its own orientation and its own interest in performance information. Figure 3B-3 lists some of the most

commonly used performance measurement systems, along with their sponsors, their target audiences, and their chief characteristics.

Performance Dimension Being Measured

As we mentioned earlier, quality is typically assessed through a composite of structures, processes, and outcomes. In developing a performance measurement system, the health plan must decide which of these service dimensions can and should be measured. Many of the same criteria that health plans use to identify key services and processes can be used to select performance dimensions. For example,

in evaluating the performance of its providers, a health plan should focus on those processes and procedures that satisfy the following criteria:

Health plans should focus on those processes and procedures that satisfy the following criteria:

Performance measurement should focus on conditions and clinical procedures that have a significant impact on mortality or morbidity, member and provider satisfaction, and cost. Illnesses related to leading causes of death clearly satisfy this criterion. Conditions that have the potential to create significant changes in patient functioning are also candidates. Consumer perceptions must also be considered. For example, women typically worry more about breast cancer than they do about heart disease, even though heart disease poses a greater risk of death to women than does breast cancer. Even self-limiting conditions may be appropriate for evaluation if current treatment patterns are likely to lead to long-term consequences. For example, using antibiotics to treat common colds has already begun to result in bacterial resistance.

An empirically established link should exist between the processes being measured and outcomes. For example, the number of patients with inoperable cancer who develop metastases within six months of diagnosis may be an important outcome measure, but it is not a performance measure because it is not the direct result of a process of care. On the other hand, the percentage of patients diagnosed with late-stage breast cancer could be used as an indicator of the success (or failure) of a health plan's mammography screening program.

Outcomes should be amenable to improvement based on modifications in the underlying processes. Even when an outcome is linked to a specific process, a cause/effect relationship is not always possible to establish. Not all positive results can be directly attributed to appropriate treatment. Nor do poor outcomes always result from poor care. A direct connection between given processes and results allows the health plan to improve outcomes by improving either the services it offers or the way those services are delivered. In other words, the health plan can improve outcomes by doing the right things or by doing things right. Reversing the process and showing a connection between desirable outcomes and specific procedures helps demonstrate that actions are available to improve outcomes.

Performance measurement should address areas over which the health plan or its providers have control. In some cases, health outcomes are affected by external factors, such as age, gender, low income, geographic location, other existing diseases, or behaviors such as smoking, alcohol/drug use, nutrition, exercise, customer perceptions, and compliance, which neither the health plan nor the provider can control. Neither the quality of the services offered to patients nor the quality of a provider's performance can be measured accurately if outcomes are affected by uncontrollable conditions. These cases require a balance between the healthcare system's responsibility to provide intervention and the patient's personal responsibility to accept that intervention and make changes.

Performance measurement should focus on those areas in which current quality levels are variable or substandard. Focusing on performance areas in

which variance from standards is greatest helps the health plan identify those areas most in need of improvement and the extent of possible improvement. Priority should be given to those areas with substantial potential for improvement. Focusing on variable or substandard performance areas also helps identify measures that consumers and purchasers can use to differentiate among health plans.

Selecting Performance Measures

Once the health plan has determined the purpose and scope of its performance measurement program, it can select the measures it will use to evaluate performance. Performance measures include structure measures, process measures, and outcome measures. Each of these types has distinct uses and advantages.

Structure Measures

Structure measures evaluate the resources available within the organization-its facilities, equipment, personnel, policies and procedures, and finances. The earliest, and still the most widely used, structure measures relate to physician education and training. Reports published in the early 1900s indicated a correlation between physician education and the quality of patient care. These reports generated a series of medical education reforms, including the use of education, licensing, and certification as criteria for "qualifying" physicians and educational institutions. They also led to the establishment of JCAHO, which produced the first published list of accreditation standards for hospitals, and to NCQA, which includes accreditation standards related to physician credentialing and quality improvement programs in its health plan accreditation program.

The main advantage of structure measures is that they are easy to identify and report. However, critics argue that structure measures are of limited value. Structure measures indicate whether an organization is capable of providing quality care, based on expert opinion, but they do not indicate whether the organization is actually providing quality care. In addition, the links between structures and healthcare outcomes are often more intuitive than evidence-based.

Performance measures known as structure measures have both advantages and disadvantages. One advantage of structure measures is that they typically:

focus on patient benefit

are easy to identify and report

are directly linked to healthcare outcomes

indicate whether an organization is actually providing quality care

Answer=B

Process Measures

Process measures evaluate the services provided to or for patients at any of the points in the healthcare delivery system. Because of the importance of preventive care to health plans and the public, health plans focus on those processes that relate to services known to be associated with improved outcomes, such as disease prevention and early intervention. A complete assessment of healthcare services also considers the care provided to plan members who are sick. To facilitate the delivery of quality healthcare, health plans measure such processes as providers' adherence to specified treatment protocols.

Process measures offer certain advantages over structure measures in evaluating performance. Unlike structures, processes are often linked directly to healthcare outcomes. In such cases, changes in the process will lead to changes in the outcome. In addition, process measures are useful in identifying problems that result from inappropriate care. These problems can be classified into the following three categories:

Three classifications of problems

Underuse of services, which occurs when a provider fails to provide a healthcare service that would have produced a favorable outcome. Failure to provide necessary childhood immunizations is an example of underuse of services.

Overuse of services, which involves the provision of unnecessary care or care that exposes the patient to unnecessary risks or side effects. Examples of overuse include prescribing antibiotics for viral infections such as colds or performing unnecessary procedures.

Inappropriate use of services, which occurs when a patient receives the wrong treatment or fails to receive the full benefit of treatment because of preventable complications. Drug interactions or poorly performed surgical procedures are evidence of the misuse of services.

Process measures are also useful in providing information that will lead to improvements in medical practice.

However, evidence-based links between processes and outcomes do not exist in all situations. For example, while there is evidence that regular cholesterol screening benefits younger patients, there is no clear evidence to support such screening for patients over age 75. In addition, process measures are designed to address commonly occurring conditions; they are not designed to track the treatment of patients with rare manifestations of disease. Without sufficient evidence of the efficacy or effectiveness of treatment, the health plan cannot establish a process measure to assess the quality of the treatment or the provider's performance.

Outcome Measures

Health plans use outcome measures to evaluate the results of care and the effectiveness of the organization. Clinical outcomes can be divided into two broad categories: health outcomes and perceived outcomes. Health outcomes gauge the extent to which healthcare services improve patients' clinical and functional status.

Health outcomes related to a patient's clinical status are typically assessed through objective data such as numeric measurements or through provider analysis based on a physical examination.

Health outcomes can be used to evaluate

Specific treatment programs-such as the survival rate of patients who receive coronary angioplasty

Specific disease states-such as the incidence of wheezing episodes in asthmatics Specific treatment settings-such as the number of patients contracting infections

in the hospital, the readmission rates for specified diseases, or the number of deaths during or after elective surgery

Health outcomes related to functional status are typically assessed through subjective data provided by patients, such as the information reported on health status questionnaires. They are used to evaluate the patient's ability to perform such tasks as eating, getting around without help, working, or looking after the household.

Perceived outcomes are a patient's conclusions about his or her own health status and quality of life. Most often, patients express perceived outcomes by comparing how they feel after treatment to how they felt before treatment. This emphasis on patient perceptions is a departure from traditional methods of evaluating performance in which quality was defined by the professionals who delivered the services. Today, patients are taking greater responsibility for healthcare decisions, and they are playing an important part in defining quality.

The value of outcome measures comes from their ability to demonstrate improved health status in given populations over time. For example, health plans often use outcome measures, such as the functional status of patients following elective surgery, the mortality rate following coronary artery bypass graft surgery, or improvements in birth weight and gestational age at delivery, to provide quantifiable evidence of the effectiveness of specific medical programs.

On the other hand, outcome measures are not appropriate for all situations. As we mentioned earlier, outcomes are valid measures of performance only if they can be linked to structures or processes and only if they are sensitive to modifications in those structures or processes. Outcome measures are also not feasible in all situations. The length of time necessary to document outcomes is often long-as much as 10 to 20 years for the survival rates following diagnosis or treatment of slow-growing tumors such as prostate cancers and 20 to 30 years for complications from diabetes. Such delays between process and outcome may be too long to provide meaningful feedback on care delivery. Figure 3B-4 summarizes the advantages and disadvantages of each of these types of performance measures.

Criteria for Selecting Performance Measures

Whether a health plan bases performance evaluations on structure measures, process measures, or outcome measures depends in part on how the organization defines the purpose of its performance measurement system, the entities it will evaluate, and the performance dimensions it will address. This choice also depends on the scientific soundness of the measures. Scientific soundness refers to the likelihood that a performance measure "will produce consistent and credible results when implemented."1 The following criteria are often used to determine the scientific soundness of performance measures.

Reliability. Performance measures must gather the same kind of information and lead to the same conclusions each time they are applied. To achieve this consistency and to allow comparison of results, measurement systems must standardize data collection and analysis.

Validity. The data collected by the measure should accurately represent the performance being measured. This is especially important when using outcomes as a measure of performance. Evaluation of a provider's performance, for example, should be based only on outcomes that can be traced directly to the provider's actions.

Precision of specifications. The value of performance measures depends on how explicitly the target population for a procedure is identified and the data collection and analysis methods are stated. Measures such as those included in the HEDIS 3.0 program are extremely precise. For example, the HEDIS mammography measure explicitly defines the target population as women age 52 to 69 who have been continuously enrolled in a health plan for a minimum of two years and defines published diagnostic and procedural codes as the source of measurement data. These specifications increase the likelihood that plans applying the measure are addressing the proper patient base, have had enough time to provide the indicated care, and are using standard definitions of the procedure. Such precision is necessary to make the results of performance measures comparable across provider groups and health plans.

Adaptability. Performance measures must be flexible enough to allow for some modification to account for different patient preferences, clinical indications, care settings, resource bases, and populations. For example, an indicator for the use of amniocentesis for pregnant women age 35 and older might need to be modified if the number of women in a particular plan who decline the test because of patient preference is high enough to affect comparisons among health plans. Including inappropriate factors in performance measures may affect the comparability and consistency of the results.

Adequacy of risk adjustment. Performance measures that are used for quality comparisons often require modifications to account for differences in medical risk. Such modifications are typically made through case mix/severity adjustment. Case mix/severity adjustment, also referred to as risk adjustment, is the statistical adjustment of outcome measures to account for differences in the severity of illness or the presence of other medical conditions. Knowing that one PCP's utilization rates are consistently higher than another PCP's rates is of little value unless it is also known that the first physician's patients suffer from a number of chronic conditions such as asthma or diabetes, whereas the second physician has a typically healthy patient base.

Case mix/severity adjustment is especially important in evaluating specialists' performance. A specialist's patient base is not only fundamentally different than the general population, but his or her training and expertise may also be different from those of other physicians in the same specialty. For example, a perinatologist who treats very high-risk patients or performs complicated surgical procedures is likely to have very different practice patterns and utilization rates than does a general obstetrician.

Case mix/severity adjustment provides a way of standardizing patient populations so that the health plan can compare providers to similar providers delivering similar

services to similar patients. Case mix/severity adjustment also reduces the number of outliers within the provider network. In the context of performance measurement, outliers are those providers who use medical resources at a much higher or lower rate or in a manner noticeably different than most of the other providers in the same network and specialty.

One approach health plans can take to equalize patient populations is to remove "unusual" cases. For example, HEDIS measures frequently attempt to standardize populations by excluding patients with contraindications to a particular treatment. Another approach health plans can take is stratification. Stratification eliminates variation within a patient population by dividing the population into groups that are at a similar level of risk.

Interpretability of results. The amount of information gathered by performance measures influences the way that information can be reported and used. Measures that gather information from a large patient base are often useful in identifying statistically significant differences in performance. Measures taken from small patient bases may be more helpful in uncovering practical differences. The type of information gathered by performance measures also affects interpretability. Measures that gather information from a variety of sources such as outcomes research, medical records, and customer satisfaction surveys typically produce both clinically detailed and general information. This information can be selectively presented to a variety of audiences. Measures that produce only one type of information are useful to a much narrower audience.

Collecting and Analyzing Performance Data

In order to measure performance for quality management, health plans must collect and analyze large amounts of data. These data can be classified into three broad categories: financial data, clinical data, and customer satisfaction data.

Financial Data

Financial data describe the costs of physical, technological, and human resources needed to provide administrative and healthcare services to plan members. As such, financial data provide a basis for analyzing how efficiently health plans and providers use resources.

Most of the financial data used to evaluate performance comes from claims and encounter reports. Each encounter between a plan member and a provider generates a claim that describes (1) the condition under investigation, (2) the healthcare professional or facility providing treatment, and (3) the treatment provided. Because conditions and treatments are coded, using standard diagnostic and procedural coding systems, claims and encounter reports also provide the health plan with detailed information about the type and number of services and supplies associated with a particular procedure and their costs. Health plans can analyze claims data to produce information about the performance of individual providers, groups of providers, or the system as a whole.

Another important source of financial data is hospital reports. These reports provide information about the costs of in-patient services exclusive of physician fees. Hospital reports describe services in terms of specific diagnoses or procedures and can be designed to provide health plans and providers with detailed information about resource utilization and practice patterns. A health plan's administrative records provide additional utilization and cost data.

Clinical Data

Clinical data create an in-depth view of the clinical status and functional status outcomes associated with particular healthcare processes. Measuring health outcomes requires gathering both disease-specific data and data related to general health and functional status.

Patient medical records are the most widely used source of disease-specific clinical information. Medical records that are accurate and complete contain a wealth of information about a patient's medical history, demographic and behavioral characteristics, past and present medical conditions, treatment history, compliance patterns, and outcomes. Data from individual patient records can be used to assess a provider's performance during an episode of care or over a continuum of care. Aggregate data from all of a provider's individual patient records provide the basis for measuring the provider's performance in treating specific conditions and for assessing the provider's overall practice patterns.

Unfortunately, not all medical records are complete or legible, and extracting relevant performance information can be time consuming and expensive. The need to protect patient privacy and preserve the confidentiality of medical information is an additional burden. Several developments have led to improvements in medical record keeping. For example, CMS requires that providers and health plans provide clear, complete documentation for Medicare reimbursement. Technological advances such as electronic medical records (EMR) and electronic data interchange (EDI) are also influencing the way providers generate and maintain medical records.

Additional disease-specific data are available through outcomes research studies sponsored by academic institutions and professional organizations. These studies provide comprehensive, detailed information about specific conditions, such as asthma or diabetes, and specific procedures, such as total hip replacement or coronary artery bypass surgery. The data generated by research studies can be used as a foundation for developing measurement tools that may become standards. Their usefulness to particular health plans or individual providers, however, is limited. Because research study results are based only on study participants, they may not be comparable to a health plan's patient population or a provider's overall practice patterns.

In order to gather data about functional status, it is necessary to go directly to patients. The current "gold standards" for collecting data related to general health and functional status are the SF-36 and the HSQ-39 (Health Status Questionnaire) surveys. These short patient surveys consist of approximately three dozen questions

that measure the patient's perceived health status along a continuum from physical health to mental health. The core questions in the SF-36 and HSQ-39 surveys are designed to address the following eight measures of a patient's perceived health status:

Eight Measure of petient's perceived health status:

Physical functioning: a measure of the impact of health status on the patient's physical activity

Role limitations related to physical health problems: a measure of the impact of health status on the patient's work or daily living activities

Bodily pain: a measure of the amount or intensity of pain the patient experiences General health: a measure of the patient's perception of current health and future

health outlook Vitality: a measure of the patient's level of energy Social functioning: a measure of the impact of health status on the patient's social

activities Role limitations related to mental or emotional health problems: a measure of

the impact of mental or emotional problems on the patient's functional status Mental health: a measure of the patient's general mental and emotional health

Patients score each measure on a numerical scale.

The eight measures in the SF-36 and HSQ-39 are further divided into three major health dimensions: (1) general health status; (2) functional health status (including physical functioning, role limitations, and bodily pain); and (3) well-being (including energy/fatigue and mental health). Additional questions in the HSQ-39 address perceived changes in the patient's health and risk of depression. A copy of the SF-36 Health Survey is included in Appendix 3B-1.

Customer Satisfaction Data

Customer satisfaction data describe how a health plan's customers view the way their health plan delivers services. Although most people equate customer satisfaction with member satisfaction, a health plan's customers also include providers, payors such as employers or government agencies who purchase the health plan's services, and insurance carriers who often underwrite those services. This broad customer base exerts considerable influence over the health plan's policies, strategies, operations, and investment decisions. Customers even influence the health plan's product offerings. A 1998 study by KPMG Peat Marwick and Northwestern University reported that "90 percent of organizations have expanded the number and types of services they offer, due to consumer preferences."2 It is not surprising, therefore, that customer satisfaction has become a critical element of performance measurement.

Customer satisfaction data provide information about members' overall satisfaction with their health plan and their satisfaction with such key factors as access, quality of care and service, and plan administration

Access. Access typically refers to the ease with which plan members can obtain care. At the plan level, access is measured by the availability of primary care and specialty care physicians, the ability to change physicians, access to emergency services, location of doctors' offices, lag times between appointment scheduling and actual appointments, and level of physician choice. At the provider level, access is measured by office wait times before seeing a physician, ability to obtain referrals, availability of after-hours service, and whether the physicians return calls. Access is affected by the size and composition of the plan network and by the plan's benefit package.

Quality of care and service. Quality of care and service is difficult to assess from a patient perspective because patients typically lack the technical expertise necessary to evaluate the quality of particular clinical interventions. Patients can, however, evaluate the quality of their relationships with health plans and providers. At the plan level, customers evaluate the treatment they receive from customer service personnel. At the provider level, they evaluate the treatment they receive from physicians and their office staff. Communicating clearly and openly with patients, addressing patients' individual needs and concerns, and providing information that is accurate, understandable, and actionable are critical to building quality relationships.

Plan administration. Plan administration includes core operational and service components such as claims processing and billing; the availability of information about eligibility, coverage, and the cost of care; the time spent doing paperwork; and customer service. The importance of each of these factors depends on the specific type of customer. For example, access to providers is important to members and payors, but is not applicable to providers. Quality of care and service, on the other hand, is critical to members and providers but is often less important to payors.

The bulk of customer satisfaction data is gathered from patients through feedback mechanisms, such as member satisfaction surveys. Surveys can be administered by phone or through the mail and can be administered at the point of service, at the end of a specified interval following service, or periodically throughout the year. Surveys can be used to gather performance data about individual providers or about the health plan as a whole.

Health plans regularly administer customer satisfaction surveys as part of their quality management programs. Surveys are also administered by third party reporting agencies in an effort to provide customers with information they can use to evaluate and select health plans. One of the most widely used third party consumer satisfaction surveys is the Consumer Assessment of Health Plans Survey (CAHPS), which we described briefly in earlier lessons. CAHPS is designed to solicit information from consumers about their experiences with health plans. The CAHPS program provides survey administrators with questionnaires, directions for conducting surveys and producing reports, and sample formats for reporting survey results. In addition, CAHPS provides instructions for setting up a computerized system for comparing plans that can be accessed through the Internet or intranet links.

CAHPS gathers detailed information about access, quality of care, and plan administration from the general patient population and from specific target populations such as patients with chronic conditions or disabilities, Medicare and Medicaid beneficiaries, and children. CAHPS reports compare the costs and benefits of various health plans and display those results in easy-to-understand formats.

CAHPS surveys can be administered independently or in conjunction with other data collection instruments. For example, CMS routinely administers CAHPS questionnaires to Medicare and Medicaid beneficiaries. As noted in the lesson Quality Management, NCQA uses the CAHPS 2.0H survey as part of its health plan acccreditation program. CAHPS results are also published in NCQA's Quality Compass, which is a database of comparative information on accreditation status and results on key HEDIS measures.

Customer satisfaction surveys provide health plans with information about which services work best and which services are most important to their customers. This information is critical to a health plan's performance improvement efforts. By improving satisfaction scores from "neutral" or "satisfied" to "very satisfied," the health plan can build customer loyalty and improve retention. Customer satisfaction, however, is only half of the picture. Health plans must also gather information about what causes customer dissatisfaction.

Health plans can gather information about customer dissatisfaction by examining customer complaints. Health plans' tracking systems record each member complaint and assign it to a category. Complaints generally fall into one of the following categories:

Problems with referrals and authorizations (e.g., the plan takes too long to authorize service or process referrals)

Problems with doctor/patient relationships (e.g., doctors rush visits, do not provide adequate explanation of condition/treatment, do not communicate well)

Problems with prescription drug coverage (e.g., prescriptions are difficult to obtain, certain drugs are not included in the plan formulary)

Problems with emergency department procedures (e.g., patients do not understand what constitutes an emergency, patients do not understand procedures for obtaining emergency care)

Problems with member services (e.g., customer service representatives are unresponsive or poorly trained)

Problems with claims (e.g., services are not covered, the plan denies payment, the plan pays only part of the expenses incurred)

Complaints can be tracked and reported by category and by individual provider, giving the health plan a summary of overall problem areas and provider-specific problems.

According to the above list, plan administration has the greatest potential for creating customer dissatisfaction. Because it is an area over which the health plan has maximum control, plan administration also has the greatest potential for improving satisfaction and building loyalty. By increasing the value of its services, the health plan can turn satisfied customers into loyal customers who will re-enroll in the plan and recommend it to others.

Data Analysis

Analysis of the financial, clinical, and customer satisfaction data that health plans collect during performance measurement provides a snapshot of the health plan's current level of performance. By comparing actual performance to standards, health plans can obtain information about the quality of their performance. A close match between actual and expected levels of performance indicates quality. Variance

between actual and expected levels of performance that falls outside acceptable limits indicates areas that need improvement.

Reporting Performance Information

The final step in performance measurement is reporting results. Performance reports can take a variety of forms, depending on the focus of the measurement, the methods used to collect and analyze data, and the intended users of the information.

Performance reports serve two purposes. Internally, performance reports are used to improve the quality of healthcare processes and outcomes by pointing out a health plan's strengths and weaknesses. They are a critical part of the health plan's strategic planning, financial planning, network and medical management, and quality management efforts. They are also a valuable tool for encouraging existing providers to focus on quality improvement and for recruiting new providers.

Externally, performance reports are designed to address the issue of accountability. By comparing one plan, provider group, or delivery system to another, performance reports can identify differences in performance and areas where changes are necessary. Health plan customers can use this comparative information to make informed healthcare decisions.

The emphasis on external accountability has increased dramatically in recent years. Whereas performance reports were initially distributed to a limited audience of health plan managers and providers, they are now available to nearly all health plan customers. Written reports are often mailed directly to consumers and distributed to employer groups, provider groups, and brokers. Health plans and reporting agencies also report performance information on the Internet. For example, CMS allows Medicare beneficiaries to access comparative information about plan costs, premiums, and types of services via an interactive Web site called "Medicare Compare." Several state-sponsored performance reports are available over the Internet with links to NCQA. The Pacific Business Group on Health's "Health Scope" site provides detailed online information about health plan and physician group performance as well as information on how to select primary care physicians and how to understand and use plan formularies.

Report Cards

Increased demands for performance information have led reporting agencies and health plans to expand reports to include rankings as well as comparisons of health plans. These ranking systems are referred to as report cards, which are structured reports designed to provide consumers, employers, and payors with plan-based and provider-based performance ratings that they can use to make informed healthcare decisions.

Health Plan Report Cards

Health plan report cards are currently available from a number of sources including major periodicals (Newsweek, U.S. News & World Report, and Consumer Reports), nonprofit consumer advocacy groups (Consumer Checkbook), accrediting agencies (NCQA Quality Compass), and employers. These report cards have a national focus and provide ratings for a variety of health plans. Other report cards such as the California Cooperative HEDIS Reporting Initiative focus on specific types of health plans operating within a single state or region. Figure 3B-6 summarizes five of these major report cards.

Additional report cards are available from America's Health Insurance Plans (AHIP), with links to NCQA and CMS, and from J. D. Power & Associates. These report card results are reported to media as well as to employers, making them widely available to the general public. NCQA and the Foundation for Accountability (FACCT), which is a major source of quality and performance measures, are also developing report card systems. NCQA's Health Plan Report Card has been produced on a monthly basis since February 2000. FACCT report cards are expected to be available by 2002.

To date, health plan report cards have focused primarily on HMOs, even though non-HMO plans such as PPOs have higher enrollment. This situation is likely to continue until new methods of collecting, analyzing, and reporting non-HMO performance information are developed.

Content

HMO report cards typically contain three types of information: measures, indices, and ratings. Measures consist of raw performance data such as member satisfaction scores or rates for preventive interventions such as mammography screening or

childhood immunization. Indices are composites of several measures into a single descriptor. For example, U.S. News & World Report combines HEDIS performance measures from NCQA's Quality Compass into four general categories: prevention, access to care (adults), access to care (children), and physicians' credentials. Ratings rank plans according to the results of specific measures or indices. Ratings can be expressed as scores or as normative values such as "excellent," "very good," "good," and "satisfactory."

Report cards may also include information such as the plan's accreditation status and organizational structure (for profit, not-for-profit). This information is not included in plan ratings. Non-HMO report cards tend to be more limited in scope and content, relying primarily on customer satisfaction data drawn from internally generated member surveys. Appendix 3B-2 at the end of this reading includes sample ratings from each of the five major report cards.

Types of performance measurement systems used to assess the quality of health plans' healthcare and administrative services include the following:

Indicator Measurement System (IMSystem) Computerized Needs-Oriented Quality Measurement Evaluation System

(CONQUEST) FACCT Quality Compass

One of these performance measurement systems is sponsored by NCQA, and its target audience consists of purchasers and consumers. This system is a national database of comparative information on accreditation status and scores on key HEDIS measures covering more than 200 health plans. This performance measurement system is:

IMSystem

CONQUEST

FACCT

Quality Compass

Answer=D

Data Sources

Most HMO report cards are based on data collected for HEDIS 3.0, a set of approximately 60 performance measures developed by NCQA. HEDIS measures are not applicable to non-HMO plans. Core HEDIS measures relate to access and availability of care, effectiveness of care, and customer satisfaction. Effectiveness of care measures include

Adolescent immunization status Check-ups following delivery Follow-ups after hospitalization for mental illness Flu shots for the elderly

Customer satisfaction measures include

Speed of care Communication with physicians Ease of finding a personal physician or nurse Claims processing Overall experience with the health plan

HEDIS 2000 incorporates five new disease-specific measures-controlling high blood pressure, appropriate medications for asthma, emergency room visits for asthma, chlamydia screening, and menopause counseling-not included in HEDIS 3.0. Future measures will address how well plans help heart attack patients control cholesterol and how well they monitor diabetes patients. The focus of these new measures is to assess how plans care for their sickest members.

A number of report cards also use performance measures available from FACCT. Unlike NCQA, FACCT does not currently collect or report performance data; instead, it provides users with patient-centered outcomes-oriented measures that can be used to collect and evaluate performance data. FACCT measures take a population-based approach that examines broad patterns of care rather than individual episodes of care. This approach allows reporting agencies to measure how the health plan serves all of its members and how it serves people with specific illnesses. In addition, FACCT measures are multidimensional and assess patient perceptions of care, functional status, and outcomes as well as clinical performance. FACCT measures also rely heavily on patient-reported data such as information reported on the SF-36 patient questionnaire.

FACCT measures are developed according to the following criteria:

Prevalence of condition in the population Cost of providing care Opportunity for improving care Ability of condition to engage consumers' interest Ability of accountable parties to affect outcomes Likelihood of revealing differences between health plans

Original FACCT measurement sets assessed performance related to treatment of breast cancer, diabetes, major depressive disorders, and health risks, as well as consumer satisfaction with health plans. Measurement sets endorsed or under development by FACCT address asthma, arthritis, heart disease, alcohol use, pediatric care, HIV/AIDS, and care at end of life.

The same pressures that led to the creation of health plan report cards have also led to the development of provider report cards. The performance measures used to construct these report cards are very much like those used for health plan report

cards. However, the data derived from those measures are related to physicians and healthcare facilities rather than health plans.

Provider report cards are being produced by a variety of organizations. Some of these report cards are sponsored by state agencies or advocacy groups. For example, several state health departments currently report patient death rates for physicians and hospitals on specific types of surgery as well as patient satisfaction, cost, and outcomes data on specific types of care. These report cards provide information about the "number of cases handled, rates of complications and mortality, length of stay, and the average payment for treatment. Hospitals get one to three stars depending on whether their performance is better, the same, or worse than expected or the national average."3

Health plans are also producing provider report cards that evaluate physician groups on the basis of customer satisfaction and treatment of specific diseases. Customer satisfaction report cards rate physician groups on quality of care, access to care, and satisfaction with the medical group. Disease-specific report cards rate groups on quality of care, quality of services, and outcomes. Report cards rate individual groups' performance as "excellent," "very good," or "good," relative to others in a region. Insight 3B-2 describes some of the specific measures one health plan uses to evaluate provider groups.

Figure 3B-7 shows a portion of a sample provider report card.

Provider report cards focus on provider groups rather than on physician practices or individual physicians, and even these have met with some resistance. Physicians often oppose report cards on the grounds that the information included is incomplete or misleading, especially with regard to case mix. Health plans often object on the grounds that the cost of establishing information systems that can collect, analyze, and transmit physician data in standardized format outweighs their potential benefits. In spite of current skepticism, the future seems to point to more report cards at more levels. Patients, who are generally more concerned with the quality

and performance of providers than they are with the performance of health plans, are likely to drive this trend.

The following statements are about the use of report cards in the managed healthcare industry. Three of the statements are true and one is false. Select the answer choice containing the FALSE statement:

Health plan report cards are available through major periodicals, such as Consumer Reports magazine, Newsweek magazine, and U.S. News & World Report magazine. Report cards are structured reports designed to provide consumers, employers, and payors with plan-based and provider-based performance ratings that they can use to make informed healthcare decisions. To date, health plan report cards have focused primarily on HMOs, even though non-HMO plans such as PPOs have higher enrollments. Currently, provider report cards focus on physician practices or individual physicians, rather than on provider groups.

Answer=D

Issues and Barriers in Performance Measurement

In theory, performance measurement offers health plans and providers a way of improving healthcare services by giving them the information they need to do a better job. Performance measurement also offers health plan customers the information they need to make better healthcare choices. In practice, performance measurement has not yet lived up to expectations. This gap between theory and practice can be traced to a number of factors.

Data Collection and Analysis

As we have seen, performance measurement often emphasizes outcomes as a way of quantifying performance and establishing comparisons. The actual usefulness of outcomes measures, however, is often limited by such factors as data availability and inconsistency.

Availability of Valid, Reliable Data

Financial outcomes are relatively easy to support because financial and administrative data are widely available. Data to support clinical outcomes and satisfaction outcomes are more difficult to find. Historical data is often not available at all.

Part of this difficulty stems from a lack of reliable measures. For example, fluctuations in mortality rates and length of stay, which are commonly used as indicators of clinical performance, cannot always be traced to specific actions of health plans or providers.

Availability of Sufficient Data

The amount of information available also affects its value. In order to make an informed decision about health plans and providers, customers need information about a wide range of options. Although published performance reports make every effort to supply sufficient data, their efforts are often negated by lack of plan or provider cooperation. Currently, only HMOs are reporting performance data. Without comparable information from non-HMO plans and FFS systems, it is impossible to generate a complete assessment of performance. Moreover, an increasing number of HMO plans that originally reported data to accrediting programs or other reporting agencies have either stopped reporting data or refused to allow their data to be published.

Inconsistent Methodology

Developing performance measures that allow customers to compare "apples to apples" requires a level of standardization in data collection and analysis that does not yet exist. A quick look at some of the major measurement systems reveals almost as many definitions, time periods, sampling methods, and reporting formats as there are sponsors. Even geographical location can affect the quality of measurement systems. Small differences in any of these areas can produce large differences in results, and plans that receive high ratings from one system may receive low ratings from another.

Inconsistencies even occur within individual measurement systems. For example, the author of U.S. News & World Report's 1998 HMO report card admitted that "because this year's methodology has changed in many ways, scores and ratings cannot be compared with last year's."4 Even when changes, such as the inclusion of new HEDIS measures, are the result of developmental advances, they affect consumers' ability to compare performance over time.

The nature of performance data also creates inconsistencies. Performance is rarely measured on a single dimension such as clinical health status or customer satisfaction. Instead, it is a composite of administrative, clinical, financial, and patient data. In order to obtain an accurate picture of performance, health plans must find the best mix of these data types. Health plans must also find ways to quantify attributes, such as quality of life, functional status, and satisfaction, that are primarily subjective.

Reporting

The value of performance information often depends on the way it is reported and the organization that reports it. As with data collection and analysis, data reporting is influenced by a variety of external and internal factors.

Scope

The value of performance information to customers depends on its breadth as well as its depth. A provider's performance during a single episode of care for a single patient, for example, is not as meaningful to consumers as the provider's

performance across a continuum of care or across an entire patient population. Similarly, a health plan's performance seen in isolation is not as meaningful to purchasers or plan members as the plan's performance compared to benchmark performance. For example, given the established link between the use of beta-blockers and deaths from heart attacks, a 50 percent rate of administering beta-blockers following heart attack would probably raise some questions about a plan's performance. Information linking the plan's rate with benchmark rates would most likely provide a much stronger indication of the quality of care provided by the plan.

In some cases, performance itself is too narrow to provide value to consumers. The use of beta-blockers in our example is a process measure; survival rates following heart attacks is an outcome measure. From a plan perspective, the process is an important indicator of quality. The data are easy to obtain and the correlation between process and outcome is relatively strong. From a member perspective, the outcome is what is important.

Potential Reporting Bias

Both health plans and provider groups have expressed concerns that performance reports produced by the media tend to focus on performance shortcomings in order to discredit the managed healthcare industry. Differences in the samples and survey methods can also introduce bias. For example, a customer satisfaction survey that offers three positive answer categories and only one negative category is likely to produce high customer satisfaction ratings.

Misleading Results

Another serious concern that plans and providers express about performance reports is that the information is misleading. For example, a poor rating on a particular performance dimension may indicate poor performance or it may simply indicate poor data submission. Poor data submission, in turn, may indicate a lack of willingness on the part of the health plan or provider group, or it may indicate a lack of systems capability. Unless the report clearly explains the conditions that affect study results, consumers are forced to interpret findings on their own.

Protecting Patient Privacy

The confidentiality of medical information is a critical issue for most consumers. As health plans and reporting agencies continue to drill down for detailed information, the need to protect individual patients increases.

Cost

All attempts to improve performance require investments in time and resources. For example, developing accurate measures of a plan's clinical performance requires collecting detailed clinical data. Many health plans' information systems cannot provide the necessary detail without massive upgrades. Those systems that are capable of collecting detailed information at the plan level must also be able to link

different databases, perform calculations, and analyze results. The more sophisticated the measures, the higher the cost. Estimates of the cost of collecting and reporting HEDIS 3.0 data range from $20,000 to $700,000 per measure.5

Overcoming Performance Obstacles

Although the barriers to performance measurement mentioned above are significant, they are by no means insurmountable. Accrediting agencies have made great strides toward standardizing the measures and indicators that health plans use to collect and analyze performance data. Research organizations such as the ones described in Insight 3B-3 have taken similar steps to improve the availability and consistency of outcomes data. These efforts are evidence of the growing importance of performance in maintaining and improving the quality of healthcare services.

Appendix

Appendix 3B-1

(copied already)

Appendix 3B-2

AHM Medical Management: Quality Improvement

Pg 1 to 56

Quality Improvement

Course Goals and Objectives After completing the lesson Quality Improvement , you should be able to:

Identify the major components of the performance improvement cycle Describe how health plans use benchmarking to guide quality improvement

activities Identify the goals of member education and outreach programs Describe the techniques health plans use to improve providers' ability to

work within the healthcare system

Describe three tools health plans can use to support provider decision making and improve clinical performance

Introduction

In the lesson Quality Assessment, we discussed the relationship between quality and performance and described some of the approaches health plans can take to assess existing performance levels. In this lesson, we will describe some of the strategies and tools health plans can use to improve performance. Because performance has a direct effect on outcomes, these tools also help health plans improve the quality of their services.

Performance Improvement

Performance improvement is based on making changes to existing structures and processes that will lead to changes in outcomes. In order to ensure that performance improvement activities produce desired results, changes to structures and processes must be carefully planned, communicated, implemented, documented, and evaluated. The components of the performance improvement cycle are illustrated in Figure 3C-1.

Planning for Change

Change is a complex process that can take a variety of forms. Change that occurs randomly is referred to as haphazard change. It can be caused by chance or by benign neglect. Because it is uncontrolled, its results are unpredictable. The dramatic increases in healthcare costs that can arise when consumers and healthcare organizations fail to recognize the consequences of unlimited utilization is an example of a haphazard change.

Reactive change occurs when situations become unmanageable and some form of immediate action is necessary. Reactive change is controlled, but it is rarely planned. It can lead to positive or negative results; however, these results are usually situational. Reactive change also has a likelihood of producing unintended results. The introduction of preauthorization as an attempt to control overuse of services is a form of reactive change.

The changes that performance improvement programs generate are planned changes. Planned change is deliberate, controlled, collaborative, and proactive. It involves the time and effort of all members of the organization. In planning performance improvements, health plans must make the following strategic decisions:

Which of the critical services and processes identified during performance assessment should be targeted for improvement

What the desired outcomes of proposed changes are and how they will be measured

What actions are most likely to produce desired outcomes

Identifying Targets for Quality Improvement

As we discussed in the lesson Quality Management, health plans offer a wide range of clinical and administrative services to their customers. Any of these services can serve as targets for quality improvement. However, because resources are limited, health plans typically direct their efforts toward those services that are most in need of improvement or that offer the greatest opportunity for development.

Defining Desired Outcomes

Outcomes guide the activities included in a performance-based QI program and turn random motion into directed change. It is important to recognize that the outcomes set by improvement plans are the results the health plan hopes to achieve as a result of changes to existing structures or processes rather than the results that are expected when a particular procedure is performed. For example, patients who undergo surgical procedures often experience pain or discomfort following surgery. Providers manage post-surgical pain by administering pain medication (a clinical process). The expected outcome of this process is a reduction in the level of pain the patient experiences. An action plan designed to improve pain management processes might modify the way medication is delivered by allowing patients to self-administer pain medication. The desired outcome of this intervention might be to increase patient comfort, reduce recovery time, or improve efficiency.

Expected outcomes can be anticipated. Health plans must carefully define desired outcomes so that they are

Specific: each outcome defines a single result Measurable: outcomes must be expressed in objective, quantifiable terms Appropriate: outcomes must be directly related to identified critical

processes Realistic: outcomes must be achievable within the context of given patient

health states, treatment options, and resources

Desired outcomes must also be achievable within the time frame established in the plan.

Designing Interventions

Once desired outcomes have been defined, the health plan must decide what actions it will undertake to achieve those outcomes. Each service a health plan offers consists of its own structures and processes, and performance improvement efforts can address either or both of these dimensions. For example, an important goal of a health plan's QI program might be to improve plan members' access to care. The health plan could change structures related to access by modifying the size and/or composition of the provider network. The health plan could change processes by modifying authorization and referral procedures. Both of these approaches are likely

to have an effect on access. The health plan's task is to determine which kinds of changes are likely to be most effective in producing desired results.

Health plans communicate proposed changes to appropriate individuals or groups in the form of action statements. A sample action statement appears in Figure 3C-2.

The "who" element of the statement identifies the individual or group responsible for taking action. The "will do" element identifies the type of change that the proposed action will generate. The change should be described in terms of results-increase, decrease, maintain, expand-rather than processes-define, evaluate, design. The "what" element describes the specific target of improvement efforts, and "when or by how much" establishes the timetable for or desired level of improvement. Actions can be carried out by individual providers, work groups, or departments.

Extensive planning frequently raises objections. Some organizations argue that because planning is focused on future activities, it is based on speculation rather than fact. They also argue that they are too busy dealing with today's activities to devote time and energy to tomorrow. In addition, planning runs counter to the emphasis among many organizations on getting things done.

These objections are more than offset by the following benefits that result from careful planning:

Planning directs an organization's activities by establishing performance goals Planning controls and limits an organization's efforts and expenditures by

focusing attention on specific tasks Planning establishes a system of responsibility and accountability for

organizational performance Planning provides management with an organized approach to complex

problems and opportunities Planning maximizes the effectiveness and efficiency of organizational

activities Planning facilitates collaboration, creativity, and participation across all levels

of the organization Planning minimizes unintended results

Communicating Change

Communication is the process by which the health plan transfers information and results upward, downward, and horizontally through the organization to its internal customers and outward to its external customers. Each of these audiences has its own information needs that define the content and format of performance communication.

Performance information can be presented verbally or in writing. It can be limited to brief summaries of important facts and figures or it can include detailed descriptions of program design, methodology, and outcomes. It can be presented informally in conversations with or memos to individuals or work groups or formally in performance reports delivered to management and governing boards.

Performance communication also serves a variety of purposes. Informational performance reports transfer facts and figures for use in decision making. They are produced for individuals and groups who need information on a routine basis. The reports that health plans submit to internal boards and committees, such as the QM committee or the pharmacy and therapeutics committee, are informational reports. Persuasive communication is intended to generate changes in attitude that will lead to changes in behavior. This is especially important in communicating performance information where the goal is to change behavior in order to achieve better outcomes. Recognition communication, which acknowledges achievements rather than problems or opportunities, provides motivation for continued growth and development.

Effective communication of performance information benefits all of its users. For patients and their families, performance information helps define and support healthcare expectations. For providers, information leads to improved guidelines for medical practice. For purchasers, it demonstrates health plan value. For health plans, it provides protection against liability.

Implementing Change

In order to turn intention into action and link structures and processes to outcomes, health plans must implement the programs they plan. Compared to planning, implementation is a relatively simple process accomplished when responsible parties complete assigned tasks in a specified time frame. The activities, timetables, and accountabilities associated with performance improvement plans are embedded in the plans themselves.

Implementation of a performance improvement plan depends on who is accountable for delivering the service and whether the service is patient-focused, provider-focused, or administrative. We will describe some of the specific tools that health plans use for performance improvement later in this lesson.

Patient-Focused Action Plans

Although patient behavior is outside the health plan's control, it is influenced by the health plan's actions. Patient-focused plans, therefore, are designed to augment the activities of providers and administrative staff and improve overall service outcomes.

Strategies such as member outreach and patient education programs are designed to improve outcomes by helping plan members

Assume responsibility for their own health Feel more satisfied with the healthcare services they receive Obtain better care

Appropriately trained and educated patients can help manage minor problems and keep them from becoming major problems.

Provider-focused action plans address the performance problems and opportunities of the providers and staff who deliver healthcare services. Clinical practice guidelines (CPGs), provider profiles, and peer reviews are examples of tools that health plans can use to guide provider performance and improve patient outcomes.

Health plan management identifies areas for improvement or development, defines outcomes, and negotiates incentives. Providers then implement the recommended actions. Outcomes are reviewed periodically by management or a panel of professionals.

Administrative action plans

Administrative action plans are used when performance problems or opportunities are related to the way the organization itself operates. For example, low rates for cholesterol screening among patients at risk for coronary artery disease can be caused by a variety of factors. If inadequate staffing or a lack of equipment are contributing factors, an administrative action plan may be necessary.

Administrative action plans allow the health plan to:

Integrate service across all levels of the organization Coordinate management activities Improve resource allocation and utilization

It is the responsibility of the health plan to create an environment in which quality improvement activities can occur.

Documenting Change

A health plan's improvement plan provides evidence of its intent to improve performance in key areas. Documentation provides evidence that the health plan has translated its intentions into actions. It also provides evidence of the health plan's progress toward achieving desired outcomes.

Accrediting agencies and regulatory bodies require a health plan to provide documentation of three major components of performance improvement: performance assessment, program planning, and program evaluation. During performance assessment, the health plan collects a significant amount of information

about its customers and its services. This information provides a written record of the health plan's activities and their impact on each of the organization's customer groups.

The health plan also documents the methods it uses to collect and analyze performance data. Documentation of data collection and analysis provides evidence of the health plan's efforts to measure and monitor performance. It also supports the health plan's performance improvement efforts by identifying variance and measuring progress.

Documentation of program planning is contained in the health plan's action plans. These plans provide written evidence of the organization's intent to take action. They document the services and processes that are of greatest concern, the interventions the health plan intends to implement, and the individuals or groups responsible for taking action. They also document expected and desired results.

Program evaluation is documented by additional data collection and analysis designed to measure the health plan's progress toward its performance goals. This documentation is recorded on progress reports that describe program status and track changes in that status over time. Prepared concurrently, progress reports describe how an action plan is progressing; retrospective reports describe end results.

Evaluating Change

All improvement plans require follow-up evaluation to determine how successful the plans are in achieving stated goals. Evaluation can be conducted concurrently or retrospectively. Concurrent evaluation is conducted as the plan is being carried out and allows the health plan to check the progress of its improvement plans against interim benchmarks. Retrospective evaluation is conducted after all planned interventions are completed and allows the health plan to measure outcomes.

Evaluation can also be formative or summative. Formative evaluation focuses on specific activities and assesses the relative importance of those activities to the plan as a whole. Summative evaluation focuses on outcomes and assesses how effective actions are in achieving desired results.

The overall purpose of evaluation is to allow the health plan to make judgments about the value of its performance improvement program. Value, in this context, refers to the efficiency and effectiveness of improvement activities. Efficiency is the relationship between what the organization puts into an improvement plan and what it gets out of the plan. Effectiveness is the degree to which the health plan is doing the right things and doing them right. In other words, did the planned improvements work? Effectiveness is measured by reviewing outcomes to determine (1) the accuracy or appropriateness of improvement strategies, that is, the "fit" between the problem or opportunity and the strategy used to address it; and (2) the adequacy of resources allocated to the strategy.

The effectiveness of an action plan is typically measured retrospectively, after planned actions are completed. Results of this retrospective analysis are then compared to the initial results and target results for a given indicator to determine the degree of progress or improvement. Evaluation of plan effectiveness typically produces one of the three following results:

The plan achieved the desired outcomes. This result is achieved when predetermined problems have been resolved or opportunities have been exploited, and when re-measurement data are comparable to plan goals. Successful interventions are measured periodically to determine that improvement is maintained.

The plan did not achieve the desired outcomes, but it did make significant progress toward those outcomes. This result occurs when re-measurement data indicate forward but incomplete movement toward predefined goals. Management typically responds to this result by conducting a process review or formative evaluation of the goals, outcomes, interventions, resources, and timetables outlined in the plan to determine what additional changes are necessary. Plan elements are then revised as needed.

The plan did not achieve the desired outcomes and is unlikely to do so under current conditions. In this case, re-measurement data are not significantly different from initial data and may even indicate regression. This situation requires both summative and formative evaluation to determine if the health plan can revise its current plan or if it must abandon the plan and develop a new one.

Data Collection and Analysis

We described the importance of data collection and analysis for quality assessment in the lesson Quality Assessment. Data collection and analysis are also important in evaluating quality improvement. The data that are collected and the methods that are used to collect and analyze data for quality improvement purposes, however, are different than those used for quality assurance. Figure 3C-3 summarizes these differences.

QA data describe the current state of various structures, processes, and outcomes. By describing the status of structures, processes, and outcomes before and after a change has been implemented, QI data describe the progress the health plan has made toward achieving its goals.

Data collection for QA is primarily a reactive process designed to verify that the health plan's operations meet expectations. Data collection for QI is a proactive process intended to

Verify that programs are proceeding as planned Identify opportunities for improvement Provide a rationale for decisions regarding resource allocation Support the development of reliable performance outcomes

Quality Improvement

QA data collection focuses on providing sufficient objective data for evaluating current performance. QI data collection procedures are designed to achieve the following goals:

To provide the health plan with accurate data on which to base future decisions. In the healthcare setting, where resources are often limited, data accuracy is critical. Poor decisions can lead to wasted time, misspent funds, poor utilization, and inadequate or excessive spending. They can also lead to the creation of inappropriate standards.

To avoid using measurement results for punitive purposes. It is important to focus quality improvement on fixing the problem rather than on fixing blame. Data collection methods that are "safe" from punitive applications foster organizational cooperation and data accuracy by eliminating fear of repercussion.

To provide the health plan with a global picture of improvement opportunities by identifying all of the organizational areas that affect or are affected by key processes and outcomes.

To confirm desired outcomes. By collecting data before and after an improvement plan has been implemented, the health plan can determine the degree of improvement its programs achieve.

To demonstrate sustained improvement. Quality improvement is an ongoing process that requires collecting data at regular intervals to track and describe trends or variations in results.

Evaluators analyze quality assessment data in order to determine the degree of variance between the organization's current performance and established standards. Health plans analyze quality improvement data in order to determine the cause of variance. Performance variance can be classified as either common cause variance or special cause variance.

The paragraph below contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the paragraph. Then select the answer choice containing the two terms you have selected.

Data collection and analysis are important in both quality assessment (QA) and quality improvement (QI). Data collection for (QA / QI) is primarily a reactive process designed to verify that the health plan's operations meet expectations. A health plan analyzes (QA / QI) data in order to determine the degree of variance between the organization's current performance and established standards.

QA / QA

QA / QI

QI / QA

QI / QI

Answer=A

Common cause variance consists of minor variations in performance that occur regardless of how good a healthcare system or provider is. In some cases, common cause variance is imbedded in the system and can be linked to specific factors such as employee skill levels or equipment capabilities. Changes in these factors can create changes in performance that cannot be corrected by modifying processes.

For example, a health plan's customer service staff might be capable of answering 2,000 calls per day at a rate of less than 30 seconds per call. If the call volume rises above 2,000, answer time will also increase. Variance, in this case, is linked to system capabilities rather than service processes. In other cases, common cause variance may occur entirely by chance. In our earlier example, variance in the number of calls answered per day would occur by chance if a large number of staff members were out sick at the same time. Because common cause variance is often impossible to control, it is generally tolerated.

Special cause variance occurs when systems and processes break down-for example, when staffing levels are inadequate or when employees make errors or equipment malfunctions. Special cause variance is generally easier to detect than is common cause variance. It is also easier to correct.

Data analysis for QA focuses on measuring current levels of performance without making recommendations for action. Because it is used to describe current performance, it provides a "snapshot" of performance at a particular time. Analysis of QI data is based on judgments about whether performance after a change in structure or process is better than performance before the change. In addition, because improvement program evaluation involves repeated measurement and analysis, it creates a kind of moving picture of the health plan's performance improvement activities.

Strategies and Tools for Improving Quality

Health plans can use a variety of strategies to improve the quality of their services. Strategies can be designed to improve services or they can be designed to improve the way those services are delivered. They can be directed toward customers, providers, or the health plan itself. In all cases, the health plan's efforts are guided by the outcomes it hopes to achieve.

Benchmarking

Quality standards such as the ones described in the lesson Quality Assessment offer health plans and their constituents a valuable method of assessing the quality of the health plan's administrative and healthcare services. One of the most effective methods of planning and implementing changes that will lead to quality improvement is benchmarking. The benchmarking process consists of two parts: (1) describing a benchmark, or highest achieved level of performance, against which a health plan's

performance can be compared; and (2) identifying the actions the health plan can or should take to arrive at that benchmark.

Establishing Benchmarks

Benchmarks identify "best of class" performance. They are similar to both standards and goals; however, unlike standards, which typically define the level of performance a health plan must achieve, and goals, which express the level of performance the organization hopes to achieve, benchmarks describe the highest level of performance that has been achieved. To better understand this relationship, consider the example of board certification as a measure of provider quality. A health plan might be subject to external standards that require a minimum percentage of providers to be board certified. As part of its strategic planning process, the health plan might set a goal for board certification of physicians that is higher than the minimum percentage cited in the standard. A benchmark percentage for board certification would put both the external standard and the health plan's internal goal in perspective by describing the best level of performance that has been achieved by a recognized industry leader.

Identifying Best Practices

Traditionally, benchmarking for managed healthcare organizations has relied on cost-center data to identify those practices that lead to the lowest overall cost. The process has been fairly simple to implement because cost-center data is easy to collect from patient billing and budget records. At the clinical level, benchmarking has focused on utilization data drawn from such sources as internal physician profiles, diagnosis and treatment reference books, commercial data services, and professional peer review associations. The usefulness of cost-based benchmarking, however, has been somewhat limited by the following conditions:

Although cost-based benchmarking identifies which areas of a health plan perform better or worse than comparable areas in other organizations, it does not reveal how or why performance levels are different.

Elements assigned to cost centers tend to vary from organization to organization. For example, some health plans assign costs for such services as utilization review and quality improvement to clinical cost centers; others assign these costs to administrative departments.

Supply costs are difficult to compare. Some health plans include all supply costs related to a particular procedure to a single cost center, whereas other health plans divide those costs among several cost centers. Similarly, supplies may be included in separate department inventories or in a centralized organizational inventory.

Patient billing records are not always an accurate measure of the cost of a procedure. In order to be complete and current, procedure costs should include not only the cost of care but the cost of key supplies such as needles, syringes, or swabs. These supply costs are not typically charged to patients or itemized on bills.

The emphasis on quality care has shifted the focus of benchmarking from identifying lowest cost practices to identifying best practices. In the context of medical care, best practices are actual practices, in use by qualified providers following the latest treatment modalities, that produce the best measurable results on a given dimension. The premise behind a best practices approach is that there is no reason for a health plan or a provider to "reinvent the wheel." Best practices can serve as models of care for others to follow.

A best practices approach to benchmarking benefits all of the members of the health plan system. Clinicians have traditionally relied on personal experience, role models, and journal articles to develop practice patterns, and many have resisted changes mandated by financial managers intent on reducing costs. Best practices allow practitioners to

See how their practice patterns compare to patterns with proven, measurable results

Use proven patterns in their own practices to emulate best results Obtain information about treatment or practice decisions for illnesses and injuries

with which they may not be familiar

Best practices, therefore, can help patients receive the most appropriate care from the outset and help health plans operate most efficiently.

At the organization level, best practices provide managers with an incentive to change operations based on ideas and practices that are proven effective. Insight 3C-1 illustrates how benchmarking results also help dispel some of the more prevalent misconceptions among healthcare executives.

Sources of Comparative Data

Health plans can obtain comparative performance data from a number of sources. Earlier in this section, we mentioned some of the sources health plans use to gather comparative data about physician practices. Health plans can develop an even more precise picture of practice patterns by analyzing information provided by the current procedural terminology (CPT) coding system, which is a method developed by the American Medical Association that allows physicians to accurately describe and bill for treatments and procedures.

CPT codes provide complete lists of supplies used for specific procedures, using descriptors that are clinically meaningful. As a result, they provide a much more accurate account of procedure costs than do patient billing records. CPT codes also have advantages over diagnosis-related groups (DRGs), which are classifications developed originally for Medicare and now used by commercial health plans to determine payment for inpatient hospital services based on a patient's principal diagnosis, secondary diagnosis, surgical procedures, age, gender, and presence of complications.2 Unlike DRGs, CPT codes describe individual procedures, cover outpatient procedures and treatments as well as inpatient services, and reflect the physician's perspective. Because CPT codes are standardized descriptions, they also provide a means of comparing physician practices across different healthcare organizations. When physicians compare the items they use for a particular CPT-

coded procedure with those used by other physicians for the same procedure, the need for change can be compelling.

Health plans can also obtain comparative data from government and commercial sources. In 1979, the Department of Health and Human Services (HHS) published its first national agenda for improving health and preventing disease in the form of Healthy People. In 1990, HHS published Healthy People 2000, which included 319 objectives organized into 22 priority areas and focused on increasing years of healthy life, reducing disparities in health among different population groups, and achieving access to preventive health services.3 To date, 47 states, the District of Columbia, and Guam have developed their own Healthy People plans. Healthy People 2010 was launched on January 25, 2000, and includes health indicators related to (1) health determinants and outcomes, (2) life course determinants, and (3) prevention.4

In 1997, NCQA began offering benchmarking information in the form of Quality Compass, a national database of HEDIS data and accreditation information collected from over 300 health plans nationwide. Quality Compass allows NCQA to report regional and national averages and to identify benchmarks. The public disclosure portion of the database provides regional and national comparisons of plans on eight clinical and preventive measures, including Caesarian-section rates, breast cancer screening, and beta-blocker treatment.

Purchasers can use these reports to analyze and compare the performance of individual health plans in order to make value-based decisions about health coverage. They can also use the information to generate report cards that employees and other consumers can use to assess plan-specific performance on key quality issues. Health plans can use the data to compare their own performance with that of other plans. Industry analysts consider Quality Compass data a major step toward holding healthcare systems publicly accountable for the quality of their services.

Regulatory boards, professional societies, provider organizations, commercial organizations, and state and national health departments offer health plans additional sources of benchmarking data. For example, the U.S. Centers for Disease Control and Prevention maintain the National Nosocomial Infection Surveillance (NNIS) System, a national database of information reported voluntarily by nearly 300 U.S. hospitals regarding the incidence of infections acquired in hospitals. Researchers use the database to develop baseline infection rates that can be used to compare performance levels among participating hospitals. CMS maintains an equally extensive database of administrative healthcare information that can be used for quality improvement activities.

Member Education Programs

Traditionally, healthcare services were the exclusive domain of providers. Providers diagnosed patients' medical conditions, prescribed treatment, defined desired outcomes, and evaluated patients' progress. Patients, for the most part, simply

followed doctors' orders. Today, these roles are changing. Patients are taking an active part in determining the course and outcome of their medical care. The increased participation of patients in making healthcare decisions has come about primarily as a result of member education programs that are designed to improve healthcare outcomes. These programs provide patients with the information they need to better understand and manage their health.

Health plans use a variety of methods to deliver educational information to patients and their families. Providers are a primary source of information. For example, PCPs routinely discuss preventive measures such as weight loss, exercise, or substance abuse programs, diagnoses, and treatment programs with their patients during regular office visits. Pharmacists provide educational information about drug usage and interactions when they fill prescriptions. Hospital personnel instruct families on how to care for patients following discharge.

Printed materials provide additional information. The format and content of printed materials depend on their source and intended use. Providers often produce and distribute printed materials to support verbal instructions. For example, a patient who has a cut sutured in a doctor's office or hospital emergency department often receives printed instructions on how to clean and bandage the wound, how to detect adverse reactions, and when to return for follow-up treatment. Brochures produced by outside sources such as medical associations, research organizations, or pharmaceutical companies provide information about specific medical conditions. Brochures typically provide detailed information on the following topics:

Onset and progression of the disease state Populations at risk for developing the disease Risk factors associated with the disease Available treatment options and their expected outcomes Commonly prescribed medications Steps patients can take to manage their health status, including nutrition, exercise

programs, and life style/behavioral changes

Evidence shows that member education programs contribute to better outcomes. For example, a year-long study of health plan members enrolled in a program designed to educate patients on the benefits of using ACE inhibitors for treating congestive heart failure (CHF) showed a 58 percent decrease in hospital days, a 60 percent drop in hospital admissions, and a 78 percent reduction in hospital costs. In addition, patient quality of life improved 15 percent and the mortality rate dropped 15 percent. Pharmacy costs associated with treatment increased by 68 percent, or $243,000, but total savings from the program were nearly $9.3 million.5 Member education programs such as this one augment provider services by encouraging patient input.

Outreach programs educate plan members about how the health plan works and about health issues such as preventive care recommendations and techniques for managing chronic disease. By proactively providing information about issues

important to plan members, these programs help prevent problems and complaints and improve customer satisfaction.

Most outreach programs consist of information packages that are sent out to plan members upon enrollment in the plan. These packages typically contain

Patient identification cards A description of plan benefits An updated provider directory Directions on how to use the plan, access services, and obtain authorizations An outline of patient rights and responsibilities

Information packages also describe the plan's system for resolving complaints. A clear understanding of grievance procedures is becoming increasingly important as the healthcare industry responds to new state and federal regulations.

Some plans also conduct telephone-based outreach programs. Telephone outreach is particularly valuable during enrollment surges. Personal contact with new patients entering the system helps disseminate plan information quickly and reduces confusion that might otherwise lead to complaints.

Provider Orientation and Education

Health plans can improve provider performance in two ways: by improving providers' ability to work within the health plan environment and by improving the way providers make decisions on behalf of their patients. Health plans typically address health plan performance through provider orientation and education efforts.

Although provider orientation and education programs are primarily network management tools, health plans also use them to establish performance expectations. Provider orientation programs communicate operational aspects of the provider contract to new providers. Orientation typically occurs before providers begin delivering services to health plan members and covers the following topics:

Health plan administrative requirements Member identification and eligibility verification Plan benefits and member copayment requirements Referral authorization and other UM processes Claims processing and reimbursement Member rights and responsibilities Provider rights and responsibilities

Orientation programs typically do not cover specific quality and performance guidelines, but they do describe requirements such as credentialing, scope of services, and peer review that are directly related to the health plan's quality and performance management programs.

Providers also receive a copy of the health plan's provider manual during orientation. In addition to reinforcing contractual provisions, the provider manual demonstrates the health plan's compliance with accrediting agency standards concerning provider performance.

Health plans provide continuing education and support in the following forms:

Regular training sessions for providers and staff Provider newsletters Contacts with provider relations staff Periodic provider meetings Online information

These tools help reduce confusion about ongoing administrative functions related to patient care. They also provide a means of addressing problems and questions that providers may have about the health plan.

Health plans, insurance carriers, and pharmaceutical companies have also begun experimenting with ways to assist providers with some of the nonclinical aspects of patient care such as patient-provider communication. Evidence shows that improved communication skills contribute to better outcomes for patients, providers, and health plans. Patients tend to be more satisfied with providers who communicate effectively. Patient satisfaction, in turn, tends to lead to better compliance with treatment programs and lifestyle recommendations, lower turnover among both patients and providers, and fewer lawsuits against health plans.

Provider Profiling

One important tool health plans use to support provider decision making is provider profiling. Provider profiling involves collecting and analyzing information about the practice patterns of individual providers. Profiling is used during credentialing and recredentialing to help determine how well a provider meets health plan standards. It is also an important part of a health plan's performance measurement and improvement efforts.

Health plans create provider profiles by gathering detailed information related to the following performance measures:

Quality of care Outcomes Patient satisfaction Resource utilization Cost-effectiveness Compliance with plan policies and protocols

Claims and encounter reports yield information about the number and type of services delivered by the provider to plan members. UM and QM reports provide additional information about the costs and outcomes of those services. Complaints

and office surveys provide information about plan members' satisfaction with providers. Together, these data provide a cumulative picture of a provider's performance.

Once provider data have been collected, they are analyzed to establish the provider's level of performance. Results are presented in the form of outcomes and rates or measures of resource use during a defined period of time for a defined population. For example, a PCP profile might present information about the average lead time required to schedule a routine physical examination, the number of referrals the PCP made within and outside the plan network, the extent of the PCP's compliance with practice guidelines, and the level of member satisfaction with the PCP. In order for information to be comparable for all providers, results should be adjusted to reflect differences in risk. The risk adjustment process is described in the lesson, Quality Assessment.

Results can be used to describe the provider's current level of performance or they can be compared with profiles of other similar providers or with benchmarks to identify the provider's strengths and weaknesses. Figure 3C-4 provides an example of a profile developed for a particular diagnosis.

Results are then communicated back to the individual provider by a health plan medical director.

Because profiles focus on patterns of care rather than on specific clinical decisions, they provide a valuable measure of the overall quality of a provider's performance. Because they combine outcome and utilization information, profiles provide a broad measure of a provider's effectiveness and efficiency. Because individual profiles can be compared to peer profiles or benchmarks, they are also useful in identifying areas needing improvement or development.

In addition, profiles offer health plans a means of establishing a provider's value to the organization by identifying outliers and high-value providers. Outliers are those providers who use medical resources at a much higher or lower rate or in a manner noticeably different than other similar providers. High-value providers are providers who consistently deliver quality medical care in a cost-effective manner.

Providers also benefit from profiling. Providers can use profiles to negotiate higher reimbursement rates. For example, some health plans offer higher capitation rates to PCPs who can demonstrate exceptional rates for preventive services. Providers can also use profile results to monitor and improve their practice patterns.

Provider profiles have limitations as well. Although a profile provides insight into the quality and cost of services that the provider delivers to plan members, that picture does not extend beyond the plan. It is virtually impossible for the health plan to gauge the provider's total performance. Profiles can also expose the health plan to legal risks if they are used for purposes other than education and performance improvement.

Peer Review

In the lesson Quality Assessment, we described the use of outcome measures to evaluate specific clinical processes. These measures assess both the provider's skill in performing procedures and the effectiveness of those procedures in achieving desired outcomes. In order to develop a complete measure of a provider's performance, the health plan also needs to evaluate the appropriateness of a provider's healthcare decisions. Appropriateness is an indication of the extent to which the expected benefits of diagnostic or treatment measures exceed expected risks. Health plans typically obtain information about the appropriateness of patient care through a peer review process. Peer review discussions are designed to provide confidentiality and, in some states, to provide freedom from legal discovery.

A health plan can assemble peer review panels from its own network providers, or it can contract with outside peer review organizations to conduct periodic quality reviews. A peer review organization (PRO) is a physician-sponsored entity responsible for reviewing the appropriateness and medical necessity of medical services ordered or furnished by practitioners in order to maintain quality of care.

During peer review, panel members analyze the healthcare services furnished by a provider to plan members. Although most peer review is conducted retrospectively, panels can also be convened to assess the appropriateness of care before it is delivered. Peer review can focus on a single case or episode of care, or it can be applied to an entire program of care. Most often, peer review focuses on high-risk, problem-prone, and high-cost services.

Clinical findings from the review are compared to standards to establish a measure of overall quality. Problems or deficiencies that are discovered by the review commonly serve as a basis for performance improvement. They also serve as a learning tool for the members of the group.

Peer review is required under the Health Care Quality Improvement Program (HCQIP) for services furnished to Medicare and Medicaid beneficiaries enrolled in health plans. For services furnished to commercial plan members, provider participation in the peer review process is determined by the health plan. In some plans, participation in peer review is required; in others, participation is voluntary.

A health plan may use provider profiling and peer review as part of its performance measurement and improvement efforts. With respect to provider profiles and peer review, it is generally correct to say that:

provider profiles focus on specific clinical decisions rather than on patterns of care provider profiles enable a health plan to gauge a provider's total performance across all health plans in which the provider participates peer review most often focuses on high-risk, problem-prone, and high-cost services provider participation in peer review is currently required by almost all health plans

Answer=C

In order to encourage voluntary participation in peer review, health plans have taken steps to support full disclosure and fair evaluation of medical information. One of these steps is to base peer review programs on well-defined principles and standards. Figure 3C-5 describes some of these principles.

Health plans also follow established procedures for protecting the confidentiality of any medical information collected and used during the peer review process. In some

cases, protection is mandated by federal law. For example, the Health Care Quality Improvement Act (HCQIA) mandates protection for participants from suits and from discovery for the documents generated by the peer review process. Most states have also enacted statutes governing the production and use of medical information. The protection offered by these statutes ranges from absolute immunity to some form of qualified immunity for actions taken in good faith.

The guarantees health plans have been able to grant to participants are critical to the success of the peer review process, where the disclosure of errors in professional judgment may have significant economic and career consequences for providers. Those guarantees, however, may no longer be available. In June 1999, the Supreme Court issued a decision allowing individuals to subpoena peer review records for federal lawsuits6. This decision is likely to have a significant effect on the strategies that health plans use to measure, monitor, and improve the clinical performance of their providers.

Clinical Practice Guidelines

As you recall from the lesson Clinical Practice Management, health plans develop clinical practice guidelines (CPGs) in order to help providers consistently deliver medical services that will improve the health status of plan members. Although CPGs are an important aspect of a health plan's clinical practice management policy, they are also valuable tools for improving provider performance. By following approaches that have been proven to be successful and by decreasing inappropriate variations in patient care, providers should be able to achieve the best, most cost-effective patient outcomes possible.

Research seems to support this position. For example, a recent analysis of published studies related to guideline use showed that "the introduction of clinical guidelines led to measurable improvement in clinical care processes."7 Unfortunately, CPGs are not widely accepted by providers.

Providers' willingness to adopt CPGs is affected by a variety of internal and external barriers. Internal barriers are related to a provider's knowledge, attitudes, and experience and include such factors as:

Lack of awareness. The number of organizations conducting research into the effectiveness of specific treatment options for specified medical conditions has increased dramatically in recent years. The number of guidelines based on results of that research has also increased. Although some of these guidelines-for example immunization guidelines and recommendations for infant sleeping positions-are widely recognized by providers, many more are unknown to a significant number of practitioners.

Lack of familiarity. Knowing that guidelines exist does not guarantee that providers are familiar with or can correctly apply guideline recommendations as part of their daily practice.

Lack of agreement. Providers have traditionally based their treatment decisions on their own past experience or on the experiences of other providers with whom they are familiar. The concept of practice guidelines often runs counter to this decision process. Because practice guidelines provide a standardized approach to treating typical patients, they often conflict with provider autonomy and clinical judgment regarding individual patients as well.

Lack of confidence. In order to initiate and sustain the activities recommended in practice guidelines, providers must be confident that they can actually perform the activities and that the activities will lead to positive outcomes. For example, although most providers agree with guidelines recommending that patients be counseled to stop smoking, many fail to provide counseling during office visits because they do not believe their efforts will be successful. Physicians also need to know when not to follow guidelines; for example, when there are contraindications to a proposed protocol.

Lack of motivation. Established providers often have a long history of practice patterns associated with particular medical conditions. In order to adopt new patterns, providers must be willing to expend the energy necessary to overcome the inertia of past behavior patterns.

External barriers are created by such factors as:

Patient preferences. Patients can feel strongly about the need for or appropriateness of particular procedures or treatment options. In some cases, personal preferences can lead patients to refuse appropriate procedures, especially if they consider those procedures embarrassing or offensive. In other cases, personal preferences can result in requests for inappropriate services. Providers often find it difficult to reconcile these patient preferences with guideline recommendations.

Guideline characteristics. Providers tend to consider guidelines in general as inconvenient or difficult to use, especially if they require eliminating established behaviors. This attitude is due, in part, to the fact that guidelines are often based on study populations that are different from most providers' patient populations. Because guidelines are designed to be applicable to a wide range of providers and settings, they are frequently "encyclopedic, equivocal, and not executable at the local level8."

Environmental constraints. Even providers who are willing to accept guideline recommendations may be unable to carry them out because of environmental factors that are beyond their control. Limited time, inadequate technology or resources, insufficient staff, increased practice costs, limited referral privileges, lack of tools such as flow sheets and reminder cards to effectively implement guidelines, and increased liability can all contribute to a provider's inability to adhere to guidelines.

One of the ways health plans can overcome these obstacles is to focus CPGs on clinical conditions that providers consider most important, that they encounter most frequently, or for which there is substantial agreement as to what constitutes appropriate treatment. Health plans can accomplish this task by gathering

information from resources that providers know and respect; working with other health plans in the region, state, or locality to develop guidelines that are consistent across health plans and relevant to the needs of member populations; and recruiting opinion leaders that providers trust to assist with disseminating guidelines.

Health plans can also improve provider acceptance of CPGs by including providers in guideline development. Flexibility and autonomy are important issues for most providers. Health plans can support flexibility by allowing providers some freedom to customize guidelines according to the needs of their patients and the medical practice conventions in their areas. Keeping guidelines current with medical literature can provide additional support. Health plans can support provider autonomy by presenting CPGs as decision support tools rather than as requirements. This approach allows physicians to vary from guidelines as long as they can document a sound clinical reason for the variance.

A third step health plans can take to improve adoption of CPGs is to simplify program implementation. For example, health plans can divide complex or lengthy guidelines into interrelated modules to facilitate understanding and usage. Health plans can introduce CPGs gradually into the provider community and allow providers to experiment with recommended innovations on a trial basis. Health plans can make CPGs available in an interactive computerized format that automatically adjusts to specific clinical circumstances and providing preprinted orders that are consistent with CPGs for common health problems. Health plans can provide physicians with a method for identifying the patients to which guidelines apply. In addition, health plans can provide guidelines for patient as well as provider use. All of these efforts are likely to make the process more "user friendly."

Because demonstrated success is often the best incentive to change provider behavior, health plans should also measure and report improvements in outcomes that result from the use of CPGs.

Conclusion

In recent years, health plans, accrediting agencies, governments, and purchasers have dedicated time and resources to developing programs to measure, evaluate, and improve the quality of healthcare services within the health plan environment. The goal of these programs has been to make useful information about quality available to purchasers and consumers.

Quality management programs such as those described in this lesson have made a significant contribution to health plans' efforts to balance the quality and cost of healthcare services. The process, however, is still evolving. As more and better information becomes available, the importance of quality management is certain to increase.

AHM Medical Management: Preventive Care Programs Pg 1 to 47

Preventive Care Programs

Course Goals and Objectives After completing the lesson Preventive Care Programs, you should be able to:

Identify the three levels of preventive care Explain the role of health risk assessment (HRA) for preventive care

Describe some strategies that health plans may use to enhance member participation in preventive care programs

Introduction

The improvement of the overall health of health plan members is central to the philosophy of health plans. In fact, from a historical perspective, health maintenance organizations (HMOs) were so named because of their coverage and promotion of preventive care services, most of which were not covered by traditional indemnity insurers.

A health plan's preventive care initiatives can be divided into three main categories: primary prevention, secondary prevention, and tertiary prevention. Primary prevention refers to activities designed to prevent the occurrence of illness or injury. Secondary prevention includes activities designed to detect a medical condition in its early stages and to manage the condition so that disease progression and complications are prevented or at least delayed. Tertiary prevention includes activities designed to prevent exacerbation of or complications from an established medical condition.1

In this lesson, we focus on primary and secondary preventive care. Tertiary prevention, which is an important aspect of disease management, will be discussed in the lesson Disease Management. We begin the lesson with a discussion of the role of preventive care in medical management. We then describe some of the strategies health plans commonly use to develop and implement preventive care programs.

Importance of Preventive Care to Medical Management

Preventive care programs impact medical management in a number of areas. One of the most important of these areas is risk management. In recent years, healthcare professionals and researchers have recognized that a significant proportion of diseases and injuries can be prevented. In fact, recent studies indicate that as much as 70 percent of healthcare treatment costs are the result of preventable diseases and injuries.2 Further, the severity of many illnesses can be greatly reduced if the conditions are detected and treated early in the disease progression. By offering programs that help members stay healthy and reduce the need for diagnostic and

therapeutic services, health plans can decrease members' exposure to the risks of complications often associated with those services.

Preventive care programs are also an important part of a health plan's quality management efforts. Accrediting agencies typically include prevention programs in their evaluation of the quality of a health plan, and NCQA, JCAHO, and URAC all have standards that address the health plan's role in preventive care.3

For example, NCQA and JCAHO both require health plans to base their clinical practice guidelines (CPGs) for preventive care on evidence from current, scientifically sound medical research. NCQA also stipulates that health plans distribute preventive healthcare recommendations to members on an annual basis. HEDIS has measures related to prevention and health promotion.

The desire to improve member satisfaction also motivates health plans to establish preventive care programs. An increasing number of members are becoming health-conscious and want access to a variety of preventive healthcare services. These members believe that by taking proactive measures to improve their health, they can avoid the financial costs, inconvenience, anxiety, and discomfort typically associated with the diagnosis and treatment of illnesses and injuries. Members' perceptions of a health plan's efforts toward improving health status have an impact on the health plan's overall satisfaction ratings, which, in turn, affect that plan's scores on accreditation evaluations, HEDIS, and report cards. Programs for health improvement also enhance a plan's public image and make it more attractive to purchasers.

Medical management staff at health plans have realized that, in general, proactive measures that prevent or at least limit the severity of disease and injury are more cost-effective than reactive healthcare services that address illnesses and injuries only after they occur. Purchasers also recognize the value of prevention programs. Many purchasers believe that preventive care keeps members healthier and more productive, so they prefer that health plans offer a variety of preventive care initiatives.

Preventive Healthcare Programs

The primary and secondary prevention programs available to members vary from one health plan to another. When selecting specific preventive care initiatives to offer to its members, a health plan considers several factors including

The expected effectiveness of the initiative in improving health, based on evidence in the medical literature

The projected cost-effectiveness of the initiative The expected effect of the initiative on member satisfaction Applicable federal, state, and regulatory agency mandates for preventive care Applicable accrediting agency standards for preventive care and health

promotion Applicable HEDIS measures for preventive care

The preferences of members and purchasers and the specific needs of the population served

A health plan in a highly competitive market may choose to offer a broad range of preventive services as a means of differentiating itself from its competitors and appealing to purchasers.4

Not every health plan member, however, needs every type of preventive care service. Health plans, therefore, try to target their prevention programs to the healthcare needs of their members. They typically do this by assessing their members' health risks.

Health Risk Assessment

Health risk assessment (HRA), also known as health risk appraisal, is a process by which a health plan or other entity projects a plan member's likelihood of experiencing specific illnesses or injuries, based on the member's current health status, health history, family health history, and health-related behaviors. The objective of HRA is to improve health outcomes by identifying members who are at risk of developing specific health problems and determining the appropriate action to reduce those risks. In many instances, the appropriate action is to direct the member to preventive care programs or disease management programs. In addition to improving clinical outcomes, HRA can also reduce costs by reducing the need for complex or long-term care.

Collecting, analyzing, storing, and reporting information about health risks is a complex task that often requires sophisticated information technology. Although some health plans perform their own HRA, many health plans delegate some or all components of HRA to external entities that specialize in managing information about health risks. Keep in mind that a delegate (rather than the health plan) may perform some or all of the HRA activities described below.

Gathering Health Risk Data

Each health plan determines which types of health risks to evaluate in its HRA, depending on its population and the issues that the plan hopes to address with the HRA. Health risk assessment generally evaluates risks associated with members' demographic characteristics, behaviors, or lifestyle choices and, in many cases, includes a provider's clinical assessment of current and past health problems. Figure 4A-1 provides more details on the types of risk data that health plans may evaluate through HRA.

Health plans can obtain information for HRA from one or more of the following sources:

Member enrollment records. Demographic data on the age, gender, and occupation of a member can provide insight into health risks. For example, a woman who has reached the age of 40 is at greater risk for breast cancer than a younger woman. A member whose job includes physical labor has an increased risk of back injury5.

Claims and encounter reports. Claims and encounter reports typically include diagnostic and procedural codes that may help a health plan identify members with symptoms or minor conditions that may develop into serious illnesses unless preventive measures are taken. An analysis of claims and encounter data can also produce a list of members whose medical histories include preventable illnesses or injuries.

Pharmacy claims and drug utilization reports. Pharmacy claims and drug utilization reports provide information about both existing and potential conditions. For example, pharmacy claims for blood pressure medication or cholesterol-lowering medication may be an indication of members who are at increased risk for serious illnesses such as coronary artery disease (CAD).

Reports on laboratory tests. Like claims and encounter reports, laboratory reports include diagnostic and procedural information that may help a health plan identify conditions that can benefit from preventive measures.

HRA surveys. These surveys can yield information on virtually any type of health risk factor, depending on the design of the questionnaire. In addition to collecting information about clinical health status and health behaviors, surveys also allow health plans to explore members' beliefs about the value of preventive care and attitudes toward changing health-related behavior.

When a health plan obtains HRA information, it is important for the health plan to compare information from all available sources to get a complete, up-to-date risk profile for a member. For example, does a member with high blood pressure also have a record of high cholesterol or smoking? When was the last time the member was screened for high cholesterol?

Comprehensive claims, encounter report, pharmacy, and laboratory data can be very useful for HRA, but this information is not always available to a health plan. If a health plan has only recently contracted with a purchaser or if a plan experienced a large influx of new members during the last open enrollment, information about members' past medical problems and treatments may be very limited. In addition, the use of pharmacy and lab data to identify health risks is somewhat controversial. Consumers and privacy advocates may view a health plan's examination of such information as an invasion of privacy if the health plan does not obtain members' consent to access this data.

HRA surveys have become a standard approach for gathering data about health risks, and many health plan and healthcare personnel use the term health risk assessment to refer to this type of data-collection tool as well as to the entire risk evaluation process. However, a health plan that uses a survey to gather health risk information must consider the following issues about the content of the questionnaire:

Which types of health risks (e.g., lifestyle, current health, past medical problems, mental health) should be addressed? Should the questionnaire address sensitive issues such as domestic violence and drug abuse and, if so, how?

How specific and detailed should the survey be? Will a single survey address the risks of the entire member population or are

multiple surveys tailored to different population segments needed? (However, if the health plan wishes to compile meaningful aggregate information, the plan must use the same HRA survey for a large number of members.)

In addition to content issues, the health plan must also determine how the survey will be administered. Many HRA surveys are self-administered; that is, plan members read and answer a series of questions on paper or on a computerized questionnaire. Alternatively, health plans may interview members about health risks by telephone or in person. Some health plans use an interactive voice response (IVR) system to administer surveys over the telephone. With an IVR system, a computer asks questions and members enter their responses on a touch-tone keypad. Providers often play a role in administering the HRA survey when the survey includes any type of clinical assessment of health status. In many instances, the HRA survey is completed through some combination of self-administration and administration by the health plan and/or providers.

A health plan may develop its own HRA survey or administer a standardized questionnaire. By using a standardized, publicly available tool, a health plan can compare its results to those from other health plans. One example of a standardized questionnaire is the Behavioral Risk Factor Surveillance System (BRFSS) developed by the Centers for Disease Control and Prevention (CDC). The BRFSS monitors the prevalence of the major behavioral risks associated with illness and injury among adults. The BRFSS consists of a series of core questions plus optional question modules that may be added to tailor the survey according to the population of a

particular state or region.6 Figure 4A-2 lists the core sections and optional modules included in the CDC's BRFSS questionnaire for the year 2000.

Each state may also add additional questions to address special interests. Figure 4A-3 shows the table of contents from the 2004 BRFSS questionnaire. Although the BRFSS was not designed specifically for use by health plans, a health plan may use or adapt this system for its HRA program. Health plans that serve a Medicare population typically use a questionnaire designed to address the needs of senior citizens.

A health plan may also opt to work with a vendor who specializes in health risk surveys to develop a customized data-collection tool. When obtaining a survey from a vendor, the health plan should check the vendor's reputation for medical knowledge and valid, scientifically sound surveys. The health plan may choose to develop its own survey according to the nature of its member population; however, this approach is typically more time-consuming and may not be feasible if the health plan wishes to implement the survey quickly.

2004Behavioral Risk Factor Surveillance SystemState QuestionnaireRevised February 20042004 BRFSS Questionnaire2

Behavioral Risk Factor Surveillance System2004 State QuestionnaireTable of ContentsTable of Contents.........................................................................................................................................2Interviewer’s Script.......................................................................................................................................3Core Sections...............................................................................................................................................5Section 1: Health Status ...........................................................................................................................5Section 2: Healthy Days — Health-Related Quality of Life ......................................................................5Section 3: Health Care Access.................................................................................................................6Section 4: Exercise..................................................................................................................................7Section 5: Environmental Factors.............................................................................................................7Section 6: Excess Sun Exposure .............................................................................................................8Section 7: Tobacco Use............................................................................................................................8Section 8: Alcohol Consumption...............................................................................................................9Section 9: Asthma..................................................................................................................................10Section 10: Diabetes..............................................................................................................................10Section 11: Oral Health..........................................................................................................................11Section 12: Immunization .......................................................................................................................12Section 13: Demographics .....................................................................................................................12Section 14: Veteran’s Status ..................................................................................................................17Section 15: Women’s Health ..................................................................................................................18Section 16: Prostate Cancer Screening .................................................................................................19Section 17: Colorectal Cancer Screening...............................................................................................21Section 18: Family Planning ...................................................................................................................22Section 19: Disability ..............................................................................................................................24Section 20: HIV/AIDS .............................................................................................................................24Section 21: Firearms..............................................................................................................................27Closing Statement or Transition to Modules and/or State-Added Questions .............................................29

Optional Modules .......................................................................................................................................30Module 1: Diabetes................................................................................................................................30Module 2: Sexual Behavior.....................................................................................................................32Module 3: Hypertension Awareness.......................................................................................................34Module 4: Cholesterol Awareness..........................................................................................................35Module 5: Healthy Days (Symptoms) .....................................................................................................35Module 6: Indoor Air Quality ...................................................................................................................36Module 7: Home Environment ................................................................................................................37Module 8: Influenza ...............................................................................................................................39Module 9: Adult Asthma History .............................................................................................................39Module 10: Childhood Asthma ...............................................................................................................42Module 11: Heart Attack and Stroke.......................................................................................................43Module 12: Cardiovascular Disease.......................................................................................................45Module 13: Folic Acid .............................................................................................................................48Module 14: Other Tobacco Products......................................................................................................50Module 15: Smoking Cessation..............................................................................................................51Module 16: Secondhand Smoke Policy..................................................................................................52Module 17: Arthritis Burden ....................................................................................................................53Module 18: Arthritis Management...........................................................................................................55Module 19: Binge Drinking .....................................................................................................................56Module 20: Reactions to Race ...............................................................................................................58

Health plans vary in terms of how often they conduct HRA and the proportion of members who undergo HRA. Ideally, a health plan conducts an HRA for every member soon after members enroll in the plan and periodically thereafter to monitor any changes in health status. In reality, however, many health plans do not have the

financial or human resources to establish or maintain such a comprehensive assessment program. Another obstacle for HRA data collection is the fact that not all members wish to participate in HRA surveys. Reasons for lack of member participation include

The perception of HRA as an invasion of privacy Lack of understanding about the value of the process The time required to complete the HRA survey Concern about employers or other parties learning the results Concern that the information might be used to exclude the member from

future health plan coverage or to increase plan premiums

As a result of limited resources and lack of member participation, health plans typically focus their HRA efforts on newly enrolled members.

A health plan may be able to increase member participation in HRA by educating members, purchasers, and providers about the purpose of HRA. Members who view HRA as an initial step toward improved health status and who believe that the health plan will treat HRA information in a confidential manner are more likely to participate than members who have little knowledge about the program. For example, the health plan can present studies that show the effect of preventive care on health outcomes. The health plan should also assure members that purchasers will receive only aggregate HRA results and that information about individuals will not be released to employers or other parties.

Education about the value of HRA may also increase the willingness of purchasers and providers to encourage members to complete the HRA process. In some cases, employers allow employees to complete a self-administered HRA survey during work hours. The employer may even make the survey available on computers in the workplace.

The health plan can make the HRA survey process more convenient by offering members several ways to complete it. For example, members might have a choice between a paper questionnaire, a computerized questionnaire at the workplace, or a computerized questionnaire available on the health plan's Internet website. Some health plans and employers offer incentives to members who participate in HRA surveys, especially if the HRA process is lengthy. For example, a member who completes the survey might receive a T-shirt, mug, gift certificate to a local store, or even a small discount off their health plan premium.

Analysis of Health Risk Data

Because HRA often integrates many different measures of risk from a variety of sources, health plans typically use computer software specifically designed for HRA. In addition to determining the risks for each individual member, a health plan usually tabulates the data for its population as a whole and for certain segments of the population to gain a better understanding of the preventive programs that are needed. For example, a health plan may analyze the data according to purchaser,

occupation, age, gender, income level, race, ethnic group, or some combination of these characteristics. The HRA information management system may also allow the health plan to stratify risk data according to other variables, such as the level of risk for individual members. For example, in addition to identifying members at risk for developing coronary artery disease (CAD), the information management system may divide the list of members with any CAD risk factors-smoking, obesity, high blood pressure, high cholesterol, family history of the disease, fatty diet, sedentary lifestyle-into subgroups according to the number and type of risk factors present. The health plan can then make a plan of action based on the level of risk represented by each subgroup.7

Another type of analysis that may be useful is stratification according to knowledge about health risks and willingness to change health-related behaviors in order to improve health status.

Application of HRA Results

The results of a health risk assessment for an individual member may be stated as the approximate number of years of life remaining, the member's age in terms of health risk, or a score on a numerical scale. Along with the numerical results, each member typically receives written recommendations on how to reduce the level of risk. For example, the health plan may encourage the member to join a smoking cessation program or to make an appointment to be screened for prostate cancer. The health plan may provide a copy of the results and recommendations to the member's primary care provider (PCP) to ensure that the provider has the necessary information to coordinate the member's care.8

Based on the health risks identified for the population as a whole or for segments of the population, the health plan can develop and promote appropriate primary, secondary, and tertiary prevention initiatives. For instance, do the employees of a particular purchaser have a high incidence of repetitive motion injury? Do the female members of the plan have unmet preventive or self-care needs? What health issues should be addressed for adolescents? Is a certain preventable condition prevalent among members of an ethnic group?

A health plan that stratifies members according to the level of risk represented can tailor its approaches to preventive care according to the urgency of the need. For example, the health plan can offer educational literature on health improvement and access to wellness programs to members with low-to-moderate risk. The health plan can direct members who are at high risk to more intensive and focused preventive care programs.9

Suppose that a member is at high risk for developing diabetes. The health plan might provide that member with educational material about diabetes and the symptoms of the disease, a description of the complications associated with that disease, and recommendations for reducing the risks that can lead to diabetes. The health plan may also contact the member frequently to offer reminders about healthy behaviors, encourage screening at appropriate intervals, and check for any problems that may have developed. By targeting needs more specifically, the health plan can address

those needs more effectively and use its preventive care resources more efficiently than if it offers the same services to all members regardless of risk level.

Stratification of members according to knowledge about health risks and willingness to take proactive measures to reduce those risks also helps health plans direct members to appropriate preventive care programs. For example, a member who is not even aware of the health risks caused by a sedentary lifestyle will probably not be receptive to a recommendation to join a fitness program.

In addition to evaluating risks for illness and injury that may occur in the future, HRA often identifies members who already have chronic conditions. If the current management of the condition is not optimal, the health plan can refer the member to the appropriate disease management program (if one exists) or to a provider who specializes in the condition. Complex cases, such as members with multiple medical problems or those who are at high risk for experiencing serious complications, may be directed to the health plan's case management program.

Health plans must exercise caution when interpreting and applying the results of health risk assessment. Because the calculations of risk are based on probabilities derived from experience with large numbers of medical cases, the results for individual members are generally less accurate than the aggregate results. In addition, HRA is subject to sampling bias, which occurs when errors in data collection change the end results so that the results do not accurately depict the characteristics of the population under study. For example, the members who participate in HRA may not be representative of the entire member population. In general, members who worry about their health even though they are relatively healthy are more likely to complete the assessment than the population as a whole. Older members who tend to have more health problems than younger members are also likely to participate in HRA. Unfortunately, some members who have significant risk factors, such as obesity or heavy alcohol use, may be reluctant to complete the survey because they perceive these risk factors as embarrassing or personal. Embarrassment about health-related behaviors or the desire to please may lead members to give false answers. For instance, members may tend to exaggerate their levels of exercise because they think they should be more active and do not want to disappoint their providers.

Although the information is not intended for utilization planning purposes, some health plans also use aggregate results from HRA to predict medical resource utilization. HRA information is typically not a reliable predictor of utilization because of sampling bias issues as described above. However, HRA can enhance the effectiveness of both primary and secondary prevention activities.

A health plan must also consider the cost of the HRA process and the effects of HRA on clinical, financial, and member satisfaction outcomes. Further, a health plan needs the appropriate disease management and case management programs to address the risks identified by the HRA. Otherwise, the costs of HRA may exceed the benefits realized by the health plan.

Once a health plan has identified the health risks present in its member population, it can design primary and secondary preventive initiatives to address those risks.

Primary Prevention

The initiatives most often employed by health plans to prevent or at least delay the onset of health problems are immunization programs and health promotion programs. An immunization program is an initiative that monitors and promotes the administration of a vaccine, that is, a medication to prevent members from contracting a particular illness. A health promotion program, also known as a wellness program or health education program, is an initiative that educates and motivates members to prevent illness and injury through their lifestyle choices. Members typically receive primary preventive care services from PCPs or directly from the health plan.

Historically, the practice of medicine has been mainly curative rather than preventive, so many providers and members still view healthcare as services to treat existing illnesses and injuries. Medical education and training, particularly for physicians, have tended to emphasize diagnosis and treatment, with less attention paid to primary prevention. One significant challenge for health plans is to educate both providers and members about the health benefits of primary prevention and to motivate them to take a more proactive approach to healthcare.

The Origami Health Plan has authorized the following providers to furnish preventive and routine healthcare services directly to its members without a referral from another provider or authorization from Origami:

Provider A, Abigail Smyth, is a general practitioner Provider B, Gregory Allen, is a physician assistant (PA) Provider C, Oliver Ulrich, is an obstetrician/gynecologist (OB/GYN) Provider D, Liza Kaplan, is a nurse practitioner (NP)

The following Origami members sought the following healthcare services from Origami:

Clarissa Grant met with Dr. Ulrich in order to discuss the possibility of using a shared decision-making program to treat Ms. Grant's menopausal symptoms.

Emily Woodruff visited Dr. Smyth for a cholesterol screening, and at the time of this visit, Ms. Woodruff also asked if she could be immunized against the flu.

Gillian Lane sought treatment for an allergic reaction at the Concord Hospital, one of Origami's participating hospitals. After briefly treating Ms. Lane in its ED, Concord determined that Ms. Lane had a reasonable chance of stabilizing to the point of being released to a non-acute level of care within 24 hours. Concord therefore decided to move Ms. Lane to a unit in the hospital where her condition could be aggressively evaluated and managed.

From the answer choices below, select the response that correctly identifies Ms. Woodruff's cholesterol test and her flu shot as examples of either primary prevention or secondary prevention:

Cholesterol test: primary prevention;   Flu shot: primary prevention

Cholesterol test: primary prevention;   Flu shot: secondary prevention

Cholesterol test: secondary prevention;   Flu shot: secondary prevention

Cholesterol test: secondary prevention;   Flu shot: primary prevention

Answer=D

Immunization Programs

Immunizations effectively prevent many diseases for both children and adults, so immunization programs are one of a health plan's most direct means of improving health status and reducing member's needs for healthcare services. Figure 4A-4 contains a list of diseases for which vaccinations are most commonly used. In addition to keeping members healthier, immunizations are typically cost-effective as well.

Although members and providers often think of immunization as a children's issue, many of the vaccine-preventable illnesses typically associated with childhood, such as measles or chicken pox, can result in serious illness or even death for adults. Adults can benefit from other immunizations as well. For example, influenza is a respiratory illness that, at best, is inconvenient and uncomfortable and, at worst, can cause severe complications that result in hospitalization or even death, especially for older members or those with chronic health conditions.10

Influenza shots have been shown to significantly reduce the incidence of flu cases among immunized adults.

Despite the obvious benefits of immunization, many health plans have experienced difficulty in achieving optimal immunization rates for their members. Health plans often focus on one or more of the following areas to improve these rates:

Member participation Provider participation Reporting systems

The following sections describe some strategies for improvement.

Member Participation. In many instances, members' failure to obtain appropriate immunizations is due to lack of knowledge. They may not be aware of all the vaccinations that exist or the schedules for administration of those vaccines. Some members view measles, mumps, and chicken pox as a normal part of childhood and do not realize the dangers of these vaccine-preventable diseases and the benefits of having their children immunized. Members may also fear adverse effects from the vaccination, such as having an allergic reaction or even contracting the disease itself. Ethnic and cultural backgrounds may have a great influence on members' knowledge about and attitudes toward immunizations. When attempting to educate members about the benefits and risks of immunization, health plans must also recognize and address members' common fears.

In addition to including information about immunization in member newsletters, there are several other ways that a health plan can reach and educate its members, such as informational articles in the health section of newspapers and magazines or brochures placed in the plan's pharmacies. Local retail stores may be willing to place educational material about immunization near their childcare products or over-the-counter medications. Members may need to see information about immunization several times before they completely understand it and remember to get the vaccinations.

Some health plans (or their providers) remind individual members about immunizations that are due via post cards or telephone calls. Insight 4A-1 describes one health plan's strategy for improving member cooperation with immunizations for children.

Blue Care Network of Michigan Makes Member Education Foundation of New Program to Increase Adolescent Immunization Rates

Blue Care Network of Michigan (BCN) has launched a series of member-centered initiatives as part of its new program to increase immunization rates among the plan's more than 11,000 adolescent members.

The program, named Blue Champs, reaches out through newsletters and financial-based provider incentives to a network of the 3,000 primary care physicians and pediatricians who largely treat the targeted 12- and 13-year-old adolescent population. The Physician Performance Recognition program, started in 2000, offers physicians a financial incentive, in addition to their negotiated fees, for reaching a targeted goal on a variety of health quality indicators, including adolescent immunization, explains Cynthia McDonald, Manager of Quality Management for Blue Care Network of Michigan. BCN then sends the physician a peer analysis indicating how his or her adolescent immunization rates compare to those of other physicians across the state, she says.

However, the thrust of the Blue Champs program is to increase the number of adolescents immunized against measles, mumps, rubella (MMR), hepatitis B (HepB), and varicella, or chickenpox, by focusing educational outreach efforts primarily on young members and their parents, according to Ms. McDonald.

The goal, says Ms. McDonald, is for both the physician and member-focused initiatives to work together simultaneously to achieve the overarching goal of increasing adolescent vaccination levels of plan members. However, she explains, the plan is utilizing more “member touch” initiatives to make the plan-patient relationship more personal and the initiatives more effective.

The first initiative implemented as part of Blue Champs, started in June 2004, uses reminder calls and cards to inform parents of gaps in their child's immunization history and encourage them to take him or her to the physician's office by the end of the year to get any needed vaccinations. “The goal is to make a call in spring or early summer on an annual basis when the kids are out of school” when they have more flexibility in their schedules to be taken to physician offices for appointments, explains Ms. McDonald. BCN-contracted vendors have made reminder calls to more than 7,000 households to date, she adds.

The newest feature to the program also uses scheduled reminder calls to urge parents to update their child's immunization records. However, in this case, BCN nurses who are Quality Management Coordinators make the requests.

“This is another way to let parents know we are trying to help them and ensure that their adolescents are up to par with their immunizations,” says Ms. McDonald, adding that this effort is a more personalized way to build a rapport with the parents.

Member newsletters and the Internet also have been effective tools in educating adolescents and their parents about the health benefits of immunizations and notifying them about vaccination schedule updates. Ms. McDonald says the biannual member newsletters include articles on child and adolescent immunization and preventive health guidelines with recent recommendations from the Centers for Disease Control and Prevention. BCN posts similar information on its web site, www.bcbsm.com/bcn, she adds.

BCN also actively participates in the Michigan Department of Community Health's Alliance for Immunization in Michigan (AIM) Coalition, which offers practitioners and their staff toolkits containing up-to-date information on vaccine administration, data on the Michigan Childhood Immunization Registry (MCIR), and other important information on immunizations. These toolkits, which are distributed to the offices of network physicians by the Quality Management Coordinators, include resources for young patients and their parents as well.

Another innovative initiative, named Health e-Blue, provides primary care physicians, including pediatricians, with patient-specific information on members who are not up to date with their immunizations, adds Ms. McDonald. Again, the emphasis is on engaging the member in the immunization process. “The [initiative] is another prompt for [physicians] to contact the parents of the member and let them know their child is due for an immunization,” she says.

While the Blue Champs program remains in the early stages of development, BCN is confident that the combination of initiatives that make up the program will successfully improve adolescent immunization rates, which for 2004 stand at 65 percent for Combination 1 (MMR, HepB) vaccine and 49 percent for Combination 2 (MMR, HepB, Varicella) vaccine.

Another way that health plans can encourage members to receive immunizations is to make vaccinations available at low or no cost. The out-of-pocket cost may be a significant barrier for members who are in a health plan with a deductible or coinsurance requirement in its cost-sharing structure, especially for low-income members. Members also want to be able to get immunizations at a convenient time and location. Health plans may offer immunizations at sites such as local malls, hospitals, or community centers during day and evening hours to make it easier for members and their children to receive the vaccines.

Provider Cooperation. Health plans should also seek ways to increase provider participation in immunization programs. Provider-side issues that may result in low immunization rates include

Confusion about which vaccinations are due because of changes in recommendations for childhood vaccination schedules and new combination vaccines that have been developed in recent years

Lack of awareness that their patients are not receiving immunizations Overlooked opportunities to administer vaccinations when the member is in

the office for another reason (e.g., sick child) Tendency of many providers to place less emphasis on preventive care than

on diagnosing and treating existing problems

Health plans can alleviate provider confusion about vaccination schedules by giving providers up-to-date information about immunizations. For example, a health plan can send providers posters with immunization guidelines for display in their offices.

Health plans can also help providers devise manual or computerized information systems to monitor immunization needs so that when a member contacts or visits the provider for any reason, the provider is alerted to immunizations that are due.

Providers may also need information about the health and cost-effectiveness advantages of immunization to encourage them to make immunization part of their standard approach to care. Regular monitoring and feedback on each provider's rates for immunization helps providers determine areas where improvement is needed.

Some health plans also consider immunization rates when determining financial incentives for providers. Insight 4A-2 describes how one health plan worked with its providers to improve immunization rates.

Improvements to Reporting Systems. Low immunization rates may be due, at least in part, to inaccurate information in a health plan's records. Consumers frequently change from one health plan to another, so health plans often lack complete medical records about their members' medical histories. Another factor that complicates immunization tracking is the availability of vaccinations from multiple sources. For example, children may receive some or all of their

immunizations at a local health department. Adult influenza (flu) vaccinations are often available in public sites such as drug stores and malls. A health plan usually has no way of knowing when a member receives an immunization from a source outside the provider network unless the member happens to report this information to the plan.

In some communities, health plans and public health agencies work together to create and maintain a central registry for immunizations. This registry helps a health plan target the members who are in need of immunization for reminders and educational information. Providers and members may also benefit from this information. For example, a provider who is unsure about the immunization status of a new patient can consult the registry. Members who need a child's entire record of immunization for school or camp can obtain a copy from the registry.

Health Promotion Programs

Many of the common medical problems experienced by health plan members are avoidable because these conditions are primarily due to health-related behaviors. However, members are often unaware of their risks, or they lack the knowledge and confidence to make the needed changes. Health plans often direct members to health promotion programs to help them recognize and modify the behaviors that pose health risks. Health promotion programs reduce the risks of specific physical health problems such as obesity, high blood pressure, high cholesterol, and weakened bones. In addition, for many members, these initiatives also result in better overall health as characterized by increased energy levels and positive attitudes.

Meeting the health education needs of a member population can be a complicated task. When choosing health promotion programs for its members, a health plan should consider the following factors:

Types of behavior to address Educational approach of the program Methods of delivering the information Expected cost and outcomes Member participation Provider cooperation

We describe considerations for each of these factors in the following sections.

Types of Behaviors to Address. Variations in the topics of health promotion programs available to members are countless. The problems most often addressed by health promotion programs include lack of physical activity, smoking, poor nutrition, abuse of alcohol and drugs, depression, and anxiety. Figure 4A-5 provides more details on different types of behaviors that are commonly addressed through health promotion programs.

In many instances, one type of health promotion program can benefit several different aspects of a member's health. For example, a stress management program that includes relaxation techniques and coping skills can reduce anxiety levels. Lower anxiety levels can reduce blood pressure, the incidence of headaches, the use of tobacco, alcohol, and drugs, and the likelihood of accidental injuries.

Health plans that conduct HRA can use the aggregate results to determine the types of programs that their members need. Before a health plan develops a new health promotion program, the company should assess the health education options that are already available from sources such as employers, hospitals, provider organizations, community service agencies, and companies that specialize in health education programs. For instance, smoking cessation programs may be available

through the American Cancer Society, the American Lung Association, or the American Heart Association. Hospitals and provider groups often sponsor educational classes on common issues such as nutrition and weight management. Programs on prenatal care, well-baby care, and smoking cessation are often available from commercial vendors. If an appropriate program already exists, the health plan may choose to refer its members to that program and devote its own resources to developing programs that focus on unmet needs. In some cases, the educational services and materials from other entities are available free of charge to a health plan's members; in other situations, the health plan or the member must purchase or at least share the costs of the services and materials.

Educational Approach of the Program. Determining the appropriate behaviors to address through health education is only the first step toward achieving effective health promotion programs. Health plans must recognize that members who have similar health-related behaviors vary greatly in terms of their readiness to participate in wellness activities. In a health plan context, readiness refers to a members' level of knowledge about existing health risks and problems and the member's ability and willingness to adopt new health-related behaviors.

A health promotion program is more likely to be effective if its content, presentation, and approach to motivation reflect a member's readiness for health education than if the program is a "one size fits all" approach. For example, a smoker who has never really thought about the risks of smoking tobacco will probably not be receptive to a recommendation to join a smoking cessation program. Likewise, a member who has already sought counseling for alcohol abuse stands to benefit little from basic education about the risks of alcohol use. Readiness is an important consideration for self-care and decision support as well as for preventive care.

Health plans often refer individuals to specific health promotion programs based on the data from their HRAs. An HRA that includes data on readiness enhances the health plan's ability to match a member with appropriate health promotion programs. In general, low readiness indicates the need to build awareness of the risks involved and understanding of the need to change behaviors. Members with moderate readiness have already been contemplating their risks and the needed changes and are ready to initiate the new behaviors. Reminders about healthy behaviors, encouragement, and support are essential aspects of programs designed for members with moderate readiness because those in the early stages of change often have lapses in which they revert to their former risky behaviors. Members with high readiness have already made significant progress toward modifying their behaviors, but may need periodic reminders and positive feedback before the new behaviors become routine for them.

In addition to member readiness, a health plan should also consider other characteristics of the targeted population when determining the educational approach of a health promotion program. By tailoring the program according to the language, literacy level, and cultural sensitivities of members, the health plan can enhance members' understanding and acceptance of the information. For example, if a significant proportion of the population is Spanish-speaking, the health plan might

provide health promotion literature in Spanish as well as in English. In addition, different cultures and religions often encompass alternative views of disease and healing processes. Some ethnic groups believe in treatments and health-related behaviors that are not recognized by medical science. Members of certain ethnic backgrounds may resist discussing healthcare issues with a person of the opposite sex. In order to serve these populations, health plans must be sensitive to and, within the limits of safety, accommodate their health-related beliefs and behaviors.

Methods of Delivering Educational Information. Health plans can choose from a wide variety of ways to deliver educational information to members. The options include printed literature, live instruction (either one-on-one, in small groups, or in large groups), counseling by healthcare providers during office visits, videotapes, audiotapes, recorded messages that can be accessed by telephone, interactive computer programs, and Internet websites. No single method of conveying health education information is best in every situation. In some instances, the health promotion program may combine delivery methods such as a live instructor who distributes printed material and plays a videotape for a small group.

Any or all of the following factors may influence the choice of delivery method:

Preferences of members, including cultural influences Amount and complexity of information. In general, as the amount or

complexity of the information increases, members have a greater need for printed material for future reference

Literacy level of the population Need for illustrations or active demonstrations Members' access to and ability to use information technology, such as video

cassette recorders, computers, or the Internet Sensitivity of the information. Sensitive issues, such as sexual behavior or

mental health, are often inappropriate for group settings Costs of the different delivery methods

Regardless of the delivery method, whenever possible, members should have access to a live person who can answer questions and provide further resources. Insight 4A-3 describes two different approaches to delivering wellness information to members.

Expected Costs and Outcomes. A health plan must also consider the cost of a particular health education program and how that cost compares to the likely benefits. Health education is typically a long-term investment for a health plan. A health plan incurs substantial costs as soon as the program is implemented, but improvements in members' health and reductions in overall healthcare service utilization are not generally evident for many years. In many instances, consumers have changed to another health plan by the time that the benefits of health education are realized. One notable exception to the typical cost/benefit pattern for health education is tobacco cessation. Programs that encourage and enable consumers to stop smoking often yield significant financial and clinical benefits within two years.

Member Participation. To encourage members to participate in health promotion programs, a health plan must raise members' awareness of their risks and inform them about the plan's initiatives to reduce those risks. Articles in member newsletters, direct mail notices or telephone calls to members who may be at risk, and posters in providers' offices and network pharmacies are some of the ways that health plans can convey messages about programs to reduce health risks.

Convenience is another important consideration for member participation in health promotion programs. For example, can the member access the program at the workplace or in a location near the home, such as a community center, hospital, or shopping mall? Lunchtime educational sessions at the workplace are a popular option for members with hectic schedules.

Many purchasers and members view wellness programs as valuable, but some members require additional encouragement before they will initiate or even contemplate changes in health-related behaviors. Members who lack motivation may be more responsive to one-on-one or small group counseling, particularly if the

counselor is a healthcare professional. As another form of motivation, some health plans offer prizes such as T-shirts, caps, or mugs as incentives for participation in health promotion activities.

Provider Cooperation. Through education on the effectiveness of counseling, health plans can encourage providers to contribute to health promotion efforts. The health plan may work with providers to develop a system in which the PCP assesses a member's needs and then either counsels the member or directs the member to other resources for instruction. Individual instruction is time-consuming and typically does not require physician-level training, so nonphysician clinicians-such as nurses, nurse practitioners, and dieticians-often provide the health promotion instruction recommended by a member's PCP.

A health plan may target certain risky behaviors as priorities for improvement and then structure its provider profiling and quality-based incentives to reflect those priorities.

Secondary Prevention

The first step in secondary prevention is screening. Screening involves conducting a medical test on a member to determine if a health problem is present even though the member has not experienced any symptoms of that problem. Screening asymptomatic members may lead to detection of an illness in its early stages. Screening activities may involve specialty care providers as well as PCPs and the health plan.

Although secondary prevention often results in more utilization immediately following the screening (as conditions are identified), this type of preventive care typically yields better outcomes and long-term savings for the plan because of early intervention. For example, the use of mammograms increases the number of breast biopsies and the number of members treated for cancer. However, the use of mammograms generally results in earlier detection of breast cancer. Overall, clinical outcomes for breast cancer detected in Stages I or II are better than outcomes for Stages III and IV, and breast cancer detected in the later stages typically requires more extensive, more costly treatment.

Screening can detect a wide variety of physical and mental illnesses in their early stages. However, health plans and their providers should use screening judiciously because unnecessary tests waste medical resources as well as the time of the provider and the member. In addition, many screening tests are uncomfortable for the member. Testing for many diseases is not appropriate unless a member has risk factors specific to the disease, such as age, gender, overall health, lifestyle, or a family history of the disease.

The types of screening most commonly performed are

Blood pressure measurement Assessment of body mass index (based on height and weight) Cholesterol level Fecal occult blood test (to detect colorectal cancer)

Pap smear (for women) Mammogram (for women)

Studies have shown these tests to be both effective in improving outcomes and cost-effective for the general adult population.16 For adult men, prostate specific antigen (PSA) testing to detect prostate cancer is also common. However, some controversy exists over the clinical appropriateness and cost-effectiveness of this test for the general male population.15

Health plans that conduct HRA can use the HRA results to determine which members need screening beyond the basic tests listed above. Some health plans have clinical practice guidelines (CPGs) that describe the population that should be screened for a particular disease, the tests that are appropriate for screening, and the recommended frequency for screening. Recommended frequencies for screening often depend on the member's age, gender, and health status. For example, adult men under the age of 45 with risk factors for coronary artery disease (CAD) may need a cholesterol test every year. For adult men under the age of 45 without CAD risk factors, less frequent cholesterol testing (e.g., every five years) may be sufficient.

Member Participation

Many of the methods that health plans use to encourage members to participate in screening are similar to those for improving participation in primary prevention:

Creating awareness of possible health problems and the benefits of early screenings

Making screening convenient (e.g., sponsoring blood pressure and cholesterol screening at the workplace or mammograms in a mobile mammogram unit that visits local malls or community centers)

Sending out reminders to at-risk members Rewarding those who participate in screening with give-aways

Insight 4A-4 describes an incentive program that includes rewards for both primary and secondary prevention.

Another option for encouraging members to undergo screening is for the health plan to waive any copayment, deductible, or coinsurance requirements that would normally apply to a healthcare service so that the member does not incur any out-of-pocket costs. For members who are at risk for a particular illness, a health plan may offer direct access to screening tests, such as mammograms or bone density tests to detect osteoporosis, that are performed by specialty care providers. Under a direct access approach, the member does not need to visit a PCP to obtain a referral.16

Conclusion

In this lesson, we have examined how health plans use preventive care programs to decrease the incidence of avoidable illness and injury, to facilitate early detection and treatment of medical conditions, and to achieve better health for their plan members. In the next lesson, we describe how health plans use self-care and decision support programs to improve members' abilities to assess and manage health problems that do occur.

AHM Medical Management: Self-Care and Decision Support Programs

Pg 1 to 34

Preventive Care Programs

Self-Care and Decision Support Programs

After completing the lesson Self-Care and Decision Support Programs, you should be able to:

Describe the use of telephone triage services in self-care and decision support programs

Identify some general methods that health plans can use to evaluate the effectiveness of their preventive care, self-care, and decision support programs

Discuss the use of integration and partnerships to improve preventive care, self-care, and decision support programs

Introduction

In the lesson Preventive Care Programs, we described how health plans use preventive care programs to achieve better overall health for health plan members. In this lesson, we describe the use of self-care and decision support programs. Self-care programs focus on providing members with the knowledge and confidence to perform certain aspects of healthcare for themselves. Decision support programs enable members to (1) decide when and how to seek medical care from healthcare professionals and (2) participate with providers in decisions about the course of care.

At the end of the lesson, we explore some general strategies that health plans may apply to all of these programs, including considerations for program evaluation.

Self-Care Programs

Most health plan members experience some type of healthcare problem on a regular, even daily, basis. In many instances, these medical problems are minor ones-headaches, indigestion, cuts, scrapes, colds, and muscle aches, for example-that members generally treat without the assistance of healthcare professionals. However, without appropriate treatment, these conditions may cause pain or worsen to the point where professional care is necessary. For example, a small cut that is not kept clean may become infected and require treatment with antibiotics or even surgery. Many health plans offer self-care education and training to enable members to assess healthcare problems and, when appropriate, take care of the condition on their own.

Types of Self-Care Programs

Self-care programs typically address common symptoms, illnesses, and injuries that can usually be safely and effectively treated with readily available methods such as rest, changes in diet, over-the-counter medications, or applications of heat or cold. Self-care education also helps members differentiate between minor problems and serious conditions that require treatment by healthcare professionals. Insight 4B-1 provides an example of self-care instruction that might be distributed to members. Some self-care initiatives teach members to conduct breast or testicular self-examinations, skin cancer checks, blood pressure monitoring, and other screening tests. Health plans often combine self-care programs with preventive care and telephone triage programs.

Some health plans also have self-care programs for members with chronic conditions that require regular management in order to prevent pain, complications, or hastening of the disease process. Severe arthritis and diabetes are two examples of common illnesses that need proper daily care by members in addition to services from providers. This type of self-care is often included in a health plan's disease management programs.

Another application of self-care education is for members who need ongoing care because they are recovering from acute illnesses or injuries. Proper self-care for these members can speed recovery and reduce the likelihood of complications. For example, a member's progress in recovering from a heart attack depends in great part on how well the member complies with provider recommendations on

medications, diet, and exercise. A self-care program that focuses on cardiac rehabilitation can enhance the member's understanding of the instructions and confidence in performing self-care.

Methods of Delivering Self-Care Information

Health plans use a variety of approaches to convey self-care education and training to members. Common methods include member newsletters, self-care pamphlets and books, recorded messages that are accessible by telephone, videotapes, information on the health plan's Internet website, references to other relevant websites, and interactive computer programs.

The criteria for selecting an appropriate medium for conveying self-care information are similar to those described for health promotion programs. Since the information provides advice on medical care, all material must be clinically sound according to current standards to promote proper treatment and to protect the health plan from charges of negligent care. In addition, the presentation of the material should be understandable by the average layperson.

While health plans often distribute some self-care information to all members, they may wish to target some members for additional education. The health plan can check claims and encounter reports to identify members with records of inappropriate utilization of medical care.

Demographic information may also be useful in identifying members with high potential for experiencing illness or injury and creating programs to address their needs. For example, families with young children tend to visit providers frequently, many times for health problems that could be treated by parents if they knew the proper approach. Health plans can send them self-care information about common children's illnesses and injuries and refer them to telephone triage lines or Internet websites for additional information. Health plans may also design self-care information for women, men, teenagers, senior citizens, or other demographic groups.1

Member Participation

When designing and promoting their self-care programs, health plan medical management personnel must realize that members vary greatly in terms of their perceptions of need for healthcare services from providers and their readiness to adopt self-care. Members who visit providers for seemingly minor problems because they lack the knowledge or self-confidence to perform self-care are often receptive to self-care instruction. Other members would rather see a provider because they consider self-care too much trouble or they enjoy the attention they receive from providers and their staffs. These members may need extensive education and motivation before they will attempt self-care, and in many cases, the results may not justify the expenditure of health plan resources.

Decision Support Programs

Decision support services are another approach that health plans use to give members more control over their own health. Members often seek care that is unlikely to improve their health because they lack the knowledge to choose the healthcare services that are the most appropriate for their situations. Health plans can improve member's abilities to make appropriate care decisions through educational material and advice from healthcare professionals about specific medical problems. Telephone triage and shared decision making are the most common types of decision support programs used by health plans.

Telephone Triage Programs

When medical problems occur, many consumers have difficulty judging (1) whether to seek professional healthcare services and (2) what type of services they should seek. For example, a member may wonder if a child's sore throat is really a symptom of something more serious, such as a streptococcus infection (strep throat). When members experience troubling symptoms, telephone triage programs can help them determine the most appropriate approach to care.

Telephone triage programs are phone-based services with clinical staff who provide information to sick or injured members to help the members decide if they need to seek care immediately at an emergency department or urgent care center, call a provider for an appointment, or treat the condition themselves. When a situation is urgent, the staff can alert the local emergency department or urgent care center of the member's needs and impending arrival. If self-care is indicated, the clinician can instruct the member on self-care treatments to relieve symptoms and hasten recovery. The staff may also be able to authorize referrals for specialty care and expedite appointments with specialists if the condition warrants specialty care. Figure 4B-1 provides an example of the health problems that most frequently caused the members of one health plan to call the plan's telephone triage line.

Telephone Triage Staffing and Procedures

Telephone triage service is generally available at a toll-free number during hours well beyond typical PCP office hours. In many cases, telephone triage service is offered 24 hours a day, 7 days a week, 365 days a year. Plans that have telephone triage in addition to self-care or health promotion programs may integrate some or all of these services at a central call center.

The clinical staff at telephone triage services are typically nurses or physician's assistants who have been trained specifically for this type of healthcare service. A physician with relevant clinical experience and training in managing phone triage lines generally oversees the development and implementation of the program. The clinical staff are often assisted by nonclinical personnel who answer calls, obtain nonmedical data (such as health plan membership information), and route the calls to the clinical staff.

When a member calls with a medical problem, the clinical staff person listens to the caller's explanation of the problem and then asks a series of questions about the situation to help the caller determine the seriousness of the problem and the most appropriate course of action. For risk management purposes, telephone triage clinical staff should not attempt to diagnose or give medical advice. Training for staff should emphasize that their role is to elicit information about symptoms and other aspects of the situation and then promptly refer emergencies to an emergency department or explain treatment options for nonemergency needs.

Clinical staff members use clinical decision support tools to guide them in their questions and responses to members. These decision support tools range from manual systems with different patterns of questions based on a member's responses to interactive computer programs that provide the clinical staff with information and questions suited to the situation. Regardless of the level of technology used, clinical decision support tools should be evidence-based guidelines that are developed in a manner similar to that for clinical practice guidelines (CPGs). The use of scientifically sound decision support tools increases the likelihood of good clinical outcomes and protects a health plan against charges of negligent care. Even though there may not be a physician or pharmacist on location, the clinical staff should be able to contact these healthcare personnel immediately if the decision support tool gives this direction or if a staff member feels that additional input is indicated. For example, a clinical staff member who suspects that a member's problem is due to drug interactions may wish to contact a pharmacist.

The clinical staff member documents all information received from and given to the caller, including the type of care the caller plans to utilize and follow-up activities that the staff should perform. Typical follow-up actions include

Expediting referrals and appointments with specialists Relaying relevant information about the call to a member's PCP Contacting the member and/or the provider from whom the member sought

care to gather outcomes information Checking back periodically to reassess the situation when a member has

decided that self-care is the appropriate approach

One common type of decision support program used by health plans is the telephone triage program. The following statement(s) can correctly be made about telephone triage programs:

A. The clinical staff at telephone triage services are typically nurses or physician assistants who have been trained specifically for this type of healthcare service.

B. For risk management purposes, telephone triage clinical staff should not attempt to diagnose or give medical advice.

Both A and B

A only

B only

Neither A nor B

Answer=A

Accurate, complete documentation of calls is critical for quality management. QM activities for telephone triage typically focus on both the quality of clinical information provided and the quality of service. For example, how did the information given affect the ultimate outcome of the medical problem? Was the caller able to speak with a clinical staff member promptly?

Monitoring the reasons for calls to telephone triage services can also be useful to the health plan's development of health promotion or self-care programs. Suppose that the telephone triage service receives many calls regarding children with fevers. The health plan may decide to send self-care information describing the treatment of fever in children and indications for seeking professional care to members with children.

The full documentation of calls is also necessary for the protection of the health plan in case it is faced with a legal suit that involves information given out by its telephone triage service.

URAC has an accreditation program specifically for telephone triage and health information services. This accreditation program's standards address staffing, policies, and procedures for handling calls, including the use of clinical decision support tools, documentation of calls, follow-up activities, and quality management.2

Even if a health plan does not seek accreditation from this agency, URAC's standards may be useful quality guidelines for establishing and operating this type of program.

Delegation of Telephone Triage Services

Health plans often delegate telephone triage activities. Contracting with a delegate typically allows a health plan to implement telephone triage more quickly than developing its own program. Since this program is conducted by phone, the delegate does not need to be in the same geographic area as a plan's members, so many telephone triage companies operate on a regional basis and serve multiple health plans. As a result, health plans have many potential delegates to choose from.

When a health plan delegates telephone triage, the health plan must confirm that the delegate

Understands the health plan's medical policy and is prepared to provide triage information consistent with this policy

Employs qualified, well-trained clinical personnel Uses evidence-based clinical decision support tools Has an effective system for rapid feedback to PCPs and the health plan on a

case-by-case basis for emergencies

Benefits of Telephone Triage Programs

Telephone triage programs offer benefits for plan members, providers, and the health plan itself. Members typically view telephone triage as a convenient, no-cost way to obtain healthcare information. Receiving information from a healthcare professional can relieve anxiety for members who have a condition that is beyond their knowledge or confidence level. Members who choose to perform self-care not only obtain treatment immediately, they also avoid the cost and inconvenience of a visit to a provider. In actual emergencies, the triage staff can calm callers and help them take appropriate actions until they can access care from a provider.

Providers may appreciate the fact that telephone triage services address members' health concerns immediately and help them determine the appropriate level of care. Triage services also save providers after-hours time that would otherwise be spent taking calls from members who are uncertain about a medical problem.

Telephone triage programs may be quite effective in reducing unnecessary utilization of medical resources, especially costly emergency services.3 However, a health plan must structure its telephone triage program so that quality and continuity of care and member satisfaction are not compromised for the sake of more appropriate utilization.

Shared Decision Making

Consumers' access to healthcare information has increased markedly over the past two decades. As a result, consumers have become more knowledgeable about medical issues and more interested in participating in decisions about their own care than in the past. To accommodate members' wishes to be involved in healthcare decisions, many health plans offer programs that facilitate shared decision making. In a shared decision-making program, a provider and a member discuss care options and the provider's recommendations, but the ultimate decision about care is up to the member. By educating members about their care options and encouraging them to participate in decisions when possible, health plans hope to improve members' satisfaction with clinical outcomes and with the health plan as a whole.

Shared decision making is not applicable to all medical situations. For many illnesses and injuries, one approach to care is clearly superior in terms of safety and effectiveness. A shared decision-making approach is appropriate when there are multiple approaches that are generally accepted as valid by the medical community and none of the approaches is best for every situation. For example, in many cases of breast cancer, lumpectomy and mastectomy are both viable options and the choice of the surgical approach depends on the member's preferences. Other conditions that may be appropriate for shared decision making include low back pain, benign prostatic hypertrophy, prostate cancer, infertility, and menopausal and post-menopausal symptoms.

When informed about their options and given the opportunity to weigh the risks and benefits, many members select a relatively conservative approach to care. For example, they may elect to wait and see how their symptoms change rather than undergoing a diagnostic test immediately, or opt for a medical treatment rather than surgery. In many instances, the interventions that members choose are less costly for the health plan than are the other care options that providers might have recommended.

Health plans should exercise caution with shared decision-making programs to support the quality of care and avoid the perception that they are simply trying to steer members toward less expensive approaches to care. A shared decision-making program must present a full range of treatment options (including no treatment) and the likely outcomes associated with those treatments in an unbiased manner.

NCQA, URAC, and JCAHO all have standards in support of members' rights to participate in healthcare decisions.4

JCAHO standards outline a variety of elements that should be explained to members, such as the right to be involved in all aspects of care including decisions about life-sustaining treatments or participation in clinical trials or investigational studies.5

The Origami Health Plan has authorized the following providers to furnish preventive and routine healthcare services directly to its members without a referral from another provider or authorization from Origami:

Provider A, Abigail Smyth, is a general practitioner Provider B, Gregory Allen, is a physician assistant (PA) Provider C, Oliver Ulrich, is an obstetrician/gynecologist (OB/GYN) Provider D, Liza Kaplan, is a nurse practitioner (NP)

The following Origami members sought the following healthcare services from Origami:

Clarissa Grant met with Dr. Ulrich in order to discuss the possibility of using a shared decision-making program to treat Ms. Grant's menopausal symptoms.

Emily Woodruff visited Dr. Smyth for a cholesterol screening, and at the time of this visit, Ms. Woodruff also asked if she could be immunized against the flu.

Gillian Lane sought treatment for an allergic reaction at the Concord Hospital, one of Origami's participating hospitals. After briefly treating Ms. Lane in its ED, Concord determined that Ms. Lane had a reasonable chance of stabilizing to the point of being released to a non-acute level of care within 24 hours. Concord therefore decided to move Ms. Lane to a unit in the hospital where her condition could be aggressively evaluated and managed.

If Ms. Grant and Dr. Ulrich decide to use a typical shared decision-making program, then the two will discuss care options, as well as Dr. Ulrich's recommendations for care. Under this shared decision-making program, the ultimate decision about care is most likely up to:

Origami and Dr. Ulrich

Dr. Ulrich and Ms. Grant

Dr. Ulrich only

Ms. Grant only

Answer=D

Approaches to Education for Shared Decision Making

By checking HRA results, claims, and encounter reports, a health plan can identify members whose conditions and associated care options are suited to shared decision making. In order to participate in healthcare decisions, members need complete, current information about their conditions, their options for diagnosis and treatment, and the likely outcomes of the different approaches. Education for shared decision making may come in one or more of the following forms:

Printed material Personal or group counseling from providers or other healthcare educators Support groups, either local or on the Internet Videotapes Audiotapes or phone-accessible audio recordings Internet websites Interactive computer programs

Videotapes and interactive computer programs are particularly useful for explaining how a test or treatment is performed. The approach to education for shared decision making should always include access to healthcare personnel who can answer questions and address specific concerns. Some programs for shared decision-making education include an assessment of a member's knowledge to ensure that the member has a good understanding of the relevant issues. Verification of member knowledge about care options also protects providers and health plans against charges of malpractice.

When deciding which specific shared decision-making programs to offer, a health plan may examine claims and encounter reports and then focus its resources on diagnostic and therapeutic procedures that appear to be overused, based on current CPGs. For example, suppose that the frequency of surgery for low back pain is significantly higher than national or regional rates for that procedure and diagnosis. The reason may be that members are not aware of other treatment options and the possible advantages of the other options over surgery. Information about many conditions and care options is already available from providers, medical professional associations, and community agencies such as the American Cancer Society. Before developing new programs for education about care options, health plans should evaluate existing resources and use its own resources to meet needs that are not already addressed.

Another way that a health plan can help a member understand care options is to provide a checklist of questions as a guide for talking to providers or conducting other research. Figure 4B-2 lists questions to help a member understand and choose among different treatment options.

Member Participation

The approach to education for shared decision making should reflect the same considerations that we presented for health promotion programs. Readiness to participate in care decisions is a critical issue. Although many members welcome the opportunity for more control over their own health, others are extremely uncomfortable about making healthcare decisions and prefer to follow provider recommendations. Members may become frightened or angry if pushed beyond their level of confidence about healthcare, so health plans must be careful to let members determine how involved they want to be in care decisions.

Provider Cooperation

Many providers are accustomed to making decisions about healthcare with limited input from members, so they may be unfamiliar with or even resistant to the shared decision-making process. By showing evidence that many members want more control over their own health and involving providers in the development of shared decision-making programs, the health plan can encourage provider cooperation.

Evaluation of Preventive Care, Self-Care, and Decision Support Programs

The evaluation of a preventive care, self-care, or decision support program is a complex process that considers many different variables. One important basis for program evaluation is progress toward specific goals. For each type of program, health plans typically identify areas for improvement and establish goals that reflect the nature of the proposed improvement, the amount of change projected, and the timeframe for the change. Program goals often specify a subset of the member population. For example, a health plan's goals for a 12-month period might include the following objectives:

10 percent increase in the proportion of members over the age of 65 who have received influenza vaccinations

8 percent increase in participation in fitness programs by members who are at least 20 percent overweight

10 percent decrease in inappropriate utilization of emergency services 7 percent increase in the proportion of women over the age of 50 who receive

a mammogram

However, progress toward goals is not a sufficient basis for determining the overall worth of a program. Health plans also consider other effects of the program such as changes in

Clinical outcomes Member and purchaser satisfaction Results on accreditation evaluations, HEDIS scores, and report card ratings Relationships with providers Appropriate and inappropriate utilization Financial outcomes (i.e., the cost of the program compared to cost savings

from the program)

Ideally, these types of programs will improve clinical outcomes, member and purchaser satisfaction, quality ratings from external bodies, and relationships with providers. Providers often play a critical role in the success of a health plan's preventive care, self-care, and decision support programs. A provider's recommendation that a member participate in one of these programs greatly increases the likelihood that the member will actually do so. Additionally, input from providers helps to maintain the scientific soundness, timeliness, and suitability of these programs' educational materials, CPGs, clinical decision support tools, and self-care information. On the other hand, a health plan must avoid the perception that it is infringing on providers' autonomy or interfering in their relationships with members. For example, if a telephone triage program refers a member directly to a specialist without informing the member's PCP in a timely manner, the PCP may feel that the health plan is interfering with the care of that member.

While these programs should decrease the incidence of members' seeking inappropriate levels of care, the health plan should not be surprised at increases in utilization of lower-intensity services, such as more members receiving immunizations and screening or members making appointments to see a PCP rather than seeking care in the emergency department.

When considering the costs and benefits associated with preventive care, self-care, and decision support programs, the health plan must take into account both current and future costs and benefits. In many instances, health plans have difficulty relating cost savings and health benefits to a particular program, especially if the health plan has all three types of programs for a particular medical condition. Another obstacle to demonstrating medical effectiveness and cost-effectiveness is that, for many of these programs, the results may not be apparent for at least a year and often longer. In addition, other factors may influence the results of an initiative. For example, a local hospital's program to encourage women to obtain mammograms may inflate the results reported by a health plan's mammogram awareness program.

Role of Information Management in Program Evaluation

Effective information management is necessary for a health plan to measure the benefits and costs of a preventive care, self-care, or decision support program. A health plan's information systems must be able to accurately collect, analyze, and report data on

The costs of providing the program to the health plan's members Clinical research evidence supporting widespread implementation of the

intervention The level of member participation in the program Changes in the utilization of other services because of the program Short-term and long-term cost savings that result from the program Clinical outcomes and member satisfaction ratings for the program Provider satisfaction ratings Quality management initiatives and periodic measurements for the program

In addition, the information system must link the different measures in order for the health plan to determine the overall value of a program. For example, does increased participation in a self-care program decrease inappropriate utilization of providers' services? How much money is saved for each dollar invested in an immunization program? Do cost savings come at the expense of clinical outcomes or member satisfaction?

Additional Stategies for Preventive Care, Self-Care, and Decision Support Programs

The final section of this lesson provides more detail on two of the strategic approaches that health plans may use when developing and implementing preventive care, self-care, and decision support programs. These strategies are (1) integration of the programs and (2) partnerships with other entities.

Integration of Programs

While some health plans have separate programs for preventive care, self-care, and decision support, other health plans have coordinated and integrated their initiatives for a particular health issue to create a care continuum that encompasses a wide

variety of activities. Such a continuum may also be linked to a health plan's disease management programs. In many cases, the development and delivery of integrated programs are driven by member needs identified through HRA. An integrated approach may be targeted to a specific medical condition, such as CAD, or to a broader concern, such as health issues for a particular demographic group. Insight 4B-2 provides an example of an integrated program of prevention, self-care, and decision support activities for peri-menopausal and menopausal women

Partnerships with Other Entities

Health plans should also explore the possibility of partnering with other entities that have a stake in health plan member health, such as employers, hospitals and other providers, state and local health departments, health-oriented community service organizations, and other health plans, for preventive care, self-care, and decision

support programs. Insight 4B-3 describes a cooperative effort for prevention between a health plan and the American Lung Association.

Other less obvious choices for partners are businesses that provide goods or services that may contribute to healthy lifestyles (e.g., food manufacturers, restaurants, fitness centers), media that are interested in public service opportunities, and churches whose members have unmet health-related needs.

Such partnerships often result in more effective programs with a greater level of participation than a health plan could achieve on its own. Partnering also allows a health plan to share the financial costs of a program.

Suppose that a health plan decides to partner with an employer on a fitness program. The health plan and the employer can pool their knowledge to select the type of program and the manner of presentation that will best address unmet employee health needs. The health plan typically develops the program according to the risks and other characteristics of the employees, and the employer can post notices and distribute reminders about the program. In some instances, the employer may provide a convenient location for the fitness activities, encourage employee participation through incentives, or subsidize the cost of the program. Increased participation in the program may improve the overall health of the employees, and healthy employees are more productive and miss less time away from work due to illness than employees who are less healthy. Employer sponsorship of preventive care programs also conveys the message that the employer cares about the well-being of its employees.

Provider partners can be invaluable for the development and implementation of preventive care, self-care, and decision support programs. As hands-on caregivers, providers may be in the best position to know the healthcare needs of individual members and the population as a whole. Further, providers often have the opportunity to address preventive issues when a member visits for another reason. For example, when a teenager comes in for a pre-camp or pre-sports physical, a PCP can conduct an HRA that looks at issues such as sexual activity, drug and alcohol use, seat belt use, and depression.7

Hospitals are likely partners for these programs because many of them already have experience with preventive care, self-care, and decision support. Hospitals have traditionally been involved in primary and secondary prevention programs, and some hospitals manage their own telephone triage services or conduct self-care classes such as first aid.8

In addition, members are often receptive to hospital-sponsored programs because they typically know and respect the hospitals in their communities.

A health plan may also decide to share its preventive care, self-care, or decision support experience with other health plans for the benefit of an entire population. Programs such as the America's Health Insurance Plans (AHIP) Innovations in Health Plans identify and publicize health plans' best practices for medical management. In some locations, health plans are collaborating on preventive care programs to (1) help providers and members understand and remember prevention guidelines and (2) improve the health of the community for the benefit of all health plans.

Conclusion

By enhancing the care that health plan members give to themselves, health plans can improve the overall quality of care their plan members receive and decrease unnecessary utilization of care from healthcare professionals. Self-care and decision support programs can also improve member and provider satisfaction. Fewer visits to providers mean more time and money saved by members and more control over their own healthcare. Providers are generally supportive of self-care programs as well. Improved patient education not only contributes to better health outcomes, it also leads to fewer visits for minor problems. Providers can focus on more serious health problems and improve the quality of care they deliver to their patients.

AHM Medical Management: Utilization Review

Pg 1 to 54

Course Goals and Objectives

After completing the lesson Utilization Review, you should be able to:

Discuss some of the key issues health plans must address to develop and maintain effective utilization review programs

Explain the importance of medical necessity, medical appropriateness, and utilization guidelines

Describe the role of authorizations and member appeals in the utilization review process

Identify some of the ways that health plans evaluate the results of utilization review programs

Utilization Review

Introduction

Few Americans have unlimited access to healthcare-primarily because of the high cost-yet when they need it, consumers want the very best care that money can buy. In addition, members and providers often equate the "best" with the "most" or "the most expensive," even though studies have shown that such an approach does not always lead to appropriate or even safe care.

One way that health plans seek to offer more affordable coverage is by excluding services and supplies that are not medically necessary and appropriate. When making coverage decisions based on the appropriate use of medical resources, health plans are sometimes confronted by the demanding and conflicting expectations of members, employers, providers, legislators, regulators, the courts, consumer advocates, and the media. Broadly speaking, health plans make these decisions by performing utilization review (UR).

In this lesson, we begin with a discussion of the purpose and function of utilization review, the process, and the types of services included in UR. Then we take a closer look at the criteria health plans use to determine medical necessity and appropriateness, as well as the role of authorization systems in UR. Next, we examine how the appeals process provides members with a means to dispute UR decisions. We also address the influence of accreditation requirements and government regulations. We end the lesson with a look at several strategic issues associated with UR. Although our discussion addresses UR in terms of a health plan's activities, keep in mind that some health plans delegate some or all UR activities to external organizations, such as utilization review organizations (UROs) or provider organizations.

The Purpose of Utilization Review

Since the 1970s, when Dartmouth Medical School professor John E. Wennberg and his colleagues began conducting studies to monitor healthcare delivery costs, researchers have uncovered significant variations in the practice of medicine. Practice variations have been observed between different regions of the country, different locations within a region, and even different physicians practicing in the same area.

For example, in a 1995 Harvard Medical School study of Medicare heart-attack patients, the likelihood of undergoing coronary angiography was 50 percent higher for hospitalized patients in Texas than for a comparable group in New York, while the New York patients were more likely to receive beta-blocker therapy. Over the following two-year period, a greater number of the Texas patients suffered from angina or died. The researchers suggested that these outcomes may have been related to the combination of invasive, possibly dangerous angiograms and the absence of life-extending beta-blocker therapy for the Texas patients. 1

A primary reason for practice variations is the lack of scientific evidence that would give healthcare practitioners the information they need to determine optimum treatments. According to Wennberg, differences often arise when there is a choice between an aggressive surgical intervention and a more conservative medical approach. Wennberg goes on to say that "controversies arise because the natural history of the untreated or conservatively treated case is poorly understood and well-designed clinical trials are notably absent."2

The utilization review process provides a way for health plans to determine whether care recommendations made by providers are (1) covered under the benefit plan and (2) medically necessary and appropriate. It is important to note, however, that UR does not actually recommend procedures.

A primary goal of utilization review is to address practice variations by applying uniform standards and guidelines, supported by evidence-based medicine, when available, or by community standards of practice in the absence of evidence-based medicine. Another important goal of UR is to support cost-effective care, based on the health plan's medical policy, the contract with the purchaser, and the member's medical needs.

Health plans also maintain UR programs to comply with regulatory requirements. Early regulations often directed HMOs to implement procedures for compiling, evaluating, and reporting utilization of healthcare services. These requirements, which usually subjected a health plan's UR procedures to review and approval by the state insurance and/or health department, continue to apply today. In addition, with the rise of managed healthcare, UR regulations now include features intended to protect consumers from UR practices that might inappropriately limit access to medical care. Insight 5A-1 provides a brief history of the development of utilization review in the United States.

The Utilization Review process

When determining if benefits are payable, health plans perform two basic types of reviews: administrative and medical. An administrative review addresses nonclinical aspects of coverage by comparing the applicable contract provision to the proposed medical care. For example, the service in question might be specifically excluded or might not appear in the contract's list of covered services and supplies. This type of review can be conducted by a staff member who is not a medical professional.

A medical review, on the other hand, is one that requires an evaluation based on medical need. For example, to determine if a therapeutic procedure meets the contract's requirement that services be medically necessary and appropriate, a healthcare professional must review the proposed course of treatment and determine if it is consistent with the health plan's medical policy and utilization guidelines.

A helath plans decisions regarding coverage and medical appropriateness are typically incorporated into utilization guidelines, which indicate standard approaches to care for many common, uncomplicated healthcare services. Utilization guidelines often take the form of computer-based screening tools or criteria sets that are structured as a series of questions arranged in a decision-tree format. A UR nurse proceeds through a set of questions to determine if a proposed course of care is similar to what a healthcare professional would normally expect under the given circumstances. Utilization guidelines also indicate when the nurse should refer a decision to a medical director or other physician reviewer due to unique circumstances.

UR can be performed prospectively, concurrently, or retrospectively. A prospective review evaluates a proposed plan for medical care before care is delivered, a concurrent review occurs while the care is in progress, and a retrospective review takes place after the care has been completed. When payment for a course of medical care is approved, the care is said to be authorized or, in the case of prospective review, preauthorized or precertified.

Generally, health plans prefer to perform UR on a prospective basis, when feasible, so that the various parties-the member, provider, and health plan-can reach an understanding about the treatment for a given medical condition before it begins. To illustrate, let's consider a proposed inpatient hospital admission. By requiring advance notice of the admission, the health plan can consider a full range of healthcare service alternatives for the member, beginning with a determination as to whether the hospital is the most appropriate setting. Using established standards of care for specific medical conditions, a prospective review might lead to the determination that the proposed care could be performed in an ambulatory surgical center or in a physician's office. If an inpatient admission is appropriate, UR staff can use established standards of care to determine a maximum length of stay and can begin the process of discharge planning.

In some health plans, UR is also used to identify as early as possible those members who are likely to benefit from other medical management initiatives, such as case management or disease management. For instance, as a result of a request for precertification of a total hip replacement, a health plan might assign a case manager who would suggest a care plan that includes preoperative physical therapy and postoperative rehabilitation. We discuss case management in greater detail in the lesson Case Management.

After the hospital admission, the health plan's UR activities switch from prospective to concurrent review, which entails: (1) gathering information about the member's progress, (2) tracking the length of stay, and (3) continuing the discharge planning process. A UR nurse performs these activities by working with the physician, hospital staff, the member, and the member's family; visiting the hospital; and/or communicating by telephone or other forms of telecommunication as needed. At some point during concurrent review, it may be determined that acute inpatient care is no longer required. In this case, the member might be moved to a skilled nursing unit within the hospital, transferred to a skilled nursing facility, or discharged from the hospital to receive outpatient follow-up care.

In most cases, the UR nurse documents the clinical details of the patient's condition and care to provide a case history, which can be used in consultations with physician reviewers or possibly in appeals or retrospective utilization review.

Under retrospective review, decisions on the authorization of payment for services are made after the services have been rendered. This approach limits the number of options available to plan members because the plan cannot direct the plan member to a more appropriate setting or type of care. An even greater problem arises when retrospective review results in the denial of payment because the completed services fail to meet coverage requirements.

One way that health plans reduce the number of retrospective denials of payment is by performing retrospective reviews on a large number of cases, collecting data on these cases, then identifying and addressing questionable utilization and outcome patterns. For example, a retrospective review of hospital admissions might reveal that certain surgeons unnecessarily admit patients the day before scheduled surgery for preoperative care that, in many cases, could have been provided on an outpatient basis or in the hospital on the day of the surgery. By identifying these surgeons and discussing utilization criteria with them, the health plan can prevent inappropriate early admissions.

The Focus of Utilization Review

Because it would be an overwhelming task to review every course of care for every member in or out of the hospital, many health plans concentrate on healthcare services that produce the best return on their UR investment. For example, UR programs often consider services that are

Overutilized Utilized differently by different providers Not well-supported by scientific evidence Known to produce variable outcomes New or investigational Known to pose potential medical risks for members Often performed for cosmetic reasons Costly

Figure 5A-1 shows some healthcare services that health plans might identify for review using the above criteria.

Lists like the one in Figure 5A-1 continually evolve as medical procedures, technologies, and medications are developed or gain popularity.

Ultimately, for UR to be effective, each health plan must carefully assess its own situation and then determine which types of UR activities would be most effective. For example, a health plan whose providers rarely propose unnecessary hospital admissions might determine that precertifying every hospital admission is no longer necessary. This health plan might choose to focus more of its UR resources on drug utilization review or on outpatient services such as diagnostic tests.

A health plan might also choose to replace or supplement traditional UR methods with other initiatives for managing the appropriateness and costs of medical care. Insight 5A-2 describes how one health plan reduced its use of precertification.

Other health plans have reported that they also have greatly reduced the number of services for which they require precertification of medical necessity.4

Appropriate Treatment and Use of Healthcare Resources

Recognizing that some services are more expensive, are less effective, or pose unnecessary health risks, health plans use appropriateness standards in utilization guidelines to help determine what should be covered. Recall from The Role of Medical Management in a Health Plan that medically appropriate services are diagnostic or treatment measures for which the expected health benefits exceed the expected drawbacks and risks by a margin wide enough to justify the measures. Utilization guidelines typically indicate standard approaches to care for many common, uncomplicated healthcare services and often take the form of computer-based screening tools or criteria sets that are structured as a series of questions arranged in a decision-tree format. A UR nurse proceeds through a set of questions to determine if a proposed course of care is similar to what a healthcare professional would normally expect under the given circumstances. Utilization guidelines also indicate when the nurse should refer a decision to a medical director or other physician reviewer due to unique circumstances.

Appropriate Use of Healthcare Resources

In addition to evaluating the appropriateness of particular medical treatments, utilization review evaluates the appropriateness of resources used in conjunction with those treatments. This aspect of utilization review focuses on determining the appropriateness of the

Level of care needed to treat the condition Clinical setting in which care is provided Services and supplies used to treat the condition

Although health plans emphasize primary care, some conditions require referral to medical specialists.

A specialty referral is a decision to divide a patient's care among one or more medical specialties. Typically, a specialty referral is made by a primary care provider (PCP) or by another specialist who determines the need for additional diagnostic or therapeutic services. Later in this lesson, we look at different approaches that health plans use to handle specialty referrals.

When making decisions about the appropriate clinical setting, UR personnel rely upon utilization guidelines as well as the member's unique medical needs and personal circumstances, such as the ability of family and friends to provide support. For example, the most appropriate clinical setting for a low-birth-weight infant might begin with a neonatal intensive care unit (NICU). As the infant's condition improves, the setting might switch to a neonatal transitional care unit and eventually home healthcare.

A resource some health plans use to review surgery and certain nonsurgical interventions is a site appropriateness listing, which indicates the most appropriate settings for common procedures. After reviewing this listing, a UR nurse might be able to point out to a surgeon that network physicians have performed a proposed surgical procedure more than 90 percent of the time on an outpatient basis. The surgeon might respond by providing additional information that justifies inpatient surgery or may decide that the surgery can, in fact, be performed safely and effectively in an outpatient setting.5

As we have seen, health plans rely on evidence-based medicine and community standards of practice to develop utilization guidelines that help determine the healthcare services and supplies that are necessary and appropriate. By reviewing medical outcomes data, health plans can determine if a particular service most often produces the best results. However, because clinical studies have not been performed for many conditions and procedures, health plans balance evidence-based criteria with experience-based criteria. Experience-based criteria recognize community standards of practice and the overall experience of medical directors, UR nurses, physician reviewers, and the provider's first-hand experience and knowledge of the patient to identify the most effective treatment.

Developing and Maintaining Utilization Guidelines

A health plan's utilization guidelines are developed and maintained by licensed physicians and other healthcare professionals who are employees of the health plan. Also, UR programs often use "off-the-shelf" guidelines developed by nationally recognized vendors such as InterQual, Value Health Systems, and Milliman & Robertson, Inc. (M & R Healthcare Management Guidelines™).

Health plans collect and analyze internal data-such as approvals and denials of payment, and complaints related to specific services-which could indicate a need to update utilization guidelines. In addition, as we saw in The Role of Medical Management in a Health Plan, health plans rely on committees to track trends in medical practice. These committees consult a variety of sources such as peer advisors, network providers, and online services that monitor and review medical literature. Usually, when the need for evaluation is identified, a health plan medical management committee reviews and, if necessary, updates the health plan's medical policy. Then the departments responsible for maintaining the health plan's contract, claims administration systems, and utilization guidelines make the applicable adjustments to reflect the company's position.

Clinical Practice Guidelines and Utilization Guidelines

As we noted in the lesson Clinical Practice Management, clinical practice guidelines (CPGs) are intended to aid providers in making decisions about the most appropriate course of care for individual patients. Many health plans make available CPGs that were developed by the provider community; other health plans distribute CPGs that they themselves have developed. Although it is important for CPGs to be aligned with conditions for coverage in the contract, CPGs are not benefit payment standards.

CPGs are used primarily as an educational tool for providers, but they can also help a health plan meet utilization goals. For example, consider a health plan that has identified a particular elective surgical procedure prone to overutilization. The health plan could send network providers the CPGs for the medical condition being treated by the overutilized procedure, then reinforce this information through the UR process. Some health plans have found that a combination of education and UR can lead to more appropriate utilization of services.

Authorization Systems

To see that utilization guidelines are consistently applied, UR programs rely on authorization systems. An authorization system can be described as a set of policies and procedures that gives specified individuals the authority to make certain choices or decisions about benefit payments. When we speak of authorization here, we generally refer to the authority to make a payment decision prior to or at the time care is rendered, rather than after the fact. In the case of medical emergencies, however, the authorization process by necessity occurs within a reasonable time after treatment in an emergency department.

For some types of care, authorization of payment is not needed. For example, a member can initiate a visit to a PCP without contacting the health plan first. Also, some health plans allow PCPs to authorize payment for certain types of care, such as a specialist visit or a hospital admission, without the need for health plan approval. In addition, as we saw earlier, some health plans have redesigned their authorization systems so that physicians are able to approve most types of care without health plan approval.

A health plan's approach to authorization is largely determined by its philosophy concerning the appropriate degree of health plan control of utilization. Several other factors also influence a health plan's approach to authorizations. For example, if a health plan contracts with a large medical group on a capitated basis, then the health plan may be comfortable delegating to the medical group most of the responsibility for developing and implementing authorization protocols.

Health plans develop authorization protocols to clarify responsibilities and effectively monitor and manage utilization of healthcare. Invariably, UR nurses may issue approvals based on medical necessity criteria, but must refer potential nonauthorization decisions to physician reviewers; only physicians can make nonauthorization decisions based on medical necessity. Under certain circumstances, the authority to make coverage decisions can reside with an internal appeals committee or with an independent third party, as we discuss later in this lesson.

In the past, most health plan authorizations were handled through the mail or over the telephone. Today, however, competitive pressures and consumer demand have prompted many health plans to modify their authorization processes. In order to make access to care more convenient for members, some health plans have

Streamlined authorization processes

Implemented special referral protocols for unique situations Given PCPs the authority to authorize referrals and/or certain healthcare

services Designed products that permit self-referrals by members6

Streamlined Authorization Processes

Besides traditional paper authorizations, health plans now offer many more options, such as automated telephone voice response systems, fax, computer-based software packages, and Internet-based programs in which the provider visits the health plan's home page and enters an identification code and password to transmit requests for authorization. Some computer-based authorization programs contain built-in decision criteria that can be used to authorize common procedures without the need for a UR staff person to review the request.

Unique Specialty Referral Protocols

Some health plans have determined that for certain types of medical conditions, a specialist, rather than a general practitioner, is in a better position to coordinate care for the member. Under these circumstances, the health plan allows the specialist to act as the PCP. For example, in the case of a member suffering from a serious heart ailment, a cardiologist, rather than a family physician, might coordinate care. Similarly, a health plan might determine that a certain type of specialist, such as an OB/GYN, can also function effectively in the role of PCP. These plans allow female members direct access to both a general practitioner and an OB/GYN. Some states have mandated unique specialty referral protocols such as those described in this paragraph.

PCP Authorization

Generally, when health plans allow PCPs to authorize coverage, they develop strategies to improve provider communications and education to help manage utilization. A health plan that is confident in the ability of its providers to recommend appropriate care is more likely to implement physician authorizations and reduce or eliminate health plan review.

Self-Referrals

Increasingly, health plans are offering products that allow members to self-refer to a specialist for any medical condition that the specialist is qualified to treat. A direct access product requires the member to select a PCP, but the member can visit any provider in the network without a referral from the PCP or the health plan. Similarly, an open access product allows the member to visit any network specialist without a referral from a PCP or the health plan; however, unlike direct access, an open access product does not require the member to select a PCP. Some health plans have designed products that charge a higher copayment for self-referrals than for referrals authorized by a PCP or the health plan. Several states require health plans to allow direct access to certain types of providers, such as chiropractors, dermatologists, and podiatrists.

The following pharmacy benefits administration policies appear in the purchaser contract between Zephyr Health Plans and the Visionary Company:

Clause A specifies a maximum outpatient pharmacy benefit of $2,000 per member per calendar year

Clause B restricts the amount of drug dispensed per prescription to a 30-day supply of capsules, tablets, or liquid

The contract between Zephyr and Visionary also includes a provision specifying that drugs which have been classified by the Food and Drug Administration (FDA) as safe, but that have not been proven fully effective, will not be covered.

In order to provide its members with greater flexibility, Zephyr offers a typical open access product.

The following statement(s) can correctly be made about Zephyr's open access product:

A. Zephyr's open access product requires each member to select a PCP B. Zephyr's open access product most likely allows members to visit any network

provider without a referral from a PCP or the health plan

Both A and B

A only

B only

Neither A nor B

Answer=C

Nonauthorizations

There are many reasons why a health plan might not authorize payment for a particular healthcare service. In some instances, the determination is straightforward; in others, the decision can become quite involved. For example, a request for surgery to straighten nose cartilage might at first glance appear to be cosmetic surgery, an excluded service in virtually all contracts. However, the surgeon may respond to the health plan's nonauthorization decision by providing additional information stating that the primary purpose for the surgery is to correct a condition that makes it difficult for the member, an asthmatic, to breathe. Typically, the cosmetic surgery exclusion does not apply when the surgery is to treat a condition that impairs a bodily function. In this situation, the UR staff would carefully examine the proposed procedure to determine if, in fact, the surgery is medically necessary to treat the member's respiratory condition or if the primary purpose is to change the person's appearance.

As the preceding example illustrates, a health plan might initially determine not to authorize payment for a procedure but later revise its decision when the provider

communicates additional information. Figure 5A-2 lists several examples of why a health plan might determine not to authorize payment for a hospital inpatient stay.

Decisions not to authorize payment of benefits are communicated to the patient and provider along with information about the right to appeal. Such decisions can result in several types of liability for health plans. For example, a plan member can file a lawsuit claiming that the contract or a marketing piece, such as a member newsletter, requires the health plan to pay benefits for the services in question. To reduce the risk of this type of lawsuit, called breach of contract, a health plan must develop language that accurately conveys the plan's provisions for paying benefits.

A member might also file a lawsuit claiming that the health plan exhibited negligence in the design of its utilization review program that resulted in a decision that was not in the best interest of the plan member. To reduce the risk of this type of lawsuit, a health plan must maintain and follow medical policy and UR/appeals processes that are based on recognized outcomes data and community standards of practice. A health plan must also see that all authorization decisions are made by personnel who have appropriate training and experience. 8

Although health plans must do everything reasonably possible to limit the risk of liability that might result from authorization decisions, they must also be careful not to allow a fear of lawsuits to lead to defensive practice of utilization review. In other words, just as healthcare professionals can become overly conservative in the practice of medicine to avoid malpractice lawsuits, health plans can become overly conservative in the design and administration of their UR programs to avoid lawsuits.

Member Appeals

Regardless of how well designed the UR program is, there are times when certain decisions lead to disputes. To address disagreements that result from utilization review, as well as other types of complaints, health plans develop and administer complaint resolution procedures for their providers and members. The term complaint resolution procedures (CRPs) refers to the entire process available to members and providers for resolving disputes with the health plan and includes informal complaints as well as formal appeals. In Network Management in Health Plans, we discuss CRPs available to providers; these procedures address, among other things, complaints about the health plan's UR decisions. In the following paragraphs, we discuss CRPs available to members.

Health plans maintain complaint resolution procedures for a number of reasons, including statutory requirements. In addition, the CRP process

Helps build trust with members Reduces the likelihood of errors in decision making Reduces the likelihood of costly lawsuits Reduces the likelihood of negative publicity Provides information to analyze trends and improve processes

Members are encouraged to first attempt to resolve a problem by means of an informal complaint through a telephone call or letter to the health plan. An informal complaint can pertain to virtually anything concerning the delivery, financing, or administration of healthcare. For instance, a member might complain about long wait times in a provider's office, the care provided by a network physician, a bill from a provider that the member believes the health plan is obligated to pay, a confusing explanation of benefits, or problems obtaining an identification card.

If the informal complaint is not resolved to the member's satisfaction, the member has the right to file a formal appeal. A formal appeal allows a member to have a dispute resolved by someone in the health plan other than the person who made the decision or performed the service that led to the complaint. Formal appeals follow an established process that typically allows for at least two levels of appeal within specified timeframes. The process steps are described in the member's certificate of coverage or are referenced in the certificate of coverage and described in a separate document available to members upon request. As we saw in Healthcare Managment: An Introduction, many health plans also issue to their members a philosophy of care, code of conduct, or statement of member rights and responsibilities that often includes a statement about the member's right to file an appeal.

To address disagreements that result from utilization review, as well as other types of complaints, health plans develop and administer complaint resolution procedures (CRPs). The following statements are about CRPs. Select the answer choice containing the correct statement:

At the present time, CRPs are available only to members, and not to providers.

In general, formal appeals follow an established process that typically allows for at least two levels of appeal within specified timeframes. In a typical CRP, if a member's informal complaint is not resolved to his or her satisfaction, the next step is an independent external review. In general, complaints must proceed through the entire CRP process before they are resolved.

Answer=B

States often enumerate specific appeals standards that apply to health plans. For example, some states require that appeals of nonauthorizations be reviewed by a specialist in the same or similar field of medicine as typically treats the condition being reviewed. At a minimum, most states require health plans to

Obtain state insurance and/or health department approval of appeals processes

Disclose to members their right to appeal Maintain and make available to the state all records regarding the number

and nature of member appeals Adhere to specific timeframes for reviewing and responding to appeals

An appeal of a decision that results from administrative review is sometimes called an administrative appeal, and an appeal that addresses medical issues is sometimes called a medical appeal. Some health plans distinguish between administrative and medical appeals, assigning each type of appeal to a different process flow involving different personnel.

With respect to the process by which members appeal a health plan's medical or administration decisions, most states impose certain minimum requirements on health plans. These requirements include:

that health plans must obtain state insurance and/or health department approval of appeals processes

that health plans must disclose to members their right to appeal

that health plans must adhere to specific timeframes for reviewing and responding to appeals

all of the above

Answer=D

The Formal Appeals Process

The formal appeals process can be viewed as an extension of the authorization process, requiring the health plan to further review its initial decision not to authorize payment of benefits. It is important for the health plan to closely monitor the appeals process to see that it is consistently administered and that accurate records are kept.

Figure 5A-3 shows a diagram of typical complaint resolution procedures, beginning with the initial UR decision, proceeding through internal review (informal complaint and formal appeals), and ending with an independent external review. It is important to note, however, that most complaints are resolved without proceeding through the entire process.

Formal Appeal: Level One

A Level One appeal often goes to one of the health plan's medical directors, assuming that the medical director was not the person who made the initial decision. Members may write a letter or request a meeting in person to present their case. Members also have the right to name someone else to represent them in their appeal, provided that they document their agreement that another person will be acting on their behalf. Such documentation is not required if the representative accompanies the member in person to an appeal meeting.

Health plans have a specified number of working days to respond to appeals, as stated by company policy or applicable regulatory requirements. This timeframe typically falls between 20 and 60 days, but is accelerated for certain types of appeals, called expedited appeals, which require a prompt decision because of the nature of the medical condition. The review period begins when the appeal arrives at

the health plan. Some states give the health plan an additional number of days (e.g., 10) if the appeal arrives without all the information needed to make a decision; in this case, the health plan must send notification of the delay to the member.

Typically, the health plan sends a letter communicating its decision to the member and/or provider involved. If the Level One appeal overturns the original decision, then the health plan informs the member that it will pay for the service in question. If the Level One appeal upholds the original decision, then the health plan sends a letter that states the reason for the nonauthorization, quotes the applicable contract provision that supports the nonauthorization, and informs the member of additional rights to appeal.

It is important for the health plan to prepare clear, accurate, and consistent communications of its decisions at all levels of the appeals process. For example, if a decision not to cover a particular surgical procedure has been upheld on appeal because of the cosmetic surgery exclusion, all letters upholding similar nonauthorizations should cite the same exclusion. Otherwise, a health plan's decisions could be viewed in court as inconsistent and perhaps faulty.

Formal Appeal: Level Two

If the Level One appeal upholds the original decision not to authorize, then the member has the right to appeal to the next level, which is often handled by an appeals committee at the local, regional, or corporate level, depending on the health plan's organizational structure.

Typically, an appeals committee consists of representatives from various areas within the health plan who meet regularly to consider most appeals and who also meet as needed to consider expedited appeals. An appeals committee that handles medical reviews always includes a physician. To avoid conflict of interest, if the committee's physician member was involved in a decision that is being appealed, then the physician is replaced by another physician within the organization. An appeals committee might also include a nurse, an attorney, and representatives from areas such as customer services and health plan operations. Some appeals committees also include health plan members.

Prior to the date of the appeals meeting, the committee members receive the files for each appeal. An appeals file contains information such as the applicable contract provisions; correspondence from the member, customer services, UR staff, and the provider involved; and any internal documentation, case history notes, or information such as the health plan's medical policy or the utilization guidelines that pertain to the care under review. During the deliberation process, the committee might contact the member or provider for clarification or might consult with a specialist.

Under certain circumstances a health plan may allow for an alternative level of appeal in lieu of the Level Two appeal. For instance, a request to precertify treatment for a life-threatening condition might go directly to the senior medical director rather than the local or regional appeals committee.

Utilization Review

Health plans maintain records of all appeals and track information such as turn-around time for decisions and the percentage of decisions that overturn the initial determination. An important use of appeals data is to identify opportunities to improve utilization, such as those listed below:

If the appeals process reveals a large number of emergency department visits for routine care, the health plan might decide to develop or redistribute a member brochure that explains the authorization process for emergency department visits.

If the appeals process reveals that a particular provider consistently performs or recommends a service excluded from the benefit plan, the health plan can supply this provider with additional training on plan provisions.

If the appeals process reveals that a UR staff member consistently fails to authorize payment for a particular course of treatment that typically should be covered, the health plan can give the staff member training.

Independent External Review

An independent external review is a review conducted by a third party that is not affiliated with the health plan or with a providers' association, is free of conflict of interest, and has no financial stake in the outcome of the authorization decision. Typically, this step in the appeals process is made available to members after the completion of the internal appeals process. Health plans should seek to establish an external review system that is easy for members to use, considers appeals quickly, and produces fair decisions based on expert medical evaluation and current medical evidence.

Accrediting agencies, Medicare, and many states have specific requirements and standards pertaining to independent external reviews, although the standards vary. For instance, in some states, health plans may be required to offer external reviews for all determinations of medical necessity, while in other states, health plans may be required to offer external reviews only for experimental or investigational procedures.

According to a study by the Kaiser Family Foundation, most cases submitted for external review involve nonauthorizations based on questions of medical necessity and coverage limitations, and a large number involve disputes over mental health coverage, substance abuse, oncology treatment, and pain management. This study also reports that about half of the decisions made by health plans have been upheld by external reviewers. 9

External appeals are often handled by independent review organizations (IROs), companies that specialize in reviewing healthcare disputes. These companies typically offer a number of different services to health plans. For example, they can

Offer advisory opinions or consultation services to health plans on utilization review

Mediate disputes between health plans and members and/or physicians Render binding decisions as the final step in the formal appeals process

When considering an appeal, an IRO receives a file similar to the one described earlier in our discussion of the appeals committee and might seek clarification or additional information as needed from the health plan, the member, and/or the provider involved. IROs often employ multi-disciplinary review teams capable of handling a broad variety of both administrative and medical issues. The IRO provides the basis for its decision in a communication it sends to all parties involved in the dispute.

Accreditation, Legal, and Regulatory Issues

Utilization review activities are influenced by regulatory authorities and, if applicable, healthcare accrediting agencies.

Accrediting Agencies

Two prominent accrediting agencies in the area of utilization review are the American Accreditation HealthCare Commission/URAC (URAC) and the National Committee for Quality Assurance (NCQA). In general, URAC and NCQA take a similar approach to UR by requiring health plans to

Use care criteria developed with input from actively practicing providers who are knowledgeable in the field for which the criteria are being developed

Base criteria on sound, nationally recognized clinical evidence Evaluate criteria at specified intervals, updating as necessary See that UR personnel have appropriate qualifications for the specific

activities they perform Maintain and follow specific policies and procedures for conducting UR

activities

Figure 5A-4 provides examples of the types of specific issues addressed by accrediting agencies.

Regulatory Requirements

Most states that regulate UR require the entity performing UR to establish its standards with input from peer advisors. Some states require UR standards to be objective, clinically valid, and compatible with established principles of healthcare, yet adaptable enough to permit variations from the normal course of treatment when justified.

A growing number of states have enacted laws requiring health plans and UROs to disclose their utilization guidelines. In some states, utilization guidelines must be disclosed to participating providers on demand. In other states, the information must be provided to state regulators, and depending on the state, the information may be made public. In still other states, if the health plan makes a determination not to authorize payment for a particular service, the health plan must disclose to the provider and patient the specific criteria upon which the decision was based.10

Some states require entities that perform UR to disclose the clinical education of their reviewers and to document training programs. Most states with UR requirements stipulate that the education of any reviewer who has the authority to decline payment for a course of treatment must have some correlation to the condition being reviewed. Procedural issues addressed by state UR regulations include standards for telephone accessibility, confidentiality of patient and provider information, and time limits for authorization and nonauthorization decisions.12

In some states, entities that perform UR must (1) be accredited by a nationally recognized organization such as URAC or NCQA and (2) comply with all applicable statutory requirements. In other states, the UR statutes specify that national accreditation is deemed to satisfy the state's UR requirements. In still other states, the UR statutes give regulators the authority to accept national accreditation in lieu of compliance with the requirements specified in the statutes.13

Health plans that operate in more than one jurisdiction must identify all applicable requirements on a state-by-state basis and implement appropriate compliance procedures. Variations in these requirements make implementation of UR a challenge. Health plans have also expressed concern that the variety of regulatory requirements might force them to inconsistently apply utilization standards that, in the absence of such laws, would be applied uniformly in all states. These variations and inconsistencies are eliminated to the extent that health plans are permitted to use national accreditation to satisfy state requirements.

Benefit mandates can also impact a health plan's utilization review standards. For example, the federal government and several states mandate a minimum length of stay (LOS) for maternity care. If the required LOS exceeds the time that the health plan's UR staff would have considered appropriate for a particular case, the health plan must cover the additional hospital stay, even though the health plan otherwise would have considered the additional stay not medically necessary.

Does UR Constitute the Practice of Medicine?

A controversial legal issue surrounding utilization review is whether UR decisions constitute the practice of medicine. This question is critical to health plans because if legislatures, regulators, or the courts determine that a health plan's UR activities constitute the practice of medicine, then such activities and the medical directors who perform them would be under the jurisdiction of state medical boards. In addition, health plans and medical directors would be subject to medical malpractice lawsuits.

Some people maintain that UR decisions are medical judgments, not benefit decisions, since many patients cannot afford to proceed with care unless payment is authorized. In other words, no matter how it is defined, nonauthorization often results in treatment being withheld. Others point out that state laws typically define the practice of medicine as the direct treatment of patients or the direct advisement of patients concerning healthcare decisions. These people note that when health plans

perform UR, they evaluate the member's medical records, not the member, and then make a benefit payment decision, but do not offer medical care or advice. 14

To date, only two states have enacted legislation that considers UR to be the practice of medicine. Although this issue has been the subject of state medical board positions, court decisions, and attorney general opinions, a clear consensus has yet to emerge. For example, a North Carolina attorney general opinion states that "denial of third party payment may have a direct impact upon a patient's decision of whether to undergo the treatment. However, such denial does not prohibit the patient from seeking treatment without third party benefits, and it does not prohibit the attending physician from providing the treatment.15" On the other hand, a Louisiana attorney general opinion states that "the act of determining medical necessity or appropriateness of proposed medical care so as to effect the diagnosis or treatment of a patient in Louisiana is the practice of medicine and must be made by a physician licensed to practice medicine." 16

Health plans can take some or all of the following steps to reduce the risks associated with UR and the practice of medicine:

Monitoring the legal and regulatory environment in each state where the health plan does business and revising UR protocols as needed

Developing UR training programs and protocols that emphasize the need to avoid giving the appearance of making medical recommendations

Maintaining appropriate liability insurance for both the health plan and its physician employees

Strategic Isseues

In this section, we examine several key strategic issues associated with UR programs: member and provider perspectives, information management, staffing and training, coordination with other health plan functions, and evaluating UR results.

Members and Providers

When designing and implementing UR programs, health plans must objectively and diplomatically address the unique perspectives of members and providers. The need to control healthcare costs is not uppermost in the minds of members when their own or a loved one's course of treatment is under review. In addition, members frequently object to the "bureaucratic red tape" of UR procedures, and they complain about referral or authorization delays, complicated rules, and network providers who are not familiar with the UR processes of the plans they represent.

From the provider's perspective, the administrative demands of UR programs are often considered time away from the practice of medicine. Further, some healthcare practitioners view UR efforts as a negative judgment on their professional competence. Health plans must consider the impact UR programs have on the way

providers interact with members and on the likelihood that providers will want to continue working with the health plan.

In developing a UR strategy, health plans should strive for a collaborative rather than an adversarial relationship with members and providers. A health plan can foster such a relationship through

Sensible and consistent UR procedures A timely UR process A convenient UR process (i.e., one that is easy for the patient and the provider to

use) UR protocols that rely on evidence-based medicine and, when appropriate, are

customized to local practices An unbiased process that is based on reliable data and presented in a manner that

does not judge physicians Procedures that foster clear communication among all parties Access to information that supports appropriate use of healthcare resources and

sound decision making Procedures that are developed with input from providers, members, and

purchasers

To specifically address the needs of members, health plans must simplify UR procedures and design education programs that help members better understand coverage provisions. Health plans must also focus on clearly communicating all available information about a proposed course of treatment, as well as the reasons for decisions not to authorize benefit payments.

To work effectively with network providers, health plans must implement procedures and education/communication programs that make it easier for providers to adhere to authorization protocols. For example, a health plan might measure, by provider, the percentage of precertification requests that are ultimately approved. If a provider always proposes services that are approved, the health plan might eliminate the authorization requirement for this provider. On the other hand, if a provider consistently proposes courses of care that are not authorized, the health plan might arrange additional education on the plan's medical policies and/or benefit administration policies for this provider.

Recognizing the importance of addressing the types of issues discussed above, some health plans are merging UR programs and case management programs, which typically involve increased communication and involvement with members and providers.

Information Management

Information technology plays an increasingly important role in utilization review. Some health plans use electronic medical records (EMRs) and health information networks (HINs) to collect and analyze medical outcomes data from the general population as well as their member populations. In addition, advances in information

technology enable providers to access plan information. Providers are much more likely to comply with a health plan's utilization guidelines when they have online access to eligibility and coverage information, authorization systems, formulary lists, and so on.

The increasing use of eCommerce facilitates concurrent review by enabling medical directors, nurse reviewers, and providers to communicate clinical information between provider sites and the health plan on a real-time basis. The UR nurse can meet with the hospitalized member and the treating physician and then enter data directly into the health plan's information system. In this way the nurse can provide up-to-the-minute clinical information about the member's condition and obtain immediate access to the applicable UR standards and expertise available in the health plan's information systems.

Staffing and Training

Utilization review cannot be successful unless a health plan has qualified employees in sufficient numbers to effectively administer the program. Many health plans have UR staff (such as nurses and medical directors) available during regular business hours, with procedures in place for after-hours or expedited requests. Some plans provide availability of UR staff 24 hours a day, every day of the year. Health plans must also see that authorizations and appeals decisions are conducted by healthcare practitioners licensed in the same or similar medical specialty as the case they are reviewing, and that appropriately qualified physician reviewers are available as needed.

Health plans often evaluate staffing levels by looking at the ratio of UR staff to the average number of members or the average number of reviews performed. Staffing ratios also vary depending on factors such as the severity of the medical conditions generally treated and whether UR is conducted on site or off site.

Health plans maintain training programs so that UR personnel can properly perform their duties. Training addresses issues such as application of clinical protocols, procedures for appeals, regulatory requirements, and protection of patients' rights, including confidentiality.

Coordination with Other Health Plan Functions

Utilization review is one of two functions that health plans perform to make benefit payment decisions; the other is claims administration. As we saw earlier in this lesson, utilization review focuses on whether a service is a covered benefit and meets the health plan's guidelines for medical necessity and appropriateness. As described in lesson 1, claims administration is the process of receiving, reviewing, adjudicating, and processing claims for either payment or denial of payment.

Claims administration examines all of the provisions of the contract to determine whether benefits should be paid. For example, does the person meet the definition of an eligible employee or dependent? Were the services performed while the person was eligible for coverage under the plan? Were the services properly authorized? Are the services included in the list of covered services? If the services are covered, should they be paid as a network or out-of-network benefit? Is there a copayment or

coinsurance? Were the services medically necessary and appropriate? Do other exclusions apply?

A health plan's claims administration and UR departments must maintain a positive working relationship to function effectively. UR can assist claims administration in a number of ways. For instance, the UR department might specify certain types of cases that always require medical review prior to claims determination and other types of cases that can be processed by claims administration personnel according to written guidelines. Also, the UR department might provide information on prospective and concurrent reviews so that the claims administration department can prepare for these cases and better manage the claims workload.

In most health plans, the claims administration department maintains a comprehensive database of information needed for processing claims. The database includes information on benefit plan provisions, coverage standards, compensation arrangements, member information, and provider utilization. Other departments in the health plan, including the UR department, contribute to this database and rely upon it for certain functions. For example, the UR department uses the claims administration database to identify utilization patterns through retrospective review.

The UR department must also maintain a positive working relationship with other departments within the health plan such as provider relations, member services, the legal department, sales and marketing, product development, or any other areas that communicate benefit payment determinations or provisions to members or providers.

Evaluating UR Results

One way that health plans evaluate the results of UR is by determining whether UR results in reduced medical costs and/or greater consistency and quality of care and if so, how these benefits compare to the costs of maintaining the UR function? In other words, does a financial cost/benefit analysis justify the activity? Do the improved outcomes and reduced medical expenses outweigh implementation costs and the potential for dissatisfied members and providers who resent nonauthorizations and the inconvenience of the process?

Health plans often monitor utilization rates to determine the effectiveness of their UR programs. Utilization rates typically measure the number of services provided per 1,000 members per year to indicate how frequently a particular service is provided. For example, a health plan may monitor the number of inpatient hospital days or the number of referrals to specialists per 1,000 members per year. These utilization rates are then examined and used to help determine overall planning, budgeting, quality management, and medical expense management.17 If a health plan notices an increase in hospital days, it may decide to precertify all or a greater number of inpatient hospital admissions. If a health plan notices that its specialty referral rate has been steadily increasing since contracting with a new PCP medical group, it may improve the education programs or UR procedures it uses with this group.

In addition to utilization rates, there are a number of other indicators that health plans may consider to evaluate the effectiveness of their UR programs, such as

Changes in the total amount of medical expenses or claim dollars paid for particular procedures

Outcomes and other quality measures Number of appeals Number of complaints overturned by the formal appeals process and/or by

external review Member and provider responses to satisfaction survey questions pertaining to

the UR process

Health plans also evaluate UR programs to adjust their medical management strategies and activities. After studying UR results, a health plan may decide to shift its focus from inpatient to outpatient reviews or to tighten authorization procedures for one course of treatment and loosen procedures for another. UR results may also affect other medical management programs. For example, a UR manager might review a summary report-showing items such as diagnosis and type of care-and identify an increase in hospital admissions for complications of pregnancy, which in turn might lead the health plan to institute a disease management program related to prenatal care or a case management program targeted at high-risk pregnancies.18

Conclusion

Although utilization review is a common component of health plan medical management programs, individual health plans vary greatly in the extent to which they use UR and the specific UR processes that they implement. In addition, the overall use of UR in the health plan industry has fluctuated in recent years. Some health plans are beginning to turn UR responsibility over to provider groups; others are experimenting with more aggressive healthcare resource evaluation techniques. As the healthcare industry changes to meet new member, provider, purchaser, and environmental demands, utilization review is likely to change as well.

AHM Medical Management: Case Management

Pg 1 to 62

Course Goals and Objectives

After completing the lesson Case Management, you should be able to:

Describe a variety of case management activities Explain the steps of the case management process Identify several strategic issues that may affect the development and

improvement of case management programs

Discuss the impact of legal issues, regulations, and accrediting agencies on

case management functions

Case Management

Introduction

Although most of the medical management issues discussed so far in this text relate to patient populations, medical management can also be used to maintain the quality and cost-effectiveness of care delivered to individual plan members. This is especially true in case management programs. Case management is used for two basic reasons. First, in almost any population, a small number of individuals will incur the most serious health problems as well as a disproportionately large percentage of total healthcare expenses. Second, for individuals with certain types of conditions, evidence increasingly points to the effectiveness and value of coordinated, multidisciplinary care. Case management seeks to identify individuals with these conditions and dedicate resources to managing their care.

In this lesson we examine the purpose and role of case management, and then we describe the case management process. We discuss case management strategies and how case management programs are evaluated. We conclude with a discussion of regulatory and accreditation issues.

Overview of Case Management

As we saw in the lesson The Role of Medical Management in a health plan, "case management is a collaborative process that assesses, plans, implements, coordinates, monitors and evaluates options and services to meet an individual's health needs through communication and available resources to promote quality, cost-effective outcomes." 1 Health plans may use case management to

Improve overall health status for members who receive case management services

Prevent complications and deterioration of condition for members Optimize use of limited healthcare resources Improve cost management Improve member compliance with provider recommendations for care

The case management process is directed by a case manager whose goal is to oversee the timely coordination of healthcare services in a cost-effective manner and in a way that meets the healthcare and quality of life needs of the individual member. The case manager facilitates communications and activities among all participants in the case management process and reduces the fragmentation of care that often results when individuals obtain services from several different providers. Serving as a liaison between the member, the member's family, the health plan, healthcare providers, purchasers, and community-based resources, the case manager addresses the member's ongoing needs by providing continuity across a continuum of care. A key element of case management is that it fosters

individualized interventions with a focus on objectively informing and educating members, families, and providers about the case management process, healthcare options, healthcare coverage, cost factors, community resources, and all relevant issues that might help participants make informed decisions. 2

Although case managers play a central role in care coordination and often make important recommendations regarding care, the physician in charge of the patient must approve all care decisions. Other providers involved in the patient's care, the health plan's medical director, and a social worker may also be part of the case management team.

Over the years, the individuals conducting case management have been nurses, social workers, occupational therapists, rehabilitation counselors, participants in self-managed multidisciplinary teams, physicians, and specialists in fields such as behavioral healthcare, pharmacy, and health education. Insight 6A-1 provides a brief history of the development of case management in the United States.

The Case Management Landscape

A health plan can conduct its own case management or obtain case management services from one or more of the following outside sources:

Other health plans Third party administrators Providers Companies that specialize in case management in conjunction with other

medical management services, such as utilization review Independent case managers

Some health plans delegate the entire case management function; others outsource on a case-by-case basis. For example, a health plan that employs its own case managers might outsource specific cases when their workload becomes too heavy or when specialty cases arise that are outside the expertise of the plan's case management staff. Our discussion will describe how a health plan performs case management. Keep in mind, however, that another entity often conducts this function on behalf of the health plan.

Besides health plans, several other types of entities use the services of case managers. For example, case management is utilized by self-insured employers, by insurance carriers-such as workers' compensation, disability, and long-term care companies-and by government programs, such as Medicare and Medicaid. Like health plans, these entities often seek to improve medical outcomes, reduce medical expenses, increase customer satisfaction, and help individuals return to work as quickly as possible. In addition, community-based organizations use case management to help individuals find medical care, reimbursement programs, housing, and employment.

Many healthcare providers such as hospitals, rehabilitation facilities, home healthcare agencies, and infusion care companies use case management to improve outcomes and more effectively manage medical resources. Some healthcare facilities have their own case management departments with which a health plan's case managers interact. These departments are influential in assisting physicians in discharge planning and implementation.

Case Management

The Scope of Case Management

Case management incorporates aspects of various medical management programs, such as quality improvement, utilization review, preventive care, self-care, member decision support systems, and disease management. It also incorporates activities that may not be a responsibility of the health plan, but that clearly influence a member's situation and response to care. These activities include

Assessing a member's financial situation Providing or arranging for motivational support for members and their families Providing or arranging for vocational counseling Negotiating the timing and circumstances of a member's return to work Arranging for community and social services

A nurse for the Savanna HMO is planning the coordination of healthcare services for a Savanna member who suffers from several serious health problems. As part of her evaluation, the nurse is completing the following activities:

Activity A: Assessing the member's financial situation Activity B: Negotiating the timing and circumstances of the member's return

to work Activity C: Arranging for motivational support for the member and his family

From the answer choices below, select the response that correctly identifies whether each of the activities described above would be considered part of a typical case management program.

Activity A: yes;   Activity B: yes;   Activity C: yes

Activity A: yes;   Activity B: no;   Activity C: no

Activity A: no;   Activity B: yes;   Activity C: yes

Activity A: no;   Activity B: no;   Activity C: no

Answer=A

By offering these value-added services, which might exceed the member's usual expectations of a health plan company, case management has the potential to increase customer satisfaction.

Case management and utilization review are similar in some respects, and in recent years, the boundary between the two activities has become less distinct. However, case management generally requires a more comprehensive and complex approach to a course of care than does UR. For example, UR is used primarily to determine medical necessity, and UR often applies preestablished criteria to evaluate medical necessity against a norm. Case management, on the other hand, consists of additional activities, such as advising members about how to optimize their healthcare benefit program, contacting members to make sure they follow the prescribed course of care, arranging for psychological counseling for members or their families, and so on. Because case management typically requires more coordinating, arranging, facilitating, and negotiating of care, the case manager is in a better position to uncover medical issues that otherwise might have gone unnoticed. For instance, if a member is taking medications prescribed by two or more providers or if the case manager is aware of an over-the-counter medication that the member is taking in addition to a prescription drug, the case manager would point out the potential for an adverse drug interaction.

For patients with chronic conditions, case management also includes a disease management component. A health plan's disease management program may identify members who are appropriate for case management, such as members who have other medical problems in addition to a chronic condition.

In the past, case management was concerned primarily with individuals whose medical conditions were categorized as catastrophic-in terms of health and/or cost. Invariably, these cases involved hospital inpatient confinements. Over time, however, case management has been applied to other types of medical conditions, such as chronic conditions that are not necessarily catastrophic, but that might benefit from the customized nature of case management. For instance, if a member is not adhering to the treatment plan or would benefit from an increased focus on support and education, then case management might be justified. In addition, case management is more frequently used for individuals who suffer from multiple

medical conditions. When case management is used in these situations, hospitalizations may be avoided and patient care may be better managed over the long term. As a result, case management has evolved to become an increasingly collaborative process designed to meet a variety of healthcare needs across all care settings, not just high-cost conditions that require inpatient hospital stays.

Case management seeks to manage a complete episode of care from the initial encounter with a provider through specialty care, hospital inpatient stays, and follow-up care in step-down units, skilled nursing facilities, or the member's home. Risk assessments are conducted to identify potential problems and begin case management before hospitalization is necessary and major expenses are incurred. For example, health plans use case management for elderly members and for members who are suffering from chronic conditions (such as back pain) or degenerative neuromuscular diseases (such as multiple sclerosis).

The Needs of Members and Their Families

Case management seeks to address a variety of member needs across the continuum of care and to actively involve the member and the member's family in the case management process by providing recommendations, information, and resources in any of four different areas: medical, financial, psychosocial, and vocational.

Medical Needs

A case manager spends a substantial portion of time on activities associated with obtaining the most effective and appropriate medical care for the member. Typically, a case manager contacts the member and the treating physician to learn about the medical condition, then suggests alternative care options, if applicable. When appropriate, the case manager also recommends additional services that may result in better overall clinical or financial outcomes. The case manager's primary goal is to find the most appropriate medical resources for providing optimal care and promoting the best possible outcome for the patient. For example, a case manager might

Identify care options and communicate them to members, family, and the medical team

Refer members to appropriate healthcare providers when necessary, such as a center of excellence for a patient in need of a transplant

Work with members to make sure they understand and adhere to the courses of care prescribed by their physicians

Monitor home care by re-evaluating equipment and making sure supplies are replenished

Provide health education for members and/or family Inform members about community-based health education programs or

programs sponsored by the health plan

Financial Needs

Case managers match healthcare needs with benefits available under the plan. They explain authorization procedures, examine the proposed course of care, determine the member's out-of-pocket costs, and discuss alternatives that might lower costs and/or improve quality. For example, a case manager might suggest that a member move from an inpatient setting to the home. Such a move often reduces the total healthcare bill, while obtaining clinical and psychosocial benefits, such as reduced risk of hospital-acquired infection and a greater comfort level for the member.

If the covered benefits do not match the member's needs, the case manager conducts a preliminary review of the member's financial situation, considering both financial obligations (e.g., housing, utility, and food bills, and out-of-pocket medical expenses) and sources of income (e.g., salary, sick pay, short- and long-term disability coverage, and government benefits). Based on this review, the case manager might refer the member to his or her employer's human resources department or might locate appropriate community-based resources or government programs.

If the member requires assistance with healthcare expenses, the case manager typically plays a more active role. The case manager serves as a liaison between the member, the health plan, and providers, facilitating plan administration and addressing problems that may arise.

Case managers also look outside the health plan to pursue methods of payment or ways to obtain needed equipment or services at a lower cost. Case managers may negotiate discounts from healthcare suppliers or find community resources that will provide the needed items or services at low or no cost. For example, the case manager may arrange for the delivery of meals to a disabled member.

Psychosocial Needs

Case managers work with members and families to develop realistic expectations about the progression of medical conditions and the expected outcomes of treatment plans, and to establish effective coping strategies. It is common for a patient with a serious illness or injury to be anxious about the uncertainty of the ultimate prognosis or despondent about the impact that the medical condition is having on daily living. Case managers must distinguish between clinical depression-which may require psychotherapy and/or medication-and common mood symptoms often associated with illness or injury. In many cases, patients will benefit from referrals to resources outside the health plan such as self-help groups, disease-specific community-based organizations, or local clergy. In addressing the member's psychosocial needs, case managers

Refer members to healthcare professionals to help them manage depression or other negative feelings associated with the illness or injury

Arrange counseling in areas of marital discord, role reversal, dependency, and sexual problems that might arise because of the medical condition

Help the family better cope with their emotions about their loved one's medical condition and more effectively provide support6

Vocational Needs

As we discuss in later lessons, a member's vocational needs are an integral part of workers' compensation plans, and workers' compensation case managers spend considerable amounts of time on vocational rehabilitation and training. If a member's medical condition results from an accident or illness that is not work related, then the case manager in a non-workers' compensation plan is also likely to conduct at least a preliminary review of a member's vocational needs as part of the case management process. For example, the case manager might refer the member to community-based counseling or job rehabilitation services.

In most instances, case managers do not focus on vocational needs because job-training activities are not covered under most commercial health plans. However, some health plans offer products that combine features of health plans and disability plans. Coordinated by case managers, these combination plans emphasize returning employees to work. Also, some self-funded employers are willing to invest additional case management resources in rehabilitation services to return their employees to work as soon as possible.

The Case Management Process

The case management process follows five basic steps: (1) case identification, (2) assessment, (3) planning, (4) implementation/monitoring, and (5) evaluation. In reality, these steps frequently overlap. For instance, when health plans identify a member for case management, they may also begin assessing risk factors and planning a course of care. Or as case managers implement and monitor plans, they also begin evaluating the results. In addition, case management is an iterative process. The case manager is constantly assessing, planning, implementing, monitoring, and evaluating the member's condition and the course of care as circumstances change. Figure 6A-1 summarizes the basic steps in the case management process and the activities performed at each step.

Case Identification

Case identification is a process that determines which members may be appropriate candidates for case management. To identify members for referral to case management, health plans examine a combination of factors, such as medical condition or diagnosis, type of treatment being given, level of resource utilization, and cost of healthcare. The utilization review process produces the greatest number of case management referrals. However, health plans also rely upon a number of other referral sources, such as network providers, institutional discharge planners, employers, member services staff, disease management staff, and plan members.

Additional data about potential candidates for case management comes from pharmacy and laboratory reports, claims reports and computer-based risk assessment models.

To screen large member populations and determine individuals whose outcomes might be positively influenced by case management, health plans conduct health status assessments by mail or telephone. Health plans also inform network providers about the services and advantages of the case management program and encourage these providers to recommend case management when appropriate. Some health plans review claims reports or conduct claims system queries to identify patients whose diagnoses or use of prescription medications indicate a potential need for case management. Claims system queries can also determine when members reach specified trigger points such as a certain length of hospital stay or total claims dollars incurred within a given period of time.

Case identification is a process that determines which members may be appropriate candidates for case management. The greatest number of case management referrals comes from:

member services staff

disease management staff

the utilization review (UR) process

claims reports

Answer=C

Health plans also use computer-based health status assessment models designed to screen their member populations for individuals who may be candidates for case management. A health plan can collect encounter-based diagnoses from office visits, urgent care, emergency room visits, and inpatient hospital stays, and classify diagnoses according to (1) clinical attributes such as cause and severity of the condition and (2) the most likely course of care. With this information, the health plan can predict with some degree of certainty which diagnoses have a relatively high expense risk compared to others and which are likely to have better outcomes with case management.

In addition, disease management programs may stratify patients according to the severity of their conditions. Members who meet specified clinical criteria are assigned a case manager. The purpose of proactively identifying the need for case management is to begin treatment at an early enough stage in the disease to halt or slow disease progression and thus reduce the need for major medical interventions.

Because the largest referral source for case management is the utilization review process, the interaction between UR and case management is critical. In some health plans, utilization review nurses and case managers routinely review case histories

and collaborate to identify members who might benefit from case management. In other health plans, UR nurses simply refer members to case management. Sometimes, case managers review UR files to identify appropriate candidates for case management, consulting with UR staff to obtain additional information as needed.

Nurse reviewers often identify case management candidates based on diagnostic codes, type of treatment being provided, other existing health problems, utilization data, or total medical expenses incurred. Indicators such as those listed below may help identify members who would benefit from case management:

Catastrophic illness or injury such as premature birth, AIDS, stroke, head or spinal cord injury, severe burns

Multiple hospital admissions in a short period of time, e.g., three or more admissions within a six-month period

Extensive utilization of services A member who has incurred a specified amount of medical expenses within a

given period of time A variety of practitioners consulted on a seemingly straightforward case Extension of a course of care or early release from a seemingly appropriate

level of care

However, objective indicators like the ones listed above do not always lead to case management. Consider two members who have incurred high amounts of healthcare expenses. A closer look might reveal that the first member obtained successful major surgery with no post-operative complications and an excellent prognosis. The second member may have incurred the same amount of expenses through a variety of healthcare encounters that when examined together indicate a serious underlying problem that is likely to result in a catastrophic illness. Even though comparable claim amounts have been paid, the latter member would probably be selected for case management, while the former would not.

Also, a seemingly straightforward diagnosis-which might not at first seem to justify case management in terms of severity, complexity, or cost-sometimes leads to case management because of a combination of factors. For example, a diagnosis of cellulitis, an inflammation of connective tissue, might not raise any red flags. However, upon closer examination, the nurse reviewer might discover that this member has had diabetes mellitus for 15 years, is a heavy smoker, and underwent coronary artery bypass graft surgery three years earlier. Because of these additional factors, the member might be at high risk of amputation and therefore be referred to case management, even though the initial diagnosis would not have led to this decision.

Assessment

Case assessment refers to the collection and evaluation of medical, financial, social, and psychosocial information about a member's situation. After case identification, the case manager contacts the member and the member's family, the

treating physician, and, if applicable, the healthcare facility where the member is confined. The initial contact, often made by telephone, is to explain the case management process and to begin the initial needs assessment. An initial needs assessment is an information gathering and reporting activity conducted by the case manager to provide an understanding of the patient's condition.

Among other things, the initial needs assessment indicates whether or not a member would benefit from case management or perhaps from a less comprehensive medical management initiative, such as healthcare education. Invariably, the case identification process identifies some cases that are not appropriate for case management. For example, after an initial needs assessment, a heart-attack patient, identified as high risk based on his age and history of coronary artery disease, might be found to be without symptoms, fully informed of his condition, practicing recommended preventive and self-care, and regularly visiting his physician. A comprehensive case management plan would not add much value for this member, who would probably benefit as much from a simple referral to a cardiac exercise program.7

Before beginning the initial needs assessment, the case manager obtains consent to proceed with the case management process from the member or, if the member's condition prevents this, from the appropriate relative. When the initial needs assessment confirms the potential value of case management, the case manager proceeds with a thorough assessment of the member's situation, obtaining information from a variety of sources, such as the member, the member's family, healthcare practitioners, health plan reference material, and general resources. The case manager gathers information about the medical diagnosis, prognosis, past and present treatment, proposed course of care, short- and long-term goals, and available provider options.

The case manager also assesses the member's medical history, background, skills, attitude, support network, home environment, and so forth to determine the need to resolve potential problems or to leverage favorable circumstances. The following examples illustrate some of the factors considered by the case manager:

If the member has been receiving treatment for several years for a condition that has shown no significant signs of improvement, the case manager, in conjunction with the physician, would investigate the reasons.

If the member is not compliant with the planned course of care, the case manager would try to determine the cause.

The case manager notes the level of interest displayed by the member's family in providing assistance and support.

If home care is being considered, the case manager helps determine whether medical treatment can be provided effectively and safely and whether the patient is cognitively ready for such a move; also, the case manager makes sure that a physical assessment of the home is completed to address architectural barriers.

Planning

The case management plan establishes goals for the member's short-term, intermediate, long-term, and ongoing needs. These goals focus on obtaining optimal medical outcomes, appropriate utilization of resources, and quality-of-life improvements. For each goal, the case management plan identifies accountable individuals and describes how needed services and supplies will be procured and coordinated. In addition, where appropriate, the plan identifies potential barriers to attainment of the stated goals and ways to overcome them.8

Typically, the case manager works with the treating physician(s) to explain to the member and the family all available healthcare options. An important aspect of case management is to empower members, enabling them to be active participants in the decision-making process. Another important function is to determine if any other healthcare professionals might add value to the member's care. For instance, the case manager or physician might consult a pharmacist who has experience with a particular condition to obtain recommendations for possible pharmaceutical alternatives to an invasive and costly surgical procedure.9

Once the case manager, physician(s), member, and family agree upon the plan, the case manager prepares an initial report to describe it. This report also incorporates information gathered during the case identification and assessment steps. The case management plan also includes the case manager's assessment of whether needed services are covered benefits and the value of both covered and noncovered services listed in the plan. We describe case management reporting in more detail later in this lesson.

Implementation/Monitoring

Once there is agreement on the proposed course of care, the case manager is ready to begin implementing the plan. The main features of implementation are coordination and monitoring. By coordinating and monitoring activities, the case manager can facilitate timely care in the most appropriate setting, while avoiding unnecessary or duplicative services. Monitoring activities may include concurrent UR if a member is an inpatient at a hospital or other healthcare facility.

The case manager notifies the involved healthcare providers, healthcare resources, and community-based resources, as well as the member and the member's family to initiate the case management plan. For example, if the member is scheduled to receive home healthcare after being discharged from the hospital, the case manager informs the member and the member's family and makes the appropriate arrangements with the hospital and the home healthcare agency in advance. As the discharge date approaches, the case manager follows up with all involved parties to make sure the care is available when the member arrives home. In this way the case manager facilitates referrals and the transfer of care among various providers.

Throughout the course of treatment, the case manager monitors and documents the member's progress to determine if the stated goals are being achieved and to

confirm that the original goals remain appropriate. The case manager maintains rapport and communication with the member and providers to address plateaus, improvements, relapses, and depressions. Unexpected events are immediately addressed. As the patient's condition evolves, new measures of care may be needed and the care plan may require adjustments or even redevelopment. Consequently, the case manager periodically reexamines the advantages, disadvantages, and costs of different options. The case manager should also investigate any new treatments that might prove beneficial to a member's condition.

To help determine when and what types of modifications may be necessary, the case manager asks questions such as

How well is the treatment working? Does the member's disease course align with the expected course for this disease? What, if any, complications have developed? How is the family coping? Does the caregiver need a rest?

How frequently the case manager reviews the course of care and the member's progress depends on the medical condition.

As a case progresses, the case manager follows up to make sure the member is adhering to the course of care prescribed by the physician and that there are no unintended consequences. If the outcome is uncertain or the member's condition seriously deteriorates, the case manager increases attention to the psychological and emotional needs of the member and immediate family.

Evaluation

Ultimately, the case management team determines when to release the member from case management, by evaluating whether

The desired treatment goals have been met Case management services would no longer have an appreciable impact on

outcomes

Obviously, the services provided by the case manager to the member and family also end if the patient dies or is no longer eligible for case management coverage. Regardless of the reason, after case management ends, the case manager performs a final evaluation of the overall effectiveness of the case management services that were provided. The evaluation of case management for a particular member focuses primarily on the effect of the case management services on quality issues (such as healthcare quality, member and family satisfaction, and continuity of care) and costs. The evaluation report usually includes the following elements:

A brief summary of the reason for case management of the member A summary of the case management and medical services rendered Actual charges incurred for the care and the case management services

Cost savings that resulted from the case management (e.g., reduced utilization of services, products, equipment, and facilities during the episode of care, and negotiated discounts with healthcare providers)

Reason for release of the patient from case management (e.g., improved medical condition, case management no longer adds value to care, death of patient)

The evaluation report may also include cost savings that are expected to result from the avoidance of potential charges in the future. For example, suppose that the case management plan provided disease management education for a patient with a chronic condition. If the education enables the patient to better manage the condition, the patient will be less likely to require emergency care or hospitalization for the condition in the future. However, future cost savings are difficult to accurately predict, and some health plans may not consider these savings in their evaluation of case management.

Aside from the cost/benefit analysis, the evaluation of case management services might also consider the extent to which the goals developed during the planning step were met during implementation. Another area of evaluation may be to determine how closely the treatment plan adhered to clinical practice guidelines (CPGs).

Case Management Reports

An essential aspect of case management is the documentation of pertinent information and preparation of reports, starting with the case identification step and continuing through assessment, planning, implementation/monitoring, and final evaluation, which concludes with a final report. For example, a report prepared after the initial assessment step would contain basic information such as the member's name, the date of occurrence, and the name of the treating physician, as well as detailed information about the member's condition and current course of care. After the planning step, the case manager would add information about the recommended course of care and would specify the goals of the case management plan.

Depending on the circumstances, a case manager might be called upon to prepare a variety of reports for different audiences. Reports might be used to keep the treating physician, health plan, and purchaser apprised of activities coordinated by the case manager. Because of the varied interests and backgrounds of each of these parties, the reports would likely vary. For instance, a report intended for a physician would contain much more clinical detail than a report intended for a purchaser. A report intended for a health plan or purchaser would focus on the value added by the case management services. In other words, what difference did case management make in terms of clinical outcomes, member satisfaction, coordination of care, or cost savings?

Strategies for Successful Case Management

To operate a successful case management program, a health plan must address several important strategic issues, which we examine in this section.

In-House Case Management versus Delegation

Some health plans have the knowledge, experience, and resources to develop and administer their own case management programs. Others obtain case management services from external entities, either as a stand-alone product or as part of a package of medical management components (e.g., case management plus utilization review and disease management). In some instances, external case management companies offer specialized programs such as care for high-risk pregnancies, cancer, Alzheimer's disease, stroke, AIDS, severe burns, mental illness, or substance abuse. Health plans may determine that it is quicker, easier, or more effective to delegate case management functions than to develop and maintain such capabilities on their own.

Integrating Case Management with Other Health Plan Functions

Case management improves considerably when integrated with other functions in the health plan. We have already seen how utilization review is used to identify candidates for case management. Member services and disease management programs can play a similar role. In addition, the provider relations area can help obtain the cooperation of providers. By communicating details of treatment plans to the claims administration department, case management can support the prompt, accurate handling of a member's claims payments. For example, communication between the case management function and the claims administration department can see that any negotiated savings are properly recorded and applied during claims processing. Health plans seek to establish procedures and lines of communication that take full advantage of these types of opportunities. 10

Staffing and Training

The scope and complexity of case management is challenging, to say the least. To perform effectively, a case manager must be knowledgeable in a number of different domains. For example, a case manager must be familiar with

Medical conditions and interventions to be able to evaluate treatment plans and make informed and creative recommendations

Psychosocial, benefit funding, vocational, and community resource issues Benefit plans and how benefits are paid to providers or members Legal, regulatory, and ethical issues associated with case management Utilization review processes and techniques

Further, a case manager must possess numerous skills such as

Research and analytical skills to obtain information from a variety of sources and to identify optimum courses of care

Interpersonal and verbal communication skills to collaborate with and gain the trust of patients, families, healthcare providers, medical suppliers, payors, purchasers, and community resources

Project management skills to expedite delivery of a variety of services and to identify and resolve treatment gaps that may arise

Writing skills to provide clear and complete documentation of all pertinent information

Computer skills to facilitate case identification, assessment analysis, and documentation

Many health plans hire nurses as case managers because of the obvious advantages of a medical background for monitoring medical conditions, providing health education and instruction, and planning care with treating physicians. Often, health plans look for nurses with a background in coordinating rather than administering care. To supplement a nurse's clinical background, these organizations provide additional training and job experiences that help develop essential nonclinical capabilities, such as benefit plan knowledge and familiarity with community-based resources.

Some health plans hire social workers as case managers, particularly if the people who rely upon their services tend to have socially or economically complex situations that would benefit from psychosocial care and access to community-based support. These organizations then provide their case managers with training and job experiences that help develop the medical and benefit plan knowledge essential to effective case management. 11

A team approach to case management can incorporate the skills of a nurse with the skills of a social worker, physicians, and other providers. Through periodic conferences, the case management team can share their experience and ideas.

To support the quality of case management, a growing number of health plans rely upon case management certification-a process similar to, though not as formalized as, the credentialing process for network providers-in which health plans obtain, review, and verify the credentials of prospective case managers. Health plans establish specific criteria with regard to certification, educational background, training, experience, and other qualifications and then use these criteria as the standard for case management hiring decisions. Figure 6A-2 lists the certification standards developed by the Case Management Society of America (CMSA), a non-profit society of case management professionals.

Similar to other types of medical management functions, the appropriate level of staffing for case management depends on the members and the nature of their medical conditions. For example, compared to commercial groups, Medicare and Medicaid populations usually require a higher ratio of case managers to members.

Another way to look at health plan staffing levels is by workload per case manager. For example, an entity whose cases tend to be extremely complex might consider an optimum workload to be significantly lower than other entities that provide case management services.

Other factors that determine staffing levels include

Scope of the case management services that are provided Amount of case management services rendered by hospitals, or other

providers Expectations of the purchaser

Telephonic versus On-site Case Management

Health plans must determine whether and under what circumstances case management will be conducted off site. Often, due to logistics, time constraints, and cost considerations, health plans choose to conduct case management without traveling to meet face-to-face with the patient and provider. This off-site process, commonly called telephonic case management, relies upon effective use of telecommunications and information management technology, such as telephones, fax machines, electronic mail, and computers.

Telephonic case management can be particularly effective for monitoring wellness, preventive, or follow-up care. For example, if a member is in critical condition, the case manager may begin monitoring the situation by making on-site visits, but later,

when the member's condition improves, the case manager may decide that off-site monitoring works just as well.

Some health plans elect to perform most of their case management on site. According to these organizations, certain situations require face-to-face visits, particularly those that are more complex or catastrophic or that involve members who are likely to ignore or forget self-care instructions. These health plans value the effectiveness of first-hand observations. For example, by visiting the member rather than merely placing a phone call, the case manager is much more likely to learn that the member is not taking prescribed medications. Any savings in administrative expenses that might have been realized by not meeting with the member would have soon disappeared if, because of failure to take the prescribed medications, the member's condition deteriorated and required additional care.

Health plans also rely upon on-site case management when they run into difficulties obtaining information from members, their families, or providers. For instance, a member who does not respond particularly well to requests for information over the telephone might be more likely to provide important information when the case manager meets with the member in person. When an on-site visit is not possible, the case manager may consult with the caregivers at the healthcare facility or with home healthcare personnel to obtain additional information.

Both types of case management have advantages and disadvantages, depending on the particular needs and circumstances of a health plan. As you might expect, each health plan tailors its use of telephonic and on-site case management to its organizational objectives (including cost considerations), to its capabilities, and to the nature of its member population. In addition, a health plan might base its approach on the preference of the group purchaser.

Information Management Systems

Information management systems are a critical element in the design and operation of case management programs. For example, health plans may develop or purchase software that integrates a variety of demographic, clinical, claims, and outcomes data from various locations throughout the healthcare delivery system to produce individual profiles. Based on these profiles, a health plan can determine which members are most at risk for major clinical episodes, increased utilization, or significant medical expenses. Similarly, health plans may use software programs to identify appropriate medical interventions and to help determine those that produce the best outcomes.

When case managers use computers for real-time access to information, they can share clinical, referral, and billing data with various members of the case management team, providing more timely and accurate services. New medical and telecommunications technologies make it possible for case managers to conduct off-site, virtual interviews or examinations and monitor the conditions of chronically ill members who are receiving home care. Once they obtain this

information, case managers can analyze and interpret the data, compare outcomes for different treatment plans, communicate information to providers, and continue to observe the member's progress. Case managers may also take advantage of Internet technology by providing members with a list of Internet websites that provide accurate, useful healthcare information.

Risk Management

Case management is a highly visible function that often deals with individuals who are seriously ill and who, along with their families, can be very emotional. Consequently, case management activities are exposed to the risks of negative healthcare outcomes, member dissatisfaction, bad publicity, and lawsuits. In this section, we examine methods that are used to reduce these risks.

Documentation

By documenting all pertinent research, analysis, discussions, and decisions, a case manager is better able to understand the member's situation and make appropriate recommendations. Also, in the event of a complaint or lawsuit, a comprehensive case management file can be used to support the health plan's position. For example, if the case management plan calls for discharge from the hospital, the file should include written documentation that the case manager or a qualified healthcare professional conducted an assessment of the risk of discharge using complete medical information and valid review criteria. 13

The case manager should also document any complaints from the member, the member's family, or healthcare practitioners and indicate the steps taken to address the complaints. All documentation should be objective and professional, avoiding any subjective conclusions, speculation, or personal opinions, and should recognize the possibility that the documents might be examined by a state insurance department or in a court of law. 14

Confidentiality and Disclosure Policies

Health plans develop confidentiality and disclosure policies and procedures to protect the privacy of patients and to avoid regulatory and legal risks. For example, many health plans have a policy that requires the case manager to obtain the patient's signature (or the signature of a family member) on a standard consent authorization form before developing a case management plan or before implementing a specific action as a result of the plan. A consent authorization form is a document that provides for the release of information to the case manager and gives the case manager permission to review case information with the healthcare practitioners and other applicable parties. This form usually includes a provision that the case manager will not share confidential information inappropriately. By obtaining a signed consent authorization form, the case manager avoids having to obtain the patient's (or a family member's) signature each time there is a need to obtain or share information. 15

Having a signed consent authorization form may protect the health plan from allegations of invasion of privacy. The use of this form is also consistent with accrediting agency requirements that health plans maintain confidentiality about medical care and protect a patient's right to privacy.

Early Intervention

One way that health plans may reduce the risk of poor medical outcomes and dissatisfaction from members, families, and providers is through early case management intervention. When case management begins in the early stages of a medical condition, it is more often perceived as evidence of the health plan's concern for the member's welfare. If, on the other hand, case management does not begin until after the member has incurred substantial medical expenses, it is more likely to be viewed as a tool to cut costs rather than improve outcomes.16

Appropriate Oversight of Delegated Case Management

When health plans delegate case management services, they should follow certain procedures to reduce the risk of legal liability. First, they should use a careful selection process that includes a thorough review of the potential delegate's procedures, personnel, and history. Once the delegate has been selected, the health plan should continue to monitor case management activities because the health plan remains accountable for the case management process. Finally, a health plan may reduce its risk by making sure that all of its plan documents clearly communicate to members, providers, and purchasers that the case management delegate is a separate, independent organization and not a part of the health plan.

Evaluating Case Management Programs

In addition to evaluating case management activities for individual members, a health plan also examines its case management program as a whole. By evaluating the entire program, a health plan can

Determine the overall impact of case management on quality and cost-effectiveness

Identify opportunities for program improvement Support efforts to convince providers and purchasers of the benefits of case

management Justify the continued operation of the programs

When performing these large-scale evaluations, health plans focus on the same types of issues addressed in the evaluation of specific case management plans: overall clinical outcomes, utilization management results, financial results, and member and provider satisfaction levels. Some organizations conduct internal audits of their case management programs. In addition, health plans establish specific performance measures such as those described below.

Clinical Outcomes

Health plans sometimes examine measures associated with specific medical conditions to help gauge the impact of their case management programs. For example, a health plan could measure the level of functional improvement among spinal cord injury patients enrolled in the case management program. Also, a health plan could measure the length of survival after diagnosis among AIDS patients receiving case management services.

Utilization Management and Financial Results

Health plans examine hospital days per member per month, average length of hospital stays, emergency department utilization, and medical expenses per member per month to help determine the impact of their case management programs on healthcare services utilized and the cost of those services.

Utilization Management and Financial Results

Health plans often document the effects of their case management programs through cost-benefit analysis. These studies, typically prepared on a monthly, quarterly, and/or yearly basis, establish a target ratio of medical expense savings to case management administrative costs. The medical expense savings are calculated as the difference between the actual medical expenses for patients under case management and the projected medical expenses for those same patients if they were not receiving case management services (Projected expenses without case management - Actual expenses with case management). For example, a health plan might have as an objective that its case management program produce an annual medical expense savings ratio of at least $6 saved for every $1 spent in administrative costs (often expressed as 6/1).17

Suppose that the health plan calculated the following costs for a particular month:

Administrative costs for case management ...............$20,000

Actual medical care expenses for patients under case management ...............$300,000

Projected medical care expenses for the same patients without case management ...............$430,000

The total medical expense savings for this month are $130,000 ($430,000 - $300,000) and the ratio of medical expense savings to administrative costs is 6.5/1, that is, $6.50 saved for each $1 of administrative cost ($130,000 ÷ $20,000). For this month, the health plan exceeded its objective.

Health plans also take into account the indirect savings that result from their case management programs. For instance, a case management program often frees up other medical management personnel who would otherwise have spent time, perhaps less efficiently, with members who were referred to the case management program.

The Stellar Health Plan used the following costs to calculate the medical expense savings ratio for its case management program:

Administrative costs for case management.....................................................................$20,000Actual medical care expenses for patients under case management............................... $175,000Projected medical care expenses for the same patients without case management......... $250,000

This information indicates that Stellar's ratio of medical expense savings to administrative costs is:

0.70/1

3.75/1

8.75/1

12.5/1

Answer=B

Satisfaction Levels

When members believe that a case manager serves as a true advocate for their needs, medical outcomes improve and customer satisfaction increases. Similarly, case management programs gain valuable and influential partners when providers feel they have the support of a professional and competent organization. Through member and provider satisfaction surveys, as well as member quality-of-life surveys, companies seek to determine the effectiveness of their case management programs from the perspective of these key stakeholders.

Regulation of Case Management

The regulation of case management occurs primarily at the state level and varies greatly from one state to another. Although all 50 states have at least one law that refers to case management, only a few states have laws that list specific requirements for a case management program. Some states have introduced comprehensive health plan legislation that recognizes and distinguishes between activities such as utilization review, disease management, and case management. However, other states view case management as part of utilization review and, therefore, subject to state regulations for UR. Very few state laws address the quality management aspect of case management. 18

Other state laws and regulations from insurance or health commissions may influence a health plan's approach to case management. States that require health plans to submit to periodic independent quality audits are likely to examine case management programs. In addition, states may require health plans to demonstrate case-oriented quality monitoring systems used to assess the care provided to individual members. Such requirements may be satisfied, at least in part, by case management programs.

Because case managers work closely with members, healthcare providers, and medical records, one of the most important issues surrounding case management is the confidentiality of medical information. Health plans must demonstrate to regulators that their case management policies and procedures adequately protect the privacy of members. In addition, most states consider case management files to be medical records that must be retained for a specified length of time, typically five years or the period during which lawsuits may be filed in that state, whichever is longer. 20

Requirements that apply to care provided in connection with certain diseases sometimes affect case management services. For instance, in some states, HIV counseling services, which might be part of a case management plan, cannot be provided to an individual prior to testing for the disease, unless the individual receives an explanation of the test and gives informed written consent.

The regulation of case management occurs primarily at the state level. With respect to state laws on case management, it is correct to say:

that most states have laws that list specific requirements for case management programs that most states consider case management files to be medical records that must be retained for a specified length of time that most states have specific regulatory requirements for the licensure or certification of case managers

all of the above

Answer=B

Because case managers often work with seriously ill or injured members, they must also be familiar with the Americans with Disabilities Act, as well as other federal and state laws that protect the rights of certain individuals.

Although there are currently no state laws or regulatory requirements for licensure or certification of case managers, voluntary certification is available from the Commission for Case Management Certification, as described earlier in this lesson. Also, because case managers are often drawn from a variety of different professions (e.g., nursing, social work, physical therapy), they may be required to maintain applicable licensure in their professional areas.

Accreditation Issues for Case Management

Although not all accrediting agencies specifically address the case management process, they do address issues that are critical to case management, such as coordination of care, discharge planning, and confidentiality. Recognizing the growth and value of case management, URAC maintains specific accreditation standards for organizations that perform case management. These standards, which apply to both on-site and telephonic services, address staff structure and organization, staff management and development, information management, quality improvement, oversight of delegated functions, organizational ethics, and complaints. URAC's case management organization standards may be applied to any entity that performs case management functions, whether a health plan or an organization that provides only medical management or case management services. Among other things, URAC's standards require companies to

Establish oversight and reporting requirements Specify the delivery of services, including a description of the delivery model for

case management services, the personnel conducting case management services, and the population served

Establish guidelines for reasonable caseload and employ sufficient personnel to provide services

Have licensed physicians available for consultations with case managers Employ case managers who have appropriate qualifications that demonstrate their

ability to practice case management Verify licensing and credentials of new hires and re-verify at least every two

years Establish a policy for records and information management that addresses storage,

transfer, destruction, accuracy, and confidentiality Disclose to patients information concerning the nature of the case management

process, the circumstances under which information may be disclosed to third parties, and the availability of a complaint resolution process

Develop for every individual who receives case management services a case management plan that meets specified criteria

Implement a quality improvement program to monitor and evaluate the effectiveness of the case management program21

Conclusion

Case management provides the means for a health plan to link and coordinate a variety of medical management activities in order to arrange better care for individual members who have extensive or complicated healthcare needs. The cost savings that may result from case management often benefit both the member and the health plan.

AHM Medical Management: Disease Management

Pg 1 to 58

Disease Management

Self-Care and Decision Support Programs

After completing the lesson Disease Management , you should be able to:

Distinguish between disease management and case management Explain why health plans establish disease management programs Describe the types of organizations that provide disease management Explain the decisions a health plan must make to implement a disease

management program

Describe four approaches to integrating information for disease management programs

Case Management

Introduction

During the late 1980s and early 1990s, health plans noticed that healthcare costs were rising once again in spite of their efforts to achieve cost-effectiveness while delivering high-quality healthcare. Looking more closely at these healthcare costs, health plans realized that a large percentage of costs came from a small percentage of their enrolled populations-members diagnosed with one or more chronic conditions.

A recent estimate indicates that costs for the care of patients with chronic diseases account for 50 percent of total healthcare expenditures. 1 Most often, these costs result from emergency department visits, inpatient hospital care, or other interventions performed when an illness is in an advanced stage or when complications (possibly preventable) of a chronic condition arise. Such costs take a toll on the purchaser, the health plan, and most importantly the patient.

To address these costs and improve the health of members with chronic conditions, health plans, pharmaceutical companies, and other organizations developed disease management programs. Today, over 160 companies offer some form of disease management. 2

What is Disease Management?

Disease management, sometimes called disease state management, is a coordinated system of preventive, diagnostic, and therapeutic measures intended to provide cost-effective, quality healthcare for a patient population that has or is at risk for a specific chronic illness or medical condition. The goal of disease management is to

provide comprehensive management of a chronic disease across all healthcare delivery settings and providers to improve a patient's health status. Note that the term disease management is somewhat misleading because disease management programs may focus on medical conditions that are not diseases, such as high-risk pregnancy, severe burns, and trauma, in addition to diseases.

Disease management is not the same tool as case management. As you learned in the lesson Case Management, the focus in case management is on responding to the needs of individual members for extensive, customized healthcare supervision. Disease management focuses the needs of a population for healthcare supervision. Disease management is a form of population-based healthcare as discussed in the lesson Quality Management.

In arranging for the delivery of services to their members, health plans may use case management and/or disease management. With respect to whether case management and disease management are forms of population-based healthcare, it is generally correct to say that:

both case management and disease management are forms of population-based healthcare

only case management is a form of population-based healthcare

only disease management is a form of population-based healthcare

neither case management nor disease management is a form of population-based healthcare

Answer = C

Many tools that have been previously discussed in this course manual, such as preventive care, self-care, decision support programs, and case management, are used in disease management. For example, a health plan member in a depression disease management program who attempts to commit suicide probably needs intense care supervision that addresses his or her individual situation. Such a patient would be a candidate for urgent case management under the disease management program.

Some disease management programs originated from pharmaceutical manufacturers' efforts to market drugs for specific diseases, but most of today's disease management programs go far beyond marketing initiatives. A wide variety of disease management programs are available, ranging from those that focus primarily on patient education to comprehensive programs that seek to influence the behaviors of patients, providers, and purchasers to reduce the occurrence and severity of diseases.

Why Do Health Plans Use Disease Management Programs?

Disease management programs may serve to improve both clinical and financial outcomes for healthcare services related to chronic conditions. Disease management also helps support a health plan's continuity of care and primary care efforts.

By identifying members at the highest risk for developing a particular disease or members who already have a particular disease and then implementing a disease management program, health plans can help patients and providers manage chronic conditions effectively to avoid acute, sometimes life-threatening, episodes. For example, diabetic patients are at increased risk for amputation and blindness. Clinical practice guidelines (CPGs) for diabetes disease management programs may recommend that primary care providers (PCPs) perform foot and eye examinations annually for diabetic patients. Detecting clinical changes early may prevent (or at least delay) the need for drastic treatment and the possible permanent impairment that often occurs after a complication has progressed significantly.

Disease management programs help health plans manage the health risks present among their member population. A disease management program for coronary artery disease (CAD) illustrates the concept of health risk management. A CAD disease management initiative focuses on the portion of a health plan's population that has or will develop CAD, which often causes patients to need extensive medical services. To reduce the health risks for these members, the health plan can identify susceptible members before the disease appears and encourage those members to modify their health-related behaviors. Hopefully, such behavior modification will reduce the occurrence of the disease. For example, people with high cholesterol levels are at increased risk for CAD. By proactively identifying members with high cholesterol levels who have other risk factors for CAD, a health plan can help those members and their providers manage their cholesterol levels and encourage them to make other lifestyle changes that may prevent them from developing CAD. In this way, the health plan may help reduce the risk that their members will need medical services for the care of CAD.

On the other hand, plan members who are identified with existing CAD can receive the care they need to slow the progress of their disease, thus reducing the need for expensive medical services to treat the acute manifestations of the disease. Such identification and prevention initiatives for members with established chronic conditions or diseases are considered tertiary prevention, as defined in the lesson Preventive Care Programs.

Some health plans have reported that disease management programs also pay off in terms of (1) overall reductions in the utilization of medical resources and (2) dollars saved by health plans and purchasers. For instance, as we discuss in Insight 7A-5 later in this lesson, a pediatric hospital in Atlanta has experienced an 85 percent decrease in emergency department visits and a 78 percent decrease in unscheduled hospital admissions for children with asthma who participated in a disease management program. As an example of cost savings, one health plan expects to realize annual net savings between $250,000 and $500,000 from its disease management programs for asthma and chronic obstructive pulmonary disease for its HMO members. 3

http://www.educode.com/Images/ahm540_7A_07p.htm

The following statements are about the use of disease management programs by health plans. Select the answer choice containing the correct statement:

One impact that disease management programs have had on health plans is that they have significantly reduced the problem of patients with comorbidities.

In general, disease management programs focus only on medical conditions that are considered to be diseases. At the present time, participation in a health plan's disease management programs is required for all at-risk members. Using disease management programs, a health plan can identify susceptible members before the disease appears, or identify members already diagnosed with a disease or condition and encourage those members to modify their health-related behaviors.

Answer=D

Insight 7A-1 discusses how one healthcare system attempts to measure the costs and benefits from its disease management programs.

Although conclusive results demonstrating the impact of disease management on patient outcomes and cost management are not currently well established, disease management programs hold the promise of improved outcomes and lower costs in the long run. Disease management programs may realize success in lowering costs and increasing patient, provider, and purchaser satisfaction because they can

Encourage and enable patient self-management of a chronic condition Help providers by supplying information about specific diseases and effective

treatment methods Save purchasers money by reducing the amount or intensity of healthcare

services required and, for purchasers who are employers, reduce absenteeism and improve productivity

Disease management may seem very intuitive and some people may ask, "Don't physicians already perform disease management for patients with chronic conditions?" The answer to this question is yes and no. Yes, physicians and other providers have been managing individual patients' chronic conditions for years. However, providers vary in their approaches to a particular chronic disease. For example, in 1995, the Agency for Health Care Policy and Research (AHCPR, now the Agency for Healthcare Research and Quality) issued CPGs for CAD that recommend cardiac rehabilitation as a standard of care. Cardiac rehabilitation is a medically supervised preventive program incorporating exercise, dietary changes, and medications to limit heart damage, thereby reducing the risk of death and helping patients resume normal lives. Yet, despite this recommendation, less than one-third of the patients who could benefit from cardiac rehabilitation participate in a rehab program. 4 Further, not all providers are able to offer patients a full range of disease management support services, such as diabetic education or pneumonia vaccine reminders for congestive heart failure patients.

Of course, each patient is unique and some variation in care by providers is necessary to accommodate the needs of individual patients. But health plans seek to support the consistent use of basic treatment patterns that have been proven to produce the best outcomes for chronic illnesses, thereby reducing unnecessary variation in the treatment approaches of individual practitioners.

Disease management programs may also satisfy regulatory requirements. For example, some states require that health plans cover diabetes management including insulin, glucose-monitoring devices, and other supplies. At least one state requires that educational information about diabetes be supplied to diabetics. A diabetes disease management program may be a useful tool to help a health plan deliver the required services and supplies to its diabetic members.

A health plan's disease management programs may help the organization meet accreditation agency standards for quality improvement initiatives. For instance, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) has standards relating to the continuum of care, education and communication, and health promotion and disease prevention. The National Committee for Quality Assurance (NCQA) has a specific standard related to disease management for chronic conditions and high-risk pregnancy.

The initiatives included in disease management programs can also affect evaluations of a health plan's performance by other external entities. For example, the Health Plan Employer Data and Information Set (HEDIS) compiles

health plans' results for effectiveness of care measures such as eye exams for diabetics, beta blocker treatment after a heart attack, and prenatal care in the first trimester. 5

Who Provides Disease Management?

Health plans, hospitals, external organizations that specialize in disease management, pharmaceutical manufacturers, and pharmacy benefit managers may all offer disease management services. Some health plans establish and maintain their own disease management programs, while others delegate some or all aspects of disease management to network providers or other external entities.

Hospitals sometimes develop disease management programs to improve the quality of care for their communities, to meet accreditation standards, and to demonstrate to health plans the quality of care they provide. One strength of hospital-based disease management programs is that they interface with members when they are ill, rather than when they are feeling more healthy, which may result in members being more receptive to ways to become healthy, including disease management efforts. Health plans sometimes choose to delegate disease management activities to a hospital, particularly if the hospital's disease management program already has a good reputation in the community.

Companies whose main business is conducting disease management programs also offer disease management services to health plans and employers. These disease management companies may accept the financial risk and the responsibility for clinical and administrative management for disease populations. A health plan that uses a disease management company basically transfers the authority to care for a population with a specific disease to the external company. This type of delegation is often referred to as a carve-out.

The term carve-out carries several different meanings in the healthcare industry. In a general sense, a carve-out refers to the separation of a medical service (or a group of services) from the basic set of benefits in some way, either through the use of a separate network or delivery system or through a different compensation method for providers. For example, a health plan may carve out its HIV/AIDS disease management program from its other medical services by contracting with an external company to develop and manage the HIV/AIDS program. The health plan still retains accountability for the HIV/AIDS program. This type of carve-out is the one that is relevant to our discussion of disease management.

In another form of carve-out, a purchaser carves out a type of service from its main contract with a health plan. For this type of carve-out, the purchaser contracts with the health plan for a basic medical benefit package, but also contracts with another entity for specified services, such as a managed behavioral healthcare organization (MBHO) for behavioral healthcare services. The health plan has no involvement with the delivery of services under a purchaser carve-out.

Often under a carve-out arrangement, patients with a chronic condition do not visit their own PCPs for treatment of the disease. Because the PCP is typically not involved in the care process with a carve-out, some industry observers express concern that primary care cannot be as effective because the disease management program interferes with the continuity of care.

One new approach to arranging disease management that may address concerns about the continuity of care is called a carve-in. A disease management carve-in is a partnership between a specialty disease management company and a health plan in which the disease management company acts as a consultant to the health plan's network providers who treat a particular condition. 6 With a carve-in, a patient maintains his or her existing relationship with a PCP for all care, including disease management. For example, Diabetes Treatment Centers of America offers a carve-in program that supplies nurses, dietitians, and health educators to work within health plans and other healthcare organizations to improve diabetic care. 7 In addition to improved continuity of care, a carve-in approach may result in greater provider buy-in and increased patient satisfaction with the concept of disease management. However, some providers are concerned that under a carve-in arrangement, a health plan might ask PCPs to provide additional care without adjusting their existing workloads and without providing additional support resources. 8

One approach a health plan can take to arranging disease management is called a disease management carve-in. One correct statement about a disease management carve-in is that it typically:

is considered by health plans to be a value-added service rather than a true disease management program describes an arrangement whereby a health plan creates a separate subsidiary to perform disease management services allows a member of a health plan to maintain his or her existing relationship with a PCP for all care, including disease management consists mainly of educational materials provided at no additional charge to the members of a health plan

Answer=C

Pharmaceutical manufacturers offer different levels of disease management. Some disease management programs developed by pharmaceutical manufacturers involve the use of their products, but this trend is changing as manufacturers develop programs that focus on managing diseases instead of using specific products. In some instances, pharmaceutical manufacturers' disease management program offerings consist largely of educational materials provided at no additional charge to the members of any health plan that is a national account client for the manufacturer's drugs. Such offerings are not true disease management programs but value-added services. A few pharmaceutical manufacturers have created separate subsidiaries to perform disease management services. Such companies indicate that

disease management is a business unrelated to their pharmaceutical manufacturing. These subsidiaries charge customers for any disease management services provided to the health plan. Often, the subsidiary and the contracting health plan share in the savings generated by the disease management program. 9

Pharmacy benefit managers (PBMs) also offer disease management services to health plans. For example, PBMs may assist in managing chronic conditions by developing formularies, performing drug utilization review, and providing other services to manage drug use by health plan members.

The disease management programs offered by PBMs are similar to those offered by pharmaceutical manufacturers. One important asset PBMs offer related to disease management is a comprehensive database that captures almost all prescription transactions of a health plan's membership. Prescription data is entered into the database directly from the pharmacy. The system can then deliver patient precautions and reminders that the pharmacist can print out for patients when they pick up their prescriptions.

Establishing a Disease Management Program

Many activities are necessary to the establishment of a disease management program. For example, a health plan must

Determine the medical condition to be targeted Determine the type of disease management program it will establish (i.e.,

coordinated outreach model or case management model) Examine any legal considerations that may affect the program (e.g., state privacy

laws, licensing requirements, etc.) Determine infrastructure necessities (e.g., information management needs and

financial resources) Develop a plan for the program Implement the disease management program

In the following sections, we discuss each of these activities in more detail. Note that the planning for the program (the fifth item in the list above) may include the decision to delegate some or all aspects of the disease management program to a provider or other external organization that offers disease management services. In this situation, the delegate may plan and execute the specific steps for implementation. We explore issues related to delegation (sometimes called "build or buy" issues) for disease management after the discussion of the six basic activities.

Choosing Conditions to Target

Most health plans select a chronic condition for a disease management program based on the prevalence of a condition or high utilization and costs associated with the condition. Some health plans may use criteria such as a high degree of unnecessary practice variation in the treatment as a factor in choosing a particular

condition to target with a disease management program. Other health plans may examine the disease management industry's results in managing a particular condition to choose conditions appropriate for disease management.

The list of diseases and conditions for which disease management may be effective is constantly expanding. Many health plans have disease management programs in place for common, costly diseases such as asthma, diabetes, and congestive heart failure. Figure 7A-1 shows some diseases and conditions for which disease management programs are currently available.

Sometimes a health plan will initially plan to target one particular disease, but further research may reveal that another disease is a better candidate for disease management. For example, Blue Cross Blue Shield of Georgia (BCBSGA) wanted to be sure that its disease management efforts yielded the greatest possible return on its investment. Initially, BCBSGA wanted to expand an existing asthma disease management program; however, a quantitative analysis of BCBSGA's population and data showed that the company would have a greater impact if it concentrated on any one of five other diseases. BCBSGA adjusted its disease management efforts to incorporate the results discovered by the quantitative analysis.10

One disease management company suggests comparing data concerning utilization patterns for physician, hospital, and ancillary resources for different conditions to identify the disease management programs that will have the greatest effect on clinical, financial, and member satisfaction outcomes. This company poses the following questions in its data analysis:

How many people in a member population does a disease affect? What is the demographic profile of these patients? What morbidities and comorbidities are associated with the disease? How much do the disease and related morbidities cost to treat? What preventive measures are available, how effective are they, and how much do

they cost? How much healthcare expenditure savings would be realized by taking preventive

measures? What will improve patient outcomes and functional status?11

Comorbidity can have a huge impact on the effective implementation of disease management programs. Comorbidity refers to the presence of a chronic condition or added complication other than the condition that requires medical treatment. 12 One of a health plan's greatest challenges in disease management is designing programs that will address members' comorbidities. For example, a member with diabetes may also have coronary artery disease. A health plan must determine whether this member will be enrolled in two separate disease management programs or one disease management program that addresses both diseases.

Some industry analysts stress the importance of choosing a disease for which the disease progression and cost drivers are well understood. 13 Another important factor in choosing a disease for disease management is an evaluation of the health plan's capabilities, strengths, and competitive business situation. Any disease management program must fit in with the organization's strategic mission. Competition may also play a role in selection of diseases to target. If other health plans in a particular market offer a disease management program for pediatric asthma, a health plan without such a program may decide to add a pediatric asthma disease management program to make its services more comprehensive and appealing to local purchasers. Health plans should also consider purchaser concerns when choosing diseases to manage. The management of diseases or medical conditions that typically contribute to employee absenteeism or low productivity may be attractive to purchasers.

Types of Disease Management Programs

Disease management programs to prevent or reduce the severity of a chronic condition often take one of two forms: the coordinated outreach model or the case management model. A coordinated outreach model program assembles and coordinates existing resources (such as educational programs and network providers) to establish a standard, comprehensive course of care for a population of patients with a particular chronic disease. The elements of this type of disease management program include

Identification of all plan members who have or are likely to have the disease or condition

Classes or written materials to educate members about the disease and to improve patient compliance with treatment

CPGs for providers treating the disease Methods for tracking the progress of patients with the disease

Telephone or mail outreach programs that seek to improve the utilization and quality of services provided aimed at providers and members

Home visits for individualized follow-up with patients are not a typical component of this model. 15

The case management model program is a disease management program that includes regular, periodic monitoring and management of individual patients' health status in their homes by a healthcare professional (typically a nurse). The nurse may make home visits or communicate via telephone with patients. Home visits allow the nurse to examine the patient, administer treatments, and assess needs for changes in the overall care plan. In this model, patients help determine their own long-term care plan, including an action plan if symptoms become worse. Based on the severity of the symptoms, the action plan may call for the patient to perform specified self-care measures, call a telephone health information line, or seek emergency care. 16

The case management model program is most appropriate for patients whose disease type and severity often result in acute episodes in which emergency care and/or hospitalization are required. The home intervention component may either prevent acute episodes or treat exacerbations before they worsen to the point that the patient must be hospitalized. Congestive heart failure is an example of a condition that may be appropriate for a case management model approach. 17

Disease management programs designed to prevent or reduce the severity of a chronic condition often take one of two forms: the coordinated outreach model program or the case management model program. With respect to these two forms, it is generally correct to say that the:

coordinated outreach model program includes home visits for individualized follow-up with patients coordinated outreach model program aims its strategies at members but not at providers case management model program allows patients to help determine their own long-term care plan case management model program aims its strategies at providers but not at members

Answer=C

Both the coordinated outreach model and the case management model incorporate strategies aimed at providers and members. Strategies directed toward providers include provider education, the provision of CPGs, and provider profiling. Strategies for members include education on self-care such as instruction on compliance with drug therapy instructions, performance of clinical monitoring tests at home, and modification of diet and other behaviors. 18

Legal Considerations

Establishing a disease management program has a variety of legal implications. Health plans must see that they or their providers have appropriate licenses for the services they offer under a disease management program. For example, a pediatric asthma disease management program that uses telephone triage lines staffed by nurses must verify that the nurses are appropriately licensed in all the states in which the disease management program participants reside. Because disease management incorporates case management, regulatory requirements that affect case management may also impact a disease management program.

Earlier in this lesson we discussed how some state regulatory requirements can be met by disease management programs. Health plans' disease management programs must also comply with federal laws and regulatory requirements. For example, as you will recall from the lesson Environmental Influences on Medical Management, a federal law called the Newborns' and Mothers' Health Protection Act of 1996 (NMHPA) requires that health plans cover hospital stays for childbirth for both the mother and the newborn for at least 48 hours for normal deliveries and 96 hours for cesarean births. Disease management programs targeted to manage pregnancy must not interfere with or discourage members from availing themselves of this mandated coverage. State and federal laws also guarantee the confidentiality of medical information and should be scrutinized before a health plan sets up its information management system for its disease management program.

In addition, health plans that contract with federal or state governments to cover Medicare or Medicaid populations must comply with increasingly specific quality improvement requirements. For example, Medicare health plans must follow the performance measurement and improvement standards outlined by the Centers for Medicare and Medicaid Services's (CMS) Quality Improvement System for Health Plans. Some of these standards impact health plans' disease management programs.

Infrastructure Requirements

A health plan that decides to establish its own disease management programs must be certain that it has the necessary infrastructure to develop and support its programs. Infrastructure requirements include

A firm commitment from the health plan's upper management for support of the disease management program

Financial resources to absorb the typically high start-up costs of a disease management program and ongoing operational costs

Information management systems and support staff to meet the information needs of the disease management program or outside information management vendors to provide such services

Information Management Needs

Information management is a core requirement for a disease management program. Disease management programs need information to

Identify populations at risk for diseases or who are known to have the disease Stratify at-risk populations into high-risk, low-risk, and other risk categories for

management Track cost, utilization, and types of services provided Determine patient satisfaction using surveys and other tools Determine the clinical and financial outcomes of the disease management

program

To meet their information needs for disease management, many health plans are using one of the following four approaches to integrate the information that is housed in separate databases or in separate organizations: (1) an integrated data warehouse, (2) a dual database, (3) a hub-and-spoke model, and (4) outsourcing. 19

Integrated Data Warehouse. An integrated data warehouse seeks to combine all existing information from all data sources (e.g., medical, laboratory, pharmaceutical) into one comprehensive system. An integrated data warehouse can support many disease management functions; unfortunately, it may take years for a health plan to develop such a system. Other potential drawbacks to the data warehouse approach include the sluggishness of a system that has to sort through masses of information for a simple disease management query.

Dual Database Approach. A dual database approach involves creating a separate database that (1) pulls from the claims database only the information necessary to respond to queries and (2) formats the information for easy analysis. In effect, the health plan now has two databases-its existing claims database and the new analytical database. For example, a health plan might obtain medical coding and encounter data from the claims database and build a new database in order to identify or stratify populations at risk for diseases.20

Hub-and-Spoke Model. The hub-and-spoke model involves connecting multiple databases with a central interface engine that acts as an information clearinghouse. The multiple databases are the spokes, and the interface engine is the hub. The interface engine can query multiple databases to assemble a virtual clinical record that includes information on prescription use from a pharmacy database, diagnosis codes from a claims database, and lab and radiology reports from their respective databases.21

Outsourcing. Outsourcing, which involves hiring outside vendors to provide data integration services, is another information management option. Plans that outsource their information management processes for disease management provide vendors with pertinent data that the vendor then compiles into an integrated database. Often, the vendor provides the integration in conjunction with clinical analysis and risk-stratification services.22

In order to meet its information needs for disease management, Sibyl Health Plans is using an approach to integrating information that involves connecting multiple databases with a central interface engine that acts as an information clearinghouse. The interface engine can query multiple databases to assemble a virtual clinical record that includes information on prescription use from a pharmacy database, diagnosis codes from a claims database, and lab and radiology reports from their respective databases. This information indicates that Sibyl most likely is using an approach to integrating information known as:

a dual database approach

a hub-and-spoke model

outsourcing

an integrated data warehouse

Answer=B

Because most health plans are just beginning to focus on disease management, few have information management systems that span across all care settings and include electronic encounter data, and the costs of establishing new, comprehensive systems such as those described above are high. A health plan must consider the cost of developing a disease management information system in relation to the potential medical cost savings and clinical improvement expected from the proposed disease management program.

Planning a Disease Management Program

Ideally, disease management will be a strategic initiative in the company's corporate business plan. Including disease management in the business plan emphasizes the organization's commitment to the process and its belief in the benefits that disease management can produce.

An organization that decides to offer a disease management program needs a plan for introducing and implementing that program. Planning a disease management program may include the following activities:

Setting clearly defined, achievable goals and benchmarks for the program Performing background literature reviews and research on effective programs and

treatment regimens Identifying network providers to be involved in the disease management program

design Determining how the disease management program will interface with providers

in the local community (e.g., Will PCPs perform disease management functions? Will outside providers with special training for the particular disease perform disease management? Will there be some combination of caregivers to administer the disease management program?)

Identifying local resources to partner with, such as hospitals or advocacy groups

Seeing that information management resources are available across all care settings to track patients' clinical progress, providers' adherence to CPGs, financial results, and satisfaction measures

Allocating resources for hiring staff for the disease management program (including clinical staff, program management staff, and marketing managers)

Designing the program itself (e.g., the processes and procedures that will be used to manage the disease including establishment of quality assessment and improvement measures, creation of patient educational materials, identification of outcomes measures to track)

Setting timelines for introducing the program to providers, purchasers, and patients

Determining criteria to be used in evaluating the success of the disease management program

Determining how the disease management program will work with existing preventive care, self-care, case management, utilization review, and quality management initiatives

Another essential element of a disease management program is a communications plan. Health plans need to plan how they will inform providers, purchasers, patients, caregivers, and other support staff about the disease management program and any program changes that occur. Health plans may use newsletters and conduct informational meetings at providers' offices to communicate disease management program goals and processes. A health plan's communications plan will also include ideas for a marketing strategy. The communications plan is important because it is the vehicle the health plan uses to obtain provider and patient buy-in into the disease management program.

Depending on which, if any, disease management activities that the health plan delegates to providers or other external entities, most of the planning activities listed above may be performed by a delegate rather than by the health plan itself. However, the health plan sets the overall goals and may establish other parameters for the delegate to follow in planning the program.

Steps in Implementing a Disease Management Program

The major steps required to implement a disease management program are

Determining the population to target with disease management Developing the CPGs to be used by providers in caring for disease

management patients Building providers' knowledge and support of the disease management effort Educating patients and encouraging patient self-management of the disease

We discuss these elements in the following sections.

How Health Plans Determine the Disease Management Population

Health plans use a variety of information sources to identify members with a particular disease and to stratify those members into risk categories for disease management purposes. Typically, health plans use enrollment data, claims data, pharmaceutical data, and diagnostic test results to identify chronic disease populations. Some health plans also review handwritten provider data contained in member medical records to obtain more information on their chronic disease populations.

Identifying populations with chronic diseases is easier with comprehensive, integrated information management systems; however, to date, few health plans have such systems in place. One stumbling block to such integration is patient privacy and confidentiality concerns. Another problem is lack of automation of provider information. Although more and more provider practices are automating their encounter data, the number of physician offices with computerized information that can be shared electronically with the health plan and other players in disease management is still low.

Once a health plan has developed a way to integrate its databases, it can identify members who are most likely to benefit from disease management by using an electronic clinical logic program. An electronic clinical logic program is a type of retrospective claims analysis tool that "relies on a series of user-defined clinical rules and algorithms to identify-based on patterns in available data-patients with (or at risk for) a particular chronic condition." 23 Not only can these programs identify members with a disease and those at risk, but they can also stratify the identified population into categories based on the severity of the disease. Stratification of members with chronic diseases is useful because it allows health plans to tailor their disease management programs to different target populations using different levels of interventions. For example, a member with a mild form of a chronic disease may benefit by receiving an educational mailing explaining methods to manage the disease. Direct contact by a disease management specialist and ongoing monitoring to help prevent acute manifestations of the disease may be more beneficial to members with a severe form of the disease. 24

Developing Clinical Practice Guidelines for a Disease Management Program

Developing and implementing CPGs is a core component of disease management programs. Some health plans create their own practice guidelines based on their review of past successes with courses of care. Others adopt CPGs created by the Agency for Healthcare and Policy Research (AHCPR, now known as AHRQ) or other organizations, then customize those CPGs to local needs with the input of local providers.

CPGs typically recommend specific clinical services that may be appropriate for a particular type of patient. Because disease management encompasses services from various types of providers delivered in various care settings, a CPG for disease

management may also include recommendations on who (e.g., physician, nurse, physical therapist) should deliver a particular service and where (e.g., in the hospital, in the provider's office, in the member's home).

Educating Providers and Building Provider Support

Successful disease management programs often involve providers in the disease management process from the very beginning. They seek providers' ideas about how to structure the program and, after implementation, ask for feedback on changes to be made. Such disease management programs communicate the goals of the program clearly and early to providers. One health plan vice-president explained the relationship between disease management and physicians in this way:

Physicians are rightly suspicious when someone wants to change the way care is delivered. It's important to help physicians understand that disease management programs are not replacements but supplements and complements to the services they already provide. 25

Most disease management programs provide some form of provider orientation early in the disease management development process. Some programs conduct a pilot program before instituting a system-wide disease management effort. Pilot programs can help convince providers of the results that disease management programs can produce.

One of a disease management program's most challenging tasks is convincing providers to modify their practice patterns. Health plans may benchmark providers' behavior and care methods against best practice performance data. Health plans can show providers if a gap exists between the most effective clinical course of care for a condition and the course of care the provider has followed in the past. Scientific evidence demonstrating that one therapy yields better outcomes than another is a great persuader for providers to change their practice patterns. 26 Two effective ways to achieve buy-in and continuing participation in a disease management program are

To inform providers about ways to change their practice patterns to benefit the health status of the chronic disease patient

To supply data to providers on outcomes that illustrate the impact of the suggested changes in the treatment of the patient

Insight 7A-2 describes how a disease management company supplies providers with tools to help them implement disease management procedures.

Many health plans use financial incentives to encourage provider participation and compliance with disease management program initiatives. For example, a health plan might pay a flat fee to PCPs for appropriate referrals into a disease management program for congestive heart failure.

Providers who participate in a disease management program may realize the potential positive effects that disease management may have on health outcomes, patient satisfaction, and their practices. One approach to streamlining care that has emerged is called the group clinic, which is a medical appointment for a group of people who share similar medical and psychosocial issues. For example, group clinics have been used successfully with diabetic patients. The group clinic appointment is usually 90 minutes in length and is co-led by a physician and a behavioral healthcare professional. During the appointment, the physician writes or changes prescriptions for medications, orders tests and discusses test results, reviews charts and documents each patient's visit, answers medical questions, and discusses treatment options in the group setting.

As needed, the group clinic may involve a brief, private medical examination or individual discussion during group time. Patients can benefit from the group clinic by sharing similar experiences, learning about healthy lifestyles, and receiving support from peers with similar medical, emotional, and lifestyle concerns. Physicians benefit in terms of time by having fewer individual office visits and being able to deliver information about drug side effects or educational material to several people at once. 28

Educating Patients and Encouraging Patient Self-Management

Patient participation and compliance with program efforts are crucial for effective disease management. If a patient does not comply with a care regimen designed by a provider or disease management program, the disease cannot be managed. One industry source identifies four goals that a disease management program should ask members to strive toward in order to manage a chronic disease:

1. Recognize and report symptoms to their providers or case managers and participate in planning or revising treatment plans2. Comply with providers' instructions concerning medications or other forms of care3. Make lifestyle changes as needed to affect the progression of the diseaseM4. Follow up as scheduled with their providers or case managers to monitor compliance with treatment instructions or lifestyle changes29

To be successful in getting members to adopt and follow these four goals, members must understand the disease they have, its typical course of progression, and the impact lifestyle changes and medications can have on the severity of the disease. Patient education about specific diseases has proven successful in encouraging member participation in and commitment to disease management.

Health plans use various tools to educate members about diseases, including

Mailing educational information directly to a member identified as having a disease or being at risk for a disease, or mailing such information to PCPs for distribution

Conducting group classes led by a nurse or other healthcare provider concerning self-management of a disease in locations such as providers' offices, schools, or places of employment

Establishing telephone information lines staffed by nurses to answer members' questions about the disease

Providing self-management kits that may include educational videotapes or pocket reference guides as well as daily diaries and other tools useful for managing the particular disease

Facilitating direct contact with providers who explain the disease verbally and provide members with written material that gives more detail about the disease

Providing information over the Internet and/or suggesting reliable Internet resources for disease-specific information

Facilitating membership in local or national support groups for particular diseases or conditions

Co-sponsoring educational events with local organizations or chapters of national organizations such as the American Cancer Society

Insight 7A-3 describes a unique method of educating children about chronic diseases using video games.

Once members have been educated about the disease, they need motivation to address the components of the disease over which they can exercise some control. This process is called self-management. Some members are self-motivated to participate in a disease management program and follow the regimen outlined under the program. These members see the benefits to themselves in terms of their sense of regaining control of their health, improving the quality of their lives, and saving money by avoiding deductibles and copayments for acute services. 30

However, not all members are intrinsically motivated to participate in or follow the course of treatment prescribed by disease management programs. For these members, external incentives and information on the potential benefits of self-management and the consequences of not managing the disease may help sway them to participate in a disease management program.

Some disease management programs use negotiated contracts that outline the roles of the patient, caregivers, providers, or others involved in the disease management process. Patients formally sign the contract, agreeing to a particular series of actions to combat the disease. Either included in the negotiated contract or set forth in

another contract can be a series of rewards for patients who comply with their course of treatment. The rewards can be small gifts or "good behavior" commendations from the provider.31

Sometimes the influence of family, friends, spouses, co-workers, or significant others may encourage a member to enroll in a disease management program. These groups of people can become coaches and support resources for the member in following the disease management regimen.

Delegation Issues for Disease Management

Once a health plan decides to establish a disease management program for a particular condition, the health plan must decide whether to develop its own disease management program or delegate the program to a provider or other supplier of disease management services. To make this decision, a health plan should examine its strategic mission and answer the following questions:

Is unified, all-inclusive care a core concept of the health plan? What effect will the delegation have on continuity of care for members? Does the health plan have the human, information management, and

monetary resources needed to develop its own disease management program? Many disease management programs require the hiring of additional staff, such as nurse educators, physicians whose primary function is to implement disease management programs, and psychosocial support staff.

Does the health plan have the time required to develop its own program when competing health plans may already have a program in place?

If a health plan decides to delegate all or part of a disease management program, it needs to consider the following qualifications in selecting a disease management delegate:

What sort of financial arrangement will the delegate accept? o Will the delegate accept capitation as a payment method for disease

management? o Will the delegate accept a risk-sharing arrangement under which the

delegate agrees to manage a group of chronic disease patients? In this type of arrangement, the delegation contract sets forth an estimated total cost for managing the group and the delegate receives no payment until a predetermined reduction in medical costs is achieved. If the delegate's disease management program does not result in medical cost reduction, it loses money or has a reduced profit.32 These risk-sharing arrangements are sometimes referred to as financial performance guarantees. Sometimes a disease management delegate will agree to a performance guarantee under which payment for services is based on clinical results. Note that improved clinical outcomes may not immediately translate into medical cost savings.

How much experience does the delegate have with disease management in general and with the particular disease for which the health plan is seeking a disease management delegate?

What are the quantitative and qualitative results (e.g., financial, clinical, and member and provider satisfaction outcomes) the delegate has achieved with similar disease management programs for other clients?

What information does the health plan have about the quality of the delegate's work and the qualifications of its staff?

What processes does the delegate use for sharing clinical information with the health plan?

What CPGs does the delegate use? Are those CPGs current and how were they developed?

Health plans that delegate disease management must also understand their liability with respect to the actions of the delegate. The health plan is ultimately accountable for any delegated disease management activities. In many cases, the health plan can be held liable in a court of law for the actions of its disease management delegate even if the delegate appears to assume full risk for the program.

Evaluating Disease Management Program Results

Measuring outcomes allows a health plan to obtain information on the results of its disease management program as well as some idea of how well certain processes are working. Outcomes can be classified into three categories: clinical outcomes, member satisfaction outcomes, and financial outcomes. For example, did the disease management program improve the physical health or quality of life for members who participated in the program? A cost/benefit analysis may reveal if the disease management program saved money by reducing the overall number of emergency department visits or hospital admissions, for instance, due to acute asthma attacks or diabetic ketoacidosis. Were the savings offset by the start-up costs the health plan paid to establish the program?

Some clinical outcomes are labeled as true outcome measures while others are viewed as intermediate outcome measures. True outcome measures "demonstrate whether the intended results of the patient's care processes have been achieved." 33 Intermediate outcome measures demonstrate progress toward the intended results. To illustrate the difference between a true outcome measure and an intermediate outcome measure, consider a specific disease management program. A true outcome measure for a diabetes disease management program would be the percentage of diabetic patients who undergo foot amputations. An intermediate disease management outcome measure for this program would be the percentage of members who receive foot exams from their providers according to the recommended guidelines of the disease management program.

An example of a clinical true outcome measure for an asthma disease management program is the number of emergency department visits for acute asthma attacks. A clinical intermediate outcome measure for asthma may be the number of asthma patients who are appropriately using peak flow meters.

Outcome measures and process measures together help a health plan identify best practices. An example of an important process measure for a disease management program is the level of providers' adherence to CPGs. Once the health plan has this information and measures of clinical outcomes, it can determine whether the guidelines have impacted patient care. If the clinical outcomes do not reflect the projected improvements in participants' health status, the CPGs for the disease management program may need to be revised. Note, however, that some clinical outcomes of disease management, such as lowering the number of foot amputations for diabetic patients, may take years to show noticeable results and the health plan should factor such considerations into its expectations for outcomes. The process of reviewing and testing CPGs to see if they improve the care of patients with chronic diseases is called outcome validation. 34

The paragraph below contains two pairs of terms enclosed in parentheses. Determine which term in each pair correctly completes the paragraph. Then select the answer choice containing the two terms you have selected. Some clinical outcomes are labeled as true outcome measures while others are viewed as intermediate outcome measures. For a diabetes disease management program, the percentage of diabetic patients who undergo foot amputations is most likely an example of (a true / an intermediate) outcome measure. For an asthma disease management program, the number of emergency department visits for acute asthma attacks is most likely an example of (a true / an intermediate) outcome measure:

a true / a true

a true / an intermediate

an intermediate / a true

an intermediate / an intermediate

Answer=A

Insight 7A-4 suggests some meaningful outcome measurements for a diabetes disease management program.

Providers, members, employers, and the health plan can all be involved in measuring outcomes. Providers report changes in the health status of their patients to the health plan. Members may respond to satisfaction surveys. Employers may be asked to provide information on days of work missed. The health plan collects, analyzes, and develops reports using its own data plus information received from the other players.

Information management tools play a key role in the evaluation of a disease management program. Computers can assist in analyzing quality and cost information to develop a comparative analysis looking at outcome measurements before and after the implementation of a disease management program. Health plan executives then use this information to determine if the disease management program is achieving its goals, and, if not, what steps need to be taken to address program inadequacies. Computer models can help health plans pinpoint certain elements of their disease management program that may be generating higher costs than were initially assumed.

Challenges and Limitations of Disease Management Programs

While some disease management programs have proven successful in keeping patients healthier and saving money, disagreement exists concerning the overall effectiveness of disease management. For example, in many cases, patients with existing chronic conditions have more than one chronic disease. A person with hypertension may also have congestive heart failure (CHF) and chronic obstructive pulmonary disease. A disease management program that targets only the patient's hypertension does not address the comorbidities. Because many disease management programs available today are designed to focus only on one disease, the individual with hypertension would have to be enrolled in three separate disease management programs to address each chronic disease or the health plan would have to choose one of the chronic diseases to target. Skeptics on the effectiveness of disease management programs argue that such an approach fragments the care to an individual and does not supply a unified, preventive regimen that addresses all of an individual's illnesses in one program. However, a recent trend in disease management is to expand disease management programs to handle comorbidities.

Another initial challenge in establishing a disease management program is the expense of startup. Delegates often offer money-back guarantees on their disease management results; however, a health plan must still find the funds to engage a delegate or start its own program. Both prospects can be prohibitively expensive to some health plans.

To date, disease management programs identify members of a certain population at risk and invite those members to participate in the disease management program. Participation is voluntary, and not all at-risk members choose to participate in disease management programs. Because participation is voluntary, the health plan is unable to implement true population-based disease management. For example, most CHF disease management programs target only members with severe cases of the disease-about 15 percent of a health plan's population with CHF. Of that 15 percent, only about half are actively managed because other members with CHF choose not to participate in the program or have comorbidities or pre-existing conditions that exclude them from the program's eligibility.35

Getting patients to participate in a disease management program is not the only hurdle for a health plan contemplating a disease management program. Patient turnover is also a challenge. When patients switch providers or change health plans, the patient may drop out of or become ineligible for the disease management

program in which they were participating. Such turnover makes it difficult for health plans to accurately assess the results of their disease management efforts.

As we discussed earlier in this lesson, managing information related to a patient's condition is a cornerstone of most disease management programs. Being able to automate patient information and make it available to all care providers in all settings is a definite advantage for disease management. However, patient information privacy and confidentiality laws and regulatory requirements may present barriers to making automated information available to all care providers. While efforts are underway to create electronic medical records that are secure, neither the public nor the medical community has embraced these concepts yet.

Automating patient information is only one step in the information management systems and processes that make a disease management program a success. Historically, health plans' data on their members have been scattered in multiple databases that often are not connected to each other. Health plans have enrollment information and claims data, providers have encounter data (often handwritten), and pharmacies that participate in the health plan have data on prescription drug use. As we discussed earlier, many health plans are addressing these disparate sources of information and working to create information systems that house all member information in one location or use sophisticated information technology to pull information from separate system locations. Obtaining and managing data on a health plan's members is a costly proposition and quite a challenge for health plans in implementing a disease management program.

Finally, lack of provider support can result in the failure of a disease management program. In addition to obtaining provider support, disease management programs often encounter difficulty when trying to modify providers' clinical practice patterns to reflect the disease management program methods.

Although most healthcare players would probably agree that managing diseases is a positive strategy to improve the health status of plan members, establishing disease management programs for every chronic disease is not economically feasible. Earlier in this lesson we explained how Blue Cross Blue Shield of Georgia reevaluated the diseases it had chosen to target with disease management after performing a data analysis of its membership's health status. Health plans must examine the costs, which may be quite high, in starting a disease management program versus the anticipated benefits of the program.

Conclusion

How does a health plan or disease management delegate bring together its resources and information to develop and then analyze the effectiveness of a disease management program? As might be expected, the answer varies according to a variety of factors including the organization's goals and resources for disease management, the targeted disease, applicable regulations and accrediting standards, and expectations of members, providers, and purchasers.

We conclude this lesson with an insight that illustrates one approach to establishing a new disease management program. Insight 7A-5 describes a hospital-based disease management program in Atlanta and explains how the hospital progressed through the steps of planning, implementation, and evaluation in creating its pediatric asthma disease management program.

http://www.educode.com/Images/ahm540_7A_07p.htm

AHM Medical Management: Medical Management Strategies for Acute Care

Pg 1 to 54

Medical Management Strategies for Acute Care

Self-Care and Decision Support Programs

After completing lesson Medical Management Considerations for Different Levels of Acute Care , you should be able to:

Describe the potential benefits and drawbacks of using hospitalists for the management of inpatient acute care

Explain why the utilization of emergency services is an ongoing concern for health plans and describe some approaches that health plans may use to improve UM for emergency care

Explain how clinical pathways may be useful for medical management and how a health plan can facilitate the development of these tools

Define the term center of excellence and describe how the use of centers of excellence may benefit a health plan's medical management programs

Medical Management Strategies for Acute Care

Introduction

Most of our discussion of medical management up to this point has focused on primary care and secondary care (care delivered by specialists). We have also described medical management approaches for preventive care and for the management of chronic conditions. However, a health plan also needs medical management programs for levels of care that involve more extensive services.

This lesson explores medical management strategies and tools that a health plan may use to support the quality, appropriateness, and cost-effectiveness of care delivered in acute care settings.

Acute care refers to healthcare services for medical problems that require prompt, intensive treatment by healthcare providers in order to restore a previous state of health or prevent the worsening of an existing condition. Acute care typically addresses healthcare needs that are expected to be of limited duration, usually no more than 30 days.1 In many instances, the need for acute care arises suddenly, as in the case of myocardial infarction or injuries from a motor vehicle accident; however, acute care may also be necessary for a chronic condition that has gradually worsened over time. The utilization of resources, including provider time and expertise, medications, supplies, equipment, and facilities, is usually quite substantial for acute care. Acute care is typically the most costly level of care.

The settings where acute care most often takes place are acute care hospital inpatient units and emergency departments. Many health plans have developed medical management initiatives specifically for hospital inpatient care and for emergency department (ED) services, as described in the next sections. After the discussion of emergency services, we explore two additional medical management strategies that may be useful for improving the delivery of acute care: clinical pathways and centers of excellence.

Management of Inpatient Acute Care

The management of care for members admitted to acute care hospitals is critical to both healthcare quality and cost-effectiveness. Hospitalized members are typically suffering from a serious illness or injury or are at risk of significant complications related to a medical condition. Their well-being depends in great part on the quality of the care they receive. Further, many inpatients have multiple medical problems that require the attention of various medical specialists and ancillary providers. The resulting recommendations for care are often complex and even confusing.

Coordination of the care from the different providers is needed to prevent the delay, omission, or duplication of medically appropriate services and to protect patients from unnecessary interventions. The physician in charge of coordinating inpatient care for a patient is called the attending physician.

Effective management of inpatient care not only improves clinical outcomes, it also enhances the efficient utilization of inpatient facilities and associated medical resources. Because inpatient care represents a large proportion of a health plan's total costs for care, health plans need attending physicians who understand the importance of managing both the quality and cost of inpatient services.

The Role of the Attending Physician

Ideally, an attending physician visits each inpatient at least once a day to (1) assess progress toward recovery and provide emotional support, (2) see that appropriate tests and treatments are ordered and delivered, and (3) perform concurrent utilization review (UR) and participate in discharge planning. The attending physician should also communicate regularly with other providers involved in the patient's care. Health plans may need to educate specialists and other providers on the attending physician's role as care coordinator. 2

Health plans should require specialists to provide regular updates and to direct care back to the attending physician when appropriate. Specialists should not initiate new courses of care without consulting with the attending physician. The attending physician may have already ordered the recommended test or treatment or know additional information that indicates a different approach to care. 3

For complex inpatient cases, the attending physician often receives assistance from a health plan or hospital case manager, as we discussed in lesson Case Management. Case managers may help with preauthorization of the hospital admission and specific procedures, concurrent UR, and discharge planning.

PCPs as Attending Physicians

Health plans that rely on primary care providers (PCPs) for the coordination of care typically take one of two approaches to the management of inpatient care. Under the first, more traditional approach, each member's own PCP acts as the attending physician, even if specialists or ancillary care providers actually deliver most of the healthcare services. (In Healthcare Management: An Introduction, we described how members' PCPs act as attending physicians.) Management of inpatient care by a member's PCP has several potential benefits:

Continuity of care during the inpatient stay because of the PCP's previous knowledge of the member

Emotional support for the hospitalized member in the form of regular visits from a familiar provider

Participation of a PCP who knows the patient, as well as the patient's medical history, in concurrent review and discharge planning

Continuity of care after discharge from the hospital because the PCP will be familiar with the inpatient course of care

In addition, a PCP who has knowledge of a member's capabilities and support systems may be a better judge of the level of care required and the most appropriate care setting than a physician who is not familiar with the member. 6

As an alternative approach to using members' PCPs to manage inpatient care, a health plan may include hospitalists in its provider network to address the needs of hospitalized patients. Hospitalists, also known as inpatient specialists or designated attending physicians, are physicians who spend at least one-quarter of their time in a hospital setting where they serve as the attending physicians for patients who have been temporarily transferred to their care by community PCPs. The patients return to the care of their original PCPs after discharge. 7

A hospitalist may manage inpatient care on behalf of a health plan, the hospital, or a provider group. Although some hospitalists practice exclusively in a hospital setting, others maintain outpatient practices as well.

Hospitalists are usually internal medicine physicians, although many have specialties or subspecialties in fields such as pulmonology, cardiology, or critical care medicine. They typically have extensive experience with the most common illnesses and injuries that lead to hospitalization, such as pneumonia and myocardial infarction. In some instances, hospitalists participate in the assessment and treatment of health plan members who come to a hospital's emergency department for care. However, they generally do not manage obstetric, pediatric, or oncology cases.

The use of hospitalists is a recent development in the healthcare industry in the United States. The overall impact of hospitalists on the cost-effectiveness and quality of inpatient care has yet to be determined and the practice remains controversial. In the following sections, we explore potential benefits and drawbacks of the hospitalist approach (as summarized in Figure 8A-1) and possible strategies for health plans that use a hospitalist system.

Potential Benefits of the Hospitalist Approach

Having a physician dedicated to inpatient care may benefit the health plan, its members, and the community PCPs who contract with the health plan. A hospitalist's presence on site, knowledge of conditions requiring inpatient care, and familiarity with the hospital's procedures can expedite the delivery of appropriate diagnostic and therapeutic services. As a result, patients may have faster recoveries and shorter stays in the hospital. Management of care by hospitalists may significantly reduce the length of stay and the total costs of care for a hospital admission. 8 The efficient use of resources may also benefit a hospital that is compensated on a case rate or capitation basis.

Hospitalists are often more accessible to hospitalized members and their families than a PCP who makes rounds on inpatients only once or twice a day. Increased interaction with the member and family allows the hospitalist to monitor the patient's evolving needs and to actively participate in patient education.

In addition, a hospitalist is likely to be more familiar with a health plan's utilization management (UM) and quality management (QM) standards for inpatient care than the average community PCP, so the use of hospitalists may reduce unnecessary variations in care and improve clinical outcomes. A hospitalist who participates in emergency care can facilitate notification of the health plan and the member's PCP and see that the member is directed to the appropriate level of care, such as acute inpatient care, follow-up with a PCP or specialist, or home care. A hospitalist in the ED eliminates the need for community PCPs to rush to the hospital each time one of their patients visits the ED.

As more and more healthcare services shift to outpatient settings, community PCPs often have only a few patients in a hospital at any given time. Traveling to the hospital once or twice a day to visit a limited number of patients is generally not an efficient use of PCP time. For PCPs in rural areas with a limited number of healthcare practitioners, time management is often a significant concern. Further, some PCPs may not have the range of knowledge to be the most effective care coordinators for hospitalized members with complex conditions. As a result, many busy PCPs appreciate being able to turn their hospital patients over to an inpatient specialist so that they can focus on their ambulatory patients.

A hospitalist can also support the appropriate use of resources and discuss any problems related to healthcare quality or resource use with the health plan's medical director. Further, a hospitalist system may facilitate communication with a health plan's medical management staff. The health plan's UM and QM personnel can contact the hospitalist for all questions and issues related to hospitalized members rather than having to contact each member's own PCP.

Although the use of hospitalists has grown rapidly since the mid 1990s, health plans, physician, and patient reaction to this practice has been mixed. Some health plans and PCPs believe that the use of hospitalists may disrupt the continuity of care because the hospitalist is not familiar with the patients, their health histories, personal preferences for healthcare, and support systems. These health plans and PCPs feel that the interests of patients are better served through the continuous participation of community PCPs across all care settings than through inpatient management by a hospitalist.

Some PCPs are concerned that a busy hospitalist who oversees the care of many patients will not have enough time for individual patients and their families. 10 Further, if a patient is dissatisfied with care from a hospitalist or is simply unhappy about having care managed by an unfamiliar physician, the PCP-member relationship may suffer.

As an alternative approach to using members' PCPs to manage inpatient care, a health plan may include hospitalists in its provider network to address the needs of hospitalized patients. However, potential drawbacks of the hospitalist approach include:

A. Inadequate attention to individual patients B. More unnecessary variation in the care given to patients C. Decreased member and family access to the attending physician D. Disruption of the continuity of care

All of these

A and D only

B and C only

D only

Answer=B

In addition, PCPs may want regular involvement with hospital care in order to maintain their inpatient management skills and stay up-to-date with advances in pharmaceutical treatment and medical technology. Some PCPs fear that they might lose hospital-admitting privileges if their skills and knowledge are not current.

Strategic Considerations for a Hospitalist System

The selection of experienced, respected physicians as hospitalists is crucial to the acceptance of the hospitalist concept by community PCPs. 11 Regular communication between hospitalists and PCPs can enhance the quality and continuity of care and PCPs' comfort levels. Communication with the hospitalist allows a community PCP to have input into the care plan for a particular patient, monitor the patient's progress, and prepare for the transfer of the member's care back to the PCP after discharge from the hospital.

For QM and risk management purposes, the health plan should regularly assess clinical outcomes and satisfaction among plan members whose inpatient stays have been managed by a hospitalist. If hospitalist care appears to compromise clinical or satisfaction outcomes, the health plan must develop and implement a plan of corrective action to improve these outcomes.

One of the main controversies related to hospitalists is the use of mandatory hospitalist programs by health plans. In a mandatory program, PCPs must transfer responsibility for the care of hospitalized patients to a hospitalist. Clear advantages of mandatory programs over the voluntary use of hospitalists have yet to be established. In addition, many physicians have indicated opposition to a mandatory hospitalist system. Because community PCPs may not be comfortable with inpatient care management by hospitalists, most health plans that use hospitalists offer their

PCPs the option of managing inpatient care themselves or turning their hospitalized patients over to a hospitalist.

Health plan members may also be apprehensive about having their course of hospital care managed by a physician with whom they are unfamiliar. A PCP's approach to explaining the hospitalist process and its benefits to the member can influence the member's acceptance of and satisfaction with the hospitalist, so a health plan may benefit by working with its PCPs on the presentation of the hospitalist concept to members. 12

Medical Management for Emergency Services

The purpose of emergency services is to provide immediate access to acute care for patients who are not currently hospital inpatients. The availability of emergency services is often essential to the successful diagnosis and treatment of critical conditions such as myocardial infarction, appendicitis, and severe injuries.

A health plan must support the quality of the emergency services delivered to its members by regularly reviewing the outcomes and QM processes of emergency service providers. A health plan should investigate deaths and other adverse outcomes related to emergency care for any deficiencies in the provider's quality of care. Figure 8A-2 lists some factors that a health plan may monitor to evaluate the quality of emergency services.

Appropriate care in the emergency department typically improves clinical outcomes and reduces the overall utilization of resources for an episode of care. For example, prompt, appropriate treatment for a member suffering a severe asthma attack may result in a shorter hospital stay for the member or even eliminate the need for hospitalization. In addition, convenient access to high-quality emergency care improves members' overall satisfaction with a health plan.

However, emergency services carry a high cost to health plans because of

The intensity of the resources (personnel, supplies, medications, and high-technology devices) utilized

Overhead charges associated with maintaining the facility and its resources for immediate use

Cost-shifting for unreimbursed services delivered to individuals who lack healthcare coverage13

The delivery of duplicate services or unnecessary services by providers who are not familiar with the patient or the patient's history

The high cost of emergency services is compounded by the fact that, in many instances, health plan members who seek care from emergency care providers (typically EDs in hospitals) do not need this level of care. Members with nonemergency situations often visit EDs for the following reasons:

Inability to determine if a health problem is life- or limb-threatening Lack of access to immediate care in another setting (e.g., PCP office is closed or

no appointment is available on that day) Lack of knowledge about appropriate use of the ED and other care settings Convenience of the ED compared to other settings

In addition to generating high costs, members who seek nonemergency care in the ED may create congestion and interfere with the unit's ability to provide immediate treatment for real emergencies. Further, these members may be dissatisfied with the length of time they have to wait for care because EDs treat patients based on the results of triage. Triage is the classification of patients into categories according to the severity of the illness or injury and the resulting need for acute care. Cases classified as more severe take priority over less severe conditions, even though the less severe cases may have arrived first at the ED. Ideally, a triage examination follows evidence-based guidelines that were developed specifically for emergency care.

The challenge for health plans is to support the delivery of emergency services for legitimate emergencies while directing members with nonemergency conditions to primary care settings or urgent care centers. An urgent care center is a healthcare facility that provides immediate care to ambulatory patients for minor illnesses and injuries. Urgent care centers often have hours that extend beyond the office hours of most PCPs and may even be open 24 hours a day. The costs of urgent care are higher than the costs for primary care delivered in a provider's office, but are

significantly less than those for emergency services because urgent care typically requires less intensive and less expensive facilities, personnel, or equipment than an ED.

Health plans have tried a variety of approaches to manage the utilization and costs of emergency services, as we describe in the following sections.

Authorization Systems for Emergency Care

Authorization requirements for emergency services vary greatly from one health plan to another. Some health plans have required preauthorization for emergency services; however, this approach may pose risks to members' well-being if the authorization process results in the delay or nonauthorization of care for conditions that are truly life- or limb-threatening. Some health plans perform retrospective review on claims for emergency services and base payment decisions on the final diagnosis of the condition rather than on the member's symptoms at the time of the visit to the ED. Both preauthorization requirements and diagnosis-based retrospective review of emergency services have come under critical scrutiny by legislative, regulatory, accreditation, and healthcare industry entities, and by the media and the general public.

The majority of health plans follow the prudent layperson standard or a similar rule for determining coverage of emergency services. The prudent layperson standard (as described in the Balanced Budget Act of 1997) defines an emergency as "a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual in serious jeopardy, serious impairment to body functions, or serious dysfunction of any bodily organ or part." 14

Twenty-six states have adopted the prudent layperson standard (or a variation of that standard) for defining emergencies and require health plans to reimburse care according to that standard. 15

The Balanced Budget Act of 1997 (BBA) established the use of the prudent layperson standard for Medicare and Medicaid health plans. The BBA also prohibits preauthorization requirements for Medicare and Medicaid plan members.

The federal Emergency Medical Treatment and Active Labor Act (EMTALA) of 1986, as described in Figure 8A-3, requires hospitals that receive Medicare reimbursement to screen and, if necessary, stabilize all patients who come to their emergency departments. To reduce the amount of unreimbursed care provided by EDs, some states place restrictions on health plan requirements for preauthorization of emergency services and retrospective nonauthorization of payment for those services. For example, the New York Health Plan Reform Act of 1996 stipulates that health plan members do not need prior authorization for emergency treatment.

Four acts that affect health plans are the Balanced Budget Act (BBA) of 1997, the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Emergency Medical Treatment and Active Labor Act (EMTALA), and the Quality Assurance Reform Initiative (QARI). The following statements describe how two of these acts affect emergency care providers:

Statement A - This act established the use of the prudent layperson standard for Medicare and Medicaid health plans.

Statement B - This act requires hospitals that receive Medicare reimbursement to screen and, if necessary, stabilize all patients who come to their emergency departments (EDs).

From the answer choices below, select the response that correctly identifies these acts.

Statement A: COBRA;   Statement B: EMTALA

Statement A: BBA;   Statement B: EMTALA

Statement A: COBRA;   Statement B: QARI

Statement A: QARI;   Statement B: BBA

Answer=B

Most health plans, including those in states that have not adopted the prudent layperson standard, have moved away from strict authorization requirements for

emergency services and are using other methods to decrease the delivery of nonemergency services through the ED.

Other Strategies for Managing ED Utilization

As we discussed in lesson Self-Care and Decision Support Programs, some health plans have telephone triage lines to help members determine what level of care is needed for a medical problem. However, many health plan members do not have access to a telephone triage service, or in their distress about the illness or injury, they forget to call the triage line. A health plan that is attempting to reduce inappropriate utilization of emergency services may need additional strategies such as

Educating all members on the appropriate use of the ED and other care settings

Identifying members who repeatedly use the ED in order to provide them with additional education and, perhaps, access to other medical management programs

Improving access to primary care and urgent care settings

Education for the Member Population

Many consumers simply do not understand the concept of different levels of care and appropriate settings for care delivery. Typically, these consumers seek healthcare only after a problem is apparent and do not have an established relationship with a PCP. Whenever a healthcare need arises, their automatic response is to go to the ED at a nearby hospital.

To help members access the appropriate level of care, a health plan may take a proactive approach and distribute information describing different care settings (such as PCP offices, urgent care centers, and emergency departments) and the purpose of each of those settings to all members of a health plan. This type of information may be included with the provider directory. A health plan that uses a telephone triage system may encourage members to use this service by decreasing the ED copayment for members who call the triage line prior to going to the ED.

Focused Strategies for Individual Members

Instead of providing instruction about appropriate care settings to all members, a health plan may target its messages about inappropriate utilization of emergency services to members who have demonstrated a pattern of using the ED for primary or urgent care. Health plan members may also receive education about appropriate use of care settings from providers in the ED, such as the health plan's hospitalist or an ED nurse. In some instances, the ED personnel assist the member with making an appointment for follow-up care with a PCP.

Repeated use of the ED, for primary care, urgent care, or real emergencies, should alert the health plan to the possibility that a member's condition may warrant additional medical management measures. For example, a member with complex

needs due to multiple medical conditions may benefit from case management. A member who repeatedly visits the ED for exacerbations of a chronic illness may be a candidate for disease management.

Improved Access to Primary and Urgent Care

A health plan must not only inform its members about appropriate care settings; the health plan must also make sure that care in those settings is accessible. For example, a health plan may contract with local urgent care centers that have extended service hours. Some health plans offer financial incentives to PCPs who have evening or weekend hours. A provider group may be willing to contract to cover urgent care needs within the group 24 hours a day, seven days a week. Ideally, health plans prefer to arrange for members to see their own PCPs (or at least a provider in the same medical group) whenever possible in order to support the continuity of care.

However, many health plans have concluded that, regardless of health plans' attempts to direct care to alternative settings, a significant number of members will still visit an ED for nonemergency care. As a result, some of these health plans have begun to focus on other ways to reduce the costs associated with delivering this care. In some instances, health plans increase members' access to nonemergency outpatient care by contracting with hospitals that, in addition to emergency care, offer other levels of care designed to address the needs of ambulatory patients. Examples of outpatient care that may be provided at a location within the hospital or even within the ED include

Urgent care Observation care

Urgent Care. Having an urgent care center nearby or connected to the ED can benefit plan members, health plans, and the healthcare facility. Members with immediate needs know that they can go to the ED even if their conditions are not life- or limb-threatening. When members arrive in the ED's receiving area, the triage nurses there can direct them to the appropriate level of care. As a means of supporting quality care, a health plan should see that the triage nurses use up-to-date, evidence-based decision support tools when routing patients to the different levels of care. Members with urgent care needs such as fevers, cuts, and sprains may receive attention more quickly in an urgent care center than in a traditional ED because the urgent care staff is not preoccupied with emergency cases.

The facilities, equipment, and staffing required for an urgent care center are much less costly than those needed to maintain an ED. For example, an urgent care center's staff may include nurse practitioners and physician assistants who provide many of the same services as physicians, but usually at a lower cost. As a result of lower costs, the hospital will likely agree to provide urgent care to a health plan's members at a cost that is substantially lower than that for services delivered in the

ED. In exchange for the lower rates, the health plan may agree to forego retrospective review on cases treated in the urgent care center. 17

In addition, providing access to urgent care through the ED may allow a health plan's hospitalist to become involved in the member's care. The hospitalist can improve both UM and QM by matching healthcare needs with plan resources and seeing that plan members receive the appropriate discharge instructions and follow-up.

An urgent care center near the ED can lessen the congestion in a busy ED's waiting room as urgent care needs are triaged to a different area. The ED personnel can then focus their attention on emergency cases without creating dissatisfaction among patients with less severe problems. Close proximity of the ED to the urgent care center allows the two units to share clinical staff according to current needs. For example, if an ED receives several victims from a motor vehicle accident at one time, the urgent care center may send some of its staff to assist the ED personnel. If the ED has very few patients and the urgent care center is overwhelmed with influenza cases, ED personnel may help the urgent care staff. A similar staff-sharing arrangement may be used with an observation unit that is near the ED.

Observation Care. A hospital may also offer observation care for patients who need healthcare services beyond primary care, but do not currently require the resource-intensive services of the ED or inpatient acute care. Observation care is the aggressive evaluation and management of patients who have a reasonable chance of stabilizing to the point of being released to a non-acute level of care within 24 hours. Observation care provides a monitored environment for these patients to wait for their conditions to improve or to be diagnosed. A hospital that offers observation care may have a unit specifically for this purpose. Alternatively, a health plan's contract with a hospital may indicate that members in need of observation care should be admitted to regular medical-surgical units at a lower rate than that for acute care. Figure 8A-4 shows some examples of patients for whom observation care may be appropriate.

The Origami Health Plan has authorized the following providers to furnish preventive and routine healthcare services directly to its members without a referral from another provider or authorization from Origami:

Provider A, Abigail Smyth, is a general practitioner Provider B, Gregory Allen, is a physician assistant (PA) Provider C, Oliver Ulrich, is an obstetrician/gynecologist (OB/GYN) Provider D, Liza Kaplan, is a nurse practitioner (NP)

The following Origami members sought the following healthcare services from Origami:

Clarissa Grant met with Dr. Ulrich in order to discuss the possibility of using a shared decision-making program to treat Ms. Grant's menopausal symptoms.

Emily Woodruff visited Dr. Smyth for a cholesterol screening, and at the time of this visit, Ms. Woodruff also asked if she could be immunized against the flu.

Gillian Lane sought treatment for an allergic reaction at the Concord Hospital, one of Origami's participating hospitals. After briefly treating Ms. Lane in its ED, Concord determined that Ms. Lane had a reasonable chance of stabilizing to the point of being released to a non-acute level of care within 24 hours. Concord therefore decided to move Ms. Lane to a unit in the hospital where her condition could be aggressively evaluated and managed.

Ms. Lane was moved from the Concord Hospital's ED to a unit that can best be described as:

an observation care unit

a hospice care unit

a group clinic

a clinical pathway unit

Answer=A

Like hospital-based urgent care, observation care may offer quality and cost advantages. Observation care staffing may include nurse practitioners and physician assistants with a limited number of physician supervisors. An ED physician, a hospitalist, or a patient's personal physician may oversee the observation care. If the patient's condition does not resolve in a given time period, the patient can be admitted for inpatient care.

Because observation care is much less resource-intensive than ED or inpatient care, health plan members who receive observation care can obtain the immediate attention they need without incurring unnecessarily expensive charges. 18 Observation care allows more opportunity for clinical staff to determine if a patient is well enough to go home or if the condition requires hospitalization. Observation care patients do not occupy ED space and do not require personnel who may be needed

for more severe illnesses or injuries. In many instances, an additional benefit is that the observation unit or bed is apart from the busy, noisy atmosphere often found in EDs, so patients can rest undisturbed.

Clinical Pathways

A medical management approach that providers frequently apply to acute care is the use of clinical pathways. A clinical pathway, also known as a critical pathway, is "an optimal sequencing and timing of interventions by physicians, nurses, and other disciplines for a particular diagnosis or procedure, designed to minimize delays and resource utilization and to maximize the quality of care."19 A clinical pathway outlines not only the services that will be delivered, but also who will deliver each service, when, and where, as well as the expected results of the interventions.

Clinical pathways typically incorporate one or more sets of standing orders. The term standing orders refers to a set of physician orders (often available on a pre-printed form) for tests, medications, procedures, and supplies that have been designated as standard practice for specific medical diagnoses or conditions.20 Standing orders in a clinical pathway are often organized as a checklist that facilitates documentation and reduces the likelihood of omission, substitution, or addition of orders by the caregiver executing the orders.21 Ideally, clinical pathways standardize care enough to decrease unwarranted variation while allowing enough flexibility to accommodate the needs of individual patients. Before implementing a clinical pathway for a particular patient, the attending physician must evaluate each component of the clinical pathway to avoid rendering services that are unnecessary or inappropriate for that patient.

Although the most frequent use of clinical pathways is for inpatient acute care, a pathway may cover other care levels or settings. Figure 8A-5 lists some examples of the scope of activities for a clinical pathway.

Clinical pathways address medical conditions that affect a significant proportion of the population in a particular area. Common medical topics for clinical pathways include pregnancy, pain management, and stroke as well as chronic conditions such as asthma, diabetes, hypertension, back pain, and depression. Types of surgeries and procedures for which providers often use clinical pathways are biopsy, angioplasty, cardiac surgery, hysterectomy, and total joint surgery. 22

Advantages of the Clinical Pathway Approach

Clinical pathways serve multiple purposes for healthcare providers. The pathways are generally an effective means of planning the care to be delivered, organizing the human and other resources that will be required, and communicating the care plan to patients, caregivers, and health plans. A clinical pathway is also helpful for scheduling and coordinating the care from different providers and different settings. Clinical pathways often result in reduced lengths of inpatient stays and lower total usage of resources. 23

The interventions and timeframes included in a clinical pathway are typically drawn from evidence-based medicine, so the use of clinical pathways should serve to

Reduce unnecessary variation in care Eliminate interventions that offer no significant benefit Increase the efficiency of care delivery Improve clinical outcomes

Because clinical pathways include anticipated outcomes, these tools are useful for evaluating the quality of care. A health plan or healthcare facility can track its own

outcomes over time as well as compare its clinical and financial results to those of other similar entities. 24 Health plan claims administration personnel may also use clinical pathways as a guideline for determining which services to pay for.

Development of Clinical Pathways

Although individual hospitals or hospital affiliations often develop their own clinical pathways and may use very different approaches for pathway development, the following steps are representative of the basic process: 25

1. Select a diagnosis, condition, or procedure for the pathway. The choice of topic typically depends on the perceived need to reduce costs and/or variation for the condition or procedure. For example, if the clinical or financial outcomes of a particular surgical procedure vary, the development of a clinical pathway for the procedure may be indicated.

2. Examine the typical diagnosis and treatment steps for possible ways to reduce cost or variation. Then define the scope of the pathway (e.g., inpatient care only or episode of care). For instance, does the variation primarily occur during inpatient care or outpatient care, or is care variable across all settings? Which aspects of care are associated with the highest costs?

3. Based on the chosen scope for the pathway, select a development team that represents the key clinicians involved in the pathway. The development team typically includes a variety of healthcare professionals (e.g., PCPs, specialists, nurses, pharmacy, and relevant ancillary service providers) as well as representatives from other hospital departments (e.g., finance, information systems, and medical records), and, perhaps, health plans. PCP involvement is essential because PCPs often manage the patient's care after the acute episode. Pharmacy input is very important to the process because pharmaceutical management can have a great impact on the patient's progress and length of stay.26 Health plans can provide helpful information about their benefit plans, medical policies, and CPGs so that clinical pathways will not conflict with a health plan's coverage of services or clinical practice parameters. Costs and coverage are important issues for clinical pathways. If an intervention is not covered, many patients will refuse the service because they cannot or will not pay for it on their own.

4. Document the current process and outcomes for the pathway. Look for possible areas of variation in the current approach and identify the results (either positive or negative) of those variations. Record the time required for each of the steps in the process.

5. Examine the current practices for consistency with evidence-based best practices as described in the current medical literature. Look at current activities to determine which steps are unnecessary or could be performed in a less intensive setting. For example, could certain aspects of preoperative care be shifted to an ambulatory care setting? Note which activities are most important to the achievement of desired outcomes. Benchmark clinical pathways from other hospitals

for goals and check the practices that they have identified as best. Unless a new clinical pathway follows evidence-based best practices, it may only serve to reinforce current inefficiencies and unnecessary activities. The development team can often adapt an existing clinical pathway for their own use.

6. Identify the ultimate desired clinical outcomes for the pathway, such as discharge home or return to a specific level of function. Describe outcomes in objective, quantifiable terms when possible.

7. Identify intermediate objectives that must be met before the final outcome can be achieved. An example of an intermediate goal is the transfer of a patient from the intensive care unit to a general medical-surgical floor.

8. Identify the activities and events that must occur in order to reach the intermediate and ultimate objectives. In this context, an event is a milestone and an activity is an intervention that takes time and resources to complete. For instance, the successful removal of a cardiac surgery patient from a mechanical respirator is an event. Examples of activities include tests, treatments, medications, and education. In this step, the team can also identify the resources that will be needed to complete the activities as well as the most appropriate care settings. 27

9. Determine which steps must be completed before others can start, then formalize the optimal sequence. For example, an oncologist needs the results of a biopsy before planning cancer treatment. Determine which steps can or should be conducted concurrently. Draw or at least list the steps in order to help with the sequencing.

10. Create a formal tool that depicts or at least describes the clinical pathway. The description of the clinical pathway may include written descriptions, charts, or both. The type of chart most commonly used to depict a clinical pathway is a matrix that lists the different activities to be performed according to the time period in which they should occur. Figure 8A-6 shows an example of a template for an activity/time matrix.

The matrix organizes activities into categories such as treatments, activity level, diet, patient and family education, medications, and tests. The time periods listed depend on the type of service being delivered. For instance, emergency services and surgeries are typically timed in minutes, while intensive care is timed in hours, and other care is generally timed in days, weeks, or months.

Activity/time matrices are usually concise and easy to understand, but the sequence and duration of individual activities may not be readily apparent. In addition, complex

cases involving many different providers and activities may be difficult to depict on or understand from this type of matrix.

In many cases, the clinical pathway development team utilizes project management computer software to expedite pathway development; to display the pathways for patients, providers, and health plans; and to document the use and effectiveness of the pathways.

Health Plan Participation in Pathway Development

Because clinical pathways offer cost and quality benefits, some health plans are becoming more involved in the development process. Participation on the development team may allow a health plan to improve the continuity of care for its members by combining care from different settings (such as ambulatory care and acute care) into a single clinical pathway. Hospitals may also be willing to incorporate health plan initiatives such as preventive care, self-care, and disease management programs into their clinical pathways.

Health plans may also assist their network hospitals with pathway development in several other ways. A health plan might gather existing clinical pathways and create a library of current pathways for hospitals to customize to their own type and size of facility. Having such a library of pathways reduces the duplication of effort and decreases the research burden on individual hospitals. Other forms of assistance that a health plan might offer hospitals include

Sharing past experience and expertise with the development team Providing computer software to aid in the development process Sponsoring instructional meetings on clinical pathway development Providing medical literature resources on best practices and outcomes research Compiling outcomes information from network hospitals to identify the clinical

pathways that yield the best results in a particular region or for a particular type of hospital28

Implementation and Evaluation of Clinical Pathways

After a clinical pathway tool has been disseminated to the caregivers at a hospital, the pathway may be placed into use as a guide to daily care for most patients with the condition addressed by the pathway. A health plan may have case managers or utilization review personnel who continuously monitor the use of clinical pathways for outcomes and variances. For clinical pathways, a variance is an activity that differs from the one listed on the clinical pathway or the failure of an event to occur as planned. For example, a test may not be performed as planned due to equipment failure. A patient's recovery may be delayed due to an infection or an adverse reaction to a medication. Concurrent monitoring of clinical pathways allows for correction of a variance before it impacts outcomes or adjustment of the clinical pathway to accommodate a new situation. All variances, the clinical reasons for the variances, and the results of the variances must be documented. 29

If a physician chooses to modify a clinical pathway before care begins or not to use the pathway for a particular patient, the reasons for and the results of the physician's action should be documented. Nonuse or modification of a clinical pathway may indicate the need to revise the pathway or to educate the provider on the intent and use of the pathway. However, health plans and hospitals must bear in mind that clinical pathways may not be appropriate for every patient with a particular condition, particularly if a patient has other serious medical problems. In addition, the pathway development team should regularly review pathways and revise them as necessary based on advances in medical knowledge or technology.

Tracking both clinical and financial outcomes is essential for a health plan's evaluation of clinical pathways. An effective pathway must improve quality without increasing cost or reduce costs without lowering quality. Ideally of course, it should improve quality and decrease costs. The health plan should document and investigate all variations from the expected clinical and financial outcomes to determine if corrective actions should be taken to modify a clinical pathway.

Risk Management for Clinical Pathways

A health plan and its network hospitals should take appropriate precautions to see that the use of clinical pathways does not increase their exposure to financial liability as a result of harm to patients. Risk management for clinical pathways often includes the following approaches:

Developing evidence-based pathways that reflect a thorough review of relevant medical literature and documenting the specific sources of information

Making clinical pathways flexible enough to accommodate multiple health problems and patients' preferences for care

Including a written policy that the purpose of the pathway is to enhance quality or cost-effectiveness rather than to establish a new standard of care and that medically appropriate variances will be accommodated

Establishing a process for documenting the rationale for any variances in case the variances are questioned

Reviewing pathways regularly and updating them as needed, based on documented variances or changes in medical knowledge

Attaching a disclaimer similar to the one shown in to each clinical pathway 30

Centers of Excellence31

In order to provide its members with access to appropriate, high-quality acute care services, a health plan may contract with one or more centers of excellence. A center of excellence is a healthcare institution that, because of its combination of clinical expertise, equipment, and other resources, has the ability to provide specific medical procedures or treatments more effectively and efficiently than other providers in the same region. 32 A center of excellence typically focuses on complex, costly procedures and conditions such as organ transplants, bone marrow transplants, open heart surgery, cancer, neurological diseases and injuries, trauma, total joint replacements, and high-risk obstetrical cases. A center of excellence may be located within a hospital or in a separate facility and may provide inpatient care, outpatient care, or both.

The perceived value of a center of excellence is based on the relationship between the center's clinical outcomes and its level of experience with a particular disease or condition. Multiple studies have shown that, for many surgical procedures and medical diagnoses, better outcomes occur when a provider treats a large volume of patients who have the specific condition. For example, in a study conducted for the Office of Technology Assessment, researchers validated the volume-outcomes relationship for a variety of procedures, including cardiac catheterization, coronary artery bypass graft surgery, and total hip replacements, as well as for medical diagnoses including acute myocardial infarction and newborn diseases.33 One explanation for the improved outcomes is that increased experience with a medical problem results in superior knowledge and skills for a facility's clinical staff.

When a health plan contracts with a center of excellence for the evaluation and treatment of a selected condition, the health plan usually refers all plan members who suffer from that problem to the center of excellence.34 However, members (or their families) may be reluctant to go to these centers. In many cases, the center of

excellence is unfamiliar to the member and may be located far away from the member's family and friends. The health plan may offer richer benefits, such as reduced or eliminated copayments, deductibles, or coinsurance, to members who use the preferred centers rather than another provider.

Because members' needs vary greatly according to their medical conditions, each health plan establishes quality standards for its centers of excellence according to the particular medical focus of each center. Figure 8A-8 lists some of the issues that are typically addressed in quality standards for a center of excellence.

A health plan should conduct a careful examination of the quality management program of a center of excellence, both as part of the process to select a center and periodically thereafter, to see that the center's quality initiatives meet the health plan's standards. The center should also promptly notify the health plan of any unexpected deaths or other significant adverse events so that the health plan may perform its own investigation of the situation.

AHM Medical Management: Medical Management Strategies for Post-Acute Care

Pg 1 to 42

Medical Management Strategies for Post-Acute Care

Course Goals and Objectives

After completing lesson Medical Management Strategies for Post-Acute Care, you should be able to:

Identify and describe the purposes of four types of post-acute care Explain how subacute care differs from skilled care Explain two types of advance directives

Describe the role of a health plan in end-of-life care

Medical Management Strategies for Post-Acute Care

Introduction

In many instances, patients have medical conditions that require services beyond primary and secondary care, but do not warrant acute care. Rather than unnecessarily using acute care resources and facilities, health plans often arrange for the delivery of post-acute care for such patients.

This lesson addresses several different types of post-acute care, situations in which these different types of care may be appropriate, and medical management considerations for each type.

What is Post-Acute Care?

Post-acute care generally refers to healthcare services delivered after a course of acute care or instead of acute care. Post-acute care involves less intensive resources than acute care, so it typically is less costly than acute care.1 Despite the apparent contradiction ("post" means after), post-acute care may also be used in place of acute care. Originally, this type of care was implemented following hospitalization; however, with the increased availability of post-acute care services, health plans and their providers can often reserve acute care settings for patients whose conditions require the highest level of care.

Within the category of post-acute care, the type and intensity of services rendered to patients vary greatly. The most appropriate type of post-acute care for a health plan member depends on the following factors:

The member's medical condition The amount and type of support available from family and community resources Services covered by the member's benefit plan and the availability of those

services in a geographically accessible location Member and family preferences

When a plan member needs post-acute care, personnel from the health plan, such as utilization review (UR) staff, case managers, or hospitalists, may work with the member and the member's primary care provider (PCP) to (1) determine the most appropriate level of care, (2) define realistic goals for that care, (3) design a care plan to achieve the goals, (4) plan for the member's discharge, and (5) assess when discharge is appropriate. Among the specific types of post-acute care that health plans may provide to plan members are subacute care, skilled care, home healthcare, and end-of-life care.

Subacute Care

Some patients in need of ongoing medical and rehabilitative services do not require the level of care and resources typically offered by acute care hospitals, but they are so ill or debilitated that they do need significant amounts of medical care on a 24-hour basis. In order to provide these plan members with the appropriate care in the most cost-effective setting, health plans arrange for the delivery of subacute care.

According to the National Subacute Care Association (NSCA), subacute care is a comprehensive, cost-effective, inpatient level of care for patients who

Have had an acute event resulting from injury, illness, or exacerbation of a disease process

Have a determined course of treatment Though stable, require diagnostics or invasive procedures but not intensive

procedures requiring an acute level of care

The severity of the patient's condition requires

Active physician direction with frequent on-site visits Professional nursing care Significant ancillary services An outcomes-focused interdisciplinary approach utilizing a professional team Complex medical and/or rehabilitative care

Typically short term, subacute care is designed to return patients to the community or transition them to a lower level of care. 2

The ultimate goal of subacute care is to optimize a patient's medical condition, functional ability, and sense of well-being within a reasonable timeframe so that the patient can be discharged home or to a lower level of care. Rehabilitation typically plays a prominent role in subacute care. Rehabilitation is the process of restoring patients with functional impairments to their maximum levels of function (physical, mental, and vocational) in order to enhance their independence and productivity. 3 The most commonly used forms of rehabilitation are physical therapy (PT), occupational therapy (OT), speech language pathology (SLP), and recreational therapy. Patients may also receive rehabilitation in other care settings, such as acute care hospitals, skilled nursing facilities, ambulatory care centers, and at home.

Because many recipients of subacute care have ongoing medical conditions or persistent impairments, self-care education for patients and families is an essential component of subacute care. Otherwise, the patient's condition may deteriorate after the patient returns home.

Subacute care relies on the coordinated efforts of a multidisciplinary team of healthcare practitioners that generally includes several types of rehabilitation specialists. Figure 8B-1 lists the disciplines that are commonly represented on a subacute care team.

Subacute Patients

Subacute patients are typically elderly; however, many younger patients are also candidates for subacute care. Subacute patients vary greatly in terms of the types of disease or injury, treatments required, and length of stay. 5 Figure 8B-2 lists some examples of patients for whom subacute care may be an appropriate option.

Utilization Management

Because the medical needs of subacute patients are often extensive, case management is a useful component of a health plan's approach to utilization management (UM) for subacute care. The health plan's case management and UR personnel typically work with the member's physician to determine the type of subacute care required and the most appropriate setting for that care. The health plan's case manager can then facilitate the member's admission to the subacute care setting, coordinate care and monitor progress, and plan for the member's discharge from that setting. Many subacute care facilities or units have their own case managers. In this situation, a health plan's case managers may share responsibilities for case management with the subacute care provider, or the health plan may choose to delegate case management activities to the provider.

Even if a health plan does not formally apply case management methods to subacute care, the health plan's utilization review personnel can improve utilization through prospective and concurrent review. Conducting preauthorization for a subacute inpatient stay helps a health plan match member needs to the subacute care facility best suited to meet those needs. Through concurrent review, the health plan can monitor a member's progress and changes in needs and then respond accordingly. For example, if a member's condition does not improve as much or as rapidly as originally anticipated, the health plan can work with the subacute provider to revise the care plan. Concurrent review also allows the health plan to participate in discharge planning. The health plan can then arrange for the resources that the member will need at home, such as medical equipment or home healthcare.

Financial outcomes indicators for subacute care are generally similar to those used for acute care, such as the length of inpatient stay, costs per day, total cost of the stay, number of treatment units delivered, the type and costs of other resources, and the amount and costs of resources required after a member is discharged.

Quality Management

One way in which a health plan can support the quality of the subacute care delivered to its members is by contracting with subacute care providers that meet the standards of the appropriate accrediting agency. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) accredits subacute care providers on a variety of criteria including staff qualifications, patient education, and, if applicable, comprehensive rehabilitation.

If the subacute care provider offers rehabilitation, accreditation under the medical rehabilitation standards of the Commission on Accreditation of Rehabilitation Facilities (CARF) is also desirable. CARF standards emphasize

Designing services around the needs of patients and their families Involving patients and their families in decision making Continuously improving quality through outcomes management7

A health plan may establish its own set of quality measures for subacute care providers to be used in place of or in addition to those from accrediting agencies. For example, the health plan may require providers to offer a specific set of services and establish minimum qualifications for the clinical staff who will provide those services. In addition, a health plan may also measure the quality of provider processes such as

Admissions Patient assessment and care planning Clinical procedures Interdisciplinary management of patients Education of patients and their families UM and quality management (QM) programs8

For example, does the clinical staff complete a care plan within 72 hours of admission? Does that care plan include adequate information on the types and amounts of care that will be rendered and the goals for that care? Does the provider have evidence-based clinical pathways, or at least clearly defined care tracks, for the conditions most often treated?9

A health plan must also manage subacute care outcomes. Clinical outcomes measures for subacute care focus on both the resolution of medical problems (e.g., wounds, infections) and functional improvement (e.g., mobility, ability to perform hygiene and grooming). Although standardized instruments for measuring subacute care clinical outcomes exist, most health plans develop their own measurement tools.10

Because family members are often very involved in subacute care and rehabilitation, health plans often solicit the opinions of patients and their families when evaluating satisfaction with subacute care. Common satisfaction indicators for subacute care include member and family perceptions of the

Healthcare services and education received, including the level of courtesy, respect, and professionalism shown by the provider's staff

Member's health status and ability to function in society after discharge Level of service provided to the member and family by the health plan

Skilled Care

The whole field of subacute care is still evolving, and similarities exist between subacute care and skilled care. Skilled care involves the regular (e.g., daily, three times per week, or weekly) delivery of healthcare services, such as medication, treatments, or procedures from a licensed nurse and, as required, respiratory, physical, occupational, and speech-language therapy to patients who are not in an acute state of illness or injury. Skilled care often includes both medical care and rehabilitation and may include personal care, such as meals and daily hygiene.

The primary distinction between skilled care and subacute care relates to the extent and medical complexity of the patient's needs. Generally subacute patients require more medical services (medications and treatments) from physicians and nurses than skilled care patients need. Rehabilitation services are generally more extensive for subacute patients than for skilled care patients. In most cases, skilled care is also less costly than subacute care.

The paragraph below contains two pairs of words enclosed in parentheses. Determine which word in each pair correctly completes the paragraph. Then select the answer choice containing the two words you have selected. The primary distinction between skilled care and subacute care relates to the extent and medical complexity of the patient's needs. In general, subacute patients require (fewer / more) medical services from physicians and nurses than skilled care patients need. Rehabilitation services are generally (less / more) extensive for subacute patients than for skilled care patients:

fewer / less

fewer / more

more / less

more / more

Answer=D

Utilization Management

Skilled care may be short term or long term. For short-term skilled care, the goal is to improve the patient's health and function to the point where the patient no longer needs professional healthcare services. Generally, in long-term skilled care situations, the main purposes of the care are to (1) maximize functional abilities, (2) prevent deterioration of the medical condition, and (3) provide personal care.

Most skilled care patients, particularly those in long-term care situations, are senior citizens. Skilled care patients' diagnoses and needs vary greatly, so a health plan's case management and UR personnel may assist their members and members' PCPs with determining the types of care needed and the most appropriate setting for that care, and with the processes necessary to access the care. Figure 8B-3 shows some examples of patients who are potential candidates for skilled care.

For short-term skilled care, health plan personnel may also assist with care coordination, perform concurrent utilization review, and participate in discharge planning. Whether the skilled care is to be short term or long term, the health plan's personnel should discuss the plan for care delivery with the member and the member's family well in advance of switching the member from a different level of care to skilled care.

Quality Management

Patients may receive skilled care on an inpatient, ambulatory, or home healthcare basis. Inpatient skilled care is typically delivered in a free-standing skilled nursing facility (SNF) or in an SNF located within a hospital. SNFs are subject to state and federal regulation. One important federal law that affects SNFs is the Omnibus Budget Reconciliation Act (OBRA) of 1987, which mandated that SNFs have formal programs for quality improvement and established key standards to be monitored under those programs. These key standards address issues such as

Healthcare quality Resident rights Assessment of residents' needs Quality of life Resident satisfaction Staff qualifications and training11

JCAHO accredits SNFs and many SNFs adhere to that agency's quality standards for skilled care. 12

In addition to requiring accreditation from an appropriate accrediting body, a health plan usually has its own QM initiatives for skilled care. These initiatives generally

include standard measures of healthcare quality, patient safety, and service quality as well as specific issues frequently encountered in skilled care, such as

Changes in medical status or functional abilities Nutrition and hydration management The utilization of antipsychotic and antidepressant medications The use of restraints Management of bladder or bowel incontinence Management of skin integrity, including wound care

The health plan may also have specific initiatives for preventive care and disease management that address illnesses and injuries commonly experienced by elderly or disabled patients.

For SNFs, a health plan should also monitor the safety and comfort of the general living environment. For example, what type of security systems does the SNF have to protect patients from fire, natural disasters, or criminal activity? Are the patient rooms and public areas attractive? Are patients treated with respect and sensitivity for their individual situations? Is the food good? What types of physical and recreational activities are offered? These issues have a great impact on patients' quality of life and can influence members' and families' overall satisfaction with the health plan.

Regular visits to an SNF by a UM nurse, QM personnel, and/or the member's physician are one way for a health plan to support the appropriateness and quality of skilled care delivered to its members. This practice also reassures members and their families that the health plan is still involved in care coordination and quality management.

Home Healthcare

Home healthcare offers health plans and their members another alternative for the delivery of post-acute care. Home healthcare encompasses a wide variety of medical, social, and support services delivered at the homes of patients who are disabled, chronically ill, terminally ill, or who are recovering from an acute illness or injury. Figure 8B-4 lists the services that are commonly provided through home healthcare. Home healthcare serves the needs of patients who require care intermittently (rather than on a 24-hour everyday basis), but are unable to travel to a provider's location for the needed services.

FIGURE 8B-4. COMMON HOME HEALTHCARE SERVICES.

Nursing care (e.g., monitoring vital signs, obtaining blood or other specimens for laboratory tests, wound care, administration of medications)

Pharmaceutical care (e.g., the infusion of intravenous medications and nutrients) Respiratory care (e.g., direction of oxygen support, breathing treatments) Rehabilitation (PT, OT, SLP) Nutrition counseling

Social work assistance with financial, transportation, housing, nutrition, and vocational rehabilitation issues

Assistance with hygiene and other personal care issues

Provision of home oxygen support and hospital beds, walkers, and other durable medical equipment

The use of home healthcare steadily increased during the 1980s and 1990s. The growth in the use of home healthcare can be attributed to several factors, including

Patients' preferences for the added comfort and convenience of home healthcare over inpatient care

Medical technology advances that facilitate the delivery of services in private homes, such as portable ultrasound; improved systems for the intravenous infusion of antibiotics, chemotherapy, and pain medications; and home monitors for cardiorespiratory function

Cost advantages of home healthcare over similar services delivered in an inpatient setting

Although the majority of home health patients are in the Medicare population (either elderly, disabled, or both), the use of home healthcare for younger patients recovering from acute episodes is also growing.

Because care takes place in individual members' homes rather than in settings specifically intended for healthcare delivery, managing utilization and quality for home healthcare presents some unique considerations, as we explore in the following sections.

Utilization Management

Health plans may use home healthcare in place of inpatient care or in conjunction with inpatient care to shorten the length of the inpatient stay. A patient whose condition improves to the point that only intermittent care is required may be discharged to home healthcare. A health plan may also use home healthcare prior to a hospital admission. For example, a home healthcare nurse may visit a homebound patient who is scheduled for hip surgery to obtain blood for preoperative tests, educate the patient about the surgery, and teach the patient how to use crutches. Shorter inpatient stays typically result in lower total costs of care and improved member satisfaction.

Home healthcare may be a means of providing disease management or self-care instruction. Home healthcare that maintains the health of disabled and chronically ill patients may decrease the number of emergency department (ED) visits and

hospital admissions for these patients. Home healthcare may also enable these patients to avoid or delay admission to an SNF.

The determination that a health plan member is an appropriate candidate for home healthcare is usually based on input from the member, the member's family, the member's physician, and health plan UR or case management personnel. A physician plans and orders the various services that a member receives through home healthcare. The treatment plan may follow a clinical practice guideline (CPG) specifically designed for home healthcare. One source of home healthcare CPGs is the Agency for Healthcare Research and Quality (AHRQ).

The health plan then transmits the authorization for home healthcare services to a home healthcare agency (HHA) in its provider network. To support the appropriate delivery of care and utilization of resources, the authorization should specify the number of visits and the types of treatments that a member is to receive. Under this type of authorization, any additional care needs identified by HHA personnel must be submitted to the health plan for review and possible authorization.

A care manager from the HHA assumes responsibility for coordinating and monitoring the care. Depending on the member's needs, the care manager may be a nurse or a social worker. The goal of the case manager is to facilitate access to the medical services and community agency services necessary to allow members to stay in their homes despite their medical problems

Quality Management

Medicare certification and accreditation status are two indicators that health plans typically consider when selecting HHAs to deliver care to their members. Most federal regulations for home healthcare are through Medicare's requirements for quality. Title 42 of the Code of Federal Regulations describes Conditions of Participation (COPs) that HHAs must meet to be certified by Medicare.14 Among the issues addressed by the COPs are

Protection of patients' rights Compliance with federal, state, and local laws, and with accepted professional

standards and principles Organizational structure, scope of services, and administration of the HHA Types of professional personnel who provide services for the HHA Acceptance of patients, plan of care, and medical supervision of care delivery Delivery of skilled nursing services, rehabilitative therapy, medical social

services, and home health aide services Clinical record keeping Evaluation of the HHA's program15

Specific standards and requirements must be fulfilled to satisfy each of the conditions. One COP requirement is the use of Medicare's Standardized Outcome

and Assessment Information Set (OASIS) for most adult patients. OASIS provides a standardized format for a comprehensive assessment for an adult home healthcare patient. OASIS also furnishes data for case mix-adjustment and clinical outcomes measurement. 16 The requirement to use OASIS does not apply to (1) patients under the age of 18, (2) patients receiving maternity services, or (3) patients receiving only chore or housekeeping services.17

Only Medicare-certified HHAs may serve Medicare beneficiaries, and some states require Medicare certification for HHAs that serve Medicaid beneficiaries. HHAs that do not provide care to Medicare or Medicaid beneficiaries must meet any applicable state requirements; however, most states have only limited, if any, requirements for the delivery of home healthcare. 18

The following statements are about home healthcare agencies (HHAs). Three of the statements are true and one is false. Select the answer choice containing the FALSE statement:

Only Medicare-certified HHAs can serve Medicare beneficiaries.

Title 42 of the Code of Federal Regulations describes Conditions of Participation (COPs) that HHAs must meet in order to be certified by Medicare. Medicare certification and accreditation status are two indicators that a health plan typically considers when selecting HHAs to deliver care to the health plan's members.

Most states have extensive requirements for the delivery of home healthcare.

Answer=D

JCAHO and the Community Health Accreditation Program (CHAP) are the primary accrediting agencies for home healthcare. CHAP has four core standards that apply to all home healthcare organizations: structure and function; quality of services and products provided; human, financial, and physical resources; and long-term viability. CHAP also has service-specific standards that may apply depending on the specific services and products provided by the HHA. Medicare accepts accreditation by either of these accrediting agencies in lieu of government inspection.

In addition to examining external indicators of quality, a health plan should have its own quality requirements for contracted HHAs. Figure 8B-5 lists some of the indicators that are typically examined under a health plan's QM initiatives for home healthcare.

Examples of accrediting agencies are the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the National Committee for Quality Assurance (NCQA), and the Community Health Accreditation Program (CHAP). Accreditation for home healthcare is conducted primarily by:

JCAHO, NCQA, and CHAP

NCQA and CHAP only

JCAHO and CHAP only

JCAHO only

Answer=C

End-of-Life Care

When a patient has an incurable medical problem and death is imminent, a health plan and its providers may need to offer a different approach to medical care. Although some terminally ill patients and their families choose to prolong life as long as possible through acute care measures, other patients opt for palliative care. Palliative care refers to healthcare services that focus on the relief of pain and other symptoms rather than attempting to cure the underlying illness or injury. The purposes of palliative care are to (1) decrease physical, mental, and emotional distress in order to improve the quality of life for terminally ill patients and (2) allow patients and their families to determine the intensity of medical intervention to be delivered. Palliative care does not attempt to either hasten death or prolong life.

The following statements are about the type of post-acute care known as palliative care. Three of the statements are true and one is false. Select the answer choice containing the FALSE statement:

Palliative care attempts to cure an underlying illness or injury rather than focus on the relief of pain and other symptoms.

Most palliative care is provided on an outpatient basis or in patients' homes.

One form of palliative care is hospice care.

The primary therapies provided in palliative care are medications for symptom relief, relaxation therapy, massage, and nursing care

Answer=A

Most palliative care is provided on an outpatient basis or in patients' homes. Many patients prefer to remain in their homes with their families as long as possible, and ambulatory and home healthcare make this possible. In addition, these settings are typically more cost-effective than providing the same level of care in a hospital. However, when a patient requires around-the-clock care, inpatient palliative care may be a more logical option.

The primary therapies included in palliative care are medications for symptom relief, relaxation therapy, massage, and nursing care. In some instances, more intensive therapies, such as radiation therapy to reduce the size of a tumor for pain management or surgery to correct a bowel obstruction, may be appropriate palliative measures.

One form of palliative care is hospice care, which is a set of specialized healthcare services that provide support to both terminally ill patients and their families. Hospice care typically includes a variety of services to address medical, nutritional, social, psychological, and spiritual needs. These services are available 24 hours a day, 7 days a week. Hospice care typically involves a multi-disciplinary team including physicians, nurses, pharmacists, social workers, clergy, and community volunteers. A company or facility that delivers hospice care must be specifically licensed or certified to provide this type of care.

The majority of patients who receive hospice care are cancer patients; however, hospice care may also be appropriate for patients with other terminal illnesses such as advanced cases of congestive heart failure (CHF), chronic obstructive pulmonary disease (COPD), AIDS, and neurological diseases such as Parkinson's disease and amyotrophic lateral sclerosis (ALS). 19

Not all health plans cover hospice care, and among those that do, many have patterned their hospice care benefits after Medicare's coverage. Under the Medicare program, hospice care is covered only for patients who have a life expectancy of six

months or less. Because of the limitation on coverage, providers tend to be conservative and try to avoid hospice care referrals when life expectancy cannot be determined to be less than six months.

Decisions Regarding Palliative Care

Only patients or their families can make the decision to forego more aggressive curative treatments in favor of palliative care. Healthcare providers typically use all of their medical capabilities to prolong a patient's life unless instructed otherwise by the patient or the patient's family. However, in many cases of terminal illness, patients become physically or mentally incapable of making decisions about medical care as their diseases progress.

Consumers may use advance directives to see that their wishes regarding healthcare services are observed even after they are no longer able to participate in decisions. An advance directive is a legal document that communicates a person's wishes about future medical care should that person become incapacitated. The two most commonly used types of advance directives are a living will and medical power of attorney. A living will documents a patient's preferences for end-of-life medical treatment and is intended to be a guide for family and providers should the patient become unable to understand the medical situation or to communicate.20 A living will often describes the extent of pain management and life-support measures that a person wishes to receive. Figure 8B-6 describes three commonly used forms of life support that are often referenced in living wills.

A medical power of attorney, also known as a healthcare proxy or a durable power of attorney for healthcare, is a document in which a person appoints another individual to make healthcare decisions on his or her behalf in the event that the first person becomes incapacitated.21 Advance directives allow patients to avoid unwanted, often futile interventions and reduce the decision-making burden on the patient and family near the time of death. With an advanced directive, a health plan

and the patient's physician have less concern about over- or under-treating a patient. Because many consumers do not want to receive all possible life-support measures, advance directives often result in reduced utilization of intensive medical resources.22

Jordan Crowe is completing a legal document that stipulates his preferences for end-of-life medical treatment. This document is intended to be a guide for Mr. Crowe's family and providers should Mr. Crowe become unable to understand his medical situation or to communicate his wishes. This information indicates that Mr. Crowe is completing a type of:

healthcare proxy known as a living will

healthcare proxy known as a medical power of attorney

advance directive known as a living will

advance directive known as a medical power of attorney

Answer=C

Despite the potential advantages of palliative care for patients, providers, and health plans, this type of care is not used as widely as might be expected. Many terminally ill patients who might benefit from palliative care are not even aware that this option exists. Some dying patients choose hospitalization because they believe that they have no alternative other than death at home without care from healthcare providers. They often do not understand the meaning of advance directives or the life-support measures that may be implemented in an acute care setting.

In other instances, the patient and the family refuse to think about the best options for death until the patient's condition reaches a crisis point. If the patient is incapacitated, the family may be unwilling to forego any available medical resources even if there is no hope of significant improvement.

Providers are sometimes unable to observe patients' wishes for end-of-life care because advance directives are not readily available to them. In addition, many providers lack the necessary medical training to deliver effective pain management and other forms of palliative care.

Physicians who are not familiar with the role of hospice care may be reluctant to refer patients for hospice care, or in their efforts to be conservative with referrals, make the hospice care referral too late for the patient and family to gain the full benefit of hospice services.

The Role of a Health Plan in End-of-Life Care

Decisions regarding end-of-life care are the right and responsibility of the patient and the patient's family. Although providers may counsel and advise terminally ill patients on treatment options, health plans should not be involved in making such decisions. The main role of a health plan regarding end-of-life care is one of education and decision support about palliative care, advance directives, and if applicable under the health plan's benefit plan, hospice care.

The health plan should research best practices for clinical measures for palliative care (e.g., pain management), the reduction of services (e.g., situations in which CPR is not appropriate), and hospice services that fall outside traditional clinical care (e.g., grief counseling). The health plan may also wish to obtain input from various disciplines of palliative care providers, such as nurses, social workers, bereavement counselors, and geriatricians, to learn more about hospice care.

The health plan can then make this information available to providers. The education of providers about palliative and hospice care may increase their likelihood of discussing these options with plan members. Based on the information discovered through its research, the health plan may also need to review and revise its own medical policies and CPGs to be consistent with these best practices. 23 Additional training on these issues may also be beneficial for health plan staff such as medical directors, UR managers and staff, case managers, and disease management personnel. 24

CMS regulations require all Medicare and Medicaid health plans to support patient participation in end-of-life decisions and to comply with federal and state laws concerning the use of advance directives. 25 For example, federal law (the Patient Self-Determination Act) requires healthcare facilities that receive Medicare and Medicaid reimbursement to inform patients about their rights to use advance directives. All of the states and the District of Columbia also have laws that recognize the use of advance directives. 26

Because health plan members typically have more contact with their physicians than with the health plan, the responsibility for discussing advance directives has traditionally fallen to physicians. Most health plans have no initiatives to promote advance directives other than informing new enrollees about advance directives through printed material as required under the Patient Self-Determination Act. However, some health plans have begun to recognize that their members value participation in decisions about their healthcare and that advance directives may result in improved quality of life for terminally ill members. These health plans may use one or more of the following approaches to support the use of advance directives:

Sending out periodic reminders to members about the purpose and value of advance directives

Sending information packets about advance directives to physicians for distribution to their patients

Including physicians' discussions of advance directives with patients (as documented in patients' medical records) as a measure of quality for profiling and recredentialing purposes27

A health plan should also explore ways to make advance directives more available to hospital and ED physicians who may be called upon to care for a terminally ill member. For example, the health plan might place members' advance directives on the computer systems of network hospitals or into a community-based directory that is available to all local providers.28

Health plans need to help members understand their options by directing them to information about palliative care and acute care life-support measures. Instructional materials such as printed information, videotapes, and CD-ROMs on end-of-life issues may be useful aids for members as they make decisions about their future healthcare.

A health plan must always exercise caution when conducting any initiatives related to end-of-life care. The health plan's programs should focus on member choice and the potential for improved quality of life. The health plan also needs programs to measure and improve the quality of the palliative care delivered to its members. Otherwise, members, purchasers, and providers may perceive the health plan's palliative care and advanced directive programs only as efforts to reduce the costs of healthcare.

When members do choose palliative care, a case management approach may be useful to see that the needs of the individual are considered. The case manager can also facilitate access to the appropriate services.29

Conclusion

Post-acute care options can play an important role in medical management. By channeling the patient to the most appropriate level of care, a health plan can support the delivery of needed healthcare services without incurring unnecessarily high costs.

AHM Medical Management: Medical Management for Pharmacy Services - Part I

Pg 1 to 51

Medical Management for Pharmacy Services - Part I

Course Goals and Objectives After completing lesson Medical Management for Pharmacy Services - Part I, you should be able to:

Describe some of the advantages and disadvantages of using pharmacy benefit managers (PBMs) to develop and manage pharmacy benefit programs

Identify strategies that health plans can use to manage the way medications are priced and prescribed

Describe three factors that impact prescription drug utilization Explain the difference between a two-tier and a three-tier copayment

structure

Describe five different types of analyses that are conducted in pharmacoeconomic research

Medical Management for Pharmacy Services - Part I

Introduction

Pharmaceuticals are an important component of quality healthcare services, especially in health plan programs, where over 93 percent of HMO enrollees have access to prescription drug benefits. 2 Pharmaceuticals are also an important component of healthcare costs. Pharmacy costs rank third, behind hospital and physician costs, in total healthcare expenditures; they rank first in annual rate of growth. In 1993, the annual rate of growth in prescription drug expenditures in the United States was 8.7 percent. By 1997, the rate had increased to more than 14 percent. During this same period, spending for prescription drug benefits by health plans and other third party payors had increased 123 percent. 3 The need to control the spiraling costs of prescription drugs while maintaining the quality of pharmaceutical care has made pharmacy benefits management an important element of health plans' medical management functions.

In this lesson, we describe the components of pharmacy benefits management that have a direct impact on medical management and discuss various strategies that health plans can use to manage the quality and cost of pharmacy benefits programs. We end the lesson with a discussion of the importance of evaluating the outcomes of pharmaceutical management efforts.

In lesson Medical Management for Pharmacy Services - Part II, we continue our discussion of medical management of the pharmacy benefit by examining in more detail two of the medical management strategies introduced in this lesson-formularies and drug utilization evaluation. We also discuss the regulatory requirements that affect medical management of pharmacy services as well as ethical issues that may arise in connection with management of the pharmacy benefit.

What is Pharmacy Benefit Management?

With the advent of health plans, health plans began to develop pharmacy benefit management programs. Pharmacy benefit management refers to all the procedures and techniques that healthcare entities use to manage the quality and cost of pharmaceutical products and services delivered to consumers. Pharmacy benefit management encompasses a wide range of activities designed to influence the way manufacturers price, providers prescribe, pharmacists dispense, and patients use prescription drugs.

Developing and Managing Pharmacy Benefit Programs

Pharmacy benefit management can be a part of a health plan's internal medical management function; it can offered by an independent, external organization; or it can be a combination of in-house and external components. 5 A health plan that chooses to perform its own pharmacy benefit management has full authority over program design and ongoing operation. It can tailor program benefits, products, and services to meet the specific needs of its members. The health plan, however, must also assume full responsibility for the costs associated with developing the program and maintaining its quality.

Health plans that choose to contract with external organizations for pharmacy services typically contract with pharmacy benefit managers (PBMs). As you learned in Healthcare Management: An Introduction, pharmacy benefit managers (PBMs), or pharmacy benefit management companies, are specialty health plans that seek to manage the costs of prescription drugs while promoting more efficient and safer drug use. PBMs perform all the same functions as health plans for pharmacy benefit management, except determining internal management responsibilities.

Health plans that use a hybrid approach to pharmacy benefit management often perform overall benefit management in-house and contract out certain major functions such as claims processing and pharmacy network development and management to external organizations.

The following sections describe some of the factors a health plan considers in deciding whether to build a pharmacy benefit management program internally or "buy" pharmacy benefit management services from a PBM.

Program Development and Operation

In order to develop and operate an effective pharmacy benefits management program, a health plan must make decisions regarding

Pharmacy benefit design Pharmacy network development and management Drug formulary development and management Claims administration Information management

These decisions affect both the quality and the cost-effectiveness of the health plan's pharmacy benefit program.

Benefit Design

Economically, health plans cannot provide coverage for every drug available from every manufacturer. Health plans use the purchaser contract and pharmacy benefit administration policies to explain what drugs will be covered, in what amounts, for how long, and from what sources. For example, purchaser contracts typically include provisions specifying that specific drugs or drug types will not be covered. These provisions are referred to as exclusions. Typical pharmacy benefit exclusions include

Over-the-counter (OTC) or nonprescription drugs: drugs that are available to patients without a prescription at a reasonable cost, but whose safety, effectiveness, and medical necessity may not have been proven

Drug efficacy study implementation (DESI) drugs: drugs that have been classified by the Federal Drug Administration (FDA) as safe, but that have not been proven fully effective

Experimental drugs: drugs that have not been tested for safety and efficacy in large clinical trials as required by the FDA

The following pharmacy benefits administration policies appear in the purchaser contract between Zephyr Health Plans and the Visionary Company:

Clause A specifies a maximum outpatient pharmacy benefit of $2,000 per member per calendar year

Clause B restricts the amount of drug dispensed per prescription to a 30-day supply of capsules, tablets, or liquid

The contract between Zephyr and Visionary also includes a provision specifying that drugs which have been classified by the Food and Drug Administration (FDA) as safe, but that have not been proven fully effective, will not be covered.

In order to provide its members with greater flexibility, Zephyr offers a typical open access product.

The fact that the contract between Zephyr and Visionary includes a provision specifying that drugs which have been classified by the FDA as safe, but that have not been proven fully effective, will not be covered, indicates that this contract most likely contains an:

exception for experimental drugs

exception for drug efficacy study implementation (DESI) drugs

exclusion for experimental drugs

exclusion for DESI drugs

Answer=D

Limitations, or restrictions, are contract provisions that place a cap on the amount of coverage in some way, usually in terms of time, money, or amount. For example, a contract clause that specifies a maximum outpatient pharmacy benefit of $2,000 per member per calendar year is a limitation. A contract clause that restricts the amount of drug dispensed per prescription, for example, a 30-day supply of capsules, tablets, or liquid, is also a limitation. How a health plan incorporates such limitations into its pharmacy benefit design can have a significant impact on program quality, cost, and member and provider satisfaction.

The following pharmacy benefits administration policies appear in the purchaser contract between Zephyr Health Plans and the Visionary Company:

Clause A specifies a maximum outpatient pharmacy benefit of $2,000 per member per calendar year

Clause B restricts the amount of drug dispensed per prescription to a 30-day supply of capsules, tablets, or liquid

The contract between Zephyr and Visionary also includes a provision specifying that drugs which have been classified by the Food and Drug Administration (FDA) as safe, but that have not been proven fully effective, will not be covered.

In order to provide its members with greater flexibility, Zephyr offers a typical open access product.

With respect to whether Clause A and Clause B are examples of limitations, it is most likely correct to say that

both Clause A and Clause B are examples of limitations

only Clause A is an example of a limitation

only Clause B is an example of a limitation

neither Clause A nor Clause B is an example of a limitation

Answer=A

Network Management

Although network development and management are often viewed as part of a health plan's efforts to manage prescription drug costs, they are also an important component of pharmacy benefit management program development. Pharmacy benefits are different from a health plan's other basic healthcare benefits in the following ways: (1) they include products as well as services, (2) they require sophisticated, specialized information management support, (3) they are delivered to plan members by nonphysician providers, and (4) they are reimbursed according to nationally accepted standards. Pharmacy benefits, as a result, cannot be delivered by

the health plan's existing provider networks, making it necessary to establish specialized networks and specialized distribution procedures.

Contracting with an established PBM can reduce or even eliminate the costs of network development. For example, PBMs typically offer pharmacies a much larger patient base than an individual health planlth plan can offer. Whereas a large HMO may serve up to 1 million members, a large PBM may serve as many as 50 million customers. 6 PBMs can use this extensive patient base to attract pharmacies or pharmacy chains into the network that might not be interested in contracting with a small health plan. In addition, many PBMs already have well-established networks of their own that include community and national retail pharmacies, mail-order pharmacies, and online pharmacy services. Mail-order pharmacies and online services offer potential cost savings by eliminating the dispensing fees and administrative charges required by retail pharmacies.

Formulary Management

Most benefit plans call for the creation of a drug formulary in conjunction with the pharmacy network. As you recall from lesson The Role of Medical Management in a Health Plan, a formulary is a listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given managed population and that are to be used by a health plan's providers in prescribing medications.

A health plan that manages pharmacy benefits in-house typically establishes its own formulary under the guidance of a pharmacy and therapeutics (P&T) committee. A pharmacy and therapeutics (P&T) committee is a group of providers, pharmacists, and health plan personnel that recommends the safe and effective use of prescription medications and administers a standard drug formulary. The P&T committee oversees the content of the formulary and meets regularly to make sure the formulary is current. Because the health plan has control over the content of the formulary, it also has maximum control over the quality and cost of pharmaceutical products delivered to plan members. Developing and managing a formulary in-house, however, also generates costs. As is the case with network development, contracting with a PBM can often reduce these costs.

PBMs usually provide a master formulary, developed by an in-house P&T committee, along with their pharmacy network. Health plans can adopt this formulary or negotiate with the PBM to include the health plan's formulary as a subset of the PBM's master formulary. Using an established PBM formulary offers health plans definite cost advantages over developing a formulary internally. As we noted earlier, PBMs serve a much larger population than do most individual health plans. Drug manufacturers, attracted by the large volume of prescriptions generated by this population, are often eager to have their products included in PBM drug formularies. Because PBMs have developed strong relationships with pharmacies and drug manufacturers as a result of their experience and focused operations, suppliers are often willing to negotiate price discounts and rebates for their products as well.

Use of a PBM formulary has disadvantages as well. For example, if the master formulary does not meet the unique needs of the health plan's population, then the health plan may not be obtaining the best value for its money by contracting with the PBM. The strong relationships PBMs have with pharmacies and manufacturers can also be problematic. Although industry ownership of PBMs varies widely, some of the nation's largest PBMs are owned by or financially linked to drug companies or pharmacy chains. These relationships may lead to preferential network contract agreements or selection of less cost-effective drugs for formularies. Overly aggressive price discounts may even cause concern among consumers and health plans over the quality of products and services available through PBMs.

Claims Administration

In traditional indemnity plans, patients paid for prescription drugs at a pharmacy and then submitted a direct claim to the plan for reimbursement. In contrast, most health plans rely on card systems, which require plan members to present a card encoded with patient and plan information each time a prescription is filled. The information, which may be embossed on the card or contained on a magnetic strip, is relayed by the pharmacy to the plan's claims administrator for payment.

Most pharmacy networks process direct or card system claims through sophisticated information systems, called point-of-service (POS), or point-of-sale, systems that deliver real-time information to the pharmacist and the plan at the time a prescription is filled. POS systems allow pharmacists and claims administrators to exchange information regarding

Patient demographics and eligibility Plan benefits, including coverage and cost-sharing requirements Medications being dispensed to the patient Other prescriptions the plan member has filled within the pharmacy network

In addition, pharmacy information system software typically includes drug edits, which are messages or warnings that appear on the dispensing pharmacist's computer screen as the pharmacist transmits information for a prescription to be filled to the health plan's claims processing system. These messages or warnings are designed to notify the dispensing pharmacist of possible side effects and drug interactions or to encourage the pharmacist to obtain additional information related to the patient's medical history before filling the prescription. Electronic POS systems also facilitate strategies such as prior authorization and the use of generic drugs. (These strategies are discussed in lesson Medical Management for Pharmacy Services - Part II.)

By contracting with PBMs, health plans can take advantage of systems and expertise that are already in place. A large number of PBMs began operation as claims processors, and claims processing and administration is still a major component of their business. In fact, a large PBM may process as many as 1 million claims transactions per day. This level of operation generates economies of scale in claims

processing and other administrative services that most individual health plans would be unable to achieve.

Information Management

As you recall from Quality Assessment, health plans generate, process, and disseminate an enormous amount of information in the course of delivering healthcare services to plan members. The same is true of delivering pharmacy services.

In order to share the data generated by network pharmacies, program managers must have communication systems that are capable of accurately capturing, storing, and reporting complete data in standardized form. Systems must also be able to merge prescription claims data with medical claims and clinical data to produce integrated outcomes information.

Most health plans do not currently have the systems required to handle these information management demands and the costs of developing new systems can be prohibitive. Most PBMs have a broad base of financial, technological, and human resources that allow them to support multiple products (e.g., commercial, Medicaid, Medicare risk plans), multiple services (e.g., claims processing, customer service, formulary management), and multiple systems applications (e.g., POS drug edits, electronic medical records, data warehousing).

A health plan that contracts with a PBM, however, must review and update its own systems, if necessary, so that information gathered by the PBM is accessible to the health plan. In addition, health plans must take steps to maintain the confidentiality of patient information and must monitor PBM adherence to internal and legally mandated protocols and standards for electronic data interchange (EDI).

Strategies for Managing the Quality and Costs of Pharmacy Benefits

So far in this lesson, we have described how health plans can use "build" or "buy" strategies to address the development and ongoing operation of pharmacy benefit programs. In the following section, we focus on strategies health plans can use to manage the quality and cost-effectiveness of pharmacy benefits. Strategies for managing quality and costs are designed to address how pharmaceutical products are priced, prescribed, paid for, and used.

Managing How Drugs Are Priced

Pharmacy reimbursement under virtually all health plan prescription drug plans is based on an amount related to the cost of the drug plus a specified dispensing fee charged by the pharmacist for each prescription. Drug costs are controlled primarily by drug manufacturers and are based on manufacturing costs, research and development costs, and marketing and distribution costs. Manufacturing costs

include ingredient costs and production costs. Research and development costs cover the costs of developing and testing new drugs. Because of the time and resources needed to secure government approval for the sale of new drugs, research costs are generally very high.

Efforts to market and distribute new drugs add another layer to prescription costs. In addition to promoting their products to healthcare practitioners, pharmaceutical companies now aggressively advertise their products to consumers by brand name on television, on billboards, on mass transit, in popular magazines, by direct mail, and through other advertising venues. This type of advertising by pharmaceutical manufacturers is known as direct-to-consumer (DTC) advertising. In 1998, pharmaceutical manufacturers spent $1.3 billion on DTC advertising.9 Like manufacturing and development costs, advertising costs are passed on to purchasers.

Health plans and PBMs that purchase prescription drugs directly from pharmaceutical manufacturers and distribute the drugs to plan members through their own pharmacies can help manage the high costs of pharmaceuticals by negotiating with manufacturers to receive discounts or rebates on their products.

Price Discounts

Price discounts are reductions in the price of a particular pharmaceutical obtained from the pharmaceutical manufacturer based on the volume of the drug purchased by the health plan or PBM. Because PBMs represent multiple health plans, PBMs can usually obtain deeper discounts from pharmaceutical manufacturers than can individual health plans.

Price discounts are typically expressed as a percentage of the prescription cost. For example, a health plan or PBM that receives a 15 percent discount under its contract with a drug manufacturer can purchase a drug with a market cost of $20.00 for only $17.00 ($20.00 - $3.00 = $17.00). Price discounts are not dependent on actual prescribing patterns.

Rebates

A rebate is a reduction in the price of a prescription drug based on the prescribing patterns of network providers and the market share of the product. Unlike price discounts, which are calculated when drugs are purchased from the manufacturer, rebates are calculated after the drugs are purchased by plan members. Insight 9A-1 describes how a pharmacy rebate program works.

Pharmaceutical manufacturers began offering rebates to PBMs and health plans to make inclusion of the manufacturers' drug products on PBM and health plan formularies more attractive. Because space on drug formularies is limited and competition among manufacturers is often fierce, the rebate business is booming.

PBMs frequently offer to share a portion of the discounts and rebates they receive from manufacturers with the health plans that contract with the PBMs for pharmaceutical management services. In this way, price discounts and rebates serve as a marketing incentive for health plans to sign up with a particular PBM. However, rebates may not always result in cost savings to the health plan. In fact, a rebate attached to a very expensive drug placed on the formulary may result in a higher drug cost than a less expensive generic with no rebate. For example, the cost to a health plan or PBM of a brand-name antibiotic might be as high as $72. Even with a $10 manufacturer rebate, the cost of the drug per prescription is still $62. The cost of a generic antibiotic in the same drug class may be under $10.

Managing How Drugs Are Prescribed

One of the primary goals of pharmacy benefits management programs is to see that appropriate medications are prescribed and used in a clinically effective manner. Appropriate medications have been shown to reduce the severity of and complications from a wide variety of illnesses and to help patients maintain optimum health and function. Appropriately prescribed pharmaceuticals also contribute to positive economic outcomes.

Inappropriate drug prescribing, on the other hand, can lead to serious and costly adverse effects. For example, in a study of the severity of injury caused by adverse drug events, researchers found that 43 percent of avoidable adverse drug events resulted in serious injuries; 20 percent resulted in life-threatening injuries.12 Researchers estimate that the direct cost of adverse drug events in the United States is more than $76 billion per year.13

It is important to recognize that appropriateness is not equated with expense and that newer and more expensive prescription drugs are not always better. In some cases, health plans and patients might benefit from a new, expensive drug, especially if that medication expenditure lowers other costs such as hospitalization. In other cases, less expensive drugs may offer a safer, more cost-effective way to treat a particular disease or condition.

Because providers play a key role in determining which medications are prescribed, they have a significant impact on pharmacy benefit quality and costs. According to one source, by changing the prescribing patterns of 1 percent of its contracted physicians, a health plan could realize 50 percent savings on its drug costs. 14 In order to support providers' clinical decisions and to modify prescribing patterns among individual providers and provider groups, health plans and PBMs typically use a variety of medical management tools.

Provider Profiling

One of the most effective tools that health plans and PBMs have for assessing and improving provider prescribing patterns is provider profiling. As you recall from Quality Improvement, provider profiles are descriptions of provider practice patterns, including prescribing patterns. Profiles can describe the prescribing patterns of individual providers, all providers within a particular medical group or practice specialty, or all providers in a network. Profiles can also compare the prescribing behavior of any or all of these groups.Health plans typically use provider profiles to support the following organizational goals:

To improve the quality of care provided through the use of prescription drugs To measure providers' performance in reducing pharmaceutical costs To assess providers' performance for reimbursement purposes (i.e., if part of

the financial risk that providers accept is based on their use of pharmaceuticals, providers' prescribing patterns may affect the amount of reimbursement they receive)

The following statements are about strategies for managing the quality and costs of pharmacy benefits. Select the answer choice containing the correct statement:

Deductibles are a cost-sharing feature frequently used by health plans in their pharmacy benefit plans. For health plans and PBMs, one disadvantage of prescription drug price discounts is that they are dependent on actual prescribing patterns. A rebate is a reduction in the price of a prescription drug based on the prescribing patterns of network providers and the market share of the product. One strategy that health plans and PBMs can use to control prescription costs is to rely more on direct-to-consumer (DTC) advertising.

Answer=C

Health plans and PBMs may also share the information they compile in provider profiles with their providers as a means of motivating providers to reevaluate their overall use of pharmaceuticals, their use of certain drug classes, or their use of drugs to treat specific diseases. The health plan or PBM may share profile information with plan members or the general public to provide additional motivation for change.

Profiles affect individual prescribing patterns by identifying outliers-that is, prescribers who fall outside the normal range revealed by the profiles. Once outliers are identified, the health plan or PBM can provide feedback to these prescribers and make suggestions for ways to improve performance. The feedback presented to an outlying prescriber might include reports on specific patients, noting the drugs that were prescribed and possible substitutions or alternative therapies.15

Profiles can also be used to modify group prescribing patterns. For example, a comparison of an aggregate profile of a particular health plan's network providers with similar profiles from other health plans, industry standards, or benchmarks, might reveal that the health plan's providers write unusually high numbers of prescriptions for a particular antibiotic that the medical literature describes as often misused. The health plan or PBM could provide feedback to providers in the form of provider education or amend its medical policy to promote more appropriate use of antibiotics.

Provider Education

A second tool health plans and PBMs can use to help providers prescribe medications effectively is provider education. In some cases, provider education is designed to balance the promotional information provided by pharmaceutical manufacturers with more objective information about drugs. Pharmaceutical manufacturer representatives frequently visit physicians' offices to market new drugs and provide educational information about the drugs, including the research and testing performed to develop the drug and determine its efficacy and safety. This process is referred to as detailing. However, because pharmaceutical manufacturers have a vested interest in having their drugs prescribed, much of the information provided during detailing visits is promotional.

To counteract the biases that can occur in detailing, some health plans and PBMs practice counterdetailing, which involves devoting resources to gather objective clinical information about recommended uses and dosages of prescription drugs. For example, health plans or PBMs can use counterdetailing to supply providers with information about the appropriate use of certain classes of frequently prescribed or expensive drugs, such as antidepressants, antibiotics, and angiotensin-converting enzyme (ACE) inhibitors.

Health plans and PBMs can also teach providers to use the Internet to find information about new medications or alternative treatment options. Sometimes the health plan or PBM will arrange for a pharmacist to contact individual providers by

phone or in person to discuss prescribing patterns or to answer questions concerning the appropriate use of certain drugs. Explaining to providers why a particular lower cost drug is more clinically effective therapy than other more costly drugs usually affects providers' prescribing behavior more dramatically than cost information alone. Insight 9A-2 describes one health plan's approach to provider education.

One way that health plans and pharmacy benefit managers (PBMs) can help providers prescribe medication effectively is through the practice of counterdetailing. Counterdetailing can correctly be defined as a process in which:

pharmaceutical manufacturer representatives visit physicians' offices to market new drugs and provide educational information about the drugs resources are devoted to gathering objective clinical information about recommended uses and dosages of prescription drugs and presenting this information to prescribers the prescribing patterns of individual providers are evaluated in order to identify outliers, or prescribers who fall outside the normal range health plan or PBM representatives visit physicians to discuss each physician's compliance with plan formularies

Answer=B

Drug Utilization Management

Drug utilization review (DUR), also know as drug utilization evaluation (DUE), is a program that evaluates whether drugs are being prescribed and used safely, effectively, and appropriately. Currently, most health plans and PBMs practice DUR and use it as an integral strategy in medical management of pharmacy services. However, many health plans are beginning to reevaluate their role in DUE. Some health plans are considering transferring DUR responsibilities to provider groups and eliminating the health plan's involvement in review and preauthorization of drug use. We discuss DUR in detail in Medical Management for Pharmacy Services - Part II.

Case Management and Disease Management

Earlier in this course, we discussed the use of case management and disease management as tools for managing the delivery of healthcare services. Both case management and disease management are also effective in managing the delivery of pharmaceutical products and services. From a pharmacy standpoint, case management for a particular patient is typically indicated for

Chronic conditions that require a large amount of healthcare resources and for which medications play a significant role (e.g., asthma, diabetes, HIV/AIDS, rheumatoid arthritis)

Conditions that involve the use of several medications simultaneously Conditions that are addressed by multiple providers, multiple prescribers, and

multiple pharmacies16

Pharmaceuticals also play a prominent role in disease management. In fact, drugs are often used to manage certain chronic diseases because the overall medical costs per chronic patient of drug therapy for tertiary prevention are typically lower than the costs of acute care that may be required if the patient's condition worsens.

The use of case management and disease management for pharmacy services, however, is not all about cost. The most cost-effective drug for a particular condition may well be the most expensive drug but the least expensive therapy in the long run. The purpose of these strategies is to implement total cost-effective, quality healthcare for members.

Managing How Drugs Are Purchased

Health plans include member cost-sharing features in their pharmacy benefits programs to share the burden of the cost of pharmaceuticals with the person receiving the benefit, to make the member more aware of the cost of pharmaceuticals, and to discourage overutilization of drugs. Cost-sharing features include copayments, deductibles, and coinsurance.

Historically, health plans had one set amount for a copayment for all covered pharmaceuticals; however, in the last few years the copayment feature has been modified by many plans. To address market demand and to better manage costs, health plans have begun developing two-tier and three-tier copayment structures.

A two-tier copayment structure requires that a member pay one copayment amount for a generic drug and a higher copayment amount for a brand-name drug. A three-tier copayment structure requires that a member pay one copayment amount for a generic drug, a higher copayment amount for a brand-name drug included on the health plan's formulary, and an even higher copayment amount for a nonformulary drug. Some plans have established a fourth tier for "life-style" drugs, such as drugs to improve sexual performance, drugs for weight reduction, or drugs for cosmetic purposes. Insight 9A-3 depicts the average copayments over time in a four-tier copayment structure.

Some plans use coinsurance as a cost-sharing design feature to combat rising pharmaceutical costs. With coinsurance, a member might be required to pay a certain percentage (e.g., 20 percent) of the cost of a prescribed drug while the health plan pays for the remainder of the cost. Plans sometimes use copayments for most drugs but require coinsurance for more expensive or less frequently used drugs.

Deductibles are another cost-sharing feature that health plans sometimes use for pharmacy benefits. Deductibles are not a common feature in pharmacy benefits; however, some plans do require a deductible of between $50 and $100 that applies to pharmaceutical costs.17

In some cases, cost-sharing features can lead to behavior that is detrimental to both the plan and its members. For example, a plan member with a limited income might stop taking prescribed medicine if he or she considers the plan's cost-sharing feature to be a financial burden. This discontinuation of therapy might, in turn, lead to a more serious condition that could endanger the plan member and require the health plan to pay for treatments that could have been avoided through the continuation of the original drug therapy. More often, however, cost-sharing features encourage a more responsible use of drug therapy among plan members.

Managing How Drugs Are Used

Although physicians play an important role in determining how prescription drugs are used, utilization is also affected by consumer demand, compliance with recommended drug therapy, and patient education. In order to manage pharmacy benefits effectively, health plans need to address each of these factors.

Consumer Demand

The following factors have contributed to dramatic increases in the number of prescriptions written:

Increased incidence of acute and chronic illnesses brought about by the aging of the population

Evidence confirming the benefits of aggressive preventive drug therapies for such conditions as hypertension, hypoglycemia, and high cholesterol

Patient and physician expectations that all symptoms can be relieved by medications

Development of new drugs and new types of drugs Increased use of direct-to-consumer (DTC) advertising for new and brand

name drugs

Consumer Demand

Many of the drugs demanded by consumers are expensive and are not included in drug formularies. In some cases, these drugs may not be covered under a health plan's benefits administration policy.

One way that health plans can address consumer demand for expensive, brand-name, nonformulary drugs is by educating physicians and members about the purpose and benefits of a formulary. Well-defined administrative policies for handling exceptions, which are authorizations by a health plan to cover a nonformulary drug after evidence is presented to support the need for the drug, and external review of denied appeals are also effective in addressing requests for nonformulary drugs. Health plans also have to establish coverage policies to handle requests for authorization of experimental drugs.

Drug Compliance

Another important issue that arises in connection with prescription drug use is patient compliance with recommended drug therapy regimens. Patient noncompliance is wasteful in terms of money, resources, and the negative effects on the patient. Again, education is key to convincing patients of the necessity of taking drugs prescribed by their providers.

Providers and their staffs can play an important role in educating patients and persuading them to follow drug therapies by explaining the need for the drug and the consequences of not taking the drug as directed. The provider and staff can answer questions about side effects or other concerns the patient may have about the drug.

Pharmacists also play an important role in educating patients about the appropriate use of prescription drugs. Pharmacists who take the time to read the online edits about possible side effects, drug interactions, and patient cautions and who share that information with the patient have a considerable impact on drug therapy compliance. Pharmacists can also provide valuable cognitive services, that is, services that the pharmacist identifies as necessary for the safe and effective use of prescription drugs. Cognitive services include patient counseling regarding drug therapy, review of patient profiles to monitor drug use and drug interactions, and documentation of pharmaceutical care in patient records.

Even drug packaging can have an impact on drug compliance. For example, manufacturers sometimes encase individual tablets or capsules in clear plastic compartments attached to a plastic, foil, paper, or cardboard backing, called a blister card. In some cases, blister cards contain combinations of different types of drugs wrapped together and color coded to indicate doses for different times during the day. Instructions in bold print may also improve patient compliance with drug therapy. 20 Electronic compliance management technology has also been proposed as a way to increase patient compliance with drug therapies.

Such technology is already being used to track blood sugar monitoring in diabetic patients. Additional applications, however, will require close supervision in order to protect the confidentiality of patient information.

Member Education

At one time or another, most people have left a physician's office with a prescription in hand and questions about the need for, possible side effects from, or directions for taking that medication. Patients sometimes do not understand what ailment a drug is intended to treat, the importance of carefully following the instructions for taking the medication with food or at certain times of day, and the need to take all of the medication prescribed as directed by the doctor. Health plans and PBMs can address these questions and concerns by educating members about drug therapies.

One approach health plans and PBMs can take to educate plan members is to print informational handouts that physicians can give to patients during the office visit or pharmacists can hand out when a prescription is filled. These handouts reinforce the doctor's instructions and answer frequently asked questions concerning the particular drug therapy. Some health plans and PBMs use case management or disease management personnel to further educate members about effective prescription drug use.

Advances in technology are also affecting the ways that health plans and PBMs communicate with members. In addition to drug information delivered by mail, some health plans and PBMs use interactive voice response systems to provide information about frequently used drugs or drugs about which the health plans or PBMs frequently receive questions. Such information may include drug interactions, possible side effects, and appropriate use of the drug.

Many health plans provide information by specific drug name, accessible on their company Web sites, that includes the purpose/uses of the drug, possible side effects, drug interaction precautions, dosage information, etc. Some PBM and health plan Web sites can customize information about specific drugs based on the member's age, the member's gender, and the presence of certain conditions, such as pregnancy or diseases.22

Health plans may also provide plan members with general educational material related to medication use. Such material may stress

The importance of complying with drug therapy, as directed by a physician or pharmacist

The need for members to inform their physicians and pharmacists at each visit about all over-the-counter, complementary and alternative therapies, and prescription drugs they are currently taking and diseases or conditions with which they have been diagnosed

Pharmacoeconomic Research

One of the primary goals of pharmacy benefit management is to improve healthcare outcomes. Although health plans often focus on cost-conscious measures to manage benefits, cheaper is not always better. In fact, disease management, which relies heavily on the use of pharmaceuticals, may require the use of greater quantities of drugs or more expensive drugs.

One of the most popular ways to evaluate the costs versus benefits of pharmacy services today is by using pharmacoeconomics. Pharmacoeconomics is "the study of cost implications and outcomes related to pharmaceutical therapy" to determine value. 23 In other words, pharmacoeconomics provides a measure of the impact, desirable and undesirable, of various pharmaceutical products and services on healthcare systems and society. For example, pharmacoeconomics helps health plans determine the true value of new drugs in comparison to existing formulary drugs that treat the same condition or disease.

Health plans are not the only organizations that conduct pharmacoeconomic research. Pharmaceutical manufacturers, academic institutions, private research companies, and not-for-profit medical research organizations also conduct such studies. 24 Such research sponsors typically use either prospective or retrospective data to perform their studies. Prospective studies may use either or both of the following approaches:

Economic modeling, in which a theoretical model is used to predict expected financial results by manipulating information about costs, methods of treatment, or other factors related to drug therapy

Randomized controlled trials (RCTs), in which controlled clinical research using randomly selected participants is conducted on drug therapies and their outcomes

Retrospective studies use data obtained from claims information, previously conducted RCTs, or other information the health plan has about the drug. Researchers can use the prospective or retrospective data they obtain to analyze the relationship between the costs of pharmaceuticals related to their values in several different ways. Figure 9A-1 describes the four types of pharmacoeconomic analysis most often recognized by researchers.

A fifth economic evaluation, cost of illness analysis (COI), or the cost consequence model, measures the economic impact of a particular disease, illness, or condition on individuals, organizations, and society.

Health plans can use pharmacoeconomic research data to answer questions related to formulary decision making, evaluation of clinical practice guidelines (CPGs), effectiveness of disease management programs, effectiveness of marketing strategies, and member satisfaction with their pharmacy benefits and overall healthcare.

The following four types of pharmacoeconomic analysis are most often recognized by researchers:

Cost-utility analysis (CUA) Cost-benefit analysis (CBA) Cost-effectiveness analysis (CEA) Cost-minimization analysis (CMA)

Of these types, one analytic method differs from the others in one key way: both outcomes and costs are measured in monetary units. This type of pharmacoeconomic analysis is:

CUA

CBA

CEA

CMA

Answer=B

Conclusion

So far in this assignment, we have described some of the basic approaches that health plans use to support the quality and cost-effectiveness of pharmacy benefit programs. In lesson Medical Management for Pharmacy Services - Part II, we focus on two of the most effective of these approaches: drug formularies and drug utilization review (DUR).

AHM Medical Management: Medical Management for Pharmacy Services - Part II

Pg 1 to 45

AHM Medical Management: Medical Management for Pharmacy Services - Part II

Course Goals and Objectives After completing lesson Medical Management for Pharmacy Services - Part II, you should be able to:

List several functions that a health plan's pharmacy and therapeutics committee performs

List the five steps in performing DUR Describe the three types of DUR

Explain the state laws related to mail-order pharmacies and generic substitution

AHM Medical Management: Medical Management for Pharmacy Services - Part II

Introduction

In Medical Management for Pharmacy Services - Part I we introduced you to various strategies that health plans and PBMs use to manage pharmacy benefit programs. This lesson describes two of those strategies-the use of formularies and drug utilization review-in more detail. We begin the lesson with a discussion of the development, structure, and operation of drug formularies, and describe some of the challenges that health plans face in establishing formularies. We then discuss how health plans use drug utilization review programs to support the safe, effective, and appropriate use of prescription drugs. We end the lesson with a description of the regulatory requirements and ethical considerations that affect pharmacy benefit management.

Drug Formularies

As we mentioned in lesson Medical Management for Pharmacy Services - Part II, drug formularies are lists of drugs approved for use within a healthcare setting. Health plans use drug formularies as part of a formulary system that determines the methods the organization uses to evaluate and select drugs and the guidelines and protocols the organization uses to operate the formulary. Such guidelines and protocols include physician prescribing guidelines, drug administration protocols, drug dispensing protocols, purchasing guidelines, and drug utilization suggestions.1 A formulary system may also develop and distribute educational material to providers, pharmacists, and patients.

Formulary System Development

In most health plans, the formulary system is developed and managed by a pharmacy and therapeutics (P&T) committee composed of primary care and specialty physicians, pharmacists, a health plan's medical director(s), and other healthcare professionals, such as nurses. Because certain specialties (e.g., internal medicine, family practice, oncology, geriatrics, obstetrics/gynecology, psychiatry, and

pediatrics) prescribe a large percentage of the prescriptions written, those specialties usually have representatives on the P&T committee. Some nonclinical health plan representatives, such as legal, administrative, or financial experts, may also serve on P&T committees. In addition, some health plans include health education managers, pharmacology experts, or others with particular expertise that can enhance the effectiveness of the committee. One study reported that the average number of members on a P&T committee is about ten.2

P&T committees may meet monthly, every other month, quarterly, or on a schedule that most closely meets the needs of the particular health plan. In most organizations, the P&T committee has the ultimate responsibility for formulary management and development; however, the P&T committee may establish subcommittees to help with these tasks.

PBMs that offer drug formularies usually have their own P&T committees. The P&T committee of a PBM typically develops a master formulary and then works with a contracting health plan to develop a customized formulary for the health plan. Typically, the health plan's customized formulary is a subset of the master formulary. For health plans that do not have their own P&T committee, the PBM's P&T committee functions as the health plan's decision maker with regard to formulary policies with input from the health plan. 3

P&T committees perform some or all of the following functions for a health plan:

Evaluation and selection of drugs for inclusion in the formulary based on each drug's effectiveness, safety, ease of use, and cost

Development and implementation of policies for periodically updating the formulary and for making additions, deletions, or modifications

Development and implementation of prior authorization policies for certain drugs or drug classes

Development of policies for generic and therapeutic substitution Development of policies and procedures for handling requests for nonformulary

drugs, including exceptions and appeals Oversight of drug utilization review and feedback to prescribers and pharmacists Provision of prescriber, pharmacist, and patient education regarding the

formulary; the health plan's philosophy for choosing drugs for inclusion in, or exclusion from, the formulary; and the safe and effective use of prescription drugs

Development of policies for accepting/rejecting rebates or discounts from pharmaceutical manufacturers for inclusion of their products in the formulary

Development of policies to support compliance with the formulary

The P&T committee also participates on other health plan committees to facilitate the development or revision of clinical practice guidelines (CPGs), the use of drugs in disease management programs, and other medical management initiatives in which pharmaceuticals play a key role.

Drug Evaluation and Selection

One of the most important functions of the P&T committee is the evaluation and selection of drugs to be included in the formulary. Figure 9B-1 outlines some key factors that P&T committees typically consider when evaluating a new drug for inclusion in its formulary.

The P&T committee typically relies on information from the Food and Drug Administration (FDA) to determine the clinical safety and efficacy of a proposed drug. The Food and Drug Administration (FDA) is an agency of the federal government that regulates the manufacture, distribution, and marketing of drugs. Prescription drugs cannot be produced or sold without FDA approval. The committee gathers additional information about proposed drugs from peer-reviewed clinical literature and information from the pharmaceutical manufacturer. The committee is especially interested in whether it has been conclusively proven that a new, more expensive

drug produces better clinical outcomes than does an existing, therapeutically equivalent formulary drug.

Issues such as patient and provider compliance and drug acceptability also influence P&T committee drug selections. For example, a decision to add a new drug to the formulary or replace an existing drug should address the following questions:

Is the new drug easier or more difficult for the patient to use appropriately than a comparable existing drug? Does it require fewer or more treatments? Does it have fewer or more side effects?

What is the rate of utilization? If a drug that many providers routinely prescribe is deleted from the formulary, will that deletion result in provider confusion and the need for an expensive campaign to change their prescribing patterns? Would it be better overall to leave the drug in the formulary?

What effect, from a public image standpoint, will deletion of a heavily used, popular drug have on the health plan?

Are there patients for whom the current drug is contraindicated and for whom the new drug would be acceptable? Are there specific indications for the new drug that the current drug does not cover?

Formulary Structure and Operation

Drug formularies can be broadly classified as open formularies or closed formularies. An open formulary is one in which use of the drugs on the preferred list developed by the P&T committee is voluntary. Formulary compliance is encouraged, and the health plan or PBM may even develop certain incentives to support compliance, but nonformulary drugs are also covered to some extent. In a closed formulary, compliance is mandatory and only those drugs on the preferred list are covered by the health plan. No reimbursement is available for nonformulary drugs except in extraordinary circumstances or with the health plan's approval.

Because a health plan's ability to establish a closed formulary is often determined by state law, most health plans offer formularies that combine characteristics of both open and closed formularies. Such formularies are commonly referred to as managed formularies. They may also be called restricted or partially/selectively closed formularies. For example, a health plan with a managed formulary may have a preferred drug list that prescribers are expected to use but, under certain circumstances, may allow coverage of prescription drugs not on the formulary. Tiered or incentive formularies are examples of managed formularies in which both formulary and nonformulary drugs are covered, but copayments and pharmacy reimbursement vary according to whether the drugs are (1) included in the formulary and (2) branded or generic.

Some health plans and some states have developed negative formularies, which are "lists of drugs within a specified therapeutic category that cannot be prescribed" under the formulary. 6 For example, states may develop negative formularies to address the pharmacy benefits available to the Medicaid population. More often, however, disallowed drugs are listed as exclusions or noncovered benefits under a plan's benefit design.

Health plans and PBMs usually publish a printed book or booklet of their formulary and disseminate that book or booklet to participating pharmacists and plan providers. Some health plans print pocket-sized, quick references of their formulary and distribute them to patients to encourage compliance with the formulary. Most health plans and PBMs also provide electronic formularies. Electronic formularies are computer information systems that link pharmacies and physicians' offices to health plans' information systems to provide formulary information.

The pharmacy and therapeutics (P&T) committee for the Elixir Health Plan is considering the following formularies for use by Elixir:

Formulary A consists of lists of drugs within a specified therapeutic category that cannot be prescribed under the formulary.

Formulary B mandates compliance with the formulary, and only those drugs on the preferred list are covered by Elixir.

From the answer choices below, select the response that correctly identifies the types of formularies represented by Formulary A and Formulary B.

Formulary A: closed formulary;   Formulary B: negative formulary

Formulary A: negative formulary;   Formulary B: closed formulary

Formulary A: tiered formulary;   Formulary B: negative formulary

Formulary A: negative formulary;   Formulary B: tiered formulary

Answer=B

Formulary Policies and Procedures

In addition to determining which drugs will be included in a health plan's formulary and how the formulary will be structured, the P&T committee develops policies and procedures that specify how prescription drugs are to be prescribed and dispensed.

Drug Classification

In the printed or electronic form of the formulary, a drug is usually ranked according to its cost-effectiveness. Drugs that are the most cost-effective receive a ranking of one dollar sign ($), while those drugs that are the least cost-effective may receive up to five dollar signs ($$$$$).

Drug Classification

Drugs included in the formulary may also be classified according to how freely they can be prescribed. Unrestricted drugs are drugs that providers may prescribe freely without obtaining permission from the health plan. Monitored drugs require some sort of review or approval by a plan physician or group of physicians before the prescription can be filled. Restricted drugs are drugs that may only be prescribed by certain providers or for certain diseases or conditions. For example, a protease inhibitor to treat an HIV patient might be a restricted drug on a health plan's formulary. Conditional drugs are drugs that are only available in the formulary for a limited time on a trial basis.8

Drugs included in a health plan's formulary may be classified according to how freely they can be prescribed. Conditional drugs can correctly be defined as drugs that:

may be prescribed by providers only under extraordinary circumstances

require some sort of review or approval by a plan physician or group of physicians before the prescription can be filled

are only available in the formulary for a limited time on a trial basis

may only be prescribed by certain providers or for certain diseases or conditions

Answer=C

Prior Authorization and Exceptions

Health plans that operate closed or managed formularies may require physicians to obtain prior authorization before prescribing certain drugs in order to certify their medical necessity. Prior authorization policies typically apply to expensive, potentially toxic, or nonformulary drugs. In many health plans, the authorization process is semi-automated. Physicians can obtain prior authorizations by telephoning the plan and responding to prompts on an interactive voice response system that request clinical and patient information. After providing the requested information, the physician is either given prior authorization or is transferred to a pharmacist for additional clarification of the medical necessity of the prescribed drug. Health plans frequently use CPGs as a basis for evaluating prior authorization requests.

If a prior authorization request is denied, the physician or patient can file a request for an exception, along with clinical and other relevant information supporting the request. Decisions are made after reviewing patient and provider information and widely accepted CPGs. For example, an exception for a nonformulary drug may be granted if a patient has a rare allergy to a formulary drug routinely prescribed for a particular condition, or if all therapeutically equivalent formulary drugs have been prescribed for a patient but have not been effective. 7 In most health plans, exception decisions are made by the plan's medical director or pharmacy director.

If the health plan does not grant an exception, the patient or physician can file an internal appeal. Such appeals are reviewed by both a physician and a pharmacist. Most states have rules or regulations that require health plans to approve or deny appeals related to coverage of nonformulary drugs within a specified time frame, usually 30 days after submission of the appeal. In addition, most states also require health plans to establish procedures for expediting the appeal process for urgent situations. The Centers for Medicare and Medicaid Services (CMS) has similar timeliness requirements for appeals from Medicare recipients. Although most appeals are resolved at the plan level, some states allow patients whose appeals have been denied to request an examination of the case by an external review board.

Prior authorization and exception processes can be cumbersome for both patients and prescribers. They can also increase the health plan's administrative expenses. As a result, many health plans are turning to alternatives such as two- and three-tiered copayment structures to reduce utilization of nonformulary drugs.

Generic and Therapeutic Substitution of Drugs

Health plans also use generic and therapeutic substitution to help manage prescription drug utilization and cost. Generic substitution is the practice of dispensing a generic drug to a patient instead of a brand-name drug. Many health plans require pharmacists to dispense generic substitutes if a generic is available. In most cases, physician approval of generic substitution is not required. Insight 9B-1 provides some background on the development and use of generic drugs.

Therapeutic substitution is a less common practice than generic substitution. Therapeutic substitution, also known as therapeutic interchange or drug switching, is the dispensing of a different chemical entity within the same drug class. While generic substitution involves substituting a drug with the identical active ingredients as the brand-name drug prescribed, therapeutic substitution involves substituting a drug that has different active ingredients than the prescribed brand-name drug. The substituted drug, however, has been shown to produce the same therapeutic outcomes as the prescribed drug. Unlike generic substitution, physician approval is always required for therapeutic substitution. Some PBMs and health plan1s offer financial incentives to pharmacists to encourage appropriate therapeutic substitution.

Because therapeutic substitution requires that the pharmacist contact the physician for authorization of the substitution, it is a time intensive process. Therefore, therapeutic substitution may be used more frequently in health plans in which the health plan has more influence over physician prescribing habits (e.g., staff model HMOs) or in a mail-order pharmacy program.11

Step-Therapy Protocols

Step-therapy is a form of prior authorization that reserves the use of more expensive medications for cases in which the use of less expensive medications has been unsuccessful. Prescribing guidelines for step-therapy are described in step-

therapy protocols, also known as step-care protocols or drug step-therapy protocols, that list the possible drug treatments for a particular condition in order, from the most cost-effective to the least cost-effective. Generally, providers should prescribe the most cost-effective medication to treat a condition first. If the patient's outcome is not satisfactory, a less cost-effective medication may be used.

Pharmaceutical point-of-service (POS) systems can usually support step-therapy protocols by allowing the pharmacist to access data indicating whether the patient has used a less expensive drug prior to the prescription he or she is seeking to fill. If the step-therapy protocol has been satisfied, the POS system will issue online authorization for the use of a more expensive medication.12

Step-therapy is appropriate for situations in which

A significant percentage of those treated with the initial therapy will respond favorably and not need the second therapy

The delay created when a patient does not respond favorably to the first therapy and moves to a second therapy will not cause serious or permanent effects

A drug or class of drugs has significantly greater potential side effects or complications than do other medications used to treat the same condition

Selection of drugs for step-therapy protocols should be based on scientific evidence from the medical literature supporting the medical effectiveness and appropriateness of the therapy.

Dispensing Guidelines

Whereas prior authorization, exceptions, generic and therapeutic substitution, and step-therapy protocols manage utilization by specifying the types of drugs that can be prescribed and dispensed, dispensing guidelines focus on the quantity of drugs that can be dispensed. For example, most health plan formularies limit the number of refills allowed per prescription, the number of doses per refill, or the amount and/or strength of a particular medication that is dispensed when a prescription is filled or refilled. Dispensing guidelines are typically based on an evaluation of the costs per day and the number of doses per day for a medication.

Challenges Related to Formularies

Formularies (especially closed or managed formularies) can have a significant impact on member and provider satisfaction. For example, member satisfaction is often linked to the ease with which plan members can obtain a drug (often the brand-name drug that they have seen, read, and heard about or one that has been prescribed by their plan providers). Member satisfaction is also linked to plan members' perceptions that the "best" and most effective drugs are the ones that cost the most. Provider satisfaction is related to how closely the formulary matches the provider's prescribing patterns. If the drugs that members and providers want and expect are not available in the health plan's formulary or if members and providers believe that they have no

choice regarding substitute drugs, they may become dissatisfied with the overall health plan experience.

Health plans can eliminate or reduce dissatisfaction by carefully developing the formulary and the policies that govern the use of prescription drugs. Periodically evaluating the formulary and making necessary additions, deletions, or modifications can also reduce member and provider dissatisfaction. In addition, health plans can use education campaigns directed at physicians, pharmacists, and patients to inform them about the clinical and financial benefits of generic versus brand-name prescription drugs.

Another related challenge that health plans must address is compliance. Most pharmacies and physicians participate in more than one health plan network and as a result must keep track of more than one formulary. The complexity and confusion of dealing with multiple formularies can lead to problems with compliance.

Health plans can address some of these problems by providing technological and administrative support. For example, providing online formulary information at the point of service makes it relatively easy for most pharmacists to comply with generic substitution programs and dispensing guidelines. The fact that physician approval is not required for generic substitution simplifies compliance even further.

Encouraging physician compliance requires a slightly different approach. Unlike pharmacies, physicians may not have easy access to formulary information. Health plans can address this problem by targeting educational materials concerning formularies and the benefits of generic substitution to physicians and other healthcare providers. Health plans can also encourage physician compliance by making formularies easier for busy physicians to use. For example, a few physicians are currently participating in trials of electronic devices (e.g., small hand-held computers that transmit patient data and drug information during the patient office visit) that can be used in the examination room to obtain formulary information and even print out prescriptions.

Other methods that health plans are using to address physician compliance with formularies include

Use of academic detailing to inform physicians about their prescribing patterns

Use of subformularies that are subsets of the entire formulary (e.g., formularies designed for individual medical specialties)

Computer software programs that match appropriate drugs with specific diagnoses

Some health plans have also used sample-closet programs-programs that put samples of formulary products on site in a physician's office for their prescribing use-to encourage formulary compliance. Increases in government-imposed procedural requirements, however, have reduced the attractiveness of these programs and many physicians have stopped providing drug samples.

Health plans can also provide financial incentives for formulary compliance. For example, plans with closed or managed formularies may not reimburse the pharmacy for nonformulary drugs or for brand-name drugs that have generic substitutes. In areas where formulary compliance is a major problem, health plans may need to provide further inducements. Health plans can require physicians or physician groups to accept some of the risk for the pharmacy benefit in the form of capitation contracts, withholds, or risk pools. Awarding bonuses for compliance with the health plan's formulary can also encourage compliance. When physicians accept responsibility for the financial results of pharmacy services, they tend to prescribe more generics and comply with the formulary more often.

Drug Utilization Review and Management

As we discussed in Medical Management for Pharmacy Services - Part I, drug utilization review (DUR), or drug utilization evaluation (DUE), is a process through which a health plan or a PBM evaluates whether drugs are being used safely, effectively, and appropriately. A natural consequence of DUR is drug utilization management, which calls for the health plan or PBM to take the information from DUR and address any perceived problems by applying management techniques to improve prescribing patterns, pharmacist dispensing, and patient compliance with drug therapy, and to deal with issues related to dosage, drug toxicity, and adverse drug interaction.

DUR programs consist of the following five steps:

Defining the criteria for appropriate or optimal drug use. Two types of criteria may be used in defining optimal drug use-diagnosis criteria and drug-specific criteria. Diagnosis criteria are standards that identify the types of diseases or conditions or the types of patients for which a drug should be used. Drug-specific criteria are standards that set forth the appropriate dosages, duration of treatment, and other elements related to the use of a particular drug.15

Measuring actual use. Measuring actual use involves reviewing information on prescribing and dispensing patterns obtained from medical records, pharmaceutical claims data, and prescriptions themselves.

Comparing actual use to identified criteria for optimal drug use. In this step of the process, problems with physicians' prescribing patterns or the inappropriate or ineffective use of drug therapies for individual patients becomes apparent.

Taking corrective action or making appropriate interventions to effect change. Once the problem (i.e., physician prescribing patterns or ineffective drug therapy regimens) is identified, the health plan must take corrective action to try to remedy the problem. If the problem is a physician's overprescription of antibiotics, for example, the health plan may send a letter to the physician

including literature to educate the physician about the appropriate use of antibiotics as drug therapy.

Evaluating the impact of DUR on drug utilization. After the health plan has taken corrective action designed to change the problem, the results of the intervention must be evaluated. For example, in the preceding example, after the physician received the literature about appropriate use of antibiotics, did his or her prescribing patterns for that class of drug change?

These steps are incorporated into each of the three DUR categories: prospective, concurrent, and retrospective review.

Prospective DUR

Prospective drug utilization review is a type of DUR that focuses on the drug therapy for a single patient instead of overall usage patterns and is designed to allow a pharmacist to intervene before a drug is administered or dispensed to a patient, to avoid undesirable results. Either by rule or by statute, most states require prospective DUR be performed by pharmacists. These rules and statutes are patterned after the Omnibus Budget Reconciliation Act of 1990 (OBRA-90) provision that requires prospective DUR be performed for Medicaid patients.16

OBRA-90 recommends that pharmacists screen for the following factors before dispensing a prescription medication:

Therapeutic duplication, a situation in which a patient is inadvertently prescribed more than one medication for the same therapeutic indication

Drug-disease contraindications Drug-drug interactions, including serious interactions with non-prescription

products Incorrect drug dose or duration of therapy Drug-allergy interactions Clinical abuse or misuse, particularly of controlled substances Step-therapy protocols

Two challenges in implementing prospective DUR lie in the requirement of immediate access to information at the point-of-service for prescription dispensing and the need for physicians and pharmacists to work together to see that the patient's needs for drug therapy are met in the most effective, least costly manner possible. 17

Concurrent DUR

Concurrent drug utilization review is a type of DUR that takes place while drug therapy is in progress. Concurrent DUR typically occurs when a health plan or one of its affiliated pharmacists performs a periodic audit of the medical records of a certain group of patients or patients taking a particular drug. If the audit reveals some drug therapy adjustment is necessary, the pharmacist or the health plan will contact the

prescribing doctor to discuss treatment alternatives that may better or more safely meet the patients' needs.

Retrospective DUR

Retrospective drug utilization review is a type of DUR that is based on historical data and that takes place after the drug therapy has begun. OBRA-90 also requires that pharmacists perform retrospective review for Medicaid patients, and this type of DUR has been adopted by many states for use with all patients. Although retrospective DUR is helpful in building information to change physicians' prescribing patterns and to document a drug's effectiveness in treating a particular disease or condition, it does not really help patients while they are following a drug therapy.

Figure 9B-2 lists practices that can be identified by using prospective, concurrent, and retrospective DUR.

Drug errors, which include adverse drug reactions as well as "errors in ordering, transcribing, dispensing, and administering drugs,"18 have become increasingly prevalent in the healthcare environment. For example, researchers at the University of Toronto identified adverse drug reactions as falling somewhere between the fourth and the sixth leading cause of deaths in the United States.19 The Institute of Medicine's recent report on the prevalence and cost of medical errors (discussed in the lesson Quality Management) confirms the severity of the problem.

Researchers have identified a number of resources that health plans can use to reduce drug errors. For example, a study partly funded by the American Society of Health-System Pharmacists Research and Education Foundation has shown that having a pharmacist participate on hospital rounds can lower the number of adverse drug events caused by prescribing errors.20 Technology can also help health plans lower the number of drug errors. For example, one company offers hospitals a computerized system that helps healthcare personnel more accurately dispense and administer drugs and provides checks to prevent adverse drug reactions. The company uses bar codes imprinted on caregivers' identification badges, patients' wrist bands, and drug packaging to provide feedback on drug usage. The caregiver scans all the relevant bar codes into a computer link at a patient's bedside. The bedside system checks the dosage, time of administration, and type of drug for the particular patient and either approves or denies the administration of the drug.21 Unfortunately, implementing new procedures or technology is expensive and often requires behavior modification of healthcare personnel.

DUR techniques can also be used to reduce drug errors. We have already discussed how a pharmacist's online review of a particular patient's claims data at the point of dispensing can alert the pharmacist to possible drug interactions and other warnings and cautions related to the drug prescribed. This type of intervention by the pharmacist at the point of service is an example of prospective DUR. Other methods used by health plans to prevent drug errors include

Prompting physicians to review patients' records prior to or during an office visit for indications of drug allergies, chronic conditions that are being treated by drug therapy, or other information that could affect the effectiveness or safety of a prescribed drug

Prompting physicians to ask patients during their office visits about other drugs they are currently taking including vitamins, herbal supplements, or over-the-counter drugs and to add the information to medication sheets or problem lists in the patients' records

Using case management to monitor the drug therapy of patients who, for an extended time, take more than one prescription drug or are under the care of more than one physician (Case management in such situations may be especially helpful for senior citizens who often are most at risk for drug errors.)

Requiring pharmacists to perform concurrent and retrospective DUR and notify physicians of favorable and unfavorable drug therapies they have used or are using for their patients

Regulatory Requirements Affecting Pharmacy Services Management22

Both federal and state laws and regulations affect the provision of pharmacy service. We have already discussed the role of the FDA in regulating the production and sale of prescription drugs. The Comprehensive Drug Abuse Prevention and Control Act of 1970, a federal law, also regulates the manufacturing, distribution, dispensing, and delivery of drugs, especially those that have the potential for abuse or cause people to develop physical or psychological dependence on them.23

States have a variety of laws regulating the delivery of pharmacy services by health plans. These laws relate to such issues as the

Pharmacists that health plans must include in their networks Use of formularies Use of mail-order pharmacies Practice of generic or therapeutic substitution Coverage required for certain types of drugs Use of drug utilization review health plan's liability for pharmacy decisions

We briefly discuss these topics here. For a more complete discussion of these topics, please see AHM 510, Health Plans: Governance and Regulation.

For each of the three categories of drug utilization review (DUR)-prospective review, concurrent review, and retrospective review-certain practices can be identified. The practice of over- and underutilization of a specific drug would most likely be identified during:

prospective review, concurrent review, and retrospective review

prospective review and retrospective review only

concurrent review and retrospective review only

retrospective review only

Answer=C

Open Pharmacy and Freedom of Choice Laws

Open pharmacy laws allow individual members to choose their own pharmacies. One type of open pharmacy law is an any willing provider statute. Any willing provider laws allow any pharmacy that agrees to accept the terms and conditions, including reimbursement, that the health plan or PBM sets for participation in the network to be a network pharmacy. Open pharmacy laws are focused on the rights of pharmacies.

Freedom of choice laws focus on the rights of patients. In some states, such laws may allow plan members to choose an out-of-network pharmacy with no monetary penalty.

Formulary Laws

Federal law grants states the right to establish Medicaid drug formularies. Because of consumer concern related to the use of formularies for both government and private healthcare programs, states have struggled with developing appropriate regulation

related to the use of formularies. In many instances, instead of developing a ban on the use of formularies, a state will mandate that certain drug classes or drug therapy for certain chronic diseases (e.g., diabetes) be covered by health plans. Recently, the state of California required several health plans to reinstate several drugs that had been deleted from their formularies. Such state action has health plans concerned that states may begin micromanaging formularies and undermine their effectiveness.

Some states now have requirements that health plans must disclose their use of formularies and how the formularies work to prospective and current enrollees. Many of the states that have passed formulary disclosure requirements also require health plans to outline the process a member must follow to obtain a drug not on the health plan's formulary. States may also have requirements relating to the length of time the process to request a nonformulary drug can take and a provision for external review of a denied request.

Mail-Order and Online Pharmacy Laws

Some states have enacted laws that prohibit health plans from requiring exclusive use of a mail-order pharmacy for all member prescriptions. A more recent trend is the requirement in some states that mail-order pharmacists be licensed in every state in which a drug is delivered to a member, instead of just the state in which the mail-order company is located. Some states also have laws or regulations that give preference to in-state versus out-of-state mail-order pharmacies. Because some issues have been raised in relation to mail-order pharmacists' ability to address patient questions and adequately convey warnings about possible drug interactions or other medication-related issues, some states require mail-order pharmacies to provide a certain number of hours of counseling services each week.

Some states are also considering legislation to regulate the use of online pharmacies and at least one state bans Internet sales of drugs unless physicians see the patient for whom they prescribe drugs. The FDA has begun to identify and sanction online pharmacies that are violating federal and state regulations that require a licensed healthcare practitioner to physically examine a patient before prescribing a drug for the first time.24

Generic and Therapeutic Substitution Laws

States have either mandatory or permissive generic substitution laws. As the term implies, mandatory substitution requires the pharmacist to substitute a generic drug for a brand-name drug unless otherwise requested by the purchaser or the purchaser's physician. Permissive substitution allows, but does not require, the substitution of generics for brand-name drugs. In every state, prescribers have some mechanism that allows them to prevent the pharmacist from substituting a generic for a brand-name drug; in most states, a pharmacist must obtain the member's consent before substituting generics for brand-name drugs.

A handful of states have passed laws relating to generic substitution for narrow therapeutic index (NTI) drugs, which are drugs "that have less than a two-fold difference between (1) the median lethal dose and the median effective dose or (2)

the therapeutic concentration and the minimum toxic concentration in the blood." Generally, such laws prohibit the substitution of generic drugs for NTI drugs.

Most state laws do not address the issue of therapeutic substitution; however, California expressly prohibits therapeutic substitution.

With respect to generic and therapeutic drug substitution laws, it most likely is correct to say:

that most state laws expressly permit the practice of therapeutic substitution

that most states prohibit the substitution of generic drugs for narrow therapeutic index (NTI) drugs that most state laws require a pharmacist to obtain a member's consent before substituting generic drugs for brand-name drugs

all of the above

Answer=C

Laws Mandating Coverage for Particular Drugs

Some states mandate that health plans offer coverage for the use of particular drugs, for example, certain experimental drugs used to treat cancer or medications used for the treatment of pain. Health plans operating in states with coverage mandates are not allowed to exclude such medications. States may also require that health plans offer coverage of drugs for off-label uses, that is, for uses other than those stated in the labeling approved by the Food and Drug Administration. Even in the absence of state mandates, health plans must carefully examine drug exclusions because members can sue based on the legal theories of negligent denial or bad faith claims.

Drug Utilization Review Laws

Following the federal government's lead in requiring prospective and retrospective DUR for Medicaid patients based on provisions in the Omnibus Budget Reconciliation Act of 1990, almost every state has a law that requires prospective DUR, and many also require retrospective DUR. To facilitate DUR, many states have enacted laws that require pharmacists to maintain patient profiles, screen the profiles for overutilization, underutilization, drug interactions, etc., and make offers face-to-face, in writing, or by telephone to counsel patients on the appropriate use of prescribed drugs. Some state laws require that the pharmacist consult with the prescriber if screening reveals a potential problem related to the drug therapy.

Health plans or pharmacies that advertise their prospective DUR systems may subject themselves to increased liability if the information gathered in the DUR indicates a problem and no action is taken to address the problem. 26

Liability and Other Legal Issues

In the lesson Environmental Influences on Medical Management, we discussed how the doctrine of vicarious liability affects health plan medical management decisions. This doctrine also applies to a health plan's decisions regarding pharmacy services. For example, in some cases, pharmacists and physicians have been shown to be "employees" of the health plan based on their contract with the health plan to provide services. In addition, a health plan may be held liable for its pharmacy policies under the corporate negligence doctrine if such policies bring harm to a patient.27 For example, if a plan member can show in court that a health plan's decision to deny authorization of a drug resulted in harm or injury that could have been avoided or lessened by use of that drug, the plan member may be able to obtain damages from the health plan.

In some circumstances, rebate programs offered by manufacturers may be considered violations of federal Medicare/Medicaid anti-kickback statutes and/or state anti-kickback laws.28

In addition to the regulatory requirements we have mentioned, states may require preapproval of communications materials for members, pursue resolution of member complaints, and perform periodic regulatory audits of a health plan's pharmacy services.

Accreditation Issues

Although no accrediting organization accredits PBMs, most accrediting organizations evaluate the pharmaceutical services provided by PBMs in their review of health plans. For example, NCQA considers the use of a PBM as delegation and requires PBMs to comply with applicable UM standards. The use of drugs is an integral component of accreditation standards used to assess CPGs. The pharmacy benefit may also impact member satisfaction. NCQA encourages the appropriate use of drug therapy and compliance with drug therapy via its HEDIS measures. For example, at least one HEDIS effectiveness of care measures relates to the use of pharmaceuticals-the measure that requires information on beta blocker treatment after a heart attack. HEDIS behavioral health measures include a requirement that health plans monitor compliance with antidepressant therapy. JCAHO requires drug utilization evaluation (another term for drug utilization review) as part of a health plan's quality assurance program.

Pharmaceutical Coverage Issues

The pharmacy benefit was initially an add-on benefit. Today, attitudes toward pharmacy benefits have changed. Most health plans now view the pharmacy benefit as an integral part of their overall benefit package. Employers see enriched pharmacy benefits as a way to attract and retain qualified workers. Consumers often view pharmacy benefits as an entitlement and consider benefit exclusions or limitations as infringements of their right to the "best" pharmacy products and services.

This shift in focus has raised some important questions related to coverage and exclusions. For example, should a health plan authorize payment for an experimental

drug that may help a critically ill patient? Should health plans provide coverage for quality-of-life drugs and, if so, under what circumstances. A quality-of-life (QOL) drug is a drug that improves "patients' satisfaction with the quality of their lives but does little to improve medical outcomes or to reduce overall healthcare costs."

Examples of drugs that health plans may classify as QOL drugs include

Anabolic steroids Cognition-enhancing drugs Erectile dysfunction agents Growth hormones

Hair growth-promoting agents

Infertility drugs Oral contraceptives Topical antiaging preparations

Weight-loss medications30

In some cases, QOL drugs may be medically necessary and appropriate. For example, weight-loss medications may improve medical outcomes for obese patients whose weight represents a significant health risk. For the general population, however, QOL drugs are discretionary.

The criteria health plans use to make coverage decisions about prescription drugs have also changed. Traditionally, health plans based decisions about coverage for new drugs on medical necessity and cost-effectiveness. Now, health plans must also consider consumer, provider, and purchaser expectations. Cost-benefit analysis has allowed health plans to respond to some of these demands and expectations by providing at least partial coverage for QOL drugs. For example, because of consumer and employer demand, most health plans currently provide some level of coverage for oral contraceptives.

Double-digit cost increases for existing drugs and a constant flow of expensive new drugs, many of them QOL drugs, are making such coverage decisions more difficult. On one hand, health plans have an obligation to develop drug policies that provide the greatest benefit to the majority of their members. On the other hand, they must operate within limited budgets. How health plans balance these potentially conflicting priorities can have significant legal and ethical consequences.

A health plan's pharmacy benefit decisions can also affect physicians and pharmacists. Physicians must balance their obligations to provide patients with the best possible treatment with their contractual obligation to the health plan to provide the most cost-effective therapy possible. For example, a physician who believes that a patient with a chronic condition can be treated best with a nonformulary drug that the health plan will not cover faces a difficult decision. That decision becomes even more difficult if the physician suspects that the patient will not have the prescription filled if the health plan won't cover the drug cost. Reimbursement arrangements that

reward physicians for prescribing fewer or less expensive drugs may create additional pressures to underutilize pharmaceuticals for therapy.

Conclusion

Pharmacists must balance their financial and contractual obligations to the health plan with their professional obligation to see the patient is not harmed and receives the best possible drug treatment. Just as physicians swear to uphold the Hippocratic oath or other ethical codes that their medical schools or employers require, pharmacists must adhere to the Code of Ethics for Pharmacists developed by the American Pharmaceutical Association.

Health plans cannot foresee every legal or ethical problem that may arise; however, health plans can prepare for such situations by developing policies to govern the use of drugs and identifying steps that must be followed to grant exceptions to their policies.

Pharmacists must balance their financial and contractual obligations to the health plan with their professional obligation to see the patient is not harmed and receives the best possible drug treatment. Just as physicians swear to uphold the Hippocratic oath or other ethical codes that their medical schools or employers require, pharmacists must adhere to the Code of Ethics for Pharmacists developed by the American Pharmaceutical Association.

Health plans cannot foresee every legal or ethical problem that may arise; however, health plans can prepare for such situations by developing policies to govern the use of drugs and identifying steps that must be followed to grant exceptions to their policies.

AHM Medical Management: Medical Management for Specialty Services

Pg 1 to 66

Medical Management for Specialty Services

Course Goals and Objectives After completing Medical Management for Specialty Services, you should be able to:

Explain why a health plan might choose to use a carve-out arrangement to deliver a specialty service

Describe several medical management challenges for behavioral healthcare Explain the strategies that health plans and managed behavioral healthcare

organizations use to manage quality and costs for behavioral healthcare

Understand quality and utilization management strategies for dental care, vision care, and complementary and alternative medicine

Medical Management for Specialty Services

Introduction

Many employers use healthcare benefit packages to attract potential new employees and keep current employees satisfied, so health plans are constantly looking for ways to make their benefit offerings more appealing to employers and employees. One way that health plans can enhance their benefit packages is by offering specialty services.

Specialty services are healthcare services that are generally considered outside standard medical-surgical services because of the specialized knowledge required for service delivery and management. Specialty services often involve different types of providers and delivery systems than do standard medical services. Health plans may cover some types of specialty services (e.g., behavioral healthcare, oncology services) in their standard medical benefit packages, while offering other types of specialty services (e.g., dental care, vision care) in a separate supplementary benefit package.

In this lesson we examine medical management issues related to the delivery, utilization, and quality of specialty services. We begin by exploring a health plan's options for arranging the delivery of a specialty service. Next we discuss several specific types of specialty services-behavioral healthcare, dental care, vision care, and complementary and alternative medicine-and the medical management issues surrounding them, such as the use of clinical practice guidelines, utilization review, and quality assessment and improvement.

Throughout the lesson, we address network management and benefits administration policy issues that may affect the quality and utilization of specialty services. We also describe applicable regulatory requirements and accreditation issues.

Options for the Deliver of Speciality Services

Health plans sometimes develop and maintain their own programs for the delivery of specialty services; however, many health plans arrange and manage the delivery of these services through carve-out (delegation) arrangements with other health plans that focus on specialty services, such as managed behavioral healthcare organizations (MBHOs). Insight 9C-1 explains more about the use of carve-out arrangements for specialty services.

Delegating (carving-out) specialty services is a relatively common practice in the health plan industry. A specialty service carve-out may offer a health plan benefits that include

Clinical and medical management expertise in a specialty service that an individual health plan may find difficult to replicate

Focused management of a single aspect of healthcare rather than a whole benefit package

Knowledge about network management for the specialty service providers and, perhaps, an established network of credentialed providers who have the education and training necessary to deliver the specialty service

Greater cost-effectiveness for specialty service medical management programs than a single health plan could achieve because of the economies of scale that may be realized by a specialty service health plan that serves multiple health plans

Improved statistical results on quality improvement and outcome studies for low-volume specialty services through the consolidation of data from several health plans

Improved member access to specialty services because of a larger provider panel than an individual health plan could support, again due to the total number of members from various health plans

Favorable compensation rates from specialty service providers, based on the large volume of patients that the specialty health plan can bring to providers

Health plans that choose to develop and manage their own specialty services programs may find that they are able to offer better continuity of care to their members tha health plans that carve out specialty services can offer. For example, a

health plan may be able to coordinate behavioral healthcare services with existing primary care/preventive services or apply its case management or disease management processes to behavioral healthcare.

On the other hand, health plans that contract with experienced specialty service health plans may find that their members receive greater continuity of care within the specialty service network. For instance, because of their experience with case management, an MBHO may be better able to coordinate a patient's needs for behavioral healthcare across different providers and care settings than a health plan without such experience.

A health plan evaluates the costs and benefits of delegation versus in-house management when deciding whether to carve out a specialty service and which aspects to delegate. Regardless of which approach it takes, the health plan is ultimately responsible for the quality of care for the specialty services included in its purchaser contract. Even if the carve-out of a specialty service is comprehensive, regulatory bodies and accrediting agencies hold the health plan accountable for the proper performance of any delegated functions. With the exception of MBHOs, there are no nationally recognized accreditation programs for specific types of specialty service health plans. Therefore, a health plan must carefully evaluate the policies, procedures, and capabilities of any organizations that render patient care or perform medical management functions on behalf of the health plan. The health plan must continue to monitor each delegate's quality of care and performance of delegated functions throughout the term of the carve-out contract.2

Examples of specialty health plans include dental health maintenance organizations (DHMOs), managed vision care organizations (MVCOs), and managed behavioral healthcare organizations (MBHOs). Of these specialty health plans, nationally recognized accreditation programs are available specifically for:

DHMOs, MVCOs, and MBHOs

DHMOs and MBHOs only

MVCOs only

MBHOs only

Answer=D

Many of the same medical management techniques that we have discussed previously in this course manual apply to managing specialty services; however, specialty services have some unique characteristics that affect medical management. We will discuss these characteristics in the following sections.

Behavioral Healthcare

Behavioral healthcare is the provision of mental health and chemical dependency (or substance abuse) services. Generally, behavioral healthcare treatment focuses on (1) protecting patients and others from harm that may result from behavioral health disorders, (2) relieving incapacitating symptoms (e.g., insomnia, inability to concentrate), (3) returning patients to the functional status they had before the behavioral disorder appeared, and (4) preventing acute episodes.

Drug therapy, psychotherapy, and counseling are the most common treatment approaches for behavioral disorders. Behavioral healthcare providers often use a combination of drug therapy and psychotherapy or counseling. Psychotherapy may be brief, goal-oriented therapy or long-term therapy. It may be administered on either an individual or group basis.

Behavioral healthcare also establishes resources to support crisis intervention, that is, the intensive treatment of acute episodes of a behavioral health disorder. Crisis intervention is a critical element of behavioral healthcare because appropriate treatment in the acute phase often allows the patients to engage their own coping mechanisms and become functional again. Without treatment, recurrent acute episodes often increase in severity and the disorder may become chronic.

MBHOs emerged in the 1980s to help curb rapidly rising costs for mental healthcare and chemical dependency. Since MBHOs have been in existence, opinions concerning the effectiveness of carving out behavioral healthcare services from traditional medical services have varied in the healthcare industry. Proponents of carving out behavioral healthcare believe that MBHOs can give members faster access to care and more specialized services than most health plans. However, a behavioral healthcare carve-out can potentially decrease continuity of care due to lack of communication and care integration between the behavioral healthcare provider and the member's primary care provider (PCP).

Medical Management Challenges for Behavioral Healthcare

Whether care is delivered and managed by a health plan or through a behavioral healthcare carve-out, the nature of behavioral healthcare creates some unique medical management challenges. The complexities of diagnosing and treating behavioral disorders make the development and application of medical policy and clinical practice guidelines (CPGs) a challenge. For example, the severity of mental and substance abuse disorders varies greatly among different patients and in the same patient over time. These conditions typically persist for long periods of time, sometimes even for the life of the patient. Many patients have both mental disorders and chemical dependency.3

The diagnosis and treatment of some behavioral disorders is based primarily on a patient's self-reported symptoms and observations made by a behavioral health specialist. However, the subjectivity of patients' self-reporting and some patients' tendencies to withhold information about behavioral issues make assessment, diagnosis, and treatment by the provider difficult. Further, patients with behavioral

disorders often display physical symptoms that may mislead their PCPs or medical specialists and delay appropriate diagnosis and treatment of the behavioral condition.

The wide variation in patients' behavioral healthcare needs also means that health plans generally offer coverage for a variety of care levels and settings for behavioral healthcare. Figure 9C-1 describes some of the levels of care and settings that health plans may include in their behavioral healthcare benefits. The levels of care are listed in order from the most intensive and restrictive to the least intensive and restrictive. A health plan's utilization management (UM) and quality management (QM) programs for behavioral healthcare services should reflect the different care levels and settings, as well as the different diagnoses (e.g., depression, anxiety disorders, alcoholism, drug addiction) and clinical interventions (e.g., medications, individual therapy, group therapy) that are covered under its benefit package.

Matching a patient's needs with the appropriate intervention(s), care level, and care setting is an important consideration for delivering high-quality, cost-effective behavioral healthcare. When determining the appropriate level of care, health plans and MBHOs consider the level of risk posed by patients to themselves, others, and property; patients' abilities to perform self-care; existing comorbidities; and other medical needs.

Because patients with behavioral disorders often do not need around-the-clock nursing care, behavioral healthcare lends itself to alternative settings. Managed behavioral healthcare encourages outpatient over inpatient care where feasible. Health plans and MBHOs often use both inpatient and outpatient care options to meet the needs of individual patients, such as hospitalization for an acute episode followed by outpatient treatments to prevent recurrent acute episodes.

Unlike many other specialty services, such as pharmaceutical or dental, behavioral healthcare services are rendered by several different professional disciplines,

including psychiatrists, psychologists, psychiatric nurses, licensed clinical social workers (LCSWs), and marriage, family, and child counselors (MFCCs). These disciplines vary greatly in terms of training, the scope of services provided, and the levels of compensation that they receive for their services. Such a diverse group of providers makes provider network management, UM, and QM very challenging. Another network-related issue is that in many health plans, PCPs serve as patients' point of entry to behavioral healthcare services. Some PCPs may lack the time or skill to accurately assess patients' needs for behavioral healthcare services.

Rising costs for behavioral healthcare are another ongoing concern for health plans. Managed behavioral healthcare has been relatively successful in shifting care for behavioral health disorders from acute inpatient settings to less intensive, less costly alternative settings.6 However, the following factors have combined to increase the total costs of treating these patients:

More frequent diagnosis of disorders such as depression, anxiety, substance abuse, obsessive compulsive disorder, phobias, etc., than in the past

Increased willingness of the general population to acknowledge and receive treatment for behavioral disorders

The development of new treatments for behavioral conditions (e.g., pharmaceuticals for depression, anxiety)

Rising drug costs, especially for new drugs

In addition to wanting lower costs for behavioral health services, health plans and purchasers want managed behavioral healthcare programs to produce positive outcomes, such as improved function and decreased absenteeism and improved productivity at work.

Strategies for Managing Quality and Costs

Health plans and MBHOs have developed several strategies to help manage costs while delivering high-quality behavioral healthcare to members. Such strategies include the management of behavioral healthcare provider networks, CPGs, the integration of behavioral healthcare into the primary care setting, quality management initiatives, utilization review (UR), case management, disease management, and benefits administration policy.

Managing Behavioral Healthcare Providers

Achieving an appropriate mix of different types of providers is critical to delivering the appropriate services in a cost-effective manner. However, identifying, recruiting, and credentialing the different types of providers can be a complicated task. For example, a health plan cannot apply the credentialing standards for psychiatrists (who are physicians) to psychologists (who are not physicians). One reason that health plans contract with MBHOs is because MBHOs generally have the experience to develop a multi-disciplinary network. Figure 9C-2 shows some typical parameters for the composition of a provider panel for managed behavioral healthcare.

As with medical services, health plans must guard against developing incentives that might induce either undertreatment or overtreatment of behavioral conditions. At the same time, health plans need to develop methods to encourage providers to use the most cost-effective treatment for a particular disorder while seeing that quality care is provided. Incentives that incorporate measures of utilization, clinical outcomes, and member satisfaction may be the most effective means of achieving both quality and cost-effectiveness goals.

Behavioral Healthcare Clinical Practice Guidelines

Just as health plans establish CPGs for the treatment of certain diseases or conditions in the medical setting, health plans or MBHOs also establish clinical practice guidelines for certain prevalent behavioral health disorders. These organizations often use CPGs for major depression, anxiety, schizophrenia, bipolar disorder, attention deficit hyperactivity disorder, alcoholism, drug abuse, obsessive compulsive disorder, and eating disorders.6 Health plans and MBHOs may create their own guidelines or adopt guidelines created by another entity (e.g., the American Psychiatric Association).7

Guidelines for behavioral healthcare may encourage the use of medications for certain disorders, suggest the use of psychotherapy in addition to drug therapy, and give general timeframes during which improvement in the patient's condition can be expected. Because behavioral health specialists' educational backgrounds and practice approaches may vary considerably, concise, simple guidelines seem to work best. General guidelines that offer boundaries or suggestions for care rather than describing exact steps for care may enhance provider cooperation with the guidelines.

Most health plans and MBHOs that develop or use CPGs make efforts to monitor compliance with the guidelines. Some organizations review treatment plans to evaluate compliance; others publicize a more simplified version of their guidelines for consumers who can question treatment options if guidelines are not being followed. If a health plan or MBHO observes unnecessary practice variation, the organization can

intervene to encourage the provider to adopt practice patterns more consistent with the guidelines.

Integrating Behavioral Healthcare with Primary Care

Many health plans are increasing their efforts to (1) improve access to appropriate services for patients who need behavioral healthcare and (2) coordinate behavioral healthcare services with medical care. For example, some health plans have developed educational programs to alert PCPs to physical signs that may indicate a behavioral, rather than a physical, health problem for a patient. For example, recurrent backaches, headaches, or stomachaches with no apparent underlying physical cause may be symptoms of behavioral health disorders.

Health plans may also establish CPGs to help PCPs assess suspected behavioral health problems; treat mild, uncomplicated behavioral disorders; and, when necessary, make appropriate referrals to behavioral healthcare providers. For example, a CPG might provide screening questions to help PCPs detect common disorders such as depression. Behavioral health screening can be an effective tool for the early detection and treatment of behavioral health disorders. Many patients are unaware of their behavioral disorders, so screening is also important to improving access to behavioral healthcare services.

To promote the integration of behavioral health and medical services, health plans and MBHOs encourage cooperation and sharing of relevant clinical information between PCPs and behavioral healthcare providers. Some health plans and MBHOs include the coordination of care across providers as a requirement in policies and procedures for their behavioral healthcare providers.8 However, these organizations must also have safeguards in place to protect the privacy and confidentiality of the information exchange. Information about behavioral health disorders and services is particularly sensitive.

Recently, several health plans have brought behavioral healthcare back into the primary care setting by placing behavioral health specialists in the same practice settings as PCPs or making behavioral health specialists available to PCPs on a consultation basis. Health plans may also seek to increase consumer awareness of the symptoms of common behavioral disorders through health promotion programs or literature placed in PCPs' offices.

Quality Management Initiatives

In addition to credentialing behavioral healthcare providers, educating PCPs, establishing CPGs, and coordinating care, health plans and MBHOs may use other QM initiatives such as provider profiling, member and provider satisfaction surveys, process measures, clinical outcome measures, and accreditation to support the quality of their behavioral healthcare services.

Process measures address such issues as the speed of access to services for members or how well members comply with their drug therapy or psychotherapy schedules. Examples of clinical outcomes include achievement of functional goals

(e.g., reduced absenteeism from school or work, performance of parental duties), relapse rates for drug and alcohol use, symptom relief, and the absence of adverse events (e.g., hospital admission, self-destructive behavior, violent acts toward others).

Accreditation organizations either include some requirements for behavioral healthcare services in their standards for evaluation of health plans, or they separately accredit MBHO programs. Both the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and the National Committee for Quality Assurance (NCQA) accredit managed behavioral healthcare providers or programs.

Figure 9C-3 lists and describes the six categories for NCQA's MBHO accreditation program standards. In addition to these separate standards, NCQA also has standards for health plan accreditation that address a health plan's delivery of behavioral healthcare, either through its own internal programs or through delegation arrangements. Further, some Health Plan Employer Data and Information Set (HEDIS) measures are specific to behavioral healthcare services. For example, HEDIS examines an MBHO's program for managing medication compliance for patients treated with antidepressants.

Although the American Accreditation HealthCare Commission/URAC (URAC) does not specifically accredit managed behavioral healthcare programs, its accreditation standards for health networks can be applied to MBHOs. URAC accredits a specialty network using the same standards it uses for general health networks, but applies specialty-specific requirements for credentialing and clinical oversight. Further, URAC frequently accredits the mental health UR components of MBHOs through its health utilization management standards.

Utilization Review

In addition to determining the most appropriate treatment approach and care setting for a particular patient, utilization review for behavioral healthcare must also determine which care provider can deliver the appropriate services in the most cost-effective manner. This determination is no easy task because the costs of behavioral healthcare vary greatly according to the type of service, the care setting, and the type of provider. For example, individual therapy sessions generally cost more than group therapy sessions, and inpatient care is usually more expensive than outpatient care. A psychotherapy session with a psychiatrist carries a higher charge than the same service rendered by a psychologist, which in turn is more costly than a similar session with a counselor.

However, the least expensive provider may not always be the most cost-effective. Although treatment by a psychiatrist typically costs more per hour than treatment by a counselor, depending on the particular behavioral disorder, the psychiatrist may be less expensive if the patient's disorder can be more effectively treated using a drug therapy instead of a series of psychotherapy sessions with a counselor. This example illustrates the complexities of UR decisions and why it is important for the health plan or MBHO to examine all of the options for care that may apply to a patient's behavioral healthcare needs. Data warehouses and decision support systems may assist UR personnel with matching patient needs to care levels, providers, and settings.

Prospective and concurrent utilization review are especially important to see that (1) appropriate treatment is provided and (2) costs are not excessive. For outpatient services, many health plans and MBHOs initially authorize one to three sessions for an assessment of a patient and require the treating provider to submit a treatment plan before payment for additional treatment will be authorized. Another form of prospective review is the precertification of inpatient services at a hospital or other treatment facility. Ideally, prospective review is available 24 hours a day, 7 days a week to address the need for crisis intervention.

Health plans and MBHOs often practice concurrent review during the course of a patient's behavioral health treatment to assess the patient's responsiveness to treatment. Reviewers closely monitor inpatient care to see that necessary assessments and treatments are aggressively pursued in a timely fashion and that discharge planning is addressed immediately. For outpatient treatment, reviewers

assess whether the patient is receiving goal-oriented therapy that is designed to stabilize the patient's condition and return the patient to a functional level in a timely manner. Based on the results of the concurrent review, the health plan may recommend changes in the level of care, care setting, or care provider.

Health plans and MBHOs may also use retrospective review for behavioral healthcare to evaluate cases that did not receive prospective or concurrent review. For behavioral healthcare, retrospective review may determine if there were extenuating circumstances for the failure to obtain preauthorization for payment. For example, a health plan might decide that the severity of a patient's condition constituted an emergency and waive its usual requirements for preauthorization. Health plans also use retrospective review to address appeals of nonauthorization of payment for services.

Case Management

Because some members need extensive behavioral healthcare services, perhaps on a long-term basis, health plans and MBHOs may use case management to support the continuity, appropriateness, quality, and cost-effectiveness of care. Case management can direct a patient's treatment, monitor progress, make changes as necessary to see that functional status goals are being met, and coordinate behavioral healthcare with medical services as necessary. Another important function of a case manager is to see that behavioral healthcare benefits (which may be limited in terms of the number of visits, inpatient days, or total dollar coverage) are used in the most efficient manner and that plan members receive referrals to relevant community services, such as self-help groups.

Case managers for behavioral healthcare may include psychologists, psychiatric nurses, licensed clinical social workers, and others with many years of clinical experience. Case managers often consult with other providers (both behavioral health and medical) involved with a particular patient.

Figure 9C-4 summarizes how case management may be a useful tool for behavioral healthcare UM and QM.

Insight 9C-2 describes how one MBHO uses prospective and concurrent UR and case management in its managed behavioral health program.

Disease Management

Some health plans are addressing common behavioral disorders through disease management programs. To help determine and reach the population in need of behavioral health disease management, health plans establish diagnostic CPGs that PCPs can use to identify behavioral health disorders or illnesses, such as depression and schizophrenia.

Upon diagnosis, the PCP usually refers the patient to a behavioral health specialist for further evaluation and treatment under a disease management program. Just as in disease management programs for medical illnesses, behavioral health disease management programs may incorporate disease-specific CPGs, preventive care, self-care, case management, education and incentives to support patients' compliance with their treatment regimens, and mechanisms to monitor clinical, financial, and member satisfaction outcomes of treatment.

Behavioral Health Benefits Administration Policy

Health plans may also use their benefits administration policies to manage utilization of behavioral health services. Many plans have an annual limit on the number of inpatient treatment days and outpatient visits or annual or lifetime dollar limits for behavioral healthcare services.

Most plans must comply with federal requirements for limitations on mental healthcare benefits, as discussed later in this lesson. However, these requirements do not apply to chemical dependency, so benefits for chemical dependency are often more limited in terms of the intensity, duration, and site of treatment than are benefits for mental disorders. For example, some plans limit the number of days in a course of drug rehabilitation or the number of times a patient may undergo a course of rehabilitation for drug or alcohol addiction. A health plan's benefits administration policy may also specify the type(s) of rehabilitation program that will be covered.

The specific types of behavioral healthcare services that are covered or excluded vary among health plans. Individual purchasers may also influence the types of services covered under their contracts with health plans.

Health plans may also adjust copayment levels, deductibles, or coinsurance amounts based on the level of care a patient receives, the type of disorder treated, types of treatment used, and the types of providers delivering care.10

For example, inpatient coinsurance or copayment requirements may be higher than outpatient contributions, and outpatient treatment provided by a psychiatrist may carry a higher copayment than such treatment provided by other behavioral healthcare disciplines.

Regulatory Requirements for Behavioral Health

Over the last few years, much attention has been focused on mental healthcare at both the state and federal levels. The Mental Health Parity Act (MHPA) of 1996, a federal law, was drafted to provide parity between medical and mental healthcare

coverage for group plan members. The MHPA does not require health plans to offer mental health benefits; rather, it prohibits group health benefit plans that do offer mental health benefits from imposing lower annual or lifetime dollar limits or caps for mental illness than for physical illness. This law applies to group health plans with more than 50 members. The law provides an exemption from MHPA requirements for plans that can demonstrate that achieving parity increases their costs by more than 1 percent. Note also, that the MHPA does not address

Limitations on the number of outpatient visits or inpatient days covered The amount or percentage of any cost-sharing mechanisms such as

copayments or coinsurance Limitations on the types of services to be covered

One federal law, the Mental Health Parity Act (MHPA) of 1996, was drafted to provide parity between medical and mental healthcare coverage for group plan members. One true statement about the MHPA is that it:

applies to group health benefit plans with more than 50 members

requires group health benefit plans to offer mental health benefits

includes benefits for chemical dependency under its definition of 'mental healthcare benefits'

addresses limitations on the types of mental healthcare services to be covered

Answer=A

Several states had their own parity laws prior to the passage of the MHPA, and many other states have passed laws relating to mental health coverage after MHPA became effective. However, some policymakers and industry analysts argue that parity has not yet been achieved. Because group health plans can impose limits on provider visits or inpatient days and adjust cost-sharing mechanisms, there still may be a gap in the care covered for medical versus mental health. Further, purchasers may opt not to provide any mental health benefits. Some federal and state legislators are currently trying to develop additional mechanisms to establish parity between medical and mental healthcare coverage.

Medical Management Considerations for Dental Care

Dental care differs from medical care in several ways. One of the primary purposes of dental care is to prevent two diseases or conditions-tooth decay and gum disease-that, if not detected and treated early or if left untreated, account for very high costs. General dental practitioners, not specialists, provide most dental care, and dental care rarely requires hospitalization. Further, many dentists are solo practitioners who are not familiar with the health plan processes such as utilization review, profiling, and peer review. Health plans must take these characteristics of dental care into consideration when making medical management decisions for dental care.

Many plans provide 100 percent coverage for preventive dental care that includes X-rays, exams, and cleanings. Most plans cover a portion of the cost of fillings, extractions, and more complex dental procedures or expensive devices, such as root canals and prosthetics.

Although indemnity (fee-for-service) dental plans are still the most common form of dental care coverage, managed dental care is gaining popularity. Managed dental care organizations typically appear in one of three forms-dental health maintenance organizations (DHMOs), dental preferred provider organizations (dental PPOs), or dental point-of-service (dental POS) options. Health plans can develop and manage their own programs for dental care or they can contract with a managed dental care organization to deliver dental care for their members.

No federal law exists to allow the formation of national DHMOs or other managed dental organizations; therefore, such organizations are regulated at the state level. Many states have dental plan licensing requirements that managed dental care organizations must meet.12 Dental PPOs are typically subject to less regulation than DHMOs.

Quality Management

Although no specific accreditation program for managed dental plans currently exists, URAC's network standards addressing QM, provider credentialing, member protection, and network management may be applied to dental plans. In addition, the National Association of Dental Plans (NADP), a not-for-profit trade association for DHMOs and dental PPOs, has developed quality standards for managed dental plans and is seeking an existing healthcare accreditation organization to implement them.13

The NADP's standards address issues such as

Dental plans' communications with their members Access to dental care Plan member privacy and confidentiality of dental information Qualification of network dentists Effectiveness and quality of dental care

In the absence of dental accreditation programs, DHMOs and dental services vendors have used credentialing and recredentialing, office audits, professional standards, CPGs, patient surveys, and profiling to support the quality of care. Some managed dental care organizations follow NCQA's standards for credentialing and recredentialing dentists (Doctors of Dental Surgery) or model their own credentialing standards after those of NCQA.14 Before adding a practitioner to its network, a DHMO may conduct a site audit to check the following quality indicators:

Cleanliness and appearance of the facility Adequacy of equipment and staffing Adequacy and convenience of office hours

Patient safety measures (e.g., infection control, procedures for medical emergencies)

Completeness and legibility of patient records and treatment plans System for telephone coverage 24 hours a day, 7 days a week

Some DHMOs conduct site audits periodically (every year, every three years, etc.) to reassess these indicators.

Many health plans and managed dental care organizations develop standards with which network dentists must comply, such as standards on the use of X-rays, sterilization of equipment, and the minimum appropriate level of care to be administered to patients. These organizations may also follow standards set by the Occupational Safety and Health Administration (OSHA). In addition, some plans have developed practice guidelines, similar to medical CPGs, for treating specific dental problems.

Health plans and dental plans also measure outcomes of dental care provided to their members. Examples of dental care outcomes may include

The number of routine preventive dental visits per member per year The incidence of advanced cases of tooth decay and gum disease that could have

been prevented15

Some plans use patient surveys to determine areas of care in which network dental providers need improvement. At least one plan publishes a dental report card based on the results of its patient survey. The report card rates access, credentialing, member satisfaction with the plan and the member's dentist, and quality of care.16

Managed dental care plans may also conduct profiling to measure dentists' performance in providing quality, cost-effective dental care to members. Dental provider profiling generally measures any or all of the following indicators:

Clinical outcomes Patient satisfaction Utilization rates for preventive care and procedures, that is, the proportion of

patients for whom a dentist provides each type of dental service (e.g., exams, crowns, oral surgeries, etc.) during a certain time period

Utilization rates for referrals to dental specialists and the types of conditions referred

Utilization rates for prescription medications for dental patients, sometimes by the types of medications prescribed

The performance measurements are compared to predetermined standards set for each indicator by the plan and, in some instances, to the performance of other network dentists.

The managed dental care organization communicates the results of the profile to the dentists and, when appropriate, may provide additional education or training to help the dentists adjust their practice patterns to be closer to the established standards. For example, if the review indicates that the proportion of a dentist's patients receiving preventive care is below the managed dental care organization's standard, the organization's network management director might discuss reasons for the variance with the dentist and, if warranted, suggest ways to improve the preventive practice patterns.

Utilization Management

The main tools for UM of dental care are preventive care, self-care, UR, and benefit design. Health plans and managed dental care organizations may have programs to educate and encourage members to (1) perform good oral hygiene on a daily basis and (2) regularly utilize the preventive care services provided by their dentists. Members can generally access preventive dental care and uncomplicated treatments (e.g., fillings, extractions) directly, that is, without preauthorization of payment by the health plan or dental health plan. However, coverage of these services may be subject to limitations (e.g., two examinations and cleanings per year) and/or cost-sharing features (e.g., copayments, deductibles, coinsurance).

More extensive and costly services are often subject to prospective authorization. For example, the authorization system of a health plan or managed dental care organization may require preauthorization of payment for caps and crowns and for services performed by dental specialists such as orthodontists, periodontists, or oral surgeons. In some instances, the UR determination may indicate whether a general dentist or a specialist should perform a particular service.

Managing Vision Care

A health plan's approach to medical management for vision care depends on the vision benefits offered by the health plan. Vision care benefits are typically separated into two categories: clinical eye care and routine eye care. Clinical eye care encompasses medical and surgical services for eye diseases, such as glaucoma, and eye injuries. Routine eye care covers general eye examinations to test vision, prescribe corrective lenses, and screen for eye disease, and sometimes includes payment for corrective lenses.17

Clinical eye care is generally included in a health plan's benefit plan; however, although many purchasers and consumers view routine eye care as an attractive benefit, most health plans do not include routine eye care as a standard benefit.18

The Gallant Health Plan offers vision benefits to its members. The following Gallant plan members received the vision care described below:

Philip Agrippa received a general eye examination to test his vision Harietta Davenport received medical services for glaucoma Marcia Schlesinger received treatment for a torn retina that she suffered as

the result of an accident

Of these services, the ones that would most likely be covered as clinical eye care would be the services received by:

Mr. Agrippa, Ms. Davenport, and Ms. Schlesinger

Mr. Agrippa and Ms. Schlesinger only

Ms. Davenport and Ms. Schlesinger only

Mr. Agrippa and Ms. Davenport only

Answer=C

The coverage of routine eye care is especially appealing to the Medicare population. Medicare does not require health plans to offer vision benefits, but some Medicare plans consider eye care benefits as a way to attract new members and enhance satisfaction with the health plan. Medicaid health plans must offer eye examinations and corrective eyeglasses to children, and many states require similar benefits for adult Medicaid recipients.19

Health plans have several options for offering vision care benefits to their members. Most health plans include clinical eye care providers in their networks. To arrange access to routine eye care, a health plan can

Add providers who perform routine eye care to its existing network Include provider organizations that offer both clinical and routine eye care in its

network Enter into a carve-out arrangement with an organization (such as a managed

vision care organization) that will arrange access to routine eye care for members Enter into a carve-out arrangement with a managed vision care organization or a

multi-specialty provider organization that will deliver both clinical and routine eye care for members20

Quality Management

A managed vision care organization (MVCO) is an organization devoted to the delivery of routine eye care or both routine eye care and clinical eye care by implementing health plan concepts such as credentialing, authorization systems, CPGs, utilization review, and QM. MVCOs that deliver both routine and clinical eye care often operate much like an HMO does. Many MVCOs that provide only routine eye care operate like PPOs.21

Under a typical carve-out arrangement for routine eye care or all eye care, the health plan delegates credentialing, UR, QM, medical records, and administrative functions to the MVCO or provider organization.

One method that health plans and MVCOs use to support appropriate eye care is by establishing or adopting CPGs for use by their contracted providers. The American Optometric Association and the American Academy of Ophthalmology have published CPGs related to vision care. These organizations' guidelines include suggestions on

Adults' and childrens' eye exams including special screenings (e.g., for cataracts) indicated by the age of the patient

Care for patients with diabetes mellitus, age-related macular degeneration, amblyopia, conjunctivitis, and glaucoma22

Some health plans and MVCOs also perform provider profiling to manage the vision care their members receive. Other quality control mechanisms health plans and MVCOs may implement for vision care include

Audits of vision service facilities and providers' optical laboratories Quality improvement studies Surveys or other communications to obtain member and provider feedback

Health plans or MVCOs often counsel providers who receive a large number of member complaints. Because member and customer (e.g., employer) satisfaction is a crucial issue to health plans, many health plans and MVCOs conduct member surveys to assess how members perceive the vision benefit or network. Typical survey topics include wait times for appointments, wait times in providers' offices, and the courtesy and helpfulness of office staff.23 In addition to surveys, most health plans and MVCOs have set up a system for tracking member communications about the vision network, specific providers, or the vision benefit.

None of the major accreditation agencies currently have an accreditation program specifically for managed vision care; however, several vision networks have obtained accreditation under URAC's network accreditation program. Other vision care networks model their credentialing and other quality standards for vision care after NCQA's standards for medical care.

Utilization Management for Vision Care

Authorization systems vary among health plans and MVCOs, but for routine eye care, managed vision care programs primarily rely on benefit design for utilization management. Members generally do not need prior authorization of payment before obtaining routine eye examinations and, if applicable, corrective lenses, but payment is based on the terms of the benefits administration policy (e.g., how often eye examinations are covered, dollar limitations on examinations or corrective lenses, copayments, etc.).

For clinical eye care, authorization systems more closely resemble those for medical care. Clinical eye services other than those provided by a PCP may be subject to precertification, concurrent review, or retrospective review.

Most PCPs have little training in diagnosing and treating vision problems, so their role is usually limited to basic vision screening to detect vision deficiencies and treating minor conditions such as conjunctivitis or removing foreign objects from the eye. They typically refer other eye care concerns to an ophthalmologist or an optometrist.

Although ophthalmologists are educated and trained to treat eye disease and injury, they can also perform routine eye exams and prescribe corrective lenses. Most health plan members see an ophthalmologist upon referral from a PCP or optometrist. An optometrist's fees for routine eye care are usually significantly less than an ophthalmologist's charges for the same services.26

An optometrist in an MVCO that delivers both clinical and routine eye care may serve in a referral role. Eye problems, such as glaucoma or other eye diseases, will be referred to an ophthalmologist. During a routine eye examination, an optometrist may detect symptoms that suggest an underlying medical problem, such as diabetes, cancer, or hypertension. In this situation, the optometrist refers the patient back to the PCP for further investigation of the symptoms.27

Opticians may work in the same office as an ophthalmologist or optometrist. Some optometrists are also opticians. Because the lab that grinds the lenses for eyeglasses may be a part of an ophthalmologist's or optometrist's practice, health plans or MVCOs must take care that such combined practices do not generate unnecessary prescriptions to support the sale of eyeglasses and contact lenses. To avoid this issue, some health plans and MVCOs use a central lab to make all lenses for members. Central labs may also facilitate quality control for lenses.

Insight 9C-3 describes how one national vision benefits manager performed a quality and utilization review study for diabetes patients.

Managing Complementary and Alternative Medicine

Complementary and alternative medicine (CAM) encompasses healthcare services not offered by traditional medical providers that are viewed as alternatives to traditional care or that can be integrated with or can complement traditional (western) medicine. Many CAM practices focus on the stimulation of the body's natural ability to remain well and to heal when illnesses and injuries occur. Prevention, wellness, and self-care are core concepts for most CAM approaches. CAM modalities tend to emphasize low-tech, minimally invasive treatments.

Chiropractic, acupuncture, herbal medicine, homeopathy, massage therapy, naturopathy, and mind-body therapies are among the most frequently used CAM treatment methods. Figure 9C-6 describes several of the more common CAM approaches.

Coverage for at least some level of chiropractic care has become so commonplace that many health plans include it as part of the medical benefit package rather than as an "alternative" approach that may be purchased as a supplement to the basic benefits. However, few health plans have integrated other types of CAM benefits into the basic benefit package.

CAM seems to have a firm hold on consumers in the United States, who now make more visits to CAM practitioners than to PCPs. Because CAM treatments may result in lower long-term costs than traditional medical therapies for chronic diseases, some employers believe the use of CAM may lower their total costs for healthcare. However, no evidence currently exists to support or refute this belief. In response to employer and consumer demand, many health plans include CAM benefits in their coverage or offer a separate CAM plan.

The following statements are about complementary and alternative medicine (CAM) and the managed plan environment. Select the answer choice containing the correct statement:

Consumers in the United States now make more visits to CAM practitioners than to PCPs.

Health plans rarely delegate CAM services to specialty health plans.

Most health plans have integrated a number of different CAM benefits into their basic benefit packages. Examples of the CAM discipline known as homeopathy include biofeedback, guided imagery, yoga, and hypnosis.

Answer=A

Medical Management Issues Related to CAM

CAM is a relatively new phenomenon for health plans and represents significant challenges in terms of how to manage the delivery of the services and how CAM should relate to traditional medical care. Medical management issues that health plans must address for CAM include

Deciding which CAM services to cover and in what amounts (i.e., setting benefits administration policy)

Managing the potential liability of covering services for which effectiveness has not been clearly established to the satisfaction of the insurance or traditional medical communities

Managing a CAM provider network Managing the quality and utilization of services that often differ significantly

from traditional medical services Determining whether to and how to integrate CAM services with existing medical

care Evaluating CAM services

Because of these issues (which are discussed in further detail in the following sections) and their inexperience with delivering and managing CAM services, health plans often delegate CAM services to specialty service health plans, such as chiropractic health plans.

Establishing CAM Benefits Administration Policy

Because many CAM practices lack conclusive scientific evidence to support claims of effectiveness, member and purchaser demands and regulatory requirements often

drive health plans' coverage of CAM. Medicare and government programs cover certain CAM services. For example, Medicare Part B covers some chiropractic and acupuncture. The Federal Employee Health Benefits Program also requires its health plans to cover acupuncture in some situations.

Laws and regulations may influence benefit design in some jurisdictions. For example, the state of Washington passed a law in 1995 that required health plans and insurers to allow access to all categories of licensed healthcare providers, including naturopaths, chiropractors, and acupuncturists. The law has been the subject of much debate and formal legal appeals; however, it currently stands, and health plans must comply with it.33Other states have sought to pass laws that allow traditional medical providers to prescribe or perform alternative treatments for their patients. In most states, traditional medical providers are not licensed to provide CAM services to patients unless they have obtained an appropriate CAM license from the state in which they practice.

Managing the Liability Associated with CAM

Covering CAM services that lack scientific evidence of effectiveness creates possible liability exposures for a health plan. First, the inclusion of an unproven (perhaps even untested) CAM benefit in a standard benefit package conflicts with the definitions and exclusion provisions for experimental and investigational services in the purchaser's contract. For this reason, many health plans choose to offer CAM benefits as a rider-that is, a separate supplemental benefit-or to have a separate CAM product (such as a discount program) rather than to include CAM benefits in their basic coverage.

Health plans that offer coverage for CAM services must also take appropriate risk-management measures to protect members from being harmed by CAM services. Supporting the appropriate delivery of these services also reduces the risk of malpractice associated with CAM.

Health plans should become familiar with state and federal consumer protection statutes that affect the provision of CAM services. Most of these statutes relate to the consumer's right to know the potential risks and benefits of using CAM. To that end, some health plans address liability by requiring members receiving CAM therapies to sign statements indicating knowledge of and consent to a particular CAM treatment. By signing such a statement, members acknowledge that they understand

What the CAM service is and what the service is expected to achieve The experimental nature of the treatment, if applicable That a conclusive impact on the ailment may not have been established for

the CAM treatment That they can withdraw their consent to the treatment at any time

Health plans must also take care in developing marketing or advertising materials so that they make no promises or implied warranties related to the results of CAM services.30

Determining the potential liability associated with a particular CAM modality is often problematic due to the lack of clinical trials to evaluate safety and effectiveness. In fact, some CAM proponents argue that studies used to evaluate new traditional medical treatments may not be the best method to establish the effectiveness of CAM therapies because CAM therapies are typically holistic, rather than directed toward a specific illness, injury, or symptom, and results vary by individual.

CAM Network Issues

Network management, particularly credentialing, for CAM providers may be difficult for health plans whose network management experience has focused on traditional providers, such as physicians, hospitals, and pharmacies. Credentialing CAM providers presents additional challenges because of the variance in state laws and regulations. For example, although all 50 states and the District of Columbia require licensing of chiropractors, licensing requirements and other regulations for acupuncturists, massage therapists, and naturopaths vary among the states. Although NCQA has credentialing standards for chiropractors, none of the major accrediting agencies have standards for credentialing other CAM disciplines.

State or national CAM associations, such as the American Chiropractic Association, the American Massage Therapy Association, or the American Holistic Nurses Association, can provide guidance on network management for CAM benefits. For example, the professions of chiropractic, acupuncture, and massage therapy offer standardized national exams. Chiropractic, naturopathy, and acupuncture have established a federally recognized accrediting agency for their schools.32

Managing Quality and Utilization

Currently, provider credentialing is the primary tool that health plans use to manage the quality of CAM services. In addition to credentialing, some health plans and specialty service health plans use CPGs, member satisfaction surveys, profiling, peer review, and report cards to support the quality of CAM services for health plan members. Health plans that wish to establish CPGs for the delivery of CAM services often turn to national CAM provider associations and specialty service health plans for assistance with CPG development.

Member satisfaction surveys for CAM often emphasize both healing and comfort as aspects of healthcare quality. In this context, healing does not necessarily mean curing, but refers to the facilitation of health. Comfort refers to the relief and sense of well-being that may result from CAM treatment.33

Plans that offer CAM benefits must decide whether to require authorization of CAM benefits by the PCP or the health plan, or to allow members direct access to CAM services. Because health plan coverage of CAM services is a relatively new phenomenon, most health plans do not have enough historical claims data on the

utilization of CAM services to project the financial and clinical impact of offering CAM services as covered benefits. Therefore, health plans often rely on benefit design features such as copayments, deductibles, cost-sharing, and limitations to manage utilization until data is available to provide a better understanding of CAM utilization patterns, costs, and outcomes.

Although most health plans and specialty service health plans do not require a PCP referral or precertification for CAM benefits, some of them do require a PCP referral. Using PCPs to help members access CAM appropriately may not be effective because few PCPs make referrals to CAM providers unless they have specific education and training about CAM practices. Some plans use naturopaths as PCPs; however, naturopaths are licensed in only one-fourth of the states, so this application may be limited.

Another consideration for CAM benefits is determining the role that CAM will play in a health plan's spectrum of services. CAM therapies are based on a holistic approach to health. For example, suppose that a physician refers a patient to an acupuncturist for a specific pain management issue. The acupuncturist will not just treat the particular part of the body where pain is present but will examine the patient's entire system using principles of acupuncture to find weaknesses that may be causing the pain that reside in a different location in the individual's body. This holistic approach to diagnosis and treatment may not fit well with a health plan's established methods for UR, which typically address the use of a particular service for a specific disease or ailment. Health plans that cover CAM may have to adjust their UR procedures to accommodate the holistic nature of those services.

Health plans and specialty service health plans sometimes struggle with questions of medical necessity and appropriateness for CAM services. For example, a member who seeks the services of a massage therapist for pain management related to injuries sustained in an automobile accident may have a better case for medical necessity than a member who accesses massage therapy for the stresses related to everyday living. Related to this issue is the question of what is a medical condition, as opposed to normal conditions that are uncomfortable.

Some CAM proponents believe that traditional requirements for medical necessity are not relevant for CAM services since holistic medicine, by definition, supports health maintenance and healing through natural body processes rather than addressing specific symptoms or isolated episodes of illness.

Integrating CAM with Traditional Medical Services

Some health plans prefer to have completely separate programs for the delivery and management of CAM and traditional medical services. However, other plans believe that the integration of the two types of care will eventually result in overall improvements in quality, cost-effectiveness, and member satisfaction.

Incorporating the use of CAM with traditional medical services requires health plans to address the education and training needs of both CAM and traditional providers.

Many CAM providers are not familiar with health plans and initially may be somewhat resistant to contract with a health plan. These providers may need education on what a health plan is, how it works, and their responsibilities for medical management under a health plan contract. For example, CAM providers may need an initial orientation to and continuing education on a health plan's quality management initiatives and systems for authorization of services and referrals.

Health plans that wish to integrate CAM with their basic medical care must also educate their traditional providers about covered CAM benefits, especially if traditional providers will serve in a referral role for CAM services. In order for traditional providers to be able to make appropriate referrals to CAM providers, the traditional providers must understand the

Different CAM approaches covered by a health plan Situations in which each CAM approach is appropriate Potential benefits and risks of CAM treatments Ways that CAM can complement traditional medicine Health plan's authorization system for CAM referrals

Lack of knowledge about CAM may discourage traditional providers from even considering a CAM referral. One way for health plans to support integration and appropriate PCP referrals for CAM is to establish CPGs to guide the PCP in assessing a patient's need for CAM and making the referral to the CAM provider. The CPGs that a health plan uses for CAM assessment and referral are very important to establishing the credibility of CAM to traditional providers. One approach to establishing such CPGs is to assemble a committee that includes both traditional and CAM providers to develop a consensus on how to assess CAM needs, indications for a referral, requirements for referral authorization, and the type of information the CAM provider needs from the PCP.

Some plans are experimenting with integrating CAM into their traditional medical practice by having CAM and traditional medical providers in the same office so that patients can be referred immediately to the most appropriate provider for diagnosis or treatment.

Evaluating CAM Results

Outcome measurements for many CAM services are sketchy; however, some information is available to assist health plans with managing and evaluating CAM services. For example, the National Institutes of Health (NIH) established the National Center for Complementary and Alternative Medicine to evaluate the effectiveness of various CAM treatments. In 1997, a federal panel of scientific experts convened by NIH issued a statement that acupuncture may be an effective treatment for chemotherapy-induced nausea, post-operative dental pain, and treatment of certain other painful conditions. Another federal organization, the Agency for Healthcare Research and Quality (AHRQ), found that chiropractic is an effective treatment for acute low back pain.

Some large health plans that offer some CAM benefits are attempting to track their own clinical, financial, and member satisfaction outcomes. Much of the information they gather is based on patients' reports on the effectiveness of certain treatments. Peer-reviewed journals that examine the effectiveness of various CAM therapies have also emerged within the last five to six years. One actuarial science organization is collaborating with Harvard Medical School to work with health plans to develop a reliable outcomes database to measure the effectiveness and cost-effectiveness of CAM.34

If favorable clinical, financial, and member and provider satisfaction outcomes can be conclusively demonstrated, then CAM services may become more standard in health plans, and health plans may relax benefit administration requirements and limitations.

AHM Medical Management: Medicare

Pg 1 to 47

Medicare

Course Goals and Objectives After completing lesson Medicare, you should be able to:

Identify the major benefits of managed Medicare Understand the legal and regulatory requirements that affect medical

management for Medicare Recognize the special health risk factors and needs of the Medicare

population

Describe the important components of a comprehensive program of geriatric care

Medicare

Introduction

Health plans were developed primarily to serve commercial populations made up of relatively young, healthy, working men and women and their families. Today, increasing numbers of Medicare beneficiaries are enrolling in health plans. The

Congressional Budget Office (CBO) predicts that the number of Medicare beneficiaries enrolled in health plans will increase from 7.8 million in 2000 to 16.8 million in 2008.1 Because Medicare beneficiaries have healthcare needs that are often different than those of commercial enrollees, this influx of Medicare beneficiaries into health plans will have a significant impact on the way health plans design and manage medical benefits.

In this lesson, we provide a brief overview of the healthcare options available to Medicare beneficiaries and describe the legal, social, and economic factors that have influenced the Medicare program. We also describe some of the steps the federal government and health plans have taken to support the delivery of high-quality, cost-effective medical care to the elderly and disabled.

Medicare Options

Originally, Medicare provided healthcare benefits only through a traditional fee-for-service (FFS) program operated by the federal government with support from third party Medicare insurance carriers and intermediaries. Passage of the Balanced Budget Act (BBA) of 1997 led to a restructuring of Medicare and established Medicare+Choice as an alternative to traditional FFS coverage. As mentioned in the lesson, Environmental Influences on Medical Management (italicized), the Medicare Modernization Act of 2003 provided some short and long term updates to the medicare program, including changing the name of the Medicare+Choice program to Medicare Advantage. Updates to this text will be made available in the spring of 2005, after the final regulations are released. Medical benefits are also available to eligible beneficiaries in the form of Medigap insurance.

Traditional Fee-For-Service (FFS) Medicare

The traditional fee-for-service (FFS) Medicare program consists of two parts. Part A provides coverage for inpatient hospital services, short-term care in skilled nursing facilities (SNFs), home healthcare following an institutional stay, and hospice care. Part B provides voluntary supplemental medical insurance coverage.

Medicare+Choice

Editor's Note

Editor's Note:The Medicare Modernization Act of 2003

On December 8, 2003, President George W. Bush signed into law the Medicare Modernization Act of 2003 (MMA), taking steps to expand private sector health care choices for current and future generations of Medicare beneficiaries. The MMA proposes short-term and long-term reforms that build upon more than 30 years of private sector participation in Medicare.

The centerpiece of the legislation is the new voluntary prescription drug benefit that will be made available to all Medicare beneficiaries in 2006. Additional changes to the Medicare+Choice (M+C) program include:

Medicare+Choice program’s name is changed to Medicare Advantage (MA); Increased funding is provided for MA plans in 2004 and 2005; MA regional plans are established effective 2006.

On January 16, 2004 CMS announced new county base payment rates for the MA program. Beginning March 1, 2004, all county MA base rates received an increase which plans are required to use for enhanced benefits. Plans may use the extra money in one of four ways:

Reduce enrollee cost sharing; Enhance benefits for enrollees; Increase access to providers; Utilize the stabilization fund.

The short-term reforms have already improved benefits and reduced out-of-pocket costs for millions of Medicare beneficiaries who are covered by health plans in the Medicare Advantage program, previously known as the Medicare+Choice program. These coverage improvements became effective on March 1, 2004.

On June 1, 2004, beneficiaries saw additional improvements in Medicare under another important MMA initiative, the Medicare-Endorsed Prescription Drug Discount Card Program, which will remain in effect through the end of 2005. This program gives beneficiaries the option of purchasing prescription drug discount cards—sponsored by private sector entities and endorsed by Medicare—which offer discounted prices on prescription drugs. Furthermore, the discount card program is providing low-income Medicare beneficiaries with up to $600 annually in assistance, in both 2004 and 2005, to help cover their prescription drug costs.

Beginning in 2006, the MMA will provide beneficiaries with a broader range of private health plan choices similar to those that are available to working-age Americans and federal employees. In addition to the locally-based health plans that currently cover more than 4.6 million Medicare beneficiaries, regional PPO-style plans will be available as a permanent option under the Medicare Advantage program.

Beginning in 2006, all beneficiaries will have the option of choosing prescription drug coverage delivered through private sector entities. This coverage will be available as a stand-alone drug benefit or, in other cases, as part of a comprehensive benefits package offered by Medicare Advantage health plans.

Other important provisions of the MMA address Medigap choices and specialized Medicare Advantage plans for beneficiaries with special needs.

Public comments on the regulations are currently in review, and changes to the draft regulations are anticipated. Final regulations are expected in the spring of 2005, and content updates will be made after the release of the final regulations.

Medicare+Choice offers Medicare beneficiaries a choice of three options.

Coordinated care plans (CCPs), which include health maintenance organizations (HMOs), with or without a point-of-service component, preferred provider organizations (PPOs), and provider-sponsored organizations (PSOs).

Private fee-for-service (PFFS) plans, under which coverage is provided by private insurance carriers rather than through the traditional FFS Medicare program.

Medicare medical savings account (MSA) plans, which consist of a tax-preferred medical savings account (MSA) set up for individual Medicare beneficiaries to which the federal government makes contributions on behalf of the beneficiary to pay healthcare expenses. Medicare MSAs are available under a national demonstration project that limits the total number of participants and suspends new enrollments as of January 1, 2003.

Medicare+Choice plans provide all Medicare Part A and Part B services to members as medically necessary.

Medigap Insurance

Traditional FFS Medicare functions primarily to protect against losses from acute illnesses and injuries and, as a result, covers only a portion of the medical expenses incurred by the average senior. To cover gaps in traditional FFS Medicare coverage and help reduce their out-of-pocket medical expenses, Medicare beneficiaries often rely on supplemental insurance policies. These policies, referred to as Medigap policies, are sold by state-licensed private insurance companies.

Although Medigap policies have been sold for many years, the Medigap policies that are currently available were developed by the National Association of Insurance Commissioners (NAIC) to standardize benefits under this type of coverage. Ten Medigap policies, labeled A through J, have been approved for sale to Medicare beneficiaries. Benefits vary by plan but not by state or by insurer. For example, a Plan B policy sold by an insurance carrier in one location will include exactly the same benefits as a Plan B policy sold by a different insurance carrier in a different location. The cost of Medigap insurance varies by policy, insurance carrier, and state.

The following individuals purchased Medigap policies: Trey Cantrip, a resident of State X, bought a Medigap Plan C insurance policy

from the Beryl Insurance Company, which is also located in State X.

Clementine Fox, a resident of State Y, bought a Medigap Plan C insurance policy from the Dorsey Insurance Company, which is also located in State Y.

With respect to these Medigap Plan C insurance policies, it most likely is correct to say

A. That the benefits of Mr. Cantrip's policy must be exactly the same as those of Ms. Fox's policy.

B. That the cost of both policies must be the same.

Both A and B

A only

B only

Neither A nor B

Answer=B

All ten policies offer a basic benefit package that includes the following components:

Coverage for Medicare Part A and Medicare Part B coinsurance 365 additional hospital days after Medicare benefits end The first three pints of blood used each year

Plan A is the simplest of the ten plans and provides only the basic benefit package. Sequential plans add benefits to the basic Medigap benefits package. Figure 10A-1 summarizes the benefits provided by each of the ten approved Medigap policies.

Benefits of Managed Medicare

Unlike other coverage options for seniors (traditional FFS Medicare, private FFS plans, non-network Medicare MSA plans, and Medigap policies), CCPs offer comprehensive programs of care that are designed to address both acute medical care needs and overall health and quality of life. This approach to healthcare offers the following advantages to Medicare beneficiaries:

Prevention and early identification/treatment of disease. By emphasizing preventive services and screening, CCPs can identify potentially serious conditions before they become acute. Also, by providing continual monitoring, CCPs can help slow the progression of chronic disease and delay disability. For example, compared to FFS patients, smokers in CCPs are 50 percent more likely to be advised to quit; heart attack survivors in CCPs are more than twice as likely to be prescribed beta-blockers; and females in CCPs are 40 percent more likely to be screened for breast or cervical cancer while in the at-risk age range.2

Focus on health status/quality of life. CCPs acknowledge the effects of both medical and non-medical factors on medical outcomes. By providing education to patients and their families, CCPs can increase patients' awareness of and participation in decisions that affect their health.

Coordinated care. Unlike other options, which have indemnity plan structures, CCPs place primary care at the center of the delivery system and focus on managing patients' care at all levels. CCPs are increasingly building interdisciplinary primary care systems that focus on delivering high-quality care in settings that best meet the needs of patients and their families.

High-quality care. As a result of quality initiatives such as performance measurement and improvement, many CCPs have collected a great deal of information about healthcare processes and outcomes. This information allows CCPs to focus on those treatment options that lead to the best outcomes.

Additional benefits. Unlike most other options, CCPs often provide benefits that are not covered by Medicare Part A and Part B. For example, in 1998, 83 percent of Medicare HMOs offered vision care as part of their basic benefit package; 71 percent offered hearing care; 70 percent offered routine physical examinations, eye and ear examinations, immunizations, and outpatient drug benefits; and 68 percent offered prescription drug benefits.3

Legal and Regulatory Requirements Affecting Medical Management for Medicare

Since its inception, Medicare has undergone a number of changes because of legal and regulatory action. The most extensive of these changes to Medicare have come about as a result of the Balanced Budget Act (BBA) of 1997 and the Balanced Budget Refinement Act (BBRA) of 1999.

As we mentioned earlier, the BBA restructured Medicare and established Medicare+Choice, which expanded the types of organizations that can deliver covered services and increased the number of available coverage options. The BBA also made significant changes to the Medicare payment structure. These changes were designed to

Encourage introduction of Medicare+Choice programs in rural areas by increasing payments in these areas

Preserve coverage and benefits in areas with higher than average costs Improve overall program efficiency, resulting in lower costs to beneficiaries and

lower growth in Medicare spending Reduce geographic variations in payment rates

The actual results of these changes are unclear. Although the BBA payment methodology encourages growth in low-payment counties, it reduces the growth in many other markets, where increases in costs are well above the 2 percent increase in payment set by the Centers for Medicare and Medicaid Services (CMS). Many Medicare HMOs contend that the payment system proposed by the BBA makes it

difficult for them to maintain their current programs. Some existing plans have withdrawn from the program or have limited their service areas. Participation by other types of plans has also been low.

The BBA also called for changes that have a direct impact on medical management. For example, the BBA expanded Medicare benefits by mandating coverage for the following preventive services:

Annual mammograms for all Medicare-eligible women ages 40 and older, with Part B deductible waived

Screening pelvic exams and Pap smears, with Part B deductible waived Annual prostate cancer screening tests for Medicare-eligible men ages 50 and

older Diabetes outpatient self-management training services and supplies, including

blood glucose monitors and testing strips for type II diabetics without regard to use of insulin

Bone density exams for high-risk individuals Vaccine outreach programs for seniors

The addition of such benefits increases the quality of care available to Medicare beneficiaries, but it also increases costs. Medicare HMOs, already under pressure to manage healthcare costs and utilization, have begun responding to the combination of increased benefits and reduced reimbursement outlined in the BBA by cutting benefits, raising premiums, or both. According to a report released by CMS in December 1999, the number of "zero premium" plans available to Medicare beneficiaries will decrease. At the same time, existing premiums are likely to rise. In addition, a significant number of plans have announced changes in benefits. The majority of these changes involve coverage for prescription drugs, with 86 percent of plans establishing annual dollar caps on prescription drugs.4 Recent proposals to provide mandatory prescription drug coverage for all Medicare beneficiaries may temper these actions and require plans to find alternative ways to reduce costs.

The BBA also established extensive guidelines for seeing that CCPs deliver quality care to Medicare beneficiaries. These guidelines are built around a series of components related to performance assessment and improvement. Originally, the BBA required PPOs to meet the quality requirements that apply to all other CCPs, including HMOs. As a result of the BBRA, however, PPOs are now required to meet the quality standards that apply to PFFS plans and non-network MSAs. Although these plans are not subject to the same quality requirements as CCPs, they must still meet requirements such as those that apply to enrollee grievances.

The following sections describe some of the specific quality initiatives outlined in the BBA.

Medicare

Quality Review

One important component of Medicare quality programs is a requirement for quality reviews by independent quality review and improvement organizations. These organizations, referred to as quality improvement organizations (QIOs) under the Health Care Quality Improvement Program (HCQIP) collaborate with providers and health plans to perform quality improvement activities. The Health Care Quality Improvement Program (HCQIP) is a program initiated by CMS to improve the quality of care provided to Medicare beneficiaries.

The BBA requires CCPs to have an agreement with a quality review and improvement organization for each Medicare plan they operate and to undergo periodic quality reviews. Review organizations perform quality reviews; assess the appropriateness of the plan's setting for care, adequacy of access, and outreach programs; and review complaints about quality. Reviews may be waived if the plan has an excellent quality record and complies with other Medicare+Choice requirements. Plans may be deemed to have met requirements for confidentiality, accuracy of patient records, access to services, anti-discrimination, advance directives, and provider participation if they have been accredited by a private organization that meets CMS' standards for deeming.

Medicare

Performance Measurement and Improvement

The BBA also requires Medicare+Choice plans' quality programs to satisfy the following five general requirements related to performance measurement and improvement. Plans must undergo a formal, independent evaluation of their quality improvement plan at least annually. The evaluation must address the impact and effectiveness of the plans' quality assessment and performance improvement programs.

Plans must establish systems for measuring and reporting performance and achieve minimum performance levels based on standard measures required by CMS

Plans must conduct performance improvement projects that produce demonstrable and sustained improvement in significant clinical and nonclinical areas

Plans must follow written policies and procedures that reflect current standards of medical practice in processing requests for initial or continued authorization of services

Plans must establish mechanisms to detect both underutilization and overutilization of services

Plans must provide CMS with information on quality and outcomes measures that will allow beneficiaries to compare health coverage options

Medicare

HEDIS and CAHPS

As you recall from Environmental Influences on Medical Management, the Health Plan Employer Data and Information Set (HEDIS) is a set of standardized performance measures designed to help consumers and purchasers evaluate health plans. Under the terms of the BBA, CCPs are required to report their results on specified HEDIS measures that apply specifically to the Medicare population. These measures include clinical effectiveness measures on flu vaccine, mammography, diabetic retinal screening, beta blockers for heart attack patients, smoking cessation programs, outpatient follow-up after hospitalization for mental illness, and functional health status.

Plans are also required to submit data from the Consumer Assessment of Health Plans (CAHPS) surveys, which measure how consumers and purchasers evaluate health plans. CAHPS surveys are administered by third party organizations under contract with the health plans. In addition, CMS contracts with a third party vendor to conduct a Health of Seniors Survey that measures functional status of patients.

To assist plans with collecting and reporting performance and satisfaction data, CMS created the Health Plan Management System (HPMS), a database that contains information on Medicare Part A and Part B recipients who are enrolled in CCPs. The HPMS database is intended to

Help beneficiaries choose among health plans Support health plans' quality improvement activities Monitor and evaluate the care provided by CCPs Assist program management Provide a research database for CMS and other researchers

The HPMS went into effect in 1998.

Medicare

Quality Assessment Performance Improvement

The Quality Assessment Performance Improvement is a CMS initiative designed to strengthen health plans' efforts to protect and improve the health and satisfaction of Medicare and Medicaid enrollees.6 Established in 1996, QAPI serves as a model for implementing the quality assessment provisions included in the BBA of 1997. For Medicare, QAPI represents CMS' administrative interpretation of Medicare+Choice requirements in the areas of quality measurement and improvement and delivery of healthcare and enrollee services.

QAPI's quality assessment standards and operational guidelines direct Medicare+Choice plans to

Operate an interim program of quality assessment and performance improvement that achieves demonstrable improvements in enrollee health, functional status, and satisfaction

Collect and report performance data using standardized measures of healthcare quality and meet contractually specified performance levels on these measures

Comply with administrative structures and operational requirements for quality of care and beneficiary protection

QAPI quality assessment standards apply to all services provided by health plans to Medicare enrollees, including medical care, mental health and substance abuse services, and any additional services delivered to Medicare enrollees as mandatory or optional supplementary benefits. Performance improvement standards are divided into clinical and nonclinical focus areas. Clinical focus areas include

Primary, secondary, and/or tertiary prevention of acute conditions Primary, secondary, and/or tertiary prevention of chronic conditions Care of acute conditions Care of chronic conditions High-volume services High-risk services Continuity and coordination of care

Nonclinical focus areas include availability, accessibility, and cultural competency of services; interpersonal aspects of care, including quality of provider/patient encounters; and handling of appeals, grievances, and other complaints.7 QAPI standards address only those areas related to quality. Separate mechanisms exist as part of CMS' oversight protocols for other health plan functions such as operations, marketing, eligibility, claims processing, and external appeals, monitoring, and enforcement.

QAPI updates the quality standards for health plan contractors established by Medicare in 1988. In addition, QAPI outlines the role of Quality Improvement Organizations (QIOs) in assisting health plans with designing and implementing required quality studies. QAPI also builds on existing and proposed quality initiatives of other organizations. For example, CMS has collaborated with the National Committee for Quality Assurance (NCQA) to incorporate Medicare-specific performance measures into HEDIS. Through QAPI, CMS specifies how these measures are to be applied to Medicare health plan programs. QAPI also provides authority and justification for the use of consumer surveys, such as CAHPS, as a component of performance measurement programs and required studies of access, continuity of care, and other nonclinical aspects of quality.

QAPI appeals and grievance measures mirror provisions included in the NAIC's Health Carrier Grievance Procedures Model Act (GPMA), a model act adopted in 1996 that defines the methods health carriers, including health plans, are to use to resolve member grievances. QAPI requires health plans to establish appeals procedures according to GPMA guidelines related to authorization, coverage, payment, and discontinuation of service. 8

A health plan's organizational structure determines the extent to which QAPI standards apply. For example, all QAPI quality measurement and improvement

standards apply to CCPs, including HMOs, POSs, and PSOs, although as mentioned earlier, they no longer apply to PPOs. Certain standards, such as those related to resolving enrollee grievances, also apply to PPOs, non-network MSA plans, and PFFS plans. Standards requiring demonstrable improvement in enrollee health do not apply to non-network plans. Programs of All-inclusive Care for the Elderly (PACE), discussed later in this lesson, are exempt from QAPI requirements.

Organizational structure also affects plans' ability to collect and report standardized performance data such as HEDIS results. CMS works with plans to identify quality measures for which data are not reasonably available and allows them to report "not available" on those particular measures. CMS' intention is to balance uniform reporting and ease of comparison with differences in organizational structure and data collection capabilities.

QAPI standards took effect on January 1, 1999, for Medicare+Choice health plans. During the first two years of implementation, plans are required to report on HEDIS and CAHPS measures, but they do not have to satisfy any minimum performance requirements. Plans also have to initiate two performance improvement projects. Projects are required to demonstrate improvement by the end of the third contract year. The BBA grants Medicare the authority to accept accreditation by a private accrediting organization, or by Medicare, as proof that a health plan meets certain quality requirements.

Until they receive Office of Personnel Management (OPM) clearance, QAPI standards remain in interim final form and are subject to modifications that result from the BBRA or legislative actions to implement quality requirements. However, most plans have already begun to monitor performance and implement improvement programs according to QAPI standards.

Issues and Challenges Regarding Quality

CMS has made progress toward making compliance with basic quality and performance standards a condition of participating in the Medicare program, including a requirement that all Medicare+Choice plans obtain accreditation. However, the process is not complete. In order to achieve its goal, CMS must address a number of issues and challenges.

Perhaps one of the most significant challenges to establishing a consistent program of quality measurement and improvement is the difficulty of comparing the quality of health plans with the quality of FFS care. Whereas health plans provide an organizational focus for accountability, FFS systems offer no comparable entity that is accountable for performance. Quality, therefore, can be assessed only at the level of individual providers. To date, health plans have had minimal success in measuring and reporting quality at the provider level. CMS is currently piloting a program for collecting HEDIS data about FFS providers in six cities, but even in this program, direct comparison with health plan data is difficult.

Consistent quality assessment and improvement is also difficult to establish across different types of health plans. Differences in plan structure and enrollment can make it difficult to determine which factors actually impact quality. CMS faces the challenge of designing appropriate performance measurements and accountability systems that promote the participation of a wide variety of healthcare delivery systems. The current system is most feasible for HMOs and FFS providers. CMS has been challenged to develop an intermediate level of accountability for the quality and cost-effectiveness of Medicare services in healthcare organizations such as PPOs.

Another challenge facing CMS is determining how to deliver quality information that is informative, engaging, and easy for the Medicare population to use. Systems that supply too much information are as likely to fail as systems that supply too little information. A successful effort will require data that can be used by CMS, healthcare purchasers, and consumers to identify and eliminate those plans that perform poorly and by health plans to improve quality and satisfaction.

The Quality Assessment Performance Improvement (QAPI) is a CMS initiative designed to strengthen health plans' efforts to protect and improve the health and satisfaction of Medicare and Medicaid enrollees. However, certain health plans are exempt from QAPI requirements. The following are examples of different types of health plans:

Programs of All-inclusive Care for the Elderly (PACE) Medicaid primary care case management (PCCM) programs Medicare+Choice provider-sponsored organizations (PSOs) Medicare+Choice health maintenance organizations (HMOs)

Of these types of health plans, those that are completely exempt from QISMC requirements:

PACE, Medicaid PCCM programs, and Medicare+Choice PSOs

PACE and Medicaid PCCM programs only

Medicare+Choice PSOs and Medicare+Choice HMOs only

PACE only

Answer=B

A final challenge for CMS is to develop a system of measuring and improving the quality of care provided to the most needy and vulnerable members of the Medicare population. As Figure 10A-2 indicates, Medicare beneficiaries in managed Medicare plans are, in general, as satisfied with the quality of care they receive as are those in the traditional FFS Medicare program. In fact, a CAHPS survey of over 100,000 CCP enrollees found that almost half rated their plan a "10" on a scale of 1 to 10.9

This pattern may not be true of disabled members or those in poor health. Because of their high utilization rates and chronic conditions, the frail elderly are the most costly segment of the Medicare population. As a group, they are also the most affected by health plan's efforts to control costs, especially efforts to limit provider choice and establish guidelines for referrals to specialty care and expensive tests. In order to measure quality of care accurately, it will be necessary to collect and analyze data from this population.

Creating Effective Healthcare Programs for the Elderly and Disabled

Designing effective medical management programs for the Medicare population involves two steps: (1) defining the special health needs of older adults and (2) developing a delivery system that makes appropriate services available at appropriate times and in appropriate settings.

Defining the Special Health Needs of Elderly and Disabled Adults

Medicare beneficiaries differ from the general healthcare population on a variety of medical and social dimensions.

Patient Demographics

Aging slows the healing process. As a result, seniors who suffer an acute illness or injury are likely to require longer and more costly recovery periods than younger patients. They are also likely to require a greater number of post-acute care services. In addition, seniors' health needs are often compounded by non-medical factors such as living arrangements, relationships with family and caregivers, and socioeconomic problems.

Prevalence of Chronic Conditions

A large number of seniors suffer from at least one chronic condition. In fact, among persons age 65 and older, "48.3 percent have arthritis, 38.1 percent, hypertension, 27.9 percent, heart disease, and 8.8 percent, diabetes."10 A significant number of these seniors suffer from more than one chronic condition.

Chronic conditions impact both utilization of healthcare services and cost of care. Studies have shown that the cost of care for an enrollee with one chronic condition is more than three times as high as the cost of care for an enrollee without a chronic condition. For enrollees with multiple chronic conditions, the cost can be nearly eight times as high.

A large number of seniors suffer from at least one chronic condition. In fact, among persons age 65 and older, "48.3 percent have arthritis, 38.1 percent, hypertension, 27.9 percent, heart disease, and 8.8 percent, diabetes."10 A significant number of these seniors suffer from more than one chronic condition.

Chronic conditions impact both utilization of healthcare services and cost of care. Studies have shown that the cost of care for an enrollee with one chronic condition is more than three times as high as the cost of care for an enrollee without a chronic condition. For enrollees with multiple chronic conditions, the cost can be nearly eight times as high.

A physician evaluating a patient's functional status found that the patient was unable to perform the following activities:

Eating Bathing Telephoning Toileting

With respect to activities of daily living (ADLs) and instrumental activities of daily living (IADLs), in this situation, the activity of bathing is most likely an example of an:

ADL, and the activity of toileting is also an example of an ADL

ADL, whereas the activity of eating is an example of an IADL

IADL, and the activity of telephoning is also an example of an IADL

IADL, whereas the activity of toileting is an example of an ADL

Answer=A

Mental Health Problems

Mental health problems occur frequently among Medicare beneficiaries. Researchers estimate that at least 10 percent of beneficiaries age 70 suffer from Alzheimer's disease. By age 80, the number increases to approximately 26 percent and by age 84, to 34 percent.12 Other forms of dementia and depression are also common among the elderly. These conditions are associated with increased mortality, morbidity, and healthcare costs.

Dependence on Caregivers

Seniors with reduced functional abilities are often forced to depend on family members or other caregivers for assistance. These caregivers often function as an important extension of the healthcare system. They also function as an extension of the patient. As a result, their needs and expectations must be addressed.

Provider/Patient Relationships

Like other segments of the population, Medicare beneficiaries consider various factors when evaluating healthcare and health plan quality. Medicare beneficiaries are particularly sensitive to the attitudes and behaviors of providers and their staffs and often equate quality of care with a provider's willingness to treat patients in a caring, respectful, informative manner. Older patients also equate quality with the amount of time they spend with providers during office visits.

Developing New Delivery Systems

In order to meet the complex health needs of the Medicare population, health plans need to deliver the kinds of services that can

Prevent or delay decline in health status Promote health independence and functional status Enhance patients' quality of life

Many health plans recognize the value of investing early in screening and prevention services and already have extensive preventive care programs in place. What health plans need now are specialized medical management programs designed to meet the unique needs of the Medicare population.

Risk Identification and Assessment

Seniors with chronic conditions account for more than 70 percent of the older population's healthcare expenses. In addition, most seniors change health plans infrequently, with Medicare HMOs averaging less than 8 percent disenrollment per year. These two facts provide strong financial incentives for CCPs to identify high-risk seniors as early as possible.

Identification of high-risk seniors is typically accomplished through intervention identification (also known as case finding), which is a three-part process that includes screening, recognition of high-risk seniors by clinicians, and analysis of administrative data. Medicare health plans should screen all new enrollees for chronic illness or other high-risk medical conditions by means of a high-risk screening questionnaire administered by mail or telephone. Enrollees who score above a specified threshold on the questionnaire are considered to be potential candidates for special preventive and maintenance services.

Clinicians-especially PCPs-also play a part in identifying high-risk enrollees. Because of frequent encounters, PCPs are in a position to observe changes in patients' health and functional status that indicate risk and to begin managing potential problems early. Analysis of administrative data from the following sources also provides risk information:

Diagnostic codes from claim forms and encounter reports Procedural codes from claim forms and encounter reports National Drug Classification codes Laboratory utilization reports Pharmacy utilization reports Patient demographic data

Because this information is available only at the time of or after an acute episode, interventions focus on preventing future episodes.

Individually, these methods provide only limited information about potential risks. Screening is often performed only for new enrollees, and questionnaires often lack questions about important nonmedical factors affecting patient health. For example,

research has shown that elderly men and women who live alone, with few or no nearby relatives, frequently require higher levels of care and attention than do men and women in stable social environments.13 Clinicians do not always have the expertise or the opportunity to assess geriatric information. In addition to being retrospective, administrative data are often difficult to obtain in a timely manner. The value of these approaches to risk identification, therefore, lies in their combination.

Once high-risk enrollees have been identified, they must be assessed in order to determine which services are most appropriate to their health needs. Initial assessments are typically conducted through interviews with nurses or other skilled healthcare professionals and cover the following elements:

Cognition Medical conditions Medications

Access to care

Functional status Social situation Nutrition

Emotional status

More detailed assessments are sometimes needed for complex problems in order to define and prioritize the major factors affecting patient health and utilization of services and to develop and communicate a management plan. These assessments are typically conducted by interdisciplinary teams.

Case Management for Seniors

In an FFS environment, seniors with chronic conditions often interact with hospitals, skilled nursing facilities, emergency departments, physician's offices, pharmacies, home care agencies, outpatient surgery and rehabilitation centers, laboratories, transport services, and medical equipment vendors. Each interaction involves different goals, plans, providers, and information. Care in such situations is fragmented and often leads to increased communication errors, duplication of effort, increased administrative costs, and adverse outcomes.

Seniors also rely on a number of nonmedical services such as senior centers, support groups, adult day care centers, companion and transport services, and meals-on-wheels programs. These services are typically provided by publicly supported, community-based organizations. The frailest elderly often require the long-term care services of nursing homes.

Case management offers a way of bringing these fragmented services together in an integrated approach to healthcare. Such an approach is especially beneficial for high-risk enrollees with multiple clinical problems, chronic conditions, and limited or unstable family and social support networks.

Case management programs can be classified into two primary groups based on the number of patients involved and the level of interaction between patients and case managers. In high-volume, low-intensity programs, case managers arrange services for large numbers of seniors, but spend little time dealing with individual patients one-on-one. In low-volume, high-intensity programs, case managers arrange services for limited numbers of seniors and meet with patients frequently.

Case management offers important benefits to both patients and health plans. By linking health plan services and community-based services, case management can decrease the reliance on acute care, reduce medical costs, enhance the quality of life for Medicare enrollees, and improve both patient and provider satisfaction with quality of care.

Team-Based Care

In traditional settings, individual providers often focus on specific components of healthcare programs for patients without effectively communicating with each other about treatment plans or integrating their services. A more effective approach, especially for seniors who often have complex healthcare needs, is to integrate these separate providers into interdisciplinary teams. Health plans design and support delivery systems that encourage the development of such teams through case management programs.

Interdisciplinary teams typically consist of a core group of providers that includes a physician, a nurse, and a social worker. Geriatricians and gerontological nurse practitioners (GNPs) are especially valuable on care teams for seniors because of their expertise in caring for the elderly. Depending on the complexity of a patient's needs and the goals of the treatment program, other providers such as pharmacists, dieticians, psychologists, and physical and occupational therapists may also be included. Leadership of the team is determined by patient needs. For example, if the patient's needs are primarily medical, the physician assumes a leadership role; programs for patients whose needs are primarily educational would most likely be led by nurses or GNPs.

The team approach to geriatric care has already been tested and shown to be effective in case management programs. Other examples include Geriatric Evaluation and Management (GEM) and Interdisciplinary Home Care (IHC) programs. Geriatric Evaluation and Management (GEM) programs are designed to provide elderly patients at risk for hospitalization with targeted outpatient intensive care at a reasonable cost.14 GEM programs include comprehensive geriatric assessment, a series of primary care office visits, and continuous case management by a team consisting of a geriatrician, a nurse or social worker, and a GNP. GEM programs have shown improvements over traditional care in diagnostic accuracy and patients' functional status and satisfaction with care, and reductions in mortality, healthcare costs, use of emergency departments and hospital services, patient depression and anxiety, and caregiver stress.15

One team approach to geriatric care consists of programs that are designed to provide elderly patients at risk for hospitalization with targeted outpatient intensive care at a reasonable cost. Such programs include comprehensive geriatric assessment, a series of primary care office visits, and continuous case management by a team consisting of a geriatrician, a nurse or social worker, and a gerontological nurse practitioner (GNP). These programs are typically known as:

Interdisciplinary Home Care (IHC) programs

Health of Seniors (HS) programs

Geriatric Evaluation and Management (GEM) programs

Intervention Identification (II) Programs

Answer=C

Interdisciplinary Home Care (IHC) provides chronically disabled seniors with an integrated, physician-led program of medical and supportive care at home. 16 IHC programs incorporate the services of nurses, home health aides, occupational and physical therapists, and home visits by physicians. Teams meet regularly to discuss active cases and to recommend necessary program changes. Although some IHC services, especially physician home visits, may not be cost effective in the short term, these programs do offer a way to avoid the need for more expensive, labor-intensive services over the long term.

Integrated Acute and Long-Term Care

Working with providers and healthcare facilities, health plans have taken a number of steps to integrate their systems for delivering acute care to Medicare enrollees including the development of home hospitalization programs, establishment of geriatric and ACE (acute care for elders) units in acute-care hospitals, and creation of sub-acute facilities. By substituting lower-technology interventions for higher-technology interventions, these programs have helped avoid or shorten hospital stays, reduce costs, and improve patients' and providers' satisfaction. A next step is to integrate acute and long-term care.

CMS has already developed two prototype programs in this area: Programs of All-inclusive Care of the Elderly (PACE) and the Social Health Maintenance Organization (SHMO) program. These efforts are supported by pooled, capitated funding from Medicare and Medicaid.

Programs of All-inclusive Care for the Elderly (PACE) grants waivers of certain Medicare and Medicaid requirements to a limited number of public and nonprofit private community-based organizations that provide integrated healthcare and long-term care services to elderly persons who require a nursing-facility level of care. The purpose of PACE is to foster prepaid comprehensive health services designed to enhance quality of life and, to the extent possible, enable frail, older adults to live in their communities.

PACE was initiated in 1986 under the Omnibus Budget Reconciliation Act (OBRA 1986). OBRA 1990 extended the number of organizations eligible to conduct PACE programs from 10 to 15. The BBA of 1997 authorized coverage of PACE under the Medicare program and amended the Social Security Act by adding a section that addresses Medicare payments and benefits under PACE. The BBA also authorized establishment of PACE as a state option under Medicaid.

PACE provides comprehensive services to eligible participants, based on need and the participant's care plan, and without limitation as to amount, duration, or scope of service and without any deductibles, copayments, or other cost-sharing features. Eligible enrollees must be assured access to providers and services 24 hours per day, 7 days per week.

Congress established the Social Health Maintenance Organization (SHMO) demonstration project under the Deficit Reduction Act of 1984 in an effort to determine whether a coordinated program of healthcare, preventive, and social services could prevent costly medical complications among the elderly. SHMOs provide Medicare beneficiaries with a combination of standard HMO benefits, such as hospital, physician, SNF, and home healthcare services, and long-term care benefits, such as social benefits for frail elderly who reside at home. The goal of these programs is to avoid institutionalization of Medicare beneficiaries through the use of community-based care. Like other Medicare risk HMOs, SHMOs receive a capitated payment from CMS for each enrolled beneficiary. This payment is equal to 100 percent of the adjusted average per capita cost (AAPCC).

The BBA mandated a report to Congress with a plan for integration and transition of SHMOs into the Medicare+Choice options. The BBRA extended the SHMO demonstration project to 18 months after submission of this report. Features of the PACE and SHMO demonstration projects are described in Figure 10A-4.

Two programs that provide healthcare services to the elderly are Programs of All-inclusive Care for the Elderly (PACE) and the Social Health Maintenance Organization (SHMO) Program. One correct statement about these programs is that:

neither imposes limits on long-term care benefits

both provide services for acute and long-term care

enrollees for both programs must be age 65 or older

A SHMO enrollee must be in a nursing facility level of care.

Answer=B

Focus on Geriatrics

Health plan's emphasis on preventive care and its focus on utilization, cost, and quality management make it an ideal setting for comprehensive geriatric care programs. Geriatric care is an approach to providing care for older adults that includes systematic assessments of patients' health and functional status, coordination of care, preventive and educational interventions, psychosocial support services, regular follow-up care, and application of geriatrics expertise.17 The essential elements of a comprehensive geriatric care program are described in Figure 10A-5.

One team approach to geriatric care consists of programs that are designed to provide elderly patients at risk for hospitalization with targeted outpatient intensive care at a reasonable cost. Such programs include comprehensive geriatric assessment, a series of primary care office visits, and continuous case management by a team consisting of a geriatrician, a nurse or social worker, and a gerontological nurse practitioner (GNP). These programs are typically known as:

Interdisciplinary Home Care (IHC) programs

Health of Seniors (HS) programs

Geriatric Evaluation and Management (GEM) programs

Intervention Identification (II) Programs

Answer=C

Geriatric specialists are an important part of these programs at both an administrative level and a clinical level. Administratively, geriatricians can provide valuable input into the design and ongoing evaluation of programs targeted at Medicare beneficiaries. Because they have a clear understanding of the

multidimensional needs of the elderly and disabled and of the impact of frailty and functional status on utilization and mortality, they are also in a position to make informed decisions regarding allocation of resources. Clinically, geriatricians can provide information about clinical needs specific to the Medicare population, help design and manage geriatric care programs, and serve as primary clinicians for special populations or special programs.

Geriatricians also play an important role in providing education and training for primary care providers, case managers, and other healthcare professionals. These efforts include providing information in the following areas:

The use of evidence-based clinical practice guidelines for common geriatric conditions such as stroke and hip fracture

The availability of special programs for acute care such as discharge planning and ACE units

The options available for transitional, custodial, and end-of-life care

Educational Programs for Patients and Caregivers

Education programs for seniors with chronic conditions and their caregivers focus on providing information about specific diseases, treatment options, proper utilization of healthcare services, and self-management techniques. Education can be provided through printed materials or through structured classes, support group sessions, and individual counseling.

Such educational programs have been proven to reduce costs and improve quality of life. For example, self-management programs for arthritis are now widely available. These programs typically consist of a series of weekly sessions during which patients and their families learn about disease pathology, treatment options, strength and endurance exercises, relaxation techniques, nutritional needs, and the effects of stress, pain, and depression. Studies show that these programs result in greater control over symptoms, improved self-management, and reduced pain.18

Conclusion

Implementing comprehensive medical management programs for the Medicare population involves challenges for both health plans and the surrounding community. For example, in order to maximize the effectiveness of case management programs, health plans will need to become aware of and familiar with the resources that are available and the requirements for gaining access to those resources; they will need to establish partnerships and contracts with community-based service providers and develop relationships and processes that will facilitate referrals; and they will need to develop payment policies that are flexible enough to take advantage of the low costs and high satisfaction levels offered by many of these services.

In order to create interdisciplinary teams, health plans will have to find ways to bring professionals from different disciplines together to "speak each other's language" and to coordinate their skills and practice patterns. In order to combine acute and

long-term care services, health plans will have to explore ways to combine Medicare capitation with other funding streams, such as Medicaid and long-term care insurance.

Similar changes will have to be made at the community level. Health plans will have to work with community leaders and program sponsors to overcome concerns with and lack of knowledge about health plans. Health plans, community leaders, and program sponsors will also have to make healthcare providers aware of the availability of community-based services that can complement health plan benefits. Even more important, community leaders and program sponsors will need to develop data systems, product definitions, and outcomes measures on which to base realistic financial arrangements with health plans.

Such efforts will take time and resources, but they offer significant potential for improving the quality and reducing the costs of medical care for the growing elderly population.

AHM Medical Management: Medicaid

Pages 1 to 49

Medicare

Course Goals and Objectives After completing lesson Medicaid, you should be able to:

Describe the impact of recent laws and regulations on the management of medical care for Medicaid beneficiaries

Describe the health risk factors and healthcare needs of Medicaid beneficiaries

Identify the essential components of an effective Medicaid health plan

Describe the challenges health plans face in designing programs to meet the needs of Medicaid beneficiaries

AHM 540: Medical Management EXECUTIVE LESSON SUMMARY

Medicaid Lesson Overview Medicaid, which was created in 1965 under the same legislation that established Medicare, is a joint federal-state entitlement program designed to provide healthcare coverage to low income families and certain categories of aged and disabled individuals. Because medical management efforts for Medicaid depend on a clear understanding of the population being served, we begin our discussion with an overview of Medicaid requirements and options. We also describe the major legal and regulatory changes that have impacted Medicaid and outline some of the steps health plans are taking to provide continuous quality healthcare to Medicaid recipients

Objectives

After completing this lesson, you should be able to: • Describe the impact of recent laws and regulations on the management of medical care for

Medicaid beneficiaries. • Describe the health risk factors and healthcare needs of Medicaid beneficiaries. • Identify the essential components of an effective Medicaid health plan. • Describe the challenges health plans face in designing programs to meet the needs of

Medicaid beneficiaries.

Questions and Answers Describe the impact of recent laws and regulations on the management of medical care for Medicaid recipients. Recent laws and regulations have established a series of new requirements for Medicaid eligibility. Because eligibility is a critical factor in delivering continuous, quality care to Medicaid beneficiaries enrolled in health plans, these changes have also created new demands for medical management. The most important changes to Medicaid eligibility have come through welfare reform laws and the Balanced Budget Act (BBA) of 1997. The BBA of 1997 softened the impact of The Personal Responsibility and Work Opportunity Reconciliation Act’s (PRWORA) restrictive definitions and eligibility requirements.

©Academy for Healthcare Management, 2006, all rights reserved. 601 Pennsylvania Ave., NW Suite 500 S Washington, DC 20004 888-249-2346 www.e-AHM.com The BBA also modified existing Medicaid eligibility requirements for children and dual eligibles and expanded the Medicaid population by allowing states to modify eligibility requirements. The PRWORA of 1996 severed the link between Medicaid and public assistance and replaced the AFDC program with a new program called Temporary Assistance for Needy Families (TANF), which provides income support and work programs to needy individuals.

Identify health risk factors and healthcare needs of Medicaid recipients.

Medicaid beneficiaries are a culturally, demographically, and medically diverse group that includes children, low-income adults, disabled individuals, and the elderly. A large percentage of Medicaid beneficiaries are poor. Some are unemployed and have poor social support systems. Some are illiterate, lack reliable transportation, or do not speak English. Some suffer from alcohol or substance abuse. Individuals with more stable incomes are periodically eligible for Medicaid, becoming eligible for coverage only when they are hospitalized and incur high medical expenses.

What are the essential components of an effective Medicaid management care plan?

The essential components in developing an effective Medicaid management care plan are:

• Access to services

• Outreach and education

• Focus on preventive care

• Case management

Describe challenges that health plans face in designing programs to meet the needs of Medicaid recipients.

The two most important of these challenges are (1) to identify the specific risk factors and healthcare needs of the Medicaid population and (2) to determine how the organization can meet those needs.

Key Terms and Concepts

Categorically Needy Individuals: Under initial Medicaid eligibility requirements, individuals who received Medicaid benefits because of their welfare status.

Dual Eligibles: Elderly and disabled Medicaid recipients who also qualify for Medicare coverage. Medically Needy Individuals: Individuals who meet the financial resource requirements of categorically needy individuals, but whose monthly income exceeds specified maximums.

The Academy for Healthcare Management (AHM) designation examinations are designed to measure whether participants have successfully completed the relevant assigned curriculum; Executive Summaries are designed to enhance but not replace the completion of online assignments.

©Academy for Healthcare Management, 2006, all rights reserved. 601 Pennsylvania Ave., NW Suite 500 S Washington, DC 20004 888-249-2346 www.e-AHM.com

Medicaid, which was created in 1965 under the same legislation that established Medicare, is a joint federal-state entitlement program designed to provide healthcare coverage to low income families and certain categories of aged and disabled individuals. Today, more than 43 million beneficiaries receive medical services and long-term care through Medicaid, making it the largest health insurer in the United States.

17 million Medicaid recipients were enrolled in managed care plans in 2003. Enrollment in these plans increased by about 8.5 percent in 2003 and grew by over 40 percent from 1998-2003. Today, every state except Alaska relies on some form of health plan for Medicaid beneficiaries.1 As they do with Medicare, health plans face important challenges in developing effective medical management programs for Medicaid enrollees.

Because medical management efforts for Medicaid depend on a clear understanding of the population being served, we begin our discussion with an overview of Medicaid requirements and options. We also describe the major legal and regulatory changes that have impacted Medicaid and outline some of the steps health plans are taking to provide continuous quality healthcare to Medicaid recipients.

Background and Overview of Medicaid Although Medicare and Medicaid were both created as part of the Social Security Act of 1965, they have very little in common. Whereas Medicare is governed entirely at the federal level, under the direction of the Centers for Medicare and Medicaid Services (CMS), authority over Medicaid is split between CMS and individual state governments. The federal government establishes broad guidelines for Medicaid programs, provides partial funding to states, and sets minimum standards for eligibility, benefits, and provider participation and reimbursement. Individual states provide additional funds and administer the programs.

Funding Federal funding for Medicaid, which is called federal financial participation (FFP), or the Federal Medical Assistance Percentage, is determined by a formula based on the per capita income in each state. FFP payments range from a legislatively set minimum of 50 percent of a state's total Medicaid costs to a maximum of 83 percent of costs. Percentages are proportionally higher in states with relatively low per capita incomes. Individual states contribute additional funds and determine the reimbursements for individual providers and health plans. The payment methodology used at the state level varies by state and by whether reimbursements are paid on a fee-for-service or capitated basis.

Eligibility

Initially, Medicaid was grafted administratively onto state welfare programs, and adults and children in low-income families that qualified for public assistance were automatically eligible for Medicaid. Beneficiaries who received Medicaid benefits as a

result of their welfare status were classified as categorically needy individuals. Categorically needy individuals consisted of members of the following two main welfare groups:

Individuals who qualified for Aid to Families with Dependent Children (AFDC), a federally funded welfare program that provided assistance to one-parent households with one or more children

Individuals who qualified for Supplemental Security Income (SSI), an ongoing federal program that provides assistance to individuals who are aged (Old Age Assistance), blind (Aid to the Blind), and/or disabled (Aid to the Disabled)

Categorically needy individuals were required to meet specified financial resource and monthly income criteria in order to be eligible for coverage.

Individuals also qualified for Medicaid benefits if they were classified as medically needy individuals or if they belonged to expansion populations. Medically needy individuals were defined as those individuals who met the categorical and financial resource requirements of categorically needy individuals but whose monthly income exceeded specified maximums. States could opt to provide coverage to medically needy individuals whose incomes were up to 100% of the federal poverty level or who "spent down" their excess income on medical care. "Spending down" was similar to a deductible: once an individual had spent enough on healthcare expenses to reduce his or her income to the specified threshold, he or she became eligible for Medicaid.

Expansion populations included children and pregnant women who did not qualify as categorically or medically needy individuals. Coverage for children included all services available under the AFDC program. Coverage for pregnant women was limited to pregnancy related services delivered during pregnancy and a period of up to 60 days following delivery and family planning services for a period of one year following delivery. Individuals in expansion populations did not have to meet financial resource requirements but did have to meet an income test based on federal poverty guidelines.

Almost 100 percent of the people who are eligible for Medicaid because they receive Old Age Assistance and 40 percent of those eligible because they receive Aid to the Blind and/or Aid to the Disabled are also eligible for Medicare coverage. These beneficiaries are classified as dual eligibles. Medicare provides primary coverage for dual eligibles; Medicaid provides secondary coverage and pays Medicare premiums, deductibles, and copayments. Prior to welfare reform legislation, immigrants with permanent residence status who met eligibility requirements were also entitled to Medicaid benefits.Dual eligibles are individuals who are eligible for both Medicare and Medicaid benefits. With respect to the coverage provided to dual eligibles, it is generally correct to say that:

Medicaid provides primary coverage, whereas Medicare provides secondary coverage and pays Medicaid premiums, deductibles, and copayments Medicare provides primary coverage, whereas Medicaid provides secondary coverage and pays Medicare premiums, deductibles, and copayments

the cost of coverage is split equally between Medicare and Medicaid

the cost of coverage is paid entirely by Medicaid

Answer=B

Benefits

The federal government requires that state Medicaid programs provide basic healthcare benefits to all eligible beneficiaries. These benefits are fairly comprehensive and include most of the services traditionally covered under group health insurance. Figure 10B-1 provides a list of federally mandated Medicaid benefits.

Individual states determine the amount and duration of services offered under Medicaid as long as benefits meet minimum federal standards. For example, states may limit the number of hospital days or physician visits allowed. Limits, however, must not reduce services below a level sufficient to achieve the purposes of the benefit and may not be different for different medical diagnoses or conditions. With approval, states may also expand benefits to include such optional items as prescription drugs, dental care, and vision care.

Medicaid Options Almost from its beginning, Medicaid has provided two healthcare coverage options: traditional fee-for-service (FFS) insurance coverage and health plan coverage. Medicaid has also traditionally funded community-based health and social services and subsidized providers who serve large numbers of indigent, uninsured individuals. Over the years, increasing pressures to manage costs and improve access to care have prompted many states to make enrollment in health plans mandatory.

Traditional Medicaid

Under traditional Medicaid, state agencies contract with individual providers to supply covered services to eligible beneficiaries for a reduced fee. Providers participating in Medicaid must accept Medicaid's established fee as payment in full for services rendered to Medicaid beneficiaries.

States have the option to impose nominal deductibles, coinsurance, or copayment requirements for certain services. States, however, cannot require copayments for emergency services and family planning services. Nor can they require cost-sharing by pregnant women, children under age 18, hospital or skilled nursing facility patients who are expected to contribute most of their income to institutional care, or individuals receiving hospice care.

The use of reduced FFS payment and cost-sharing systems has helped to manage healthcare costs under Medicaid. Unfortunately, it has also resulted in limited access to providers and increased reliance on emergency departments. State Medicaid reimbursement rates are typically low compared to those of commercial insurance, and as a result, many providers choose not to participate in Medicaid. The socioeconomic circumstances of Medicaid recipients tend to make access and utilization problems even worse.

Managed Medicaid

Prior to the Balanced Budget Act (BBA) of 1997, Medicaid could contract with one of the following three types of organizations to provide services to eligible recipients:

Health plans (HMOs and health insuring organizations) Prepaid health plans (PHPs) Primary care case management (PCCM) programs

The BBA expanded Medicaid health plan options to include provider-sponsored organizations (PSOs) as well. Health plans provide the same broad range of services available under traditional FFS Medicaid, with an emphasis on preventive care and health maintenance.

Medicaid Supplemental Services

In addition to paying for traditional healthcare services, Medicaid reimburses services rendered by a variety of community-based organizations such as federally qualified health centers (FQHCs), large urban teaching hospitals, public health departments, and rural health clinics (RHCs). These organizations provide both clinical and "enabling" services such as programs for mentally ill and disabled individuals, substance abuse treatment programs, and group clinics. Medicaid also provides financial subsidies for individual safety net providers and disproportionate share hospitals (DSHs).

Safety net providers are defined as providers who have historically served large numbers of Medicaid and indigent patients and who are willing to provide health and related services regardless of the patient's ability to pay. These safety net providers often rely on Medicaid payments, government grants, and private donations to maintain their practices.

Disproportionate share hospitals (DSHs) are qualified hospitals that provide inpatient services to large numbers of Medicaid and indigent patients and are therefore at a high risk of operating at a loss. Medicaid makes direct supplemental assistance payments to DSHs rather than reimbursing the hospitals for services rendered to a specific patient. Even when DSHs contract with health plans, these payments are made directly to the hospitals. The federal government matches state funds designated for DSH payments.

Some state Medicaid agencies require health plans to take steps to include safety net providers and DSHs in their provider networks and to work with state and local public health departments to provide services that will improve the overall quality of care delivered to Medicaid beneficiaries. Because these providers and community-based organizations are conveniently located and often have established relationships with patients, they offer an efficient way of delivering care to Medicaid beneficiaries.

Laws and Regulations Affecting the Management of Medical Care for Medicaid Benefiaries Recent laws and regulations have established a series of new requirements for Medicaid eligibility. Because eligibility is a critical factor in delivering continuous, quality care to Medicaid beneficiaries enrolled in health plans, these changes have also created new demands for medical management. The most important changes to Medicaid eligibility have come through welfare reform laws and the Balanced Budget Act (BBA) of 1997.

Welfare Reform

The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 severed the link between Medicaid and public assistance and replaced the AFDC program with a new program called Temporary Assistance for Needy Families (TANF), which provides income support and work programs to needy individuals. States must still make Medicaid available to individuals who meet previous AFDC categorical and medically needy criteria; however, qualified individuals must now submit formal applications to Medicaid in order to receive benefits. Medicaid applications are separate from TANF applications.

Although PRWORA was designed to address welfare eligibility, it has had unintended effects on Medicaid eligibility as well. For example, even though Medicaid eligibility is no longer linked to welfare eligibility, reductions in the number of welfare caseloads has triggered similar reductions in the number of people applying for Medicaid coverage. A study conducted by the Kaiser Commission on Medicaid and the Uninsured concluded that because people now see public assistance as a temporary benefit, they are less likely to apply for or continue Medicaid coverage.3 In addition, PRWORA's revised eligibility requirements and disability determination threatened both the welfare status and Medicaid eligibility of certain segments of the Medicaid population.

Balanced Budget Act (BBA) of 1997

The BBA of 1997 softened the impact of PRWORA's restrictive definitions and eligibility requirements. The BBA also modified existing Medicaid eligibility requirements for children and dual eligibles and expanded the Medicaid population by allowing states to modify eligibility requirements.

For example, the BBA restored SSI and Medicaid eligibility to immigrants who had attained permanent resident status prior to PRWORA and allowed states to extend continuous eligibility for children up to age 19 from 6 months to 12 months. In addition, the BBA provided supplemental funding for dual eligibles in the form of five-year block grants. These funds are available on a first-come, first-served basis to low-income, low-resource individuals who do not qualify for Old Age Assistance.

The Balanced Budget Act (BBA) of 1997 mandated that states establish coverage for the State Children's Health Insurance Program (SCHIP) to provide health assistance to uninsured, low-income children. In order to be eligible for SCHIP assistance, a child must meet several requirements. One requirement is that the child must:

be under the age of 19

be currently eligible for Medicaid

reside in a family with income that is no more than 250% of the federal poverty level (FPL) or 100 percentage points above the state's established eligibility limits

be placed in a plan that provides benchmark-equivalent coverage

Answer= A

States have used the expansion authority granted to them by the BBA to provide Medicaid coverage for the following populations:

Specific information about eligibility and expanded coverage under Medicaid is available from state or county Medicaid agencies or from CMS.

Groups not ordinarily covered by Medicaid. A number of states have received CMS approval to waive Medicaid eligibility rules and extend eligibility to groups outside the traditional Medicaid population. Arizona's Employing and Moving People Off Welfare and Encouraging Responsibility (EMPOWER) program, a state-wide initiative that contains measures and incentives to help families achieve and maintain self-sufficiency and independence, is an example of a successful Medicaid waiver program.

Children eligible for medical benefits under the State Children's Health Insurance Program (SCHIP)-Title XXI of the Social Security Act. The BBA allows states to implement SCHIP through their existing Medicaid programs or as a commercial insurance program. States determine eligibility requirements, subject to CMS approval. We will discuss SCHIP in more detail in the next section.

Individuals, referred to as Home Relief or General Relief Recipients, who do not satisfy federal Medicaid eligibility criteria and therefore do not qualify for federal Medicaid assistance. States determine eligibility requirements for these individuals independently and provide coverage out of state funds. CMS approval is not required because no federal funding for services is provided.

Elderly individuals eligible for long-term care under Programs of All-inclusive Care for the Elderly (PACE). The BBA established PACE as a permanent program of care and allowed states to extend coverage to Medicaid-eligible program enrollees. Individuals are not required to be enrolled in Medicare to receive Medicaid benefits through PACE. We described the basic features of PACE in lesson Medicare.

State Children's Health Insurance Program (SCHIP)

The BBA mandated that states establish SCHIP coverage, either in conjunction with Medicaid programs or as commercial insurance benefit programs, to provide health assistance to uninsured, low-income children. In order to receive federal funding for SCHIP, states are required to submit a State Child Health Plan to the Department of Health and Human Services (HHS) for approval. The State Child Health Plan must include the following information:

States must submit annual reports to HHS, assessing the operation of their SCHIP plan, progress they have made to reduce the number of low-income children not covered by insurance, and overall plan effectiveness.

General background information about the extent of current insurance coverage for children

A description of current state efforts to obtain coverage Details about how the plan will be coordinated with other efforts An outline of proposed delivery methods A description of methods to maintain the quality and availability of covered

services A description of standards and methods used to establish and continue eligibility

and enrollment for targeted low-income children Written procedures for outreach to inform and enroll families of children likely to

be eligible for assistance under the plan

Eligibility

SCHIP assistance is available to any child who meets the following eligibility criteria:

Is under age 19

Is not currently eligible for Medicaid or covered under other health insurance Resides in a family with income below the greater of 200 percent of the FPL or

50 percentage points above the state's established eligibility limits

Program Options

States can establish SCHIP as a separate commercial health insurance program (in addition to existing Medicaid programs) or as an extension of existing Medicaid programs.

Separate Program Option. Separate, non-Medicaid programs must structure benefit packages in compliance with one of four options: benchmark coverage, benchmark-equivalent coverage, existing comprehensive state-based coverage, or HHS Secretary-approved coverage. Details of these options are presented in Figure 10B-2.

States may not impose any premiums or cost-sharing requirements that favor high-income children over lower-income children and may not impose any pre-existing condition exclusions for covered benefits.

Medicaid-Expansion Option. States that elect to expand children's health insurance through existing Medicaid programs are required to provide the state-mandated Medicaid benefit package. States choosing the expansion option must submit a plan amendment and specified information required by Title XXI.

The advantage of the expansion option is that even after the federal funds provided through SCHIP are exhausted, states may continue to receive matching federal funds at their normal Medicaid rate for children covered by a Medicaid expansion program.

Quality Assessment Performance Improvement

As you recall from the lesson Medicare, QAPI is a CMS initiative designed to guide health plans in developing and implementing quality assessment and improvement strategies. The standards applied to Medicaid Health Plan Entities are the same as those applied to health plan Medicare contracts and are designed to measure and improve the quality of clinical and nonclinical services delivered to Medicaid enrollees. However, whereas QAPI standards and guidelines are required for Medicare health plans, they are applicable to Medicaid MCEs at the discretion of the individual states. Medicaid PCCM programs are exempt from QAPI standards. States that choose to adopt QAPI standards and require compliance by Medicaid MCEs are considered to be in compliance with CMS regulations implementing the quality assessment and improvement provisions of the BBA.

QAPI standards update guidelines for internal quality assessment programs of HMOs, HIOs, and PHPs established by the Quality Assurance Reform Initiative. The Quality Assurance Reform Initiative (QARI) is a 1993 CMS initiative that developed and tested standards for states to use in monitoring and improving quality in Medicaid managed care plans.4 In addition, QAPI outlines how states can use such performance measures as HEDIS and CAHPS as part of their required quality measurement and improvement programs. QAPI also affects the role of External Quality Review Organizations (EQROs) in Medicaid programs. Under the terms of the BBA, state Medicaid agencies are required to contract with EQROs to perform annual reviews of health plan quality, access, and timeliness of care. CMS has identified compliance with QAPI standards and guidelines as an EQRO contract protocol.

As with Medicare, Medicaid programs have the authority to accept accreditation by a private accrediting organization as evidence that a health plan is in compliance with BBA quality requirements.

Developing Effective Medical Management Programs for Medicaid Enrollees

As a result of legal and regulatory changes, health plans face certain challenges in designing effective medical management programs for Medicaid enrollees. The two most important of these challenges are (1) to identify the specific risk factors and healthcare needs of the Medicaid population and (2) to determine how the organization can meet those needs.

Health Risk Factors and Healthcare Needs of the Medicaid Population Medicaid beneficiaries are a culturally, demographically, and medically diverse group that includes children, low-income adults, disabled individuals, and the elderly. A large percentage of Medicaid beneficiaries are poor. Some are unemployed and have poor social support systems. Some are illiterate, lack reliable transportation, or do not speak English. Some suffer from alcohol or substance abuse. Individuals with more stable incomes are periodically eligible for Medicaid, becoming eligible for coverage only when they are hospitalized and incur high medical expenses. All of these factors contribute to the health problems and risks represented by the Medicaid population.

In spite of the diversity of the Medicaid population, however, it is possible to divide beneficiaries into three broad subgroups:

Children and low-income adults Adults with chronic conditions or disabilities who are not eligible for Medicare Dual eligibles

Each of these groups is characterized by specific health risk factors and healthcare needs. The relative size and Medicaid costs of each of these groups are shown in Figure 10B-3.

Children and Low-Income Adults

Children and low-income adults make up the largest, and generally the healthiest, subset of the Medicaid population, accounting for nearly 75 percent of all Medicaid beneficiaries but less than 30 percent of Medicaid expenditures. Two-thirds of this group, or approximately 50 percent of the total Medicaid population, are children.5 This group is also the most likely to be targeted for mandatory enrollment in Medicaid health plans.6

Perinatal morbidity and mortality and the incidence of chronic conditions among children are significant health risk factors for this group. For example, the neonatal mortality rate among low-income women is 1.5 times as high and the number of low-birth-weight deliveries is 2 times as high as those rates for higher-income women. In

addition, children in Medicaid programs have a higher incidence of chronic disabling conditions than do children in the general population.7

It is possible to divide Medicaid recipients into three broad subgroups: Dual eligibles Chronically ill or disabled individuals not eligible for Medicare Children and low-income adults

From the answer choices below, select the response that correctly indicates whether children and low-income adults are the largest subset of the Medicaid population and whether they account for the greatest percentage of Medicaid expenditures:

Largest subset? no;   Greatest percentage of Medicaid expenditures? no

Largest subset? no;   Greatest percentage of Medicaid expenditures? yes

Largest subset? yes;   Greatest percentage of Medicaid expenditures? yes

Largest subset? yes;   Greatest percentage of Medicaid expenditures? no

Answer=D

Children and Low-Income Adults

The nature of chronic and disabling conditions among children in Medicaid is also significant. Medicaid-eligible children are at risk for a variety of chronic conditions related to prematurity and mental illness, including developmental delays, behavioral and emotional problems, and learning disabilities. They are also at risk for serious physical conditions. Although some of the chronic conditions affecting children are common conditions such as allergies, asthma, recurrent ear infections, speech defects, and attention deficit disorder, the majority are conditions that are rarer in the general population, such as

Sickle cell disease Cerebral palsy Chronic respiratory disease

Cystic fibrosis

Diabetes Muscular dystrophy Malignant neoplasms

Spina bifida

The cost of treating chronic conditions among children is high. For example, a study of the Washington State Medicaid program found that 10 percent of the state's Medicaid-enrolled children suffered from one of the eight conditions listed above. The children with one or more of these conditions accounted for more than 70 percent of the state's total Medicaid expenditures.8 Children with chronic conditions that limit their activities are "twice as likely to be hospitalized, consume twice as many physician services, and use six times as many nonphysician professional services as children without activity-limiting chronic conditions."9

Perinatal risk factors and the prevalence of chronic conditions indicate a significant need for preventive and primary care services, especially for children. Problems that are undetected and untreated during childhood can result in high medical and social costs that, because of the long life expectancy of most children, are likely to continue for many years. Evidence has shown that early detection and intervention can reduce, if not eliminate, a significant portion of these costs. For example, studies conducted in the 1980s estimated that every dollar spent on prenatal care saved over three dollars in short- and long-term treatment costs for premature and low-birth-weight infants. Similarly, every dollar spent on childhood immunization saved an average of ten dollars in hospitalization and treatment costs. Interventions such as nurse home-visits directed toward high-risk infants and families resulted in overall cost savings as well as decreased use of emergency services, decreased child abuse, and improved cognitive development.10

Individuals with Disabilities

Blind and disabled persons account for approximately 18 percent of the total Medicaid population and more than 45 percent of total Medicaid expenditures. CMS estimated that in 2000 the annual cost per beneficiary was $9,095 for disabled individuals, compared with $1,876 average for adults in low-income families and $1,203 for children. These expenditures did not include Medicare payments.11 The major reason for this disproportionate percentage of costs is the high demand among disabled beneficiaries for acute and long-term care services.

Unlike children, adult Medicaid beneficiaries with chronic, disabling conditions tend to suffer from prevalent conditions such as bronchitis, emphysema, chronic obstructive pulmonary disorder (COPD), hypertension, heart disease, congestive heart failure, and cancer. A large percentage of disabled adults also suffer from chronic mental illnesses, such as psychoses, personality disorders, and schizophrenia, and from alcohol and substance abuse. In addition, almost all disabled adults have more than one chronic health problem.

The prevalence of chronic conditions, low income, lack of social support networks, and limited access to medical care put this segment of the Medicaid population at high risk for both decreased functional status and serious complications from other illnesses. These characteristics also point to the need for comprehensive case management programs that include preventive care, wellness programs, and coordination of medical and community services.

Dual Eligibles

As we mentioned earlier, dual eligibles are those beneficiaries who are eligible for both Medicare and Medicaid benefits. Although the beneficiaries in this group tend to be relatively few in number, representing roughly 10 percent of the Medicaid population, they tend to be very vulnerable and very costly. In 2000, Medicaid's costs per beneficiary were $10,243 for elderly individuals.12 A significant portion of total Medicaid costs for this group is for long-term institutionalization.

In the lesson Medicare, we identified the following factors that contribute to health risk among Medicare beneficiaries:

These same factors apply to dual eligibles receiving care through Medicaid programs and indicate a need for coordinated care across multiple settings, interdisciplinary delivery systems, focused preventive and primary care, and integrated acute and long-term services.

Advanced age Prevalence of chronic conditions Reliance on prescription drugs Decreased functional status Mental health problems Dependence on caregivers

Designing Effective Medicaid Health Plan Programs

Because of the diversity of the Medicaid population, it is unlikely that any one medical management program will be able to meet all the needs of all beneficiaries. The following elements, however, are essential:

Access to services

Outreach and education

Focus on preventive care

Case management

Health plans have led the way in implementing many of these strategies in their commercial health plans. They have learned the hard way, however, that what works for the commercial population does not necessarily work for the Medicaid population and that simply merging Medicaid beneficiaries into existing plans is not enough. Implementing these strategies for Medicaid beneficiaries requires a clear understanding of the needs and challenges of the Medicaid population.

Access to Services

Although access to services is an important indicator of quality for Medicaid beneficiaries, access is often hampered by Medicaid's complex eligibility and service requirements. This is true in both FFS Medicaid and managed Medicaid programs.

FFS Medicaid. Poor reimbursement rates have triggered large-scale reductions in the number of FFS providers willing to treat Medicaid patients, especially those with chronic or disabling conditions. The result is that illnesses among Medicaid recipients often go undetected and untreated until they are serious and costly. When patients do seek care, they most often turn to acute care facilities or emergency departments. Poor social and economic conditions also make it difficult for patients to comply with treatment programs. For example, management of diabetes can be nearly impossible for patients who are homeless or cannot afford a proper diet. Socially isolated patients are at risk for poor outcomes from strokes; for deterioration of cognitive, physical, and psychological functioning; and for poor compliance with instructions for medication and follow-up care.

Physicians often lack the resources necessary to provide care management or case management services for patients with complex conditions. In addition, physicians' offices are often inconveniently located and open only during specified hours. Patients who can get appointments often face long waits before and after they arrive at the doctor's office.

Managed Medicaid. Obstacles to access under managed Medicaid programs are different than those under FFS Medicaid. For example, a lack of qualified providers is typically not an issue for most health plans that maintain provider networks. Health plans often have established case management and disease management programs as well. The unstable eligibility status of Medicaid beneficiaries, however, is a serious problem for health plans.

Unlike commercial enrollees who obtain healthcare coverage early and maintain it over many years, Medicaid beneficiaries other than dual eligibles or individuals confined to institutions tend to gain and lose coverage periodically. Because Medicaid uses strict income standards to determine eligibility, even slight fluctuations in income can trigger changes in enrollment. Recipients of AFDC/TANF are especially susceptible to such changes, with 30 percent or more of the population being replaced each year.14 Changes in eligibility are also common among patients who "spend down" their income on medical expenses. These patients frequently enter Medicaid only when they are hospitalized for illness or injury; once they leave the hospital, they may leave Medicaid as well. Even patients who suffer chronic or disabling conditions such as AIDS, mental illness, and substance abuse are often not enrolled in Medicaid at the onset of their medical problems.

Health plans have already taken the following steps to improve Medicaid enrollees' access to care:

Locating facilities in nearby neighborhoods or contracting with providers with offices in those areas

Providing extended hours of service at healthcare facilities and physicians' offices

Including multiple services in a single location Providing "extras" such as translation services, multicultural and multilingual

staff, and transportation services Providing a system of mid-level professionals such as nurse practitioners and

physician's assistants and mid-level programs such as telephone hot-lines and triage programs

Including community health centers in provider networks

One of the most important steps health plans have taken to improve access is to provide beneficiaries with a medical "home" where they can receive regular, reliable healthcare services. Access to a primary care provider who is responsible for supervising patient care encourages patients to seek-and follow the recommendations of-preventive care and early intervention programs. For example, managed Medicaid programs have been shown to improve prenatal care for pregnant women, increase regular pap smears and breast cancer screenings, and boost the level of child immunizations.15 health plan staff also help Medicaid patients obtain other social services. These efforts improve continuity of care for Medicaid beneficiaries and reduce reliance on acute care facilities and emergency departments.

Outreach and Education

Introducing commercial enrollees to health plans can often be accomplished by handing out information packages to new enrollees or offering orientation programs. Introducing Medicaid beneficiaries whose contact with healthcare is often limited to intermittent visits to hospital emergency departments to the benefits of regular primary care and disease prevention requires ongoing, intensive, and personalized outreach and education.

The following steps can help make outreach and education programs more effective:

Establish an information contact within the organization. Medicaid enrollees who come into a health plan are likely to be unfamiliar with procedures such as selecting PCPs and obtaining referrals. A contact within the organization can serve as a source of information. The contact can explain plan benefits, assist with scheduling appointments, and remind patients about recommended services such as immunizations and preventive screening and follow-up appointments. Plan contacts can also play an important role in educating enrollees on self-care techniques for minor medical problems.

Establish a follow-up system. Even patients who see PCPs for routine preventive care tend to turn to emergency departments when they are sick. Follow-up calls to these patients allow plans to acknowledge the patient's condition and to reinforce the need for primary care and prevention. Such calls are often effective in reinforcing patient/provider relationships and reducing the utilization of emergency services. One health plan reported that such calls had reduced emergency department visits from 540 per 1,000 members to 395 per 1,000 members over a three-year period.

Provide information in multiple forms. Education and outreach programs need to provide information in a variety of formats, such as telephone hot-lines or follow-up services, information packages sent through the mail or available at churches and neighborhood clinics where enrollees gather, or home visits by outreach workers. Such efforts should be designed to provide information where and when patients need it.

Match information to patients' social, cultural, language, and literacy needs. Medicaid beneficiaries' access to medical care is frequently hampered by language barriers, cultural beliefs, socioeconomic status, and illiteracy. For example, people from cultures that do not embrace Western medicine may have difficulty understanding the need for childhood immunization. Patients who do not have access to regular meals may have trouble accepting the idea of planned diets. Messages that are tailored to accommodate patients' needs, that are written in multiple languages, and that contain culturally relevant information can help eliminate barriers, even if they fall outside the boundaries of standard practice. As one plan leader put it, "If you've got an obese Medicaid patient and your dietitian hands out recipe cards, forget the ones that require blenders and deboned chicken."

Give members an incentive to comply. Health plan programs will succeed only if they can encourage their Medicaid members to get involved in preventive and primary care programs and become accountable for their own health. One way to accomplish this goal is to provide members with incentives and rewards for compliance. For example, one plan offers gift certificates to supermarkets and department stores to young mothers who come in for all their prenatal checkups. Another offers mothers whose children are up to date on immunizations a chance to win savings bonds.[Endnote 18] The cost of these incentives is incidental compared to their long-term savings. Because individual states often have regulations regarding the types of incentives Health plans can and cannot offer, plans should check state Medicaid regulations before designing an incentive program.

Outreach and education programs tend to be labor-intensive and costly, but over the long term they can produce significant savings and improved health outcomes. In addition to reducing emergency department visits, such programs have been shown to reduce the costs of hospital admissions. One plan reported an average cost-per-hospital-admission that was $4,300 below the $6,900 average cost reported by FFS Medicaid.19

Focus on Preventive Care

Disease prevention and early intervention can have a significant impact on long-term health outcomes and costs. Risk identification and assessment systems such as those described in Medicare for identifying high-risk Medicare recipients can also help plans determine which Medicaid enrollees are at risk for serious and costly health problems and which services are most appropriate to meet their needs. Risk screening is not a new concept under Medicaid, which has included screening and assessment as a covered benefit for a number of years. What is new is the inclusion of non-medical factors such as behavioral, developmental, and emotional health, peer relationships, and family needs and resources in the screening process.

Preventive care programs offer obvious benefits to both Medicaid beneficiaries and health plans. Prenatal and neonatal care have been shown to reduce low-birth-weight delivery and infant mortality rates. For example, since 1987, North Carolina's Baby Love Program, which provides comprehensive prenatal care and infant health services to Medicaid beneficiaries, has reduced the state's Medicaid infant mortality rate by 27 percent.20 Programs in other states have produced similar results.

Immunizations can eliminate most childhood diseases and reduce serious complications from illnesses such as flu among high-risk patients. Wellness programs that emphasize good nutrition, exercise, smoking cessation, and behavioral and lifestyle changes can help reduce the incidence and effects of preventable diseases. Preventive and primary care services can also have a significant effect on healthcare costs.

Preventive care programs also pose significant challenges. Preventive measures are usually derived by tracking patterns in utilization and outcomes. With the exception of elderly beneficiaries confined to institutions or covered by SSI, Medicaid beneficiaries' use of services is unpredictable and intermittent. It is often unclear which interventions are likely to produce the best results. Preventive measures are also most effective if implemented early and continued over time. Such an approach is ineffective for patients who are not eligible for benefits until they become ill or who are not enrolled long enough to follow programs such as prenatal care and childhood immunization through to completion.

In order to maintain continuity of care, prevent secondary complications of illness or injury, and reduce the impact of chronic and disabling conditions on medical costs, health plans will have to develop programs that extend beyond the limits of plan enrollment and current Medicaid rosters to include the entire population.

Case Management

Health plan's success in controlling healthcare costs in the commercial arena is linked to its efforts to maintain the health of a relatively young, employed, and basically healthy population. Even when beneficiaries who become eligible as a result of catastrophic conditions or through other medically needy mechanisms are excluded from consideration, Medicaid enrollees challenge this approach.

As we mentioned earlier, the Medicaid population consists of distinct subgroups, including children, low-income adults, chronically ill or disabled adults, and the elderly. Costs for these subgroups are typically higher than costs for commercial enrollees; for Medicaid enrollees with chronic conditions, for example, costs can be as much as 300 percent higher.22 Moreover, risk behaviors associated with chronic conditions tend to increase with age and are inversely related to social and economic status. In order to meet the needs of Medicaid enrollees, health plans will have to develop health management programs.

Case management, which we described in lesson Medicare, is an essential component of health management and medical management. Case management provides access to important public health and community-based social services such as substance abuse counseling and treatment programs, community-wide programs to identify and reduce the transmission of disease, transportation services, housing, and employment programs. By coordinating healthcare and community-based services, case management helps Medicaid beneficiaries receive quality care. It also provides a way to manage costs by reducing Medicaid enrollees' reliance on acute care.

The Future of Managed Medicaid

If current trends continue, increasing numbers of Medicaid beneficiaries will be entering health plans. In 2003, 46 states provided managed care options for Medicaid recipients. Between 1998 and 2003, the number of Medicaid recipeitns enrolled in any type of managed care plan increased dramatically, from 16.6 to 25.3 million (see Figure 10B-4.) This 52 percent increase in Medicaid managed care enrollment over

the last five years indicates states' increasing reliance on private plan options in their Medicaid program.

Organizations that enter the Medicaid market will have to contend with a wide variety of legal and regulatory requirements. They will have to redefine their role as healthcare organizations by developing new ways of managing medical care and expanding their services from the confines of individual health plans to the surrounding community. And they will have to accomplish these tasks without sacrificing quality.

AHM Medical Management: Other Government Sponsored Programs

Pages 1 to 39

Other Government-Sponsored Healthcare Programs

Course Goals and Objectives After completing the lesson Other Government-Sponsored Healthcare Programs, you should be able to:

Identify several FEHBP requirements that might impact a health plan's medical management activities

Describe how the Military Health System and the Veterans Health Administration influence healthcare quality and cost in the private sector, and vice versa

Discuss key differences between managing quality and cost in workers' compensation programs as opposed to group healthcare programs

AHM 540: Medical Management EXECUTIVE LESSON SUMMARY

Other Government- Sponsored Healthcare Programs Lesson Overview In this lesson, we turn our attention to the Federal Employee Health Benefits Program, the Military Health System, the Veterans Health Administration, and state workers' compensation programs.

Objectives

After completing this lesson, you should be able to: • Identify several FEHBP requirements that might impact a health plan's medical

management activities. • Describe how the Military Health System and the Veterans Health Administration influence

healthcare quality and cost in the private sector, and vice versa. • Discuss key differences between managing quality and cost in workers' compensation

programs as opposed to group healthcare programs.

Questions and Answers Identify several FEHB requirements that may impact a health plan’s medical management activities. Health plans that seek to participate in FEHBP must satisfy OPM requirements for financial stability, management experience, total enrollment, choice of providers, access to providers, benefit design, etc. Premium rates must be in accordance with FEHBP rating requirements. Health plans must also agree to enrollment, claims review, and audit requirements specified in the FEHBP contract. If there is a discrepancy between the FEHBP contract and a state law, the contract governs. FEHB also requires health plans to cover:

• Mammography screenings according to the National Cancer Institute's minimum standard. • Prudent layperson standard for coverage decisions regarding use of emergency services. • Direct access to obstetricians and gynecologists (OB/GYNs) for routine and preventive

women's healthcare services. • Direct access to qualified network specialists for members who have complex or serious

medical conditions that require frequent specialty care.

©Academy for Healthcare Management, 2006, all rights reserved. 601 Pennsylvania Ave., NW Suite 500 S Washington, DC 20004 888-249-2346 www.e-AHM.com

Describe how the Military Health System influences the healthcare quality and cost in the private sector, and vice versa.

The Military Health System (MHS) plays a direct role in the delivery of healthcare. The MHS operate hundreds of healthcare facilities, exerting a major influence on healthcare issues such as medical research, medical education, and patient care.

Describe how the Veterans Health Administration influences the healthcare quality and cost in the private sector, and vice versa.

The Office of Quality Management (OQM), a department within the VHA, oversees many quality improvement activities in areas such as hospital JCAHO accreditation, external peer review, quality improvement checklists, best practices, outcomes monitoring, clinical practice guidelines, and patient feedback.

Recognizing the importance of providing quality and value in the delivery of healthcare, OQM has established a family of performance measures in each of three critical performance dimensions:

• Quality outcomes, as defined by healthcare practitioners, e.g., mortality rates, functional state of the patient, etc.

• Cost-effectiveness, e.g., cost per visit, cost per period of care, cost per patient per year, etc.

• Patient satisfaction, as determined by customer standards and surveys

The VHA examines results in the above areas to monitor and improve performance. For instance, healthcare costs and resource allocations have tended to vary by region, pointing to a need to place more emphasis on appropriate utilization of resources.

What are key differences between workers’ compensation programs and group healthcare programs in terms of quality and cost management?

There are fundamental differences between group healthcare and workers’ compensation. Unlike group healthcare, where the focus is on managing care within the scope of a healthcare benefits contract, workers’ compensation focuses on the total claim, which include a variety of direct and indirect healthcare, disability, and workplace issues. Key Terms and Concepts

Military Health System (MHS): A worldwide healthcare system operated by the U.S. Department of Defense that focuses its efforts on population health improvement by integrating the delivery of healthcare services for active-duty personnel, retirees, and the families of active families of active-duty personnel and retirees.

Military Treatment Facilities (MTFs): Hospitals, clinics, and treatment centers that the Army, Navy, Air Force, and Coast Guard operate to deliver care to Military Health System beneficiaries.

©Academy for Healthcare Management, 2006, all rights reserved. 601 Pennsylvania Ave., NW Suite 500 S Washington, DC 20004 888-249-2346 www.e-AHM.com TRICARE Extra: A reduced fee-for- service (FFS) plan similar to the network portion of a PPO. TRICARE Prime: An enrollment- based health plan option designed to provide coordinated care managed by a primary care manager, who is similar to a primary care provider in a commercial HMO. TRICARE Standard: A fee-for-service plan that allows participants to use TRICARE authorized providers or non-network providers.

The Academy for Healthcare Management (AHM) designation examinations are designed to measure whether participants have successfully completed the relevant assigned curriculum; Executive Summaries are designed to enhance but not replace the completion of online assignments.

©Academy for Healthcare Management, 2006, all rights reserved. 601 Pennsylvania Ave., NW Suite 500 S Washington, DC 20004 888-249-2346 www.e-AHM.com

Other Government-Sponsored Healthcare Programs

Introduction

In the previous two lessons, we examined medical management as it relates to Medicare and Medicaid. In this lesson, we turn our attention to the Federal Employee Health Benefits Program, the Military Health System, the Veterans Health Administration, and state workers' compensation programs.

The Federal Employee Health Benefits Program (FEHBP)

The Federal Employee Health Benefits Program (FEHBP) provides healthcare benefits to civilian employees, retirees, and former employees of the federal government, their eligible family members and former spouses, and certain other individuals specified by the federal government. In terms of number of enrollees and participating health plans, FEHBP is the largest employer-sponsored group healthcare program in the world. It is administered by the Office of Personnel Management (OPM), the federal government's human resources agency. OPM contracts with health plans to purchase many of the products and services obtained by nonfederal purchasers. Depending on availability in the geographical area, FEHBP offers enrollees a choice of health maintenance organization (HMO), point-of-service (POS) product, preferred provider organization (PPO), and managed fee-for-service coverage.

Health plans that seek to participate in FEHBP must satisfy OPM requirements for financial stability, management experience, total enrollment, choice of providers, access to providers, benefit design, etc. Premium rates must be in accordance with FEHBP rating requirements. Health plans must also agree to enrollment, claims review, and audit requirements specified in the FEHBP contract. If there is a discrepancy between the FEHBP contract and a state law, the contract governs.In terms of number of enrollees and participating health plans, the largest employer-sponsored group healthcare program in the world is the:

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)

Civilian Health and Medical Program for Veterans Administration (CHAMPVA)

Veterans Health Administration (VHA) Program

Federal Employee Health Benefits Program (FEHBP)

Answer=D

FEHBP and Medical Management

Because OPM prefers products and services available in the commercial marketplace, health plan medical management is not significantly affected by FEHBP contracts. However, some requirements can have an impact. For example, in response to the 1999 report on medical errors by the Institute of Medicine (IOM), the president issued an executive order requiring all health plans that cover federal employees to develop and implement patient safety initiatives. In addition, FEHBP requires health plans to cover:

Autologous bone marrow transplants (ABMT) for late stage breast cancer Mammography screenings according to the National Cancer Institute's minimum

standard Prudent layperson standard for coverage decisions regarding use of emergency

services Direct access to obstetricians and gynecologists (OB/GYNs) for routine and

preventive women's healthcare services Direct access to qualified network specialists for members who have complex or

serious medical conditions that require frequent specialty care

Furthermore, some FEHBP service requirements differ from typical health plan procedures. For example, FEHBP has an external review process to facilitate independent review of disputes between members and health plans. When members disagree with an authorization or coverage decision, they follow the health plan's usual appeals process, but if the original decision is upheld, members can request an OPM review. OPM typically acknowledges receipt of these requests within 5 days and sends a final response within 60 days of receipt of the appeal.2

OPM encourages enrollees to be knowledgeable healthcare consumers and patients. Through brochures and electronic communications, OPM provides access to information about cost of coverage, benefits, participating health plans, and healthcare-related topics such as preventive care, self-care, and healthcare quality. For example, the FEHBP handbook lists all available health plans and indicates their accreditation status. OPM also uses the Consumer Assessment of Health Plans (CAHPS) to provide enrollees with the results of health plan assessments. By making this type of information available to FEHBP enrollees, OPM helps advance the primary objective of medical management-high quality, cost-effective care. Insight 10C-1 shows an excerpt, from OPM's FEHBP website, on the subject of obtaining high quality healthcare.

The Military Health System and the Veterans Health Administartion

Unlike FEHBP, two other federal programs, the Military Health System (MHS) and the Veterans Health Administration (VHA) play a direct role in the delivery of healthcare. The MHS and VHA operate hundreds of healthcare facilities, exerting a major influence on healthcare issues such as medical research, medical education, and patient care. The MHS and VHA also monitor initiatives in the civilian healthcare sector and work closely with providers, health plans, and accrediting agencies, as well as other agencies in federal and state government on a variety of healthcare and medical management issues.

The Military Health System (MHS)

The Military Health System (MHS) is a worldwide healthcare system operated by the U.S. Department of Defense (DoD). The MHS has two primary objectives. First, it provides (and maintains readiness to provide) medical care for the U.S. armed forces during military operations. Second, it offers ongoing healthcare for active duty personnel, military retirees, and the families of active duty personnel and military retirees.

Key to the success of the MHS is its network of military treatment facilities (MTFs), the hospitals, clinics, and treatment centers that the Army, Navy, and Air Force operate to deliver care to MHS beneficiaries. In some locations, civilian healthcare contractors provide resources such as personnel, equipment, and supplies for use in MTFs. To supplement the MTFs, the DoD also offers healthcare coverage through a program called TRICARE, which includes care available directly from MTFs as well as care obtained from civilian sources (providers, health plans, and third party administrators) that contract with the DoD. Oversight of the TRICARE program is the responsibility of TRICARE Management Activity (TMA).

The MHS includes 15 geographical health services regions, 12 of which are in the United States. In each region, a senior military healthcare officer, called a lead agent, works with the region's MTF commanders to coordinate delivery of healthcare services between MTFs and civilian providers and health plans.

In the 1980s, the DoD initiated a number of demonstration projects to determine the effectiveness of specific healthcare delivery and financing mechanisms. The success of these demonstration projects led to a 1994 congressional directive to incorporate health plan features into the Civilian Health and Medical Programs of the Uniformed Services (CHAMPUS), which was the name of the existing program for military families and retirees. In 1995, the DoD began a region-by-region, phased implementation of TRICARE to replace CHAMPUS.

Eligibility and Plan Options

Since active duty military personnel are covered by the uniformed services, they obtain most of their healthcare at MTFs, although in certain circumstances they may be referred to civilian providers. Families of active duty military personnel, military retirees and their families, and survivors and certain former spouses of military personnel are covered by TRICARE. Typically, individuals are not covered by TRICARE if they are eligible for Medicare. However, several demonstration projects are under way to test enrolling Medicare eligible beneficiaries in the TRICARE program.

TRICARE offers three plan options: TRICARE Prime, TRICARE Extra, and TRICARE Standard. TRICARE Prime is an HMO plan in which enrollees select or are assigned to a primary care manager (PCM) who coordinates care much like a primary care provider (PCP) in a commercial HMO. The PCM may be a family practitioner, general practitioner, internist, OB/GYN, or pediatrician. The network consists of MTFs and civilian providers. Services that are provided or authorized by a PCM are not subject to a deductible or coinsurance, although copayments apply for certain services obtained from non-military providers. A point-of-service component allows enrollees to visit specialists without a referral from the PCM, subject to a deductible and coinsurance. Active-duty military personnel are automatically enrolled in TRICARE Prime. All other eligible individuals who wish to be covered under TRICARE Prime must opt into it.

TRICARE offers three plan options: TRICARE Standard TRICARE Prime TRICARE Extra

With respect to these plan options, it is most likely correct to say that:

active-duty military personnel are automatically enrolled in TRICARE Prime

TRICARE Standard is similar to the network portion of a PPO

only TRICARE Extra uses cost-sharing arrangements such as deductibles, coinsurance, and copayments

TRICARE Standard has the lowest out-of-pocket payments

Answer=A

TRICARE eligible individuals who are not enrolled in TRICARE Prime are covered under the other two plan options: TRICARE Extra and TRICARE Standard. TRICARE

Extra is similar to the network portion of a PPO plan. Under TRICARE Extra, beneficiaries who choose to visit a TRICARE-authorized, community-based network provider pay a deductible and coinsurance, but this out-of-pocket payment is less than the out-of-pocket payment under TRICARE Standard. TRICARE Standard is a fee-for-service plan, similar to the CHAMPUS plan that was available prior to TRICARE. Under TRICARE Standard, beneficiaries can visit any TRICARE-authorized provider, subject to a deductible and coinsurance. The TRICARE Standard option has the highest out-of-pocket payments.

Health Plan Features

At each location where there is a military installation, there is a TRICARE Service Center (TSC) staffed by trained personnel, many of whom have a medical background. Beneficiary services representatives are the primary point of contact, usually by telephone, for answering questions about plan options, eligibility, selecting PCMs, and filing claims. The TSC also serves as a resource for beneficiaries and providers on a variety of medical management issues, such as referrals, authorizations, and case management. As the MHS has evolved, it has refined and expanded its medical management activities, adopting many initiatives that have been successful in the civilian sector.

One of the goals of TRICARE has been to increase collaboration between the military and civilian health plans and providers. In some locations, MTF staff conduct medical management activities; in other locations, the DoD contracts with private sector health plans to perform these activities. The DoD enters into health plan support contracts with health plans for administrative services and healthcare delivery systems. MCS contractors are required to follow all TRICARE quality management and utilization management procedures.

Preventive Care, Self-Care, and Decision-Support Programs The MHS provides a variety of wellness services and screening procedures to prevent illness and to detect and provide early interventions for existing medical conditions. For example, TRICARE offers eye exams, hearing screenings, immunizations, mammograms, pap smears, cholesterol testing, and blood pressure screening. In most regions, nurse advisors are available by telephone 24 hours a day, seven days a week to help enrollees with their healthcare decision making. Nurse advisors provide advice and assistance on healthcare issues such as what to do about a sudden illness or injury, treatment alternatives for a chronic condition, and prevention and self-care. The DoD also makes available self-help books, prenatal programs, community education programs, and so on.3

Utilization Review and Case Management

Under TRICARE, healthcare finders and MTF utilization management staff sometimes handle utilization review and case management activities. Healthcare finders (HCFs), located at TRICARE Service Centers, work with patients and PCMs to authorize and coordinate referrals for specialty care and hospital admissions. HCFs, often in coordination with MTF staff, determine if care can be provided at the MTF; if it cannot, then they refer the patient to a civilian provider in the network. HCFs also help identify beneficiaries who might benefit from case management. Typically, case managers are available in MTFs or network hospitals to evaluate referrals for

acceptance into the case management program and to assist providers by coordinating inpatient care and discharge planning.

Appeals and Grievances

TRICARE beneficiaries and providers have the right to appeal authorization and coverage decisions. Initial appeals and, if necessary, second level appeals, called requests for reconsideration, are handled by the TRICARE contractor. After the request for reconsideration, beneficiaries (but not providers) can file a final appeal with a national quality monitoring contractor (NQMC). If the beneficiary is a hospital inpatient, the second level appeal is handled by the NQMC.

Complaints about care delivered by civilian network providers are called grievances. Often, grievances are routed through the TRICARE contractor's appeals process. A beneficiary not satisfied with the way a grievance has been resolved can contact the TSC or, in some regions, the Area Field Office (AFO) for assistance. In some cases, the TRICARE contractor works in concert with the lead agent office or the MTF to resolve a grievance.

Accreditation and Performance Measures For its larger military treatment facilities, the DoD seeks accreditation from the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). The DoD contracts with outside vendors to obtain performance measurement systems used to monitor outcomes and other clinical performance data needed to meet JCAHO reporting requirements. The DoD also uses this data to compare outcomes and performance results across MTFs to help guide quality improvement efforts.

Healthcare Initiatives and Studies

The MHS participates in a variety of healthcare initiatives and studies. There are over 50 MHS committees, work groups, and charters ranging from the Armed Forces Institute of Pathology Board of Governors to the Vision Information Services Functional Process Improvement Work Group.4 TRICARE's National Quality Management Program (NQMP) evaluates the quality and cost of healthcare through various studies of clinical topics such as cardiovascular disease and orthopedic injuries. Each branch of the uniformed services also sponsors healthcare initiatives and studies. For example, in 1999 the U.S. Army Center for Health Promotion and Preventive Medicine provided funding for a number of different projects, which are listed in Figure 10C-1.

At each location where there is a military installation, there is a TRICARE Service Center (TSC) staffed by trained personnel, many of whom have a medical background. ____________, who are located at TSCs, work with patients and primary care managers (PCMs) to authorize and coordinate referrals for specialty care and hospital admission:

Lead agents

Safety net providers

Healthcare finders (HCFs)

Managed care support (MCS) contractors

Answer=C

The MHS participates in other government sponsored programs as well, such as Put Prevention Into Practice, a national prevention implementation initiative designed for primary care practice, developed by the U.S. Public Health Service's Office of Disease Prevention and Health Promotion. In addition, the MHS participates in clinical trials such as the DoD/National Cancer Institute (NCI) Cancer Prevention and Treatment Clinical Trials Demonstration Project. By covering certain experimental procedures, TRICARE gives beneficiaries and healthcare practitioners the opportunity to enroll in cancer prevention and treatment studies sponsored by the National Cancer Institute.5

The Veterans Health Administration (VHA) The Veterans Health Administration (VHA), a division of the U.S. Department of Veterans Affairs (VA), provides hospital, nursing home, and outpatient medical and dental care to eligible veterans of military service. The VHA operates medical

centers, nursing home care units, and outpatient facilities. In some cases, the VHA oversees healthcare provided to veterans by civilian providers. In addition, the VHA offers healthcare coverage under the Civilian Health and Medical Program for Veterans Administration (CHAMPVA) for dependents of veterans who meet certain coverage conditions. Besides providing and coordinating patient care, the VHA conducts medical research and, through affiliations with educational institutions and healthcare facilities, assists in educating and training healthcare providers. For more information about the unique relationship between the VA and the U.S. healthcare system, see Insight 10C-2. 6

The Office of Quality Management (OQM), a department within the VHA, oversees many quality improvement activities in areas such as JCAHO accreditation, external peer review, quality improvement checklists, best practices, outcomes monitoring, clinical practice guidelines, and patient feedback. Recognizing the importance of providing quality and value in the delivery of healthcare, OQM has established a family of performance measures in each of three critical performance dimensions:

Quality outcomes, as defined by healthcare practitioners, e.g., mortality rates, functional state of the patient, etc.

Cost-effectiveness, e.g., cost per visit, cost per period of care, cost per patient per year, etc.

Patient satisfaction, as determined by customer standards and surveys

The VHA examines results in the above areas to monitor and improve performance. For instance, healthcare costs and resource allocations have tended to vary by region, pointing to a need to place more emphasis on appropriate utilization of resources.

Workers' Compensation

Recall from the lesson Environmental Influences on Medical Management that workers' compensation programs are state-mandated insurance programs that provide benefits for healthcare costs, lost wages, and loss of earning capacity resulting from a work-related injury or illness. Workers' compensation was developed to balance the needs of employees and employers. Under workers' compensation, employees injured on the job are entitled to health and disability benefits but generally cannot sue their employers, while employers are largely protected from lawsuits but must compensate employees for work-related injuries and illnesses regardless of who is at fault. Insight 10C-3 provides an example of how workers' compensation works.

Although the delivery of quality, cost-effective healthcare is always a primary goal, there are fundamental differences between group healthcare and workers' compensation. Unlike group healthcare, where the focus is on managing care within the scope of a healthcare benefits contract, workers' compensation focuses on the total claim, which includes a variety of direct and indirect healthcare, disability, and workplace issues.

Every state has a workers' compensation law, and most require that workers' compensation coverage be provided or arranged by the employer. Interestingly, workers' compensation is not considered health insurance, but rather property-

casualty insurance, similar to homeowners' or automobile coverage. Workers' compensation laws require coverage of a wide array of services often not included in health insurance programs. They also prohibit benefit designs that contain employee cost-sharing features. These distinctions present unique challenges in integrating disability management and health insurance functions into the workplace and into healthcare delivery organizations. In this section, we discuss the healthcare and disability components of employer-sponsored workers' compensation programs. Keep in mind, however, that workers' compensation programs vary considerably from state to state due to regulatory requirements.

The Cost of Occupational Injury and Illness

Under workers' compensation, employees do not contribute for their coverage, and all reasonable medical expenses are paid in full for as long as care is necessary. There are no cost-sharing features such as deductibles, copayments, and coinsurance, nor are there benefit limits such as restrictions on days, visits, or benefits payable. To control medical costs, many states use fee schedules, based on Medicare and Medicaid fee schedules, that specify the maximum amount providers may charge for treating workers' compensation patients. Although these fee schedules cap the cost per procedure, they do not control utilization.

Over the years, healthcare costs under workers' compensation programs have increased significantly. Possible reasons for these increases include the following:

Employees do not pay healthcare expenses under workers' compensation, so they have no incentive to control costs.

Workers' compensation takes an aggressive approach to healthcare (e.g., greater use of tests, specialists, and rehabilitation) to return employees to work quickly.

Lack of clear clinical practice guidelines for providers results in overuse of services by providers.

Benefits for lost wages provide an incentive for employees to prolong their care and delay their return to work.

The sometimes adversarial relationship between employee and employer can lead to employee fraud and abuse or unwillingness to cooperate in efforts to manage costs.

Fee schedules and fee-for-service reimbursements provide an incentive for healthcare professionals to overtreat in order to increase their earnings.

State workers' compensation laws often limit the use of health plan techniques. Employers often do not permit employees to return to work through job

modifications or modified-duty positions.

The total cost for work-related injuries and illnesses includes more than just the cost of healthcare. Employers also pay wage-replacement benefits to employees who are unable to work. These payments, sometimes called indemnity benefits, account for a large percentage of workers' compensation costs. In addition, employers absorb various indirect costs such as lost or poor productivity, the cost of hiring and paying replacement workers, employee benefit expenses for injured employees, contributions to Social Security and Medicare for disabled workers, and so on.

Furthermore, in job-related illnesses, there are hidden costs that can be very difficult to identify because of the length of time between workplace exposure and the medical diagnosis. Often, when sickness occurs, a work-related cause is not considered, or if it is considered, an occupational connection is difficult to establish. Yet the impact of overlooking workplace-caused illnesses can be serious. The worker and other employees may remain at risk, and in the long run, employees, their families, and the employer suffer human, business, and financial consequences when the cause of illness remains undetected.9

Health Plans and Workers' Compensation

Many states have adopted enabling legislation for managed care techniques to be incorporated in workers' compensation, but with wide variations in defining the term managed care. For example, some states allow or require the use of "managed care" networks with few restrictions. Other states require health plans to meet specific certification standards before they can manage care. In these states, the term managed care, as it relates to workers' compensation, refers solely to state-certified health plans.

In many states, the use of health plan networks is prohibited or significantly limited. In these states, employers either (1) cannot require employees to visit network providers or (2) may initially require employees to visit network providers but must allow employees to opt out of the network after a certain number of visits or a specified period of time.

Largely because of the impact of state workers' compensation laws, health plans are not as prevalent in workers' compensation as in group healthcare. The use of HMO-like health plans, with PCPs and referral procedures, is extremely rare. Regulatory limitations on the use of networks have led many health plans to establish their workers' compensation products as PPOs. However, due to state-mandated plan designs, health plans generally cannot apply out-of-network benefit reductions to encourage employees to visit network providers. Instead, health plans must rely on other ways to encourage network utilization. For example, employers or health plans occasionally offer incentives, such as increased wage replacement benefits for workers who use network providers. Health plans also try to attract injured workers by delivering excellent service from the outset and providing the right combination of quality care, expense management, and return-to-work techniques. Two key areas for health plans to focus on are occupational medicine and the use of medical and disability management.

Occupational Medicine

Effective workers' compensation programs recognize the important role that PCPs play in the delivery of occupational medicine. The PCP must be able to assess a patient's condition in terms of clinical needs as well as functional capacity and return-to-work potential. The PCP is called upon to assess and regularly report on an employee's status, providing a functional assessment and a job assessment. When an employee is able to return to work, the PCP must determine in what capacity. In some cases, the PCP must determine the percentage of permanent disability that will be used to award compensation to an injured worker.

Compared to group healthcare, workers' compensation programs commonly address a narrower set of medical conditions: minor wounds, lacerations, chemical burns, and

various musculoskeletal injuries such as fractures, sprains, strains, hernias, repetitive motion injuries, and back pain. These types of conditions often require the immediate attention of medical specialists, but less often result in costly medical procedures or extended hospital stays. Many occupational injuries respond favorably to orthopedic or chiropractic care, as well as intensive rehabilitation and physical therapy.

Medical and Disability Management in Workers' Compensation

Disability management seeks to manage total workers' compensation costs through prevention and recovery programs that (1) maintain or improve the health of employees in their jobs and (2) emphasize returning injured or ill employees to full work-capacity and productivity, without relapse, as soon as medically appropriate. Often, wage replacement and indirect costs in a workers' compensation case far exceed the cost of healthcare. In these situations, it makes sense to aggressively treat the condition if the result will be a faster return to work with a corresponding reduction in indemnity benefits and other expenses.

Effective disability management programs involve employers to ensure that needed workplace modifications are implemented and that injured workers can return to modified-duty jobs when appropriate. Employer cooperation is essential, since data shows that the potential for return to work decreases dramatically the longer a worker stays away from the workplace.

The following statements are about the use of managed care in workers' compensation programs. Select the answer choice containing the correct statement:

Compared to group healthcare, workers' compensation programs commonly address a wider set of medical conditions. The use of HMO-like programs, with PCPs and referral procedures, is common in managed workers' compensation programs. One factor for health plans to consider when constructing managed workers' compensation products is that, for a typical workers' compensation case, wage replacement and indirect costs far exceed the cost of healthcare One challenge for health plans that offer managed workers' compensation programs lies in determining appropriate cost-sharing features such as deductibles, copayments, and coinsurance, as well as benefit restrictions.

Answer= C

Using a variety of medical and disability management techniques, workers' compensation programs concentrate on two major areas: prevention and recovery. In this context, prevention means all activities intended to keep accidents, injuries, or illnesses from occurring in the workplace, while recovery refers to activities-pursued after an employee sustains an injury or illness-to bring about the quickest possible recuperation and return to work. Most health plans do not conduct primary prevention activities in the workplace, although some do offer these programs as part of their total workers' compensation package.

Prevention

The goal of a workers' compensation prevention program is to reduce the number of job-related injuries and illnesses by working closely with employers and employees on both the work environment and employee behavioral and healthcare issues. Prevention programs rely on a combination of risk management and educational activities. These programs typically include a job site analysis intended to uncover specific practices that increase the risk of accidents, injuries, or illness. For example, employee workstations might be examined for proper ergonomic design to prevent back strain or repetitive motion injuries. In addition, the activities of workers might be observed to determine the need for training in proper lifting, use of equipment, or the importance of wearing protective devices.

Typically, workers' compensation risk management and education programs are provided by insurers, while the role of health plans is to assist in monitoring and reporting the results of these programs. In addition, health plans conduct secondary and tertiary prevention by supporting early detection of medical conditions and by seeking ways to prevent conditions from worsening or recurring. Many injuries common to workers' compensation cases (sprains, strains, and lower back pain, for example) are chronic in nature. Consequently, health plans must balance the need to prevent relapses with the goal of returning the employee to work as soon as possible.

Recovery

By emphasizing prompt reporting of job-related medical conditions and immediate referral to the appropriate provider, health plans increase the likelihood of an accurate diagnosis, early intervention, and timely recovery. Once employees enter the healthcare system, health plans use medical and disability management techniques, usually performed within the framework of utilization review and case management programs, to help return the employee to work as quickly as possible. Formal return-to-work programs are offered by the health plan or the employer to coordinate clinical care, functional capacity, and job-related issues. Because of state requirements, as well as emphasis on the total claim, workers' compensation health plans are typically less concerned than other health plans about strict definitions of medical necessity.

In some states, providers are required to use treatment guidelines developed by state medical advisory panels for treating common workplace injuries. In states without such requirements, health plans often implement similar guidelines for network providers. Standards for managing workers' compensation cases are called return-to-work protocols, which establish expected lengths of disability, recommended medical treatments, and job placement guidelines to facilitate a patient's return to work. These protocols are in some ways comparable to UR protocols that facilitate hospital discharge. Return-to-work protocols take into account the nature of the medical condition; the age, gender, and occupation of the worker; and the employee's functional capacity as it relates to the demands of the job. Return-to-work protocols emphasize rehabilitation programs to help workers once again become fully functional in their jobs.

When an employee is not able to assume all the functions of the job, the case manager might develop a treatment plan that allows the employee to return to light

duty while still receiving treatment for the injury or illness. Light duty, sometimes called transitional duty or limited hours, is work that is less demanding than the employee's original job.

In some cases, there are no objective standards for establishing recovery and return-to-work timeframes. For example, soft-tissue injuries of the back and neck are determined by a worker's subjective complaints of pain. In situations like this, a case manager often works with the patient to closely monitor progress and promote return to work as a goal.

Case management is prominent in workers' compensation programs because successful resolution of injuries requires collaboration and coordination in planning, implementing, and monitoring services among a variety of individuals. The case manager reviews the specifics of each file and often consults with the employer, the worker, and providers to determine the cause and nature of the condition as well as the impact on the worker's functional capacity and ability to perform the requirements of the job. The case manager participates in the development of a plan for recovery and return to work, within appropriate medical guidelines, and then monitors the employee's progress.

Workers' compensation case managers are generally experienced in occupational medicine or disability management. They have knowledge of both medical and vocational issues and resources. A case manager might obtain information about a worker's education, hobbies, job skills, and employment history, then analyze the requirements of the job and complete a job analysis to determine the employee's ability to return to work.10

Most health plans objectively measure outcomes of their medical and disability management initiatives in terms of medical improvement and improved functional capacity. They report utilization in terms of frequency and cost of care, average disability duration, and case closure rates. They also report on the amount of time it takes for employees to return to work and how often employees return to work on a partial basis.

Insight 10C-4 summarizes several initiatives pursued by workers' compensation health plans.

Accrediting Agency Standards

URAC (also known as the American Accreditation HealthCare Commission) has established national standards for the conduct of utilization management in workers' compensation. These standards are organized into the following general categories:11

Some states, which have enacted licensing requirements for workers' compensation utilization review organizations (UROs), permit UROs to satisfy these requirements through URAC accreditation.

In addition to UM standards, URAC has developed standards for workers' compensation networks in areas such as access, contracting, quality management, and credentialing.

Confidentiality of worker- and provider-specific information Individuals who can initiate reviews of UM decisions Job responsibilities, qualifications, training, supervision, resources, and written

procedures for individuals involved in the UM process Personnel who perform program oversight; written policies and procedures for all

aspects of the UM process; oversight of delegated or subcontracted functions; criteria for scripted clinical screening; professional staff training, management, and credentialing; quality management

Standards for telephone review and on-site review

Standards for obtaining and using information needed to render decisions; procedures for reimbursing facilities or providers for the cost of supplying information

Procedures for timely review and notification; procedures for when a worker or provider does not provide needed information to perform a review; procedures that allow providers to discuss nonauthorization decisions

Procedures for appeals (expedited and standard) of nonauthorization decisions

24-Hour Coverage

Typically, workers' compensation programs are administered separately from group healthcare and non-occupational disability programs. However, occasionally employers combine all health and disability coverage into an integrated product known as 24-hour coverage. Under 24-hour coverage (also called integrated health and disability benefits or comprehensive medical event management), a purchaser's group health plan, non-occupational disability plan, and workers' compensation program are merged, integrated, or coordinated (depending on state regulations) into a single benefit plan. The combined program must still comply with all applicable state workers' compensation requirements, such as the prohibition on employee cost-sharing for treatment of occupational injuries.12

Twenty-four hour coverage can provide several advantages. For instance, non-occupational conditions, such as heart attack, often respond well to disability management and return-to-work techniques that are normally used only in conjunction with occupational injuries or illnesses. Also, the consolidation of three separate administrative systems reduces expenses associated with operating multiple systems and determining whether conditions are work related. In addition, a single administrative system facilitates communication and record keeping by combining patient care information from all sources into one location. Providers can use this information to coordinate services and improve outcomes, while health plans can better manage utilization and avoid unnecessary costs. Employers benefit from a single healthcare and disability program that can more effectively manage total claims and expenses. Employees benefit from the convenience and simplicity of a single point of entry to the healthcare and disability system, whether or not the condition is work related.13

Successful 24-hour coverage programs require a team approach with excellent communication and information sharing among all participants: the employer, employees, providers, and the departments within the health/disability plans that administer the program.

Conclusion

Participation in FEHBP, the MHS, the VHA, or workers' compensation programs presents unique medical management challenges for a health plan. The medical management systems and requirements of these government-sponsored programs may differ substantially from the health plan's medical management initiatives for other types of group health coverage. In addition, workers' compensation programs involve disability and workplace issues as well as the delivery of healthcare services.

Glossary of Terms- Medical Management In Health Plans

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

24-Hour Coverage A benefits program that combines healthcare coverage, disability income coverage, and on-the-job accident coverage in one program.

24-Hour Health Plan The plan that results when health plan principles are applied to 24-hour coverage.

Back to TOP

A

Accountability The process by which one party is required to justify its actions and policies to another party.

Accreditation An evaluative process in which a healthcare organization voluntarily undergoes an on-site examination of its policies and operating procedures to determine whether they meet the criteria as defined by the accrediting body.

Activities Of Daily Living (ADLs) Basic self-care activities such as bathing, dressing, eating, and personal care.

Acute Care Healthcare services for medical problems that require prompt, intensive treatment by healthcare providers to restore a previous state of health or prevent the worsening of an existing condition.

ADLs See activities of daily living.

Administrative Coverage See extra-contractual coverage.

Administrative Policies The type of coverage policies that outline processes and procedures for the development, application, and revision of medical and benefits administration policies, including a reconsideration and appeal process for providers and members to resolve disputes with the health plan.

Administrative Review A type of utilization review that addresses nonclinical aspects of coverage by comparing the applicable contract provision to the proposed medical care.

Advance Directive A legal document that communicates a person's wishes about future medical care should that person become incapacitated.

Aggregate Data Indicators

Specialized performance indicators that are used to measure outcomes related to groups of cases rather than individual cases.

AI See artificial intelligence.

Alternative Care Provision A contractual provision or a rider that states that, at the discretion of the health plan, noncovered services are considered to be covered, provided they are medically appropriate and comparable in cost to the applicable covered services.

American Accreditation HealthCare Commission/URAC (URAC) An accrediting agency that promotes consistent standards in the application of utilization procedures and provider network standards.

Apparent Agency A legal doctrine under which a health plan may be liable for the actions of its delegate if the following three conditions are true: the health plan fails in some way to establish that the delegate is not the health plan's agent; a plan member perceives the delegate as an agent; and in relying on this perception, the member suffers physical or financial harm. Also called ostensible agency.

Artificial Intelligence (AI) The use of computers to simulate the function of a human brain; that is, computers that can think and learn from previous knowledge.

Attending Physician The physician in charge of coordinating inpatient care for a patient.

Authorization System A set of policies and procedures that gives specified individuals the authority to make certain choices or decisions about benefit payments.

Back to TOP

B

Balanced Budget Act (BBA) of 1997 A federal law that includes provisions to facilitate the enrollment of beneficiaries of government-sponsored health programs in health plans and allocated funding for health insurance for uninsured children.

BBA See Balanced Budget Act of 1997.

Behavioral Healthcare The provision of mental health and chemical dependency (or substance abuse) services.

Beneficiary Services Representatives TRICARE Service Center staff who serve as the primary point of contact, usually by telephone, for answering questions about plan options, eligibility, selecting primary care managers, and filing claims.

Benefits Administration Policy The type of coverage policy that evaluates clinical services against specific benefits language rather than against scientific evidence.

Best Practices Actual practices, in use by qualified providers following the latest treatment modalities, that produce the best measurable results on a given dimension.

Bioequivalence A drug that enters the bloodstream in the same amount of time and quantity as another drug.

Back to TOP

C

CAHPS See Consumer Assessment of Health Plans.

CAM See complementary and alternative medicine.

Capitation A provider compensation method in which healthcare services are paid for in advance based on the number of patients who are covered for specific services over a specified period of time, rather than on the cost or number of services actually provided.

Care Management See medical management.

Carve-Out The separation of a medical service (or a group of services) from the basic set of benefits in some way, either through the use of a separate network or delivery system or through a different compensation method for providers.

Case Assessment The collection and evaluation of medical, financial, social, and psychosocial information about a member's situation.

Case Finding See intervention identification.

Case Identification A process that determines which members may be appropriate candidates for case management.

Case Law A body of law that consists of federal and state court decisions. Also called common law.

Case Management The process of identifying plan members who require extensive, complex healthcare; developing an appropriate treatment strategy; and coordinating and

monitoring the care. Also called large case management, catastrophic case management, or complex case management.

Case Management Model Program A disease management program that includes regular, periodic monitoring and management of individual patients' health status in their homes by a healthcare professional (typically a nurse).

Case Mix/Severity Adjustment The statistical adjustment of outcome measures to account for differences in the severity of illness or the presence of other medical conditions. Also called risk adjustment.

Case Rate A single fee that the health plan pays a provider for all services associated with an entire course of treatment for a condition, such as cardiac surgery or the delivery of a baby.

Catastrophic Case Management See case management.

Categorically Needy Individuals Medicaid beneficiaries who received Medicaid benefits as a result of their welfare status.

CBA See cost-benefit analysis.

CCPs See coordinated care plans.

CEA See cost-effectiveness analysis.

Center Of Excellence A healthcare institution that, because of its combination of clinical expertise, equipment, and other resources has the ability to provide specific medical procedures or treatments more effectively and efficiently than other providers in the same region.

CHAMPUS See Civilian Health and Medical Program of the Uniformed Services.

CHAMPVA See Civilian Health and Medical Program for Veterans Administration.

Chief Medical Officer See senior medical director.

Civilian Health and Medical Program for Veterans Administration (CHAMPVA) A Veterans Health Administration program that offers healthcare coverage for dependents of veterans who meet certain coverage conditions.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) The name of the healthcare benefit program for military families and retirees prior to TRICARE.

Claims Administration

The process of receiving, reviewing, adjudicating, and processing claims for full payment, partial payment, or denial of payment.

Clinical Eye Care The type of vision care that encompasses medical and surgical services for eye diseases, such as glaucoma, and eye injuries.

Clinical Pathway "An optimal sequencing and timing of interventions by physicians, nurses, and other disciplines for a particular diagnosis or procedure, designed to minimize delays and resource utilization and to maximize the quality of care." Also called critical pathway.

Clinical Practice Guidelines (CPGs) Statements of recommended medical practices that help providers make decisions about the most appropriate course of treatment for specific patients.

Clinical Practice Management The development and implementation of parameters for the delivery of healthcare services to a health plan's members.

Closed Formulary A formulary in which compliance is mandatory and only those drugs on the preferred list are covered by the health plan.

CMA See cost-minimization analysis.

Cognitive Services Services that the pharmacist identifies as necessary for the safe and effective use of prescription drugs including patient counseling regarding drug therapy, review of patient profiles to monitor drug use and drug interactions, and documentation of pharmaceutical care in patient records.

COI See cost of illness analysis.

Common Cause Variance Minor variations in performance that occur regardless of how good a healthcare system or provider is.

common law See case law.

Comorbidity The presence of a chronic condition or added complication other than the condition that requires medical treatment.

Competitive Benchmarks The highest levels of performance that have been achieved on particular performance dimensions, based on the performance of the organization's best external competitor.

Complaint Resolution Procedures (CRPs) The entire process available to members and providers for resolving disputes with the health plan, including informal complaints and formal appeals.

Complementary And Alternative Medicine (CAM) Healthcare services not offered by traditional medical providers that are viewed as an alternative to traditional care or that can be integrated with or can complement traditional (western) medicine.

Complex Case Management See case management.

Computer-Based Patient Record See electronic medical record.

Concurrent Drug Utilization Review A type of drug utilization review that takes place while drug therapy is in progress.

Conditional Drugs Formulary drugs that are only available in the formulary for a limited time on a trial basis.

Consent Authorization Form A document that provides for the release of information to the case manager and gives the case manager permission to review case information with healthcare practitioners and other applicable parties.

Consumer Assessment of Health Plans (CAHPS) A consumer survey tool developed by the Agency for Healthcare Research and Quality to gather comparative data on healthcare service quality across populations.

Continuous Variable Indicators Performance indicators that produce results that fit within a specified range, such as the length of time to schedule an appointment, or the number of patients referred to a specialist.

Coordinated Care Plans (CCPs) Health maintenance organizations, with or without a point-of-service component, preferred provider organizations, and provider-sponsored organizations that provide healthcare coverage through Medicare+Choice.

Coordinated Outreach Model Program A disease management program that assembles and coordinates existing resources (e.g., educational programs and network providers) to establish a standard, comprehensive course of care for a population of patients with a particular chronic disease.

Cost-Benefit Analysis (CBA) A type of pharmacoeconomic analysis that measures both outcomes and costs in monetary units.

Cost Consequence Model See cost of illness analysis.

Cost-Effectiveness Analysis (CEA) A type of pharmacoeconomic analysis that measures both the clinical outcomes and costs associated with two or more competing interventions.

Cost-Minimization Analysis (CMA) A type of pharmacoeconomic analysis that is used to compare two or more treatment options whose outcomes are accepted as being identical.

Cost Of Illness Analysis (COI) A type of pharmacoeconomic analysis that measures the economic impact of a particular disease, illness, or condition on individuals, organizations, and society. Also called the cost consequence model.

Cost-Utility Analysis (CUA) A type of pharmacoeconomic analysis that attempts to measure subjective humanistic variables, such as well-being or quality of life, along with costs and clinical outcomes.

Counterdetailing The distribution of objective clinical information about recommended uses and dosages of prescription drugs by health plans and pharmacy benefit managers to providers.

Coverage Policy All the rules and processes that a health plan develops and implements in conjunction with its purchaser contracts to determine covered healthcare services and supplies.

CPGs See clinical practice guidelines.

CPT See current procedural terminology coding system.

Critical Pathway See clinical pathway.

Critical Processes Those activities that fit into all four key process categories (high-risk, high volume, problem-prone, and high-cost).

CRPs See complaint resolution procedures.

CUA See cost-utility analysis.

Current Procedural Terminology (CPT) Coding System A method developed by the American Medical Association that allows physicians to accurately describe and bill for treatments and procedures.

Back to TOP

D

Data Mining An automated information management process that analyzes variables to help detect patterns and relationships in the data.

Data Warehouse A specific database (or set of databases) containing data from many sources that is linked by a common subject (e.g., a plan member).

Decision Support System (DSS) A form of information technology that uses databases and decision models to enhance the decision-making process for health plan executives, managers, clinical staff, and providers.

Delegate An entity that contracts with a health plan to perform a specified delegated function on behalf of the health plan.

Delegation A formal process through which a health plan transfers to another entity the authority to conduct certain functions on behalf of the health plan.

Delegation Agreement The contractual document that describes the delegated functions and the responsibilities of the health plan and the delegate.

Delegator A health plan that transfers the authority to perform a specified delegated function to another entity.

Designated Attending Physicians See hospitalists.

Detailing Pharmaceutical manufacturer representatives' visits to physicians' offices to market new drugs and provide educational information about the drugs, including the research and testing performed to develop the drug and determine its efficacy and safety.

DFFS Payment System See discounted fee-for-service payment system.

Diagnosis Criteria Standards that identify the types of diseases or conditions or the types of patients for which a drug should be used.

Diagnosis Related Groups (DRGs) Classifications developed originally for Medicare and now used by commercial health plans to determine payment for inpatient hospital services based on a patient's principal diagnosis, secondary diagnosis, surgical procedures, age, gender, and presence of complications.

Direct Access An authorization system that requires the member to select a primary care provider (PCP), but allows the member to visit any provider in the network without a referral from the PCP or the health plan.

Direct-To-Consumer (DTC) Advertising The promotion of brand-name prescription pharmaceutical products to consumers through various advertising venues.

Disability Management

A program that seeks to manage total workers' compensation costs through prevention and recovery programs that (1) maintain or improve the health of employees in their jobs and (2) emphasize returning injured or ill employees to full-work capacity and productivity, without relapse, as soon as medically appropriate.

Discounted Fee-For-Service (DFFS) Payment System A payment system in which the health plan negotiates with the provider a percentage discount from the usual fee-for-service charges.

Discrete Variable Indicators Performance indicators that limit measurement results to specified options, such as "greater than" or "less than" a defined quantity. Also called yes/no indicators.

Disease Management A coordinated system of preventive, diagnostic, and therapeutic measures intended to provide cost-effective, quality healthcare for a patient population who have or are at risk for a specific chronic illness or medical condition. Also called disease state management.

Disease Management Carve-In A partnership between a specialty disease management company and a health plan in which the disease management company acts as a consultant to the health plan's network providers who treat a particular condition.

Disease State Management See disease management.

Disproportionate Share Hospitals (DSHs) Qualified hospitals that provide inpatient services to large numbers of Medicaid and indigent patients and are therefore at a high risk of operating at a loss.

DRGs See diagnosis related groups.

Drilling Down The process of examining multiple layers of increasingly detailed information and data to improve understanding of a particular issue.

Drug Edits Messages or warnings that appear on the dispensing pharmacist's computer screen as the pharmacist transmits information for a prescription to be filled to the health plan's claims processing system.

Drug-Specific Criteria Standards that set forth the appropriate dosages, duration of treatment, and other elements related to the use of a particular drug.

Drug Step-Therapy Protocols See step-therapy protocols

Drug Switching See therapeutic substitution.

Drug Utilization Evaluation See drug utilization review.

Drug Utilization Management A process in which a health plan or a pharmacy benefit manager takes the information from drug utilization review and addresses any perceived problems by applying management techniques to improve prescribing patterns, pharmacist dispensing, and patient compliance with drug therapy, and to deal with issues related to dosage, drug toxicity, and adverse drug interaction.

Drug Utilization Review (DUR) A program that evaluates whether drugs are being prescribed and used safely, effectively, and appropriately. Also called drug utilization evaluation (DUE).

DSHs See disproportionate share hospitals.

DSS See decision support system.

DTC Advertising See direct-to-consumer advertising.

Dual Database Approach An approach to information integration that involves creating a separate database that pulls from the claims database only the information necessary to respond to queries and formats the information for easy analysis.

Dual Eligibles People who are eligible for both Medicare and Medicaid coverage.

DUR See drug utilization review.

Duty To Act In Good Faith A health plan's legal responsibility to consider members' best interests and not act maliciously, recklessly, or purely in its own economic self-interest.

Back to TOP

E

eCommerce See electronic commerce.

Economic Modeling A type of prospective pharmacoeconomic research that uses theoretical models to predict expected financial results by manipulating information about costs, methods of treatment, or other factors related to drug therapy.

EDI See electronic data interchange.

Electronic Clinical Logic Program A type of retrospective claims analysis tool that relies "on a series of user-defined clinical rules and algorithms to identify-based on patterns in available data-patients with (or at risk for) a particular chronic condition."

Electronic Commerce (eCommerce) The use of computer networks as a means to perform business transactions and, in a health plan context, to facilitate the delivery of healthcare services to a health plan's members.

Electronic Data Interchange (EDI) The computer-to-computer transfer of data between organizations using a data format agreed upon by the sending and receiving parties.

Electronic Formularies Computer information systems that link pharmacies and providers' offices to health plans' information systems to provide formulary information.

Electronic Medical Record (EMR) A computerized record of a patient's clinical, demographic, and administrative data. Also called a computer-based patient record (CPR).

Employee Retirement Income Security Act (ERISA) of 1974 A federal law designed to maintain the proper funding and administrative management of pension and employee welfare benefit plans.

EMR See electronic medical record.

ERISA See Employee Retirement Income Security Act of 1974.

Evidence-Based Medicine The practice of medicine according to the findings of clinical trials and other scientifically valid research as reported in the current body of medical literature and opinions from unbiased expert clinicians.

exceptions Authorizations by a health plan to cover a nonformulary drug after evidence is presented to support the need for the drug.

Exclusions Purchaser contract provisions that specify which drugs or drug types will not be covered.

Expansion Populations Populations including children and pregnant women who did not qualify as categorically or medically needy individuals but were deemed eligible for Medicaid benefits.

Experience-Based Criteria Utilization review requirements that recognize community standards of practice and the overall experience of medical directors, utilization review nurses, physician reviewers, and the provider's first-hand experience and knowledge of the patient to identify the most effective treatment.

Experimental Services Medical services that have not been tested for safety and effectiveness or are being tested outside standard clinical trials.

Expert System

A knowledge-based computer system designed to provide expert consultation to end-users for solving specialized and complex problems.

External Standards Standards based on outside information such as published industry-wide averages or best practices of recognized industry leaders.

Extra-Contractual Coverage A type of healthcare service coverage provided by health plans when they wish to authorize payment for a particular service or supply that, although not covered by the contract, might provide a significant benefit to a member. Also called administrative coverage.

Extranet A private computer network that incorporates Web-based technologies and links selected resources of a health plan to external entities or individuals.

Extremely Important Processes Those activities that fit into three of the four key process categories (high-risk, high volume, problem-prone, and high-cost).

Back to TOP

F

FACCT See Foundation for Accountability.

FDA See Food and Drug Administration.

Federal Employee Health Benefits Program (FEHBP) A voluntary health coverage program for federal employees, retirees, and their dependents and survivors.

Federal Financial Participation (FFP) Federal funding for Medicaid as determined by a formula based on the per capita income in each state. Also called the Federal Medical Assistance Percentage.

Federal Medical Assistance Percentage See federal financial participation.

Fee-For-Service (FFS) Payment System A provider compensation method in which the health plan reimburses the health plan member or the provider an amount based on the actual amount of medical services delivered.

FEHBP See Federal Employee Health Benefits Program.

FFP See federal financial participation.

FFS Payment System See fee-for-service payment system.

Financial Risk The possibility that the actual costs of a health plan member's care will be greater than projected costs.

Food and Drug Administration (FDA) An agency of the federal government that regulates the manufacture, distribution, and marketing of drugs.

Formal Appeal The process that allows a member to have a dispute resolved by someone in the health plan other than the person who made the decision or performed the service that led to the complaint.

Formative Evaluation Evaluation that focuses on specific activities and assesses the relative importance of those activities to the plan as a whole.

Formulary A listing of drugs, classified by therapeutic category or disease class, that are considered preferred therapy for a given health plan population and that are to be used by a health plan's providers in prescribing medications.

Formulary System A health plan's system for determining the methods the organization uses to evaluate and select drugs and the guidelines and protocols the organization uses to operate the formulary.

Foundation for Accountability (FACCT) An organization created and governed by a coalition of consumer organizations, large employers, and government healthcare purchasers to improve healthcare quality and help consumers make healthcare decisions on the basis of quality.

Functional Status A patient's ability to perform the activities associated with daily life.

Back to TOP

G

GEM See Geriatric Evaluation and Management.

Generic Benchmarks The highest levels of performance that have been achieved on particular performance dimensions, based on the performance of leading organizations in other industries.

Generic Substitution The practice of dispensing a generic drug to a patient instead of a brand-name drug.

Geriatric Care

An approach to providing care for older adults that includes systematic assessments of patients' health and functional status, coordination of care, preventive and educational interventions, psychosocial support services, regular follow-up care, and application of geriatrics expertise.

Geriatric Evaluation and Management (GEM) Team-based senior care programs designed to provide elderly patients at risk for hospitalization with targeted outpatient intensive care at a reasonable cost.

GPMA See Health Carrier Grievance Procedures Model Act.

Grievances In the Military Health System, complaints about care delivered by civilian network providers.

Group Clinic A medical appointment for a group of people who share similar medical and psychosocial issues.

Back to TOP

H

Haphazard Change Change that occurs randomly.

HCFs See healthcare finders.

HCQIP See Health Care Quality Improvement Program.

Healthcare Finders (HCFs) TRICARE personnel located at TRICARE Service Centers who work with patients and primary care managers to authorize and coordinate referrals for specialty care and hospital admissions.

Healthcare Quality "The degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge."

Health Care Quality Improvement Program (HCQIP) A program initiated by the Centers for Medicare and Medicaid Services to improve the quality of care provided to Medicare beneficiaries.

Health Carrier Grievance Procedures Model Act (GPMA)

A National Association of Insurance Commissioners model act adopted in 1996 that defines the methods health carriers, including health plans, must use to resolve member grievances.

Health Data Network See health information network.

Health Education Program See health promotion program.

Health Information Network (HIN) A computer network that provides access to a database of medical information. Also called a health data network (HDN).

Health Insurance Portability and Accountability Act (HIPAA) of 1996 A federal law that increases the continuity and portability of healthcare coverage in the group and individual healthcare markets, and contains provisions that ban a group health plan from denying coverage or discriminating against individuals on the basis of their health status.

Health of Seniors Survey A Centers for Medicare and Medicaid Services survey that measures the functional status of patients.

Health Outcomes Measurements that gauge the extent to which healthcare services improve patients' clinical and functional status.

Health Plan Employer Data and Information Set (HEDIS) A performance measurement tool developed by the National Committee for Quality Assurance that is designed to help healthcare purchasers and consumers compare the quality offered by different health plans.

Health Plan Management System (HPMS) A database that contains information on Medicare Part A and Part B recipients who are enrolled in Coordinated Care Plans.

Health Plan Support Contracts Contracts between the Department of Defense and private health plans for administrative services and healthcare delivery systems.

Health Promotion Program An initiative that educates and motivates members to prevent illness and injury through their lifestyle choices. Also called a wellness program or health education program.

Health Risk Appraisal See health risk assessment.

Health Risk Assessment (HRA) A process by which a health plan or other entity projects a plan member's likelihood of experiencing specific illnesses or injuries, based on the member's current health status, health history, family health history, and health-related behaviors. Also called health risk appraisal.

Health Status The degree to which a patient is able to function physically, emotionally, and socially, with or without assistance from the healthcare system.

Healthy People The Department of Health and Human Services' first national agenda for improving health and preventing disease.

HEDIS See Health Plan Employer Data and Information Set.

high-cost processes Activities that require large financial expenditures or significant human, physical, or technological resources.

high-risk processes Activities that expose patients to the risk of adverse outcomes.

High-Value Providers Providers who consistently deliver quality medical care in a cost-effective manner.

High-Volume Processes Processes that are performed frequently or that affect large numbers of people.

HIN See health information network.

HIPAA See Health Insurance Portability and Accountability Act (HIPAA) of 1996.

Home Healthcare A wide variety of medical, social, and support services delivered at the homes of patients who are disabled, chronically ill, or terminally ill, or who are recovering from an acute illness or injury.

Horizontal Group Boycotts Arrangements, prohibited by the Federal Trade Commission, in which two or more competing health plans decide to exclude a particular provider because the provider also contracts with another health plan.

Hospice Care A set of specialized healthcare services that provide support to both terminally ill patients and their families.

Hospitalists Physicians who spend at least one-quarter of their time in a hospital setting where they serve as the attending physicians for patients who have been temporarily transferred to their care by community PCPs. Also called inpatient specialists or designated attending physicians.

HPMS See Health Plan Management System.

HRA See health risk assessment.

Hub-And-Spoke Model

An approach to information integration that involves connecting multiple databases with a central interface engine that acts as an information clearinghouse.

Back to TOP

I

IADLs See instrumental activities of daily living.

IHC See Interdisciplinary Home Care.

Immunization Program An initiative that monitors and promotes the administration of a vaccine, that is, a medication to prevent members from contracting a particular illness.

Important Processes Those activities that fit into a single category of the four key process categories (high-risk, high volume, problem-prone, or high-cost).

Indemnity Benefits Under workers' compensation, the wage-replacement benefits for employees who are unable to work.

Independent External Review A review conducted by a third party that is not affiliated with the health plan or with a providers' association, is free of conflict of interest, and has no financial stake in the outcome of the authorization decision.

Independent Review Organizations (IROs) Companies that specialize in external reviews of healthcare disputes.

Indices Composites of several measures into a single descriptor.

Informal Complaint A health plan member grievance pertaining to virtually anything concerning the delivery, financing, or administration of healthcare, often delivered by a telephone call or letter to the health plan.

Information Framework A broad concept that combines information system technology with information management principles about the use, transfer, and standardization of clinical and administrative data.

Information Management The combination of systems, processes, and technology that a health plan uses to provide the company's information users with the information they need to carry out their job responsibilities.

Information Technology

The wide range of electronic devices and tools used to acquire, record, store, transfer, or transform data or information.

Initial Needs Assessment An information gathering and reporting activity, conducted by the case manager, that is intended to provide an understanding of the patient's condition.

Inpatient Specialists See hospitalists.

Instrumental Activities Of Daily Living (IADLs) Cognitive activities such as shopping, managing money, and using the telephone.

Interdisciplinary Home Care (IHC) A team-based approach to geriatric care that provides chronically disabled seniors with an integrated, physician-led program of medical and supportive care at home.

Intermediate Outcome Measures Clinical outcome measurements that demonstrate progress toward the intended results.

Internal Benchmarks The highest levels of performance that have been achieved on particular performance dimensions, based on the performance of individuals or units within the health plan, such as individual practitioners within a given specialty or different hospitals in the plan's provider network.

Internal Standards Standards developed inside the health plan that are based on the health plan's own historic performance levels.

Internet A public, international collection of interconnected computer networks.

Intervention Identification A three-part process that includes screening of seniors for illness, recognition of high-risk seniors by clinicians, and analysis of administrative data. Also called case finding.

Intranet An internal (private) computer network, built on Web-based technologies and standards, that is accessible only to members of the computer network.

Investigational Services Medical services that are being tested in humans for safety and effectiveness in accordance with standard clinical trials and for which conclusive results are not yet available.

IRO See independent review organizations.

Back to TOP

J

JCAHO See Joint Commission on Accreditation of Healthcare Organizations.

Joint Commission See Joint Commission on Accreditation of Healthcare Organizations.

Joint Commission on Accreditation of Healthcare Organizations (JCAHO) An independent, not-for-profit hospital accreditation organization that also accredits health plan provider networks and health plans, psychiatric and long-term care facilities, substance abuse programs, and home healthcare organizations.[Endnote 46] Also called the Joint Commission.

Back to TOP

L

Large Case Management See case management.

Lead Agent A senior military healthcare officer who works with a region's military treatment facility (MTF) commanders to coordinate delivery of healthcare services between MTFs and civilian providers and health plans.

Letter Of Intent A preliminary agreement that indicates a health plan's and a delegation candidate's intentions to enter into a delegation arrangement.

Light Duty Work that is less demanding than the employee's original job. Also called transitional duty or limited hours.

Limitations Purchaser contract provisions that place a cap on the amount of coverage in some way, usually in terms of time, money, or amount. Also called restrictions.

Limited Hours See light duty.

Living Will A type of advance directive that documents a patient's preferences for end-of-life medical treatment and that is intended as a guide for family and providers if the patient becomes unable to understand the medical situation or to communicate.

Back to TOP

M

Managed Formularies

Formularies that combine characteristics of both open and closed formularies. Also called restricted formularies or partially/selectively closed formularies.

Managed Vision Care Organization (MVCO) An organization that uses health plan concepts to deliver routine eye care or both routine eye care and clinical eye care.

Mandated Benefit Laws State or federal laws that require health plans to arrange for the financing and delivery of particular benefits, such as coverage for a stay in a hospital for a specified length of time.

MCS Contracts See health plan support contracts.

Measures Raw performance data such as member satisfaction scores or rates for preventive interventions such as mammography screening or childhood immunization.

Medically Appropriate Services Diagnostic or treatment measures for which the expected health benefits exceed the expected risks by a margin wide enough to justify the measures.

Medically Necessary Services Services or supplies as provided by a physician or other healthcare provider to identify and treat a member's illness or injury, which, as determined by the payor, are (1) consistent with the symptoms, diagnosis and treatment of the member's condition; (2) in accordance with the standards of good medical practice; (3) not solely for the convenience of the member, member's family, physician, or other healthcare provider; and (4) furnished in the least intensive type of medical care setting required by the member's condition.

Medically Needy Individuals Medicaid beneficiaries who met the categorical and financial resource requirements of categorically needy individuals but whose monthly income exceeded specified maximums.

Medical Malpractice A type of negligence that occurs when a patient is harmed because a provider failed to exercise reasonable care in providing medical treatment.

Medical Management All the activities that health plans and their providers conduct to (1) maintain or improve the quality of service and healthcare received by members; (2) meet budget projections for medical services; (3) achieve member satisfaction; and (4) respond to accreditation and regulatory requirements.[Endnote 53] Also called care management.

Medical Policy The rules and processes health plans apply when making coverage determinations that require an interpretation of the contract's medical necessity and appropriateness provision and experimental/investigational provision.

Medical Power Of Attorney

A type of advance directive in which a person appoints another individual to make healthcare decisions on his or her behalf in the event the first person becomes incapacitated. Also called a healthcare proxy or durable power of attorney.

Medical Review A type of utilization review that requires an evaluation based on medical necessity and appropriateness.

Medicare Medical Savings Account (Medicare MSA) A Medicare+Choice coverage option which consists of a tax-preferred medical savings account set up for individual Medicare beneficiaries to which the federal government makes contributions on behalf of the beneficiary to pay healthcare expenses.

Medicare MSA See Medicare medical savings account.

Medigap Policies Supplemental insurance policies available to Medicare beneficiaries designed to cover gaps in traditional fee-for-service Medicare coverage and help reduce their out-of-pocket Medicare expenses.

Member Services The health plan department responsible for giving members information about the health plan, benefits, and network providers; helping members with any problems; handling member grievances and complaints; tracking and reporting patterns of problems encountered; and enhancing the relationship between the members of the plan and the plan itself.

Mental Health Parity Act (MHPA) of 1996 A federal law that prohibits group health plans that offer mental health benefits from imposing lower annual or lifetime dollar limits or caps for mental illness than for physical illness.

MHPA See Mental Health Parity Act of 1996.

MHS See Military Health System.

Military Health System (MHS) A worldwide healthcare system operated by the U.S. Department of Defense.

Military Treatment Facilities (MTFs) The hospitals, clinics, and treatment centers that the Army, Navy, and Air Force operate to deliver care to Military Health System beneficiaries.

Monitored Drugs Formulary drugs that require some sort of review or approval by a plan physician or group of physicians before the prescription can be filled.

MTFs See military treatment facilities.

MVCO

See managed vision care organization.

Back to TOP

N

NAIC See National Association of Insurance Commissioners.

Narrow Therapeutic Index (NTI) Drugs Drugs "that have less than a two-fold difference between (1) the median lethal dose and the median effective dose or (2) the therapeutic concentration and the minimum toxic concentration in the blood."

National Association of Insurance Commissioners (NAIC) An organization of state insurance commissioners established to encourage uniformity in insurance regulation.

National Committee for Quality Assurance (NCQA) An independent, not-for-profit organization that serves as the primary accrediting agency for most HMOs and similar health plans, managed behavioral healthcare organizations, credentials verification organizations, and physician organizations.

National Forum for Health Care Quality Measurement and Reporting A not-for-profit organization established to develop and implement a national strategy for quality measurement and reporting. Also called the Quality Forum.

National Quality Management Program (NQMP) A TRICARE program that evaluates the quality and cost of healthcare through various studies of clinical topics such as cardiovascular disease and orthopedic injuries.

NCQA See National Committee for Quality Assurance.

Negative Formularies "Lists of drugs within a specified therapeutic category that cannot be prescribed" under the formulary.

Negligence Failure to exercise the amount of care that a reasonable person or entity would exercise under similar circumstances.

Network Management All the activities that a health plan conducts to design, assemble, monitor, and maintain a provider network.

NQMP See National Quality Management Program.

NTI Drugs See narrow therapeutic index drugs.

Nurse Advisors

Nurses who are available by telephone 24 hours a day, seven days a week to help enrollees in the military health system with their healthcare decision making.

Back to TOP

O

OBRA See Omnibus Budget Reconciliation Act of 1987.

Observation Care The aggressive evaluation and management of patients who have a reasonable chance of stabilizing to the point of being released to a non-acute level of care within 24 hours.

Office of Quality Management (OQM) A department within the Veterans Health Administration that oversees many quality improvement activities in areas such as accreditation, external peer review, quality improvement checklists, best practices, outcomes monitoring, clinical practice guidelines, and patient feedback.

Off-Label Use The prescribing of a drug by a healthcare practitioner for clinical indications other than those stated in the labeling approved by the Food and Drug Administration.

Omnibus Budget Reconciliation Act (OBRA) of 1987 A federal budget law that, among other provisions, mandated that skilled nursing facilities have formal programs for quality improvement and established key standards that such programs must monitor.

Open Access An authorization system that allows the member to visit any network specialist without a referral from a primary care provider (PCP) or the health plan and does not require the member to select a PCP.

Open Formulary A formulary in which use of the drugs on the preferred list developed by the pharmacy and therapeutics committee is voluntary.

OQM See Office of Quality Management.

Ostensible Agency See apparent agency.

Outcomes In a healthcare context, the measurable results of health-related interventions.

Outcomes Management A systematic analysis of outcomes applied to improving the quality of patient care and services.

Outcomes Research

The "scientific study of the outcomes (results) for patients receiving different treatments for a single disease or illness."

Outcome Validation The process of reviewing and testing clinical practice guidelines to see if they improve the care of patients with chronic diseases.

Outliers Those providers who use medical resources at a much higher or lower rate or in a manner noticeably different from most of the other providers in the same network and specialty.

Outsourcing The hiring of external vendors to perform specified functions for a health plan.

Back to TOP

P

PACE See Programs of All-inclusive Care for the Elderly.

Palliative Care Healthcare services that focus on the relief of pain and other symptoms rather than attempting to cure the underlying illness or injury.

Partially/Selectively Closed Formularies See managed formularies.

PBMs See pharmacy benefit managers.

PCM See primary care manager.

Peer Advisors Providers who are consulted when the expertise of a certain specialty is needed to review a question on utilization, quality of care, or provider performance.

Peer Review The analysis of a clinician's care for patients by a group of that clinician's professional colleagues.

Perceived Outcomes A patient's conclusions about his or her own health status and quality of life.

PFFS Plans See private fee-for-service plans.

Pharmacoeconomics "The study of cost implications and outcomes related to pharmaceutical therapy" to determine value.

Pharmacy And Therapeutics (P&T) Committee

A group of providers, pharmacists, and health plan personnel that recommends the safe and effective use of prescription medications and administers a standard drug formulary.

Pharmacy Benefit Management All the procedures and techniques that healthcare entities use to manage the quality and cost of pharmaceutical products and services delivered to consumers.

Pharmacy Benefit Management Companies See pharmacy benefit managers.

Pharmacy Benefit Managers (PBMs) Specialty health plans that seek to manage the costs of prescription drugs while promoting more efficient and safer drug use. Also called pharmacy benefit management companies.

Pharmacy Network A group of individual pharmacies or pharmacy chains that provide pharmacy services to the members of a designated health plan or other payor.

Planned Change Change that is deliberate, controlled, collaborative, and proactive.

Population-Based Healthcare An approach to healthcare based on the premise that patients within a population share certain characteristics and that healthcare services can be designed to address those commonalities.

Post-Acute Care Healthcare services delivered after a course of acute care or instead of acute care.

Price Discount A reduction in the price of a particular pharmaceutical obtained from the pharmaceutical manufacturer based on the volume of the drug purchased by the health plan or pharmacy benefit manager.

Primary Care Manager (PCM) A physician or other medical professional who coordinates care much like a primary care provider in a commercial HMO.

Primary Prevention Activities designed to prevent the occurrence of illness or injury.

Private Fee-For-Service (PFFS) Plans Private insurance carriers that provide coverage through Medicare+Choice rather than through the traditional fee-for-service Medicare program.

Problem-Prone Processes Processes that have produced problems for clients or the health plan in the past.

Programs of All-inclusive Care for the Elderly (PACE) A prototype Centers for Medicare and Medicaid Services program that grants waivers of certain Medicare and Medicaid requirements to a limited number of public and nonprofit private community-based organizations that provide integrated healthcare and long-term care services to elderly persons who require a nursing-facility level of care.

Prospective Drug Utilization Review A type of drug utilization review that focuses on the drug therapy for a single patient instead of overall usage patterns and is designed to allow a pharmacist to intervene before a drug is administered or dispensed to a patient, to avoid undesirable results.

Provider Orientation Education programs that communicate operational aspects of the provider contract to new providers.

Provider Profiling The collection and analysis of information about the practice patterns of individual providers.

Prudent Layperson Standard A rule for determining coverage of emergency services that defines an emergency as "a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in placing the health of the individual in serious jeopardy, serious impairment to body functions, or serious dysfunction of any bodily organ or part."

P&T Committee See pharmacy and therapeutics committee.

Back to TOP

Q

QARI See Quality Assurance Reform Initiative.

QAPI See Quality Assessment Performance Improvement.

QIO See quality improvement organization.

QM See quality management.

QOL Drug See quality-of-life drug.

Quality Assurance Reform Initiative (QARI) A 1993 Centers for Medicare and Medicaid Services initiative that developed and tested standards for states' use in monitoring and improving quality in Medicaid health plans.

Quality Compass

The National Committee for Quality Assurance's national database of HEDIS data and accreditation information collected from over 200 managed healthcare plans nationwide.

Quality Forum See National Forum for Health Care Quality Measurement and Reporting.

Quality Improvement Organization (QIO) A physician-sponsored entity responsible for reviewing the appropriateness and medical necessity of medical services ordered or furnished by practitioners in order to maintain quality of care.

Quality Improvement System for Health Plans A quality initiative developed by the Centers for Medicare and Medicaid Services that is designed to strengthen health plans' efforts to protect and improve the health and satisfaction of Medicare and Medicaid health plan enrollees.

Quality Indicators Factual statements of existing conditions that are used to measure the variance between actual performance and the expected performance expressed in a standard.

Quality Management (QM) An organization-wide process of measuring and improving the quality of the healthcare and services provided to the members of a health plan.

Quality Of Life A patient's perception of and satisfaction with his or her functional ability.

Quality-Of-Life (QOL) Drug A drug that improves "patients' satisfaction with the quality of their lives but does little to improve medical outcomes or to reduce overall healthcare costs."

Back to TOP

R

(Randomized Controlled Trials ( RCTs) A type of prospective pharmacoeconomic research in which controlled clinical research using randomly selected participants is conducted on drug therapies and their outcomes.

Ratings The ranking of plans according to the results of specific measures or indices.

RCTs See randomized controlled trials.

Reactive Change Change that occurs when situations become unmanageable and some form of immediate action is necessary.

Readiness A member's level of knowledge about existing health risks and problems and the member's ability and willingness to adopt new health-related behaviors.

Rebate A reduction in the price of a prescription drug based on the prescribing patterns of network providers and the market share of the product.

Rehabilitation The process of restoring patients with functional impairments to their maximum levels of function (physical, mental, and vocational) to enhance their independence and productivity.

Report Cards Structured reports designed to provide consumers, employers, and other purchasers with health plan and provider performance ratings that they can use to make informed healthcare decisions.

Restricted Drugs Formulary drugs that may only be prescribed by certain providers or for certain diseases or conditions.

Restricted Formularies See managed formularies.

Restrictions See limitations.

Retrospective Drug Utilization Review A type of drug utilization review that is based on historical data and that takes place after the drug therapy has begun.

Return-To-Work Protocols Standards for workers' compensation cases that establish expected lengths of disability, recommended medical treatments, and job placement guidelines to facilitate a patient's return to work.

Risk Adjustment See case mix/severity adjustment.

Risk Management All the activities that a health plan undertakes to protect the plan against financial loss associated with the delivery of healthcare services and to protect its members against harm from medical care.

Routine Eye Care The type of vision care that includes general eye examinations to test vision, prescribe corrective lenses, and screen for eye disease, and sometimes, payment for corrective lenses.

Back to TOP

S

Safety Net Providers Providers who have historically served large numbers of Medicaid and indigent patients and who are willing to provide healthcare and related services regardless of the patient's ability to pay.

Sampling Bias

Errors in data collection that change the end results so that the results do not accurately depict the characteristics of the population under study.

Scientific Soundness The likelihood that a performance measure "will produce consistent and credible results when implemented."

Screening Conducting a medical test on a member to determine if a health problem is present even though the member has not experienced any symptoms of that problem.

Secondary Prevention Activities designed to detect a medical condition in its early stages and to manage the condition so that disease progression and complications are prevented or at least delayed.

Senior Medical Director The health plan physician executive who oversees the medical care delivered by the health plan's providers and is responsible for the quality and cost-effectiveness of that care. Also called a chief medical officer.

Sentinel Events Healthcare service delivery events that lead to serious, undesirable, and often avoidable outcomes such as trauma or death.

Service Quality The success of a health plan and its providers in meeting the nonclinical needs of plan members.

Shared Decision-Making Program A healthcare delivery initiative in which a provider and a member discuss care options and the provider's recommendations, but the ultimate decision about care is up to the member.

SHMO See Social Health Maintenance Organization.

Site Appropriateness Listing A resource for the review of surgery and certain nonsurgical interventions that indicates the most appropriate settings for common procedures.

Skilled care The regular (e.g., daily, weekly, etc.) delivery of healthcare services such as medication, treatments, or procedures from a licensed nurse and, as required, respiratory, physical, occupational, and speech-language therapy to patients not in an acute state of illness or injury.

Social Health Maintenance Organization (SHMO) A Centers for Medicare and Medicaid Services demonstration project that provides standard HMO benefits as well as long-term care benefits, established to determine whether a coordinated program of healthcare, preventive, and social services could prevent costly medical complications among the elderly.

Special Cause Variance

Performance variation that occurs when systems and processes break down. Specialty Referral

A decision to divide a patient's care among one or more medical specialties. Specialty Services

Healthcare services that are generally considered outside standard medical-surgical services because of the specialized knowledge required for service delivery and management.

Standards "Authoritative statements of: (1) minimum levels of acceptable performance or results, (2) excellent levels of performance or results, or (3) the range of acceptable performance or results," according to the Institute of Medicine.

Standing Orders A set of physician orders (often available on a pre-printed form) for tests, medications, procedures, and supplies that have been designated as standard practice for specific medical diagnoses or conditions.

Step-Care Protocols See step-therapy protocols.

Step-Therapy A form of prior authorization that reserves the use of more expensive medications to cases in which the use of less expensive medications has been unsuccessful.

Step-Therapy Protocols Prescribing guidelines that list the possible drug treatments for a particular condition in order, from the most cost-effective to the least cost-effective. Also called step-care protocols or drug step-therapy protocols.

Stratification The division of a patient population into groups that are at a similar level of risk.

Subdelegation The process that occurs when a health plan's delegate contracts with a third entity to perform activities that were originally delegated by the health plan.

Summative Evaluation Evaluation that focuses on outcomes and assesses how effective actions are in achieving desired results.

Back to TOP

T

TANF See Temporary Assistance for Needy Families.

Technology Assessment A process that evaluates the clinical aspects of new medical procedures, devices, drugs, and tests (as well as new applications of existing medical technology) to

determine which approaches should be incorporated into the plan's medical policy.

Telephone Triage Programs Phone-based services in which clinical staff provide information to sick or injured members to help the members decide if they need to seek care immediately at an emergency department or urgent care center, call a provider for an appointment, or treat the condition themselves.

Telephonic Case Management The use of telecommunications and information management technology such as telephones, fax machines, electronic mail, and computers to perform case management activities off site.

Temporary Assistance for Needy Families (TANF) A program that provides income support and work programs to needy individuals under the Personal Responsibility and Work Opportunity Reconciliation Act.

Tertiary Prevention Activities designed to prevent exacerbation of or complications from an established medical condition.

Therapeutic Interchange See therapeutic substitution.

Therapeutic Substitution The dispensing of a different chemical entity within the same drug class to a patient rather than the prescribed brand-name drug. Also called therapeutic interchange or drug switching.

Third Party Prescription Programs Programs in which someone other than the patient pays some or all of the pharmacy expenses.

Three-Tier Copayment Structure A pharmaceutical copayment system under which a member is required to pay one copayment amount for a generic drug, a higher copayment amount for a brand-name drug included on the health plan's formulary, and an even higher copayment amount for a nonformulary drug.

Traditional Fee-For-Service Medicare Program A federally funded, two-part entitlement program designed to provide healthcare coverage for the elderly and disabled. Part A provides coverage for inpatient hospital services, short-term care in skilled nursing facilities, home healthcare following an institutional stay, and hospice care. Part B provides voluntary supplemental medical insurance coverage.

Transitional Duty See light duty.

Treatment Effectiveness The strength of a particular treatment under average conditions such as those found "in the field" of clinical medicine.

Treatment Efficacy The strength of a particular treatment under ideal conditions, such as those found in controlled clinical trials.

Triage The classification of patients into categories according to the severity of the illness or injury and the resulting need for acute care.

TRICARE The healthcare benefit program offered by the federal government to active and inactive military personnel and their families.

TRICARE Extra A military health system plan option similar to the network portion of a PPO plan in which enrollees can choose to visit a community-based network provider and pay a deductible and coinsurance.

TRICARE Prime A military health system plan option that provides an HMO plan in which enrollees select or are assigned to a primary care manager who coordinates care much like a primary care provider in a commercial HMO.

TRICARE Service Center (TSC) A center located at a military installation that is staffed by trained personnel, many of whom have a medical background, and that serves as a resource for beneficiaries and providers on various medical management issues.

TRICARE Standard A military health system plan option that provides a fee-for-service plan, similar to the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS) plan that was available prior to TRICARE, where enrollees can visit the provider of their choice, subject to a deductible and coinsurance.

True Outcome Measures Clinical outcome measurements that "demonstrate whether the intended results of the patient's care processes have been achieved."

TSC See TRICARE Service Center.

Two-Tier Copayment Structure A pharmaceutical copayment system under which a member is required to pay one copayment amount for a generic drug and a higher copayment amount for a brand-name drug.

Tying Arrangements An arrangement between a health plan and a provider under which the health plan requires the provider to purchase the health plan's healthcare benefits in order for the provider to participate in the health plan's network. Such arrangements are prohibited by the Federal Trade Commission.

Back to TOP

U

UM See utilization management.

Unbundling The submission of separate charges for the different components of a service, rather than one charge for the service as a whole.

Unrestricted Drugs Formulary drugs that providers may prescribe freely without obtaining permission from the health plan.

Upcoding A type of false billing in which a provider submits a code for a service with a higher level of reimbursement than the service actually performed.

UR See utilization review.

URAC See American Accreditation HealthCare Commission/URAC.

Urgent Care Center A healthcare facility that provides immediate care to ambulatory patients for minor illnesses and injuries.

Utilization Guidelines Health plan recommendations for standard approaches to care for many common, uncomplicated healthcare services, often in the form of computer-based screening tools or criteria sets structured as a series of questions arranged in a decision-tree format.

Utilization Management (UM) Health plan programs that manage the use of medical services so that a patient receives appropriate care in a cost-effective manner in an appropriate setting.

Utilization Rates Measurements of the number of services provided per 1,000 members per year to indicate how frequently a particular service is provided.

Utilization Review (UR) The process for evaluating the medical necessity, efficiency, and appropriateness of healthcare services and treatment plans for a given patient.

Back to TOP

V

Very Important Processes Those activities that fit into two of the four key process categories (high-risk, high-volume, problem-prone, and high-cost).

Veterans Health Administration (VHA)

A division of the U.S. Department of Veterans Affairs that provides hospital, nursing home, and outpatient medical and dental care to eligible veterans of military service.

VHA See Veterans Health Administration.

Vicarious Liability Liability that arises when one party is held responsible for the actions of another party because of the existence of a special relationship between those two parties.

Back to TOP

W

Web site A specific location on the World Wide Web that provides users access to a group of related text, graphic, and perhaps, multimedia files.

Wellness Program See health promotion program.

Workers' Comp See workers' compensation.

Workers' Compensation A state-mandated insurance program that provides benefits for medical expenses that are incurred and wages that are lost by workers who suffer work-related injury or illness. Also called workers' comp.

World Wide Web (WWW) An Internet service that links independently owned databases containing text, pictures, and multimedia elements.

WWW See World Wide Web.

Back to TOP

Y

Yes/No Indicators See discrete variable indicators.