Controlling Costs and Changing Patient Care? The Role of Utilization Management (1989) / Chapter Skim
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Impact of Prior Review Programs
Impact of Prior Review Programs
Pages 91-118
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From page 91... ...
Appendix B of this report discusses the limited information about the effects of different methods used by HMOs to influence patient care decisions. The committee has not attempted a global assessment of the broad societal effects of utilization management.
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From page 92... ...
an increase in the use of outpatient facilities and physician office services following the introduction of prior review; · a greater decline in inpatient utilization for reviewed groups than for nonreviewed groups during a period of generally declining hospital use; · among groups covered by prior review, a more sizable drop in inpatient utilization for groups that started with higher than average initial utilization rates compared with those with lower than average initial utilization rates; and · a lower rate of increase in the short-term in per-employee medical care costs for groups covered by prior review compared with those that were not, but no long-term reduction in the rate of growth in total medical care spending. Evidence discussed in this chapter about the effects of prior review programs was discovered through site visits by the committee, computerized literature searches, presentations to the committee, and less formal efforts.
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From page 93... ...
In 1984, the journal Hospitals included some typical press release information in a story on preadmission review programs ("Preadmission Review Cuts Hospital Use," 1984~. The story noted that Blue Cross and Blue Shield of North Carolina reported that a pilot preadmission review program helped cut hospital days by 37 percent and that Blue Cross of Northeast Ohio reported a 23 percent decrease in hospital days and savings of $30 million during the first 5 months of a preadmission review program.
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From page 94... ...
Baton review Provider audit, feedback, and education Consumer education and health promotion Government Regulation Medicare prospective payment system, PRO programs State rate setting and other hospital regulation Mandated benefits and other insurance regulation Medicaid program features Health planning Individual, Group, and Community Characteristics Age, income, education, race, and sex Union membership Marital and family status Other health insurance coverage Health status Occupation and industry Geographic region Urban or rural location Health Care Delivery System Supply of hospital and other institutional resources Supply and distribution of physicians and other practitioners Medicare and Medicaid market shares HMO and PPO market shares Blue Cross and Blue Shield market shares Proportion of self-paying and uninsured patients changed the balance of incentives for using inpatient versus outpatient care and have contributed to substantial general reductions in hospital use (liable 4-1~. Data from the American Hospital Association, the Hospital Discharge Survey, the Health Interview Survey, and the Blue Cross and Blue Shield Association indicate that hospital days per 1,000 people under age 65 were beginning to level off and then drop in the latter part of the 1970s (Lerner et al., 1983b)
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From page 95... ...
Ike savings were not reduced by the cost of alternative services but did exclude the estimated fixed costs of avoided admissions (Service Employees International Union, 1988~. Yet another approach was used by Blue Cross of Greater Philadelphia, which established a utilization management program as part of its 1985 contractual agreement with area hospitals.
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From page 96... ...
One utilization management company structures its comparisons by trying to match review and nonreview groups by industry, geographic region, and other characteristics. In an analysis for one insurance company client, the firm reported that hospital days per 1,000 covered individuals dropped 14 percent for review groups, whereas for nonreview groups they dropped 7 percent.
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From page 97... ...
Using a combination of cross-sectional and longitudinal analyses that included controls for some differences in case mix, employee characteristics, market factors, and benefit plan features, the authors concluded that for the period 1984-1986 prior review reduced admissions by 13 percent, inpatient days by 11 percent, and total medical expenditures by 6 percent. (Because some groups included in this part of the analysis had a utilization management program in place before the first year for which data were analyzed, these results do not reflect straightforward preprogram-postprogram utilization.)
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From page 98... ...
and Blue Cross benefits cost-management programs using quarterly claims data (1980-1986) on Blue Cross inpatient admissions and lengths of stay, hospital outpatient visits, total inpatient and total outpatient benefit payments, and total payments per member (adjusted for inflation)
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From page 99... ...
evidence about other utilization management techniques. WEAKNESSES IN THE EVIDENCE ON EFFECTS OF PRIOR REVIEW Because prior review programs have been developed and implemented in an operational rather than a research context, rigorous evaluation has not been a high priority for most organizations, and studies by outside researchers have been limited.
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From page 100... ...
savings relative to program costs; · failure to control statistically or otherwise for nonprogram variables (for example, other cost-containment activities, scope of benefits, shifts in group composition, and market area characteristics) that may affect utilization and costs; knowledge by evaluators of whether data are from groups with or without utilization management; D r · absence of comparisons of the relative impact of different program elements (for example, preadmission review versus continued-stay review)
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From page 101... ...
Some purchasers of prior review services, recognizing that utilization management firms may be biased or may lack expertise in evaluation, ask that data be turned over for analysis by outside consultants. The study committee did not have access to the reports of these outside consultants.
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From page 102... ...
And private review programs may be confused with those involving Medicare and Medicaid patients. Also, changes in clinical and management technologies would inevitably have spurred some shifts in clinical and administrative practices in the absence of utilization management.
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From page 103... ...
This is obviously a tenuous inference, and better monitoring and study of prior review's relationship to quality of care is needed. Navigating Health Care and Health Ben edits Most employers and utilization management firms make some effort to educate employees about prior review requirements, although the level of effort appears to vary considerably.
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From page 104... ...
Some review organizations survey a sample of those who have been subject to utilization management to determine their views of the process. This information may be used in reporting to clients and refining programs.
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From page 105... ...
survey, for example, physician respondents reported that over onethird of their cases required prior review as a condition of payment. The growth of the utilization management industry, which depends on cooperation from hospitals and physicians, is itself an indicator of acceptance.
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From page 106... ...
More generally, utilization management reinforces other trends that are increasing the severity of hospital case mix and encouraging hospitals to diversify, sometimes successfully and sometimes not, into areas such as home health, health promotion, health insurance, and administrative services for physicians and other institutions. Overall, utilization management appears to be one of many factors contributing to tighter integration of hospital medical staffs and more physician involvement in hospital management.
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From page 107... ...
The American College of Physicians is notable for its work in this area for more than a decade (American College of Physicians, 1986; Schwartz, 1984~. Recently, the American Medical Association has discussed work with the Rand Corporation to develop practice guidelines, and there is a complementary effort with the Blue Cross and Blue Shield Association and the Health Insurance Association of America to incorporate the guidelines into insurers' utilization management programs (McIlrath, 1988; Meyer and Page, 1988~.3 And, to name one other initiative, physician organizations have been cooperating with the efforts of the Physician Payment Review Commission to improve the definition and coding of medical services and to suggest methodological standards for developing practice guidelines (Physician Payment Review Commission, 1988~.
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From page 108... ...
· All preadmission review programs should provide for immediate hospitalization of any patient for whom the treating physician determines the admission to be of an emergency nature, so long as medical necessity is subsequently documented. · In the absence of any contractual agreement between physician and health benefit plan, the responsibility for obtaining prior authorization required by a claims administrator should be that of the enrollee.
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From page 109... ...
Most utilization management firms are under heavy pressure to report more utilization and cost data and present more credible analyses of program impact. Some employers are concerned that prior review exposes them to a new risk of liability, particularly if they administer the programs directly.
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From page 110... ...
Qualitative assessments of the impact of utilization management on patients, providers, and purchasers suggest the potential for both positive and negative effects. The committee recognizes that rigorous evaluations are expensive and difficult.
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From page 111... ...
Information that tracks multiple episodes of care for an individual is even more limited, and the patient-level links between prior review decisions and subsequent care are Epically not examined. Group Data Important characteristics of employee groups and individuals covered by utilization management may be unmeasured or measured inadequately.
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From page 112... ...
Number of second opinions obtained and confirmed or not confirmed Number of nonconfirming opinions not followed by surgery Source Review organization Comments · Do not measure health services use or costs · Are helpful in assessing workload and checking some administrative practices Are relatively simple to collect Can be manipulated by utilization management organizations to project unrealistically favorable results Can be manipulated by providers who request more days than are really wanted Cannot tap "sentinel effect" (that is, admissions discouraged with no prior authorization approval sought) May not be matched to actual utilization (that is, may ignore days or admissions approved but not used; days or admissions denied but approved upon appeal or after an emergency admission; for second opinion, may ignore individuals encouraged by second opinion to get surgery when they otherwise would not have)
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From page 113... ...
per claim Outpatient payments per 1,000 covered individuals Payments for inpatient or outpatient physician services per 1,000 covered individuals Source Claims data Hospital cost reports Comments - Are useful for assessing changes in hospital payments, which have traditionally accounted for the largest share of total outlays May not adjust for differences in costs for days of care averted earlier versus later in a hospital stay May not adjust for fixed costs that are eventually absorbed by most retrospective cost- or charge-based payment systems Do not adjust for severity of remaining admissions and days of care May have same problems with denominators of rates as utilization statistics PROGRAM SAVINGS AND COSTS Benefit payments per 1,000 covered individuals Premium per covered individual Administrative charge per contract (or other basis) Ratio of review program costs to program savings Benefit payments less program costs per 1,000 covered individuals Number of hospital days averted and savings Number of surgeries averted and savings Source Claims data Plan contract, enrollment, and premium data Review organization Comments Are needed to assess trends in overall benefit costs and to assess net savings May not measure true costs to the supplier, depending on market strategy of utilization management company (importance of this issue depends on evaluator's objectives)
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From page 114... ...
Differences in program quality, scope, techniques, and other characteristics may not be described, much less assessed, in reports on prior review program effects. Savings Calculations Many utilization management organizations estimate savings by taking the number of hospital days requested by a physician or hospital, subtracting the number of hospital days not authorized, and multiplying the result by the average cost of a hospital day.
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From page 115... ...
In addition, retrieval of preprogram data is often time-consuming and expensive, particularly when data are being aggregated for several groups and must be obtained from a separate claims payer. Utilization management also may be introduced simultaneously with a major redesign of benefits (for example, increased cost sharing)
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From page 116... ...
. Some employers and utilization management organizations survey employees to assess their reactions to utilization management programs.
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From page 117... ...
Mayo Clinic, "The 'Cost' of Effective Utilization Review Programs," Statement submitted to the Institute of Medicine Committee on Utilization Management, May 1988. McIlrath, Sharon, "AMA~, Rand Corp.
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From page 118... ...
6, Greenwich, CI: JAI Press, Inc., 1985. Schemer, Richard M., Gibbs, James O., and Gurnick, Deborah, The Impact of Medicare's Prospective Payment System and Private Sector Initiatives: Blue Cross Experience, 19801986, HCFA Grant No.
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