National Academies Press: OpenBook

Controlling Costs and Changing Patient Care?: The Role of Utilization Management (1989)

Chapter: Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations

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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Appendix E
Summaries of Committee Site Visits To Utilization Management Organizations*

Members and staff of the Committee on Utilization Management by Third Parties visited 12 organizations during the summer of 1988. The organizations visited included three independent companies, three insurance company subsidiaries, two third-party administrators, two peer review organizations (PROs) engaged in private review, and two health maintenance organizations (HMOs) (one staff model and one independent practice association [IPA]). The sites were selected to convey something of the variety that currently exists in utilization management. The following summaries and Tables E-1 through E-4 at the end of this appendix briefly describe important features of the organizations visited. Appendix F provides an analysis of client contracts that were obtained from seven of the organizations visited.

Organization 1

Organization 1 is a relatively small, independent organization that handles about 3,000 cases a month. It is a privately held, for-profit organization whose leaders come from professional standard review organizations

* The summaries and tables in this appendix were originally drafted by Susan Sherman and edited by Bradford H. Gray. Each organization reviewed its summary for accuracy. Eileen Connor undertook further editing of the summaries and tables. The data provided were not independently verified.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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(PSROs) and academic health centers. Clients are third-party administrators and insurers, and the company sees itself as applying not only its own review criteria but also as applying the more general coverage provisions of clients' benefit plans.

A ''standard" list of procedures that normally should be done on an outpatient basis is used to guide decisions about the appropriateness of proposed inpatient care. The details of the list, however, may vary by client. Allowances for preoperative days also vary by client. Criteria are modified on an ad hoc basis as issues are raised by reviewers. The organization also performs prior review of the medical need for certain procedures, which are a mix of inpatient and outpatient services.

The organization's services are limited to utilization management and include preadmission review, second-opinion screening, high-cost and psychiatric case management, bill audits, claims review, retrospective utilization review, and physician adviser services for in-house review programs operated by insurance companies. Most reviews take place by telephone, and the information is entered into a computer. Some psychiatric case management and most retrospective reviews are conducted at the site of service. Data analysis and program evaluation capabilities are limited because the organization has only its own activity data, not claims data or medical records.

Although patients are responsible for seeing that the prior review process occurs, most calls actually come from hospital staff. All required information is obtained on the first call in an estimated 80 percent of cases. The process works best when the reviewer calls the physician's office after receiving notification of an impending admission. Incoming calls are answered by a receptionist who refers them to review nurses, who collect the information and approve the admission if the criteria are met. If the criteria are not met, the nurses are authorized to negotiate changes with attending physicians. Nurse reviewers are expected to use their own clinical judgment. (It is acknowledged that reviewers sometimes "feed" the criteria to attending physicians to facilitate admission of a patient that the reviewer feels should be admitted.) When nurse reviewers find themselves unable to authorize proposed services, cases are referred to physician advisers, who serve part-time but work from the organization's office. Appeals of denied certifications go to a second physician adviser.

Some clients request that all reviews be done by physicians. In these situations, referrals come to the organization's physician review unit from the client's nurse reviewers by telephone or facsimile machine. Incoming calls are answered by an intake coordinator who enters the information into the organization's data base and prints the referral form for distribution to the appropriate physician specialist. Faxed referrals are handled in a similar fashion. The physician reviewer will, if necessary or requested, call

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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the client's nurse reviewer to discuss the case and then call the attending physician to make a certification decision. The physician reviewer will inform the attending physician of the decision. The final decision is also faxed to the client's nurse review office.

In the high-cost case management program, the patient calls the insurer or claims administrator, who validates health plan eligibility and then refers the case to the case management unit. For those clients where site-of-service case management is operational, preadmission review is conducted by telephone, while emergency admission and all continued-stay reviews are conducted at the site of the service. The monitoring of aftercare or alternative care is done by the nurse case managers and physician case managers in the office. Obviously, for those clients for which case management is telephone-based, all levels of review are conducted directly out of the organization's office. The case management program uses a team approach, with nurses and physicians working together in the same unit.

The organization believes in intensive involvement of physicians in the review process, in the importance of informal communication among physician advisers, and in seeking cooperative relations with providers. The office is small, and much of the monitoring, sharing of information, and revision of procedures or criteria tends to emerge from the informal communication among nurses and physicians. More formal communication occurs through regular, scheduled medical review committee meetings that assess the quality of decisions by physician reviewers and evaluate the need to change review criteria. The committee is made up of senior physicians who are not involved in initial reviews.

The staff emphasizes cooperation with attending physicians. Although they are willing to deny certification, they think that to deny cases ''too readily will alienate doctors." Rather, they encourage behavior change through effective negotiating skills by nurse and physician reviewers. And they "will bend over backwards" to certify a case that they deem a necessary admission, regardless of criteria. Overall, they find physicians to be generally accepting of their programs. Most days saved are as a result of persuasion, not denial.

Cost savings are measured by hospital days saved; the organization believes that it is helping to reduce inpatient days per 1,000 lives for its clients. Except for the case management program, no data on quality and appropriateness of service or on patients and families are collected. Retrospective reviews are done for several clients. The organization believes that its biggest impact has been in influencing a switch of some inpatient procedures to outpatient procedures, including cataract surgery, myelogram, cardiac catheterization, hemorrhoid surgery, hernias, and bronchoscopies, and in diverting emergency and inappropriate psychiatric and chemical dependency treatment from inpatient to alternate forms of care.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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The organization expressed concern about the adequacy of the clinical research base for some review criteria. There was also concern that some criteria developed by medical specialty societies include too broad a range of acceptable services. It was noted that refusing to allow a preoperative day may be self-defeating if the addition of such a day would shorten the overall length of stay.

Organization 2

Organization 2 is a wholly owned subsidiary of a third-party payer and was incorporated in 1985. Clients are mainly those of the parent payer, but it is branching out to others. It covers about 1.12 million lives and reviews about 2,000 cases per month. Services include preadmission review; admission review and concurrent review for medical, surgical, and psychiatric cases; case management; second surgical opinion; disability review and workman's compensation review; and hospital bill auditing.

The organization has developed a detailed set of administrative policies and procedures and comprehensive clinical screening criteria. Nurse reviewers are guided through the decision-making process by a criteria manual, which lists procedures, gives conditions for certifying an admission, and assigns a rating to conditions denoting the likelihood of an admission for this condition. Nurses must apply the criteria in all cases and consult a physician adviser if the information given does not meet the screening criteria. They must document their reasons for approval or referral to a physician adviser. The organization emphasizes that it requires its nurses to have at least 5 years of clinical experience. Physician advisers are local and work from their own Offices. Advisers may sometimes know the physicians they are reviewing.

The cost-effectiveness of services and the cost-benefit of programs are emphasized rather than simple cost savings. The staff believes that cost savings from utilization management will decrease after the initial impact has been achieved, except in the mental health field where there is a greater potential to achieve the desired goals. The staff expressed skepticism about most measures of cost savings used by other companies. In this organization, pricing is based on the client company's inpatient utilization.

The organization is becoming more concerned about reviewing appropriateness of care and may call in a physician adviser on cases in which the quality of treatment is questionable. There is an internal quality assurance program, and the organization is now undertaking an outcome-based program to evaluate the appropriateness of decisions made by review coordinators and physician advisers.

The review process is initiated by the patient, a family member, or the

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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provider. The organization expects employers to educate employees about the program. The organization has a full-time account services representative to assist employers with that education. When nurse reviewers are notified that an admission is planned, they call the attending physician to get the reason for admission, other clinical information, the anticipated length of stay, and the treatment plan. About 90 percent of the time, the reviewer speaks to the physician's office staff for medical and surgical admissions. For psychiatric admissions, the attending physician is almost always called. If the admission is authorized, the nurse notifies the attending physician, the patient, and the hospital. At the end of the certified length of stay, the nurse reviewer calls to verify that the patient is being discharged. If the patient needs additional time in the hospital, then the continued-stay review process continues until the time of discharge. If the nurse reviewer cannot approve a case based on the criteria, he or she will refer the case to a physician adviser, who must call the attending physician or document that they have made a reasonable attempt to discuss the case. Most referred cases involve requests for extensions of length of stay. About 2 percent of the total cases are denied. Appeals can be made to a second and then a third physician adviser. Of the denied cases, about eight or nine have been appealed.

Organization 2 does not currently review for quality of care but may refer problem cases to a physician adviser for review. The company surveys patient satisfaction by sending out a postcard questionnaire, for which there is a 15 percent return rate. It has observed a sentinel effect on physician requests for admissions and lengths of stay. The organization believes that it has had its biggest impact on cutting preoperative days, shortening lengths of stay, and increasing consumer awareness.

The organization expressed the following concerns about its current processes. (1) Attending physicians may bill patients for their time spent on the telephone with reviewers, and these charges are not usually covered by insurance. (2) All of the physician advisers work out of their own offices. In addition, the medical director and physician adviser work at the organization's offices part-time. Physician adviser specialists are reluctant to make calls to physicians who work in the same metropolitan area. The organization's management believes it is necessary to have at least one physician adviser on staff to ensure accessibility and consistency. (3) Patients are often uninformed about their benefit coverage. It is possible for a reviewer to certify a procedure as medically necessary, but to have that procedure not be covered by the patient's benefit package. However, letters sent by the organization to the patient clearly state that the days certified are certified for medical necessity only, and there may be contractual exclusions and/or limitations on coverage of these services in their health plans.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Organization 3

Organization 3 is a third-party claims administrator that began to offer utilization management services about 1 year before the site visit. It covers about 2.3 million lives and has about 700 medium-sized companies (5,000 to 15,000 employees) as clients. Services include preadmission review, continued-stay review, retrospective review, discharge planning, second-opinion surgery (focused on specific procedures using criteria-based waivers), case management, and outpatient surgery review. It also conducts hospital bill audits and offers health information services and referral services to preferred providers.

Because this company does claims administration, it has a vast amount of data on its program and its impact on patients and providers. It can track case histories of patients, review benefits packages of patients, check outcomes of care in terms of rehospitalizations, and measure savings in terms of costs. A variety of reports can be generated on every aspect of its utilization management activities, including reports on days approved and used by diagnosis, extensions, averages for days requested and days approved, variances, estimated savings, and readmissions. Audits are done on both hospital services and physician services. The company considers data analysis and reporting one of its four main functions (the others are utilization management itself, claims administration, and preferred provider referencing).

This company is very client-oriented. It markets its programs as a service to employers. It believes it offers an added benefit to employees, guiding them through the maze of health care services. Decisions are rendered on the medical necessity of services and the reasonableness of provider charges to clients.

To maintain the quality of the review process, Organization 3 monitors almost every activity of the nurse reviewers, and reviewer comparisons are made across time. Reviewers have 5 years of clinical experience and some review experience. They go through a 3-week training program. Physician advisers are local practitioners who spend about 3 hours a week conducting reviews out of their own offices. Their decisions are monitored to see how often they uphold a nurse reviewer's recommendation to deny certification.

Nurse reviewers are allowed to negotiate with providers and may use their own clinical judgments. The company uses the Health Data Institute Optimed system, but it believes that the review criteria are too liberal. It plans to switch to a system of its own. Reviewers are allowed to override criteria with a supervisor's permission. All of the review information, including the criteria, is programmed into the organization's computer system.

Patients are expected to trigger the preadmission review process.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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About half of calls come from patients, and about half come from physicians and hospitals. If the patient or the hospital has made the initial call, the nurse reviewer will call the physician's office to confirm the diagnosis and treatment plan. If the nurse reviewer approves the admission, he or she assigns the case a length of stay (based on the Professional Activity Study Western Region at the 50th percentile minus 1 day). The reviewer calls back on the day before the expected discharge date to verify the discharge. If the case is to involve a surgical procedure, the reviewer determines whether a second surgical opinion is necessary. The opinion may be waived by the reviewer on the basis of criteria indicating that there are solid indications for surgery.

If a case does not meet criteria and the reviewer cannot negotiate a change with the attending physician, he or she refers the case to a physician adviser. Most referrals concern inpatient versus outpatient decisions. About 75 percent of the referred cases are denied by the physician advisers. Appeals may be made for consideration by a second physician adviser. Less than 1 percent of cases are appealed.

During its 1 year of utilization management experience, the company says that it has brought about an average 12.5 percent reduction in admissions, a 32 percent reduction in days of hospital care per 1,000 employees, and a 26 percent reduction in hospital costs per covered person for its clients. The company monitors quality and appropriateness of care and patient satisfaction by conducting retrospective chart reviews and by having reviewers make follow-up calls to all patients after they return home. This follow-up also allows the organization to confirm information given upon admission about diagnoses and treatment. The biggest area of impact is believed to have been in moving tonsillectomies and cataract surgery to outpatient settings.

Staff expressed concerns about how data are used, how impact is measured, and how savings are calculated. They expect to be able to track the appropriateness of their decision-making, outcomes of care, and impact in a much more sophisticated manner as they update and improve their own data base. A more sophisticated data base is necessary to enable the organization to modify its review criteria appropriately. It expects to use more restrictive criteria reviews in the future to further reduce lengths of stay and inpatient admissions, and the staff wants to use data to justify and monitor these changes. More retrospective review of cases is planned.

Organization 4

Organization 4 is an independent review organization with origins in a staff model HMO. It was one of the earliest organizations to apply preadmission review in an indemnity context. The company views its

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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business as a health care cost management business, and it serves a variety of clients—both insurers and employers. The goal is to get the most cost-effective care for the employers. It offers a full range of utilization management services.

The company strives to eliminate all inappropriate and unnecessary care. Reviews are concerned not only with inpatient versus outpatient surgery, presurgical days, and length of stay, but also with medical necessity of admissions, necessity of surgery, and necessity of expensive outpatient testing and procedures (for example, nuclear magnetic resonance imaging and lithotripsy). Criteria are developed by panels of outside physicians, who build protocols using existing criteria sets, specialty society guidelines, and their own clinical judgment. Some decisions (for example, those regarding outpatient surgery) are based on clients' benefit plans rather than the company's own criteria. Information used for medical necessity determination includes all available clinical data and also the narratives for x-ray and lab work.

This company is at the high-tech end of utilization management in both computerization and telephone systems. It strives for a paperless process from initial phone call until discharge, except in those instances in which case management is involved. The system captures 150 data elements, including clinical information beyond just diagnoses and procedures.

Calls for review come to an operator who directs each call to one member of a team of review nurses (the goal is to do this within 30 seconds), who enter data into the computer. The average call lasts less than 5 minutes. Nurses collect and enter data but can neither certify nor deny certification for cases. All cases are transmitted electronically to a member of the full-time medical staff for review. An estimated 25-30 percent of cases involve virtually automatic decisions (for example, admission for childbirth), and an estimated 60 percent present significant complexities for the reviewing physician to evaluate. The review physician calls the attending physician in virtually all mental health and catastrophic rehabilitation cases, 65-70 percent of medical cases, 40 percent of surgical cases, and 15 percent of obstetrical cases. As many as 20-30 percent of the initial negative decisions are appealed, first to another staff physician and then to an external consultant. The company reports utilization levels comparable to those of a staff model HMO.

The organization emphasizes internal quality control. Nurses are monitored through the computerized telephone system by supervisors and physician reviewers. Physicians' decisions are reviewed by a team supervisor, and a random 10 percent of cases are sent each month to members of external advisory panels for review. They prefer to report to clients on before-and-after utilization levels rather than on days of care averted.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Organization 5

Organization 5 is a third-party administrator that has been doing utilization management since the early 1980s. It has about 40 clients, most with 5,000 or more employees, and covers about 600,000 lives. Its services include benefit plan design, preadmission review, concurrent review, discharge planning, case management, second surgical opinions, and preferred provider organization (PPO) management and referral, bill audits, and claims payment.

Though committed to cost containment, this organization also takes a strong pro-employee/patient stance. The staff seeks to eliminate care that is of questionable medical necessity. It believes that patient cost-sharing is an important element of cost containment but seeks to have employers also hold patients harmless for costs incurred when providers do not follow review requirements or when bill audits identify unnecessary services. It contends that it is on solid ground in making those decisions and will go to court to defend its judgments. It considers assisting clients with their benefits packages to be an integral part of its service. Staff are also directly involved in educating employees about utilization management. Physician advisers and nurse reviewers meet with employees, benefits personnel, and representatives of physicians and hospitals in the communities at key locations of new clients. The physician or nurse reviewer may spend up to 2 weeks at a client company holding small group educational sessions. The company's toll-free 800 telephone number is also open to all employees 1 month before services are to begin, to enable employees to call in for information.

As a claims payer, Organization 5 has extensive data on its review programs and on actual utilization. It offers clients a wide selection of standard reports and will prepare ad hoc reports as clients request.

The staff uses internally developed criteria that they base on InterQual and Professional Activity Study lengths of stay, but nurse reviewers and physician advisers can make exceptions based on clinical judgment. A medical advisory committee of physicians from across the country develops and modifies criteria. They hold that the burden is on the provider to show that services are necessary, not on the review organization to show that they are unnecessary.

In the preadmission review process, about half of the initial calls come from patients, and about half come from physicians' offices. Staff members say that they can get most of the needed information from patients and hospitals "without disturbing the physician." Nurse reviewers can certify cases immediately if they meet the criteria, or they can negotiate with providers' offices. If an attending physician challenges the nurse reviewer, the case goes to a physician adviser. About I percent of the cases are

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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referred. Most referrals are handled by the medical director (who works at the organization's offices nearly full-time) and four other advisers. The advisers may call specialists for advice. A majority of the referred cases are denied. Appeals are made directly to employers through benefit plan grievance processes.

Savings are measured by days of care averted. The organization also monitors provider charges to evaluate whether they are within reasonable and customary rates according to its own and Health Insurance Association of America data. It can address quality of care to some extent through bill audits and through second opinions if the proposed service seems unusual. The organization solicits feedback by sending comment cards to patients who have gone through utilization management. It believes that its impact has been greatest from disallowing preoperative days, managing long-term-care cases, arranging transfers to lower levels of care, and getting concurrence to outpatient rather than inpatient care.

The leaders of this organization expressed the following concerns. (1) The preadmission review system is being evaded by patients who are admitted on an emergency basis for diagnostic workups only. They seek to have these patients discharged. (2) About half the hospitals they deal with do not cooperate with concurrent review. Patients may end up paying for services not certified for payment by the employee's benefit plan. (3) Staff described "rolling" laboratories, mobile labs that offer complete testing for patients and then submit big bills for comprehensive, unnecessary tests. Most of these claims are denied. (4) Many companies lack the baseline data needed to evaluate changes in costs.

The organization plans to do more outpatient reviews and focused reviews based on historical data. It is developing a data base with claims histories for each patient.

Organization 6

Organization 6 started doing disability and rehabilitation management and workman's compensation review in the 1970s. It then moved into medical case management and, more recently, into prior review services. A subsidiary of an insurance company, it now offers preadmission review, continued-stay review, second surgical opinion referrals, discharge planning, disability and rehabilitation management, vocational rehabilitation, hospital bill and provider auditing, and case management. It covers 8.5 million lives for large and small companies, insurers, third-party administrators, and self-insured employers.

Because this company's program grew from case management, it emphasizes appropriateness of services and review of the entire spectrum of

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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services a patient receives. The staff is very patient-oriented. For example, reviewers will arrange patient appointments for second opinions, and case managers will help identify new jobs for partially disabled employees through the vocational rehabilitation program. Case management is done face-to-face with patients. The company has more than 100 local offices for the case management program. Case managers typically make several visits to patients in their homes to monitor the services they are receiving.

The company also emphasizes data collection, auditing, and monitoring of their services. The size of the quality assurance staff is proportional to the volume at each service center. One to five quality assurance staff per site is the range. Every month the quality assurance staff reviews a 2 percent sample of preadmission review cases, examining 14 different elements such as timeliness, accuracy of data entry, and application of criteria. They also review a 5 percent sample of physician advisers' decisions for consistency. Physician advisers also review a sample of one another's cases each month to monitor accuracy and the appropriateness of the determination. The quality assurance staff also tracks second-opinion referrals and provider billing accuracy. The company also has a sophisticated telephone monitoring system that tracks call volume, duration, hold time, abandon rates, and turnaround time. Daily reports on telephone activities are reviewed by a supervisor, who also regularly evaluates reviewers on their telephone performance.

The company assesses the medical necessity of admissions and the appropriateness of the level of care. It does not accept responsibility for determining whether services are otherwise covered under a client's benefit plan. The staff does, however, remind callers to check the provisions of their benefit plan. The organization uses a modified version of InterQual to judge the medical necessity of services. It modifies the criteria on the basis of its own data and other information data on medical practice. A panel of physicians approves modifications. The inpatient and outpatient lists vary, depending on client benefit plans.

Nurse reviewers work in teams to serve particular clients. Nurse reviewers have hospital and review experience and are allowed to use their own judgment in conjunction with the organization's written criteria. They can negotiate with providers and can make exceptions to the guidelines. All nursing judgments must be accompanied by supportive documentation in the patient's file. An administrator of the company said "we don't want to keep [the nurses] on a ball and chain." Physician advisers use their own judgment to decide cases. They work in the company's office 1 day per week; one physician adviser is on-site each day. Management suspects that nurse reviewers are more aggressive than physician advisers in negotiating lower lengths of stays or use of outpatient care.

The organization's review process is intended to be paperless. The

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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reviewer enters information into the computer system as it is obtained and as decisions are made. Paperless processing eliminates the need for participating employees to submit forms. Through computer linkages to claims entities, the organization also has the capability of notifying the payers that prior review obligations have been met.

Patients are expected to trigger the review process. Most calls come from patients, families, and hospitals, but the nurse reviewer must always contact the attending physician to obtain information about the admission. About 120 data elements are collected on each patient. If criteria are met, reviewers may approve the admission; they call back on the day prior to discharge to verify the discharge or conduct continued-stay review if further days are requested. About 5 percent of the cases are referred to physician advisers. The most contentious cases involve preoperative days, overnight stays for outpatient procedures, and requests for longer stays, in that order. Most referred cases are approved by the advisers. About 1-2 percent of all cases are ultimately denied. Appealed cases receive a second review by a specialist in the local area. The company also has a complaint resolution process.

The company sees an average reduction of 10 percent in their clients' hospital inpatient costs and a reduction of 18 percent in the ratio of days requested to days certified after it implemented review. The company does not review for quality of care, but when quality problems appear in continued-stay review, the case is referred to a physician adviser, who may counsel the attending physician. Repeat admissions are referred to the case management program. Provider profiling is planned for the future. It is difficult for the firm to measure the impact of its programs because it does not pay claims or have other access to information about final payment decisions.

The company expressed the concern that current utilization management programs are only shifting health care costs to the outpatient setting and suggested that utilization controls on outpatient Services are needed. Products for outpatient reviews are currently being developed. The staff also believes that a number of diagnostic tests and procedures are being ''abused" and need to be monitored. A methodology to track overused tests and procedures is being developed.

Organization 7

Organization 7 is a subsidiary of a regional third-party payer. Its review program is based on a model developed by a study committee sponsored by the Robert Wood Johnson Foundation. It has been engaged in utilization management since 1985. The organization services 1.7 million subscribers (including dependents). It offers preadmission review, admission review

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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(emergency and maternity cases), home health review, skilled nursing facility care review, intensive psychiatric review, continued-stay review, second surgical opinion, medical and psychiatric case management, discharge planning, medical audits, workman's compensation and disability management, consumer education, benefits analysis, and hospital bill auditing. It also markets software products to support health information systems.

The company has a strong local base. More than half of its clients are located in the area. The company is oriented toward serving the employees of its client companies. It sees utilization management as a service to employees, as part of the employees' benefit package. Several of the major figures in the company have backgrounds in benefits and insurance. The company routinely conducts employee education programs to describe the details of the review program. Company representatives attend client meetings and union negotiation sessions. It has received endorsements from major employee groups.

The company emphasizes service to the employee population and is concerned that people understand their treatment options. Changing practice patterns is viewed as an evolutionary process.

An effort is made to minimize interference with individual physician-patient relationships. Nurse reviewers can certify admission based on established criteria and accepted medical practice and can negotiate with attending physicians regarding the appropriate level of care. If that fails, cases are referred to physician advisers. The physician adviser contacts the attending physician. The company views one aspect of its patient advocate role as preventing situations in which patients may see themselves as caught in the middle between their physician and the review organization.

The review process covers the medical necessity of admissions and verification that proposed services are covered by the benefit plan. The company uses a modified version of Appropriateness Evaluation Protocol criteria as guidelines and negotiating tools, rather than absolute standards. Company leaders stated that the objective is to affect medical outliers and not to lead medical practice trends but to follow clinical consensus. The list of procedures subject to second opinion varies with the client benefit package. The firm's quality assurance team has developed a rapid assessment tool for selected procedures and diagnoses. This tool assists the staff in establishing and maintaining the clinical picture for a patient from admission to discharge.

Nurse reviewers are assigned to teams. They must have 5 years of clinical experience; most have more. Many continue to work a few hours a week at local hospitals. Nurse reviewers can certify cases, negotiate with attending physicians, override existing criteria, and waive second surgical opinions. They are encouraged to utilize their medical expertise and are provided with continuing education. The nurse reviewers spend about half

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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their time educating patients about treatment options, resources, and other health matters as part of a patient consultation module.

The company currently has a contract with an independent physician adviser network that includes board-certified physicians with utilization management experience. Only about eight advisers are dealt with on a daily basis. The private physician group also reviews modifications in the company's written review criteria. The organization plans to phase out the use of this panel in favor of a team of on-site physician advisers.

Telephone calls from physicians, hospitals, or patients can trigger the preadmission review process; no forms are needed. About 3-5 percent of cases are referred from nurse reviewers to physician advisers. Appeals are handled by a special review committee.

Through 1987, the company reported a 21 percent reduction in hospital admissions per 1,000 subscribers and a 20 percent reduction in days per 1,000 subscribers. It collects data on quality of care and checks for provider noncompliance with review programs. The company has observed that it has had a sentinel effect on physicians and has virtually eliminated preoperative days. Client surveys track patient satisfaction, and a combination of retrospective review and data analysis is used to track outcomes of care.

The organization expressed several concerns. (1) It is sometimes difficult to explain to employers why patterns of care may differ 'among groups of employees. Regional differences in demographics, health problems, and other factors exist, but employers tend to see the lowest reported utilization as the appropriate utilization for all areas. (2) Physicians need more education on the availability and efficacy of outpatient care. (3) Some benefit plans do not include coverage for alternative treatments or treatment settings, and this inhibits their use.

Organization 8

Organization 8 is an independent review organization that was started in 1982 by a physician with extensive PSRO experience. The organization now handles about 1 million employees and their dependents and does about 2,000 certifications per day. It offers preadmission review, continued-stay review, second surgical opinion, case management, disability review, and mental health services review. It also maintains a medical information telephone line.

The organization claims to have set the pattern for independent utilization management. As one of the earliest utilization management organizations, it claims to have developed the basic procedure of having nurses review admissions and refer more complicated cases on to physicians. However, it differs from most other organizations in that 40 percent of cases

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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are reviewed by physicians. Nurse reviewers may only certify cases that meet the written criteria. Any cases that vary must be referred to physician advisers, who work full-time at the organization's office. On receiving a case, the physician adviser telephones the attending physician to discuss the case. Physician advisers use their clinical judgment to negotiate with providers. The organization claims to cut extra days per 1,000 lives for each client because of this extensive use of physician review. It stresses that the goal of utilization management is to make physicians accountable for their decisions and believes that accountability can only be attained through objective peer review. Physicians must be reviewed by physicians who are affiliated with the review organization for the program to succeed.

Physician advisers have clinical experience, and the organization sponsors continuing education. It also has made arrangements with a local hospital to allow the physician advisers to attend grand rounds at the hospital. Moreover, the head of the organization notes that physician advisers have contact with 10,000 admissions per year through preadmission and continued-stay reviews and are continually educated through this process. Nurse reviewers also have clinical experience. They receive a 6-week training program and continuing education sponsored by the organization.

The organization claims to be the only review organization that is operating at a profit. It has several million dollars in billings and has doubled its business in the past year.

The review process can be triggered by physicians, patients, or hospitals. Usually, the hospital calls the utilization management organization, and the nurse reviewer then calls the attending physician's office. Nurse reviewers approve about 60 percent of the cases. Most of these conform to the organization's criteria initially; in a small number of instances, even though the nurse reviewer is not supposed to negotiate, changes occur in the process of obtaining information. The company's criteria are a modified version of the InterQual criteria. Forty percent of cases are referred to physician advisers, who negotiate changes and ultimately approve about 98 percent of the cases that are referred to them. Sometimes physician advisers can approve a case based on information provided by a nurse reviewer, but usually the physician adviser contacts the attending physician to discuss the case. They deny about 1-2 percent of the cases. Appeals can be made to a second physician adviser. About 1 percent of denial cases are appealed.

The organization claims to cut their clients' inpatient health care costs by 20-40 percent. Because they conduct physician-to-physician review, they can intercede if they perceive quality problems in a case, but they cannot actually determine care.

The organization expressed the following concerns. (1) Its second opinion list is too inclusive. They could cut back on waiver rates if the list

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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were more selective. Clients need to be educated to the fact that second opinions have a low return. (2) No information on review organization experience is getting into the medical literature. There is a lot of information and expertise that is not being made available to people in the health care field. (3) The organization does not favor regulation of review organizations because it feels it is one of the better companies. If all companies were regulated, it believes that this might cut its effectiveness and it would lose its competitive edge.

Organization 9

Organization 9 is a staff model HMO. It has been in operation for more than 15 years and began conducting concurrent review about 1 year ago. The HMO has over 200,000 members, which is a large share of the HMO population in its area. It conducts concurrent review, discharge planning, and case management. Staff physicians authorize admission to the hospital, but this is an administrative and not a review process. The organization relies on its physician members to act as gatekeepers. It assumes that the admissions requested by its physicians are appropriate.

Because it is a staff model HMO, this organization has a great deal of influence over the utilization practices of participating physicians. Because physicians who work for the HMO are ''sold on the HMO idea," it is possible to get physicians to adapt to new patterns of practice. The organization also emphasizes physician leadership in changing practice patterns. Generally, one physician moves to a new treatment or diagnostic approach and champions the idea to other physicians, who eventually adopt procedures reported by peers to be appropriate. The organization does not use financial incentives to get physicians to change their practice patterns because it believes that financial incentives can have adverse effects. It tracks referral patterns and will counsel physicians who have unusual practice patterns.

The organization reports to have been the first in the community to have cut preoperative days and the first to have implemented a 2-day length of stay for normal deliveries. It also asserts that it is the first HMO in its area to offer managed care services.

The organization contends that concurrent review is more effective with physician participation and that preadmission review is unnecessary in staff model organizations. The emphasis is on collaboration with the attending physician when conducting concurrent review and case management.

For emergency admissions, staff physicians judge whether the admission has been justified—usually within 48 hours of the admission. Nurse reviewers conduct concurrent review. Nurse reviewers work on-site in most hospitals. Whey review the patient's charts and discuss the patient's care with the attending physician and the patient. Reviewers use InterQual

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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criteria and Professional Activity Study data as guides for their professional judgments. They communicate closely with the attending physicians. If a physician disagrees with a shorter length of stay, the reviewer may refer to a medical adviser from the same specialty group as the attending physician. Each medical department in the HMO has a utilization review committee; medical advisers are drawn from each specialty group. The medical adviser confers with the attending physician. Denial of coverage is rare. It would occur if a patient goes to a nonplan physician for services or if the patient received services in an emergency room when clinic services would have been appropriate. Appeals may be made in the form of a request for a second opinion. Physicians or patients may also file complaints, and there is an arbitration process through member services.

The nurse reviewers consider quality of care to be part of the review process. The organization conducts peer review within each department and has a quality assurance department that conducts studies on outcomes of care. Patient satisfaction surveys are also conducted. Although the utilization review program is "invisible" to patients, patients "appreciate" case management services. The physicians on the staff are generally cooperative and amenable to new utilization practices.

Leaders of the organization expressed concern over the difficulty in measuring cost savings from utilization management because the cost of health care is generally increasing. They added that effective physician leadership is essential for changes to be made in practice patterns.

Organization 10

Organization 10 is a private, not-for-profit statewide PRO. About 60 percent of its business involves private contracts; it has 25 private clients, including third-party payers and self-insured companies. It does Medicaid review in 6 states, and private review in 50 states. The organization reviews about 1.5 million cases per year. About 250,000 of the cases are within the state, a figure that represents 60-80 percent of the discharges within the state. It offers preadmission review; concurrent and retrospective review; outpatient review; discharge planning; some quality-of-care reviews and fee reviews; physician profiling within the state; and long-term-care, chiropractic, obstetrical, and disability reviews. In addition, it does data processing for 10 other PROs.

The organization has developed a means to focus preadmission review based on retrospective review experience. On the basis of Medicare data, it has selected certain procedures for 100 percent review. And it selects certain physicians for 100 percent review. (If a physician has one case denied retrospectively, all cases will be reviewed for 3 months. This intensified review is considered to be a sanction.) The organization believes that

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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focused preadmission review would be more efficient and just as effective as full review of all elective procedures, but finds that most private clients want 100 percent review of all procedures.

The organization reports a high level of cooperation from providers. Because it is a PRO, the physicians in the state are very familiar with its methods. It has been in operation since 1972 and operates on a statewide basis. The organization also claims to have a strong political base and a good relationship with the state medical society.

The peer review aspect of the program is emphasized. Peer review is believed to be the only means by which quality-of-care issues and treatment options can be encompassed in the review process. The organization is planning to expand its private review, particularly into other states. There is also a desire to do more outpatient office procedure reviews.

Physicians are responsible for initiating the preadmission review. If a patient calls, they tell the patient to have their physician call. Nurse reviewers receive the information, may ask questions, and can certify cases that meet their criteria. They are not allowed to advise attending physicians. The nurse reviewers use a modified version of InterQual criteria that was developed and approved by physician members of the PRO. Cases that fail the screens are referred to physician advisers. Nurses may choose the physician adviser to whom they refer a case. The PRO has about 23,000 physician members, but most reviews are conducted by about 200 physicians, who work out of their own offices. Physician advisers ordinarily make their decisions based on the information provided by the nurse reviewer and rarely contact the attending physician, unless the case has been appealed and is being reconsidered. Physician advisers make decisions based on their own clinical judgment, not written criteria. The organization has an internal validity committee that monitors reviewer and adviser decisions. Reviewers are held to a 95 percent accuracy standard; that is, the committee must agree with 95 percent of their decisions.

About 80 percent of the cases are approved by nurse reviewers; 20 percent get referred. About 1 percent are denied. Appeals take the form of reconsideration by one or two physicians, depending on the client. A second formal written appeal process is also available.

The organization believes that it has substantially cut inpatient days for its clients. It claims to have saved clients a total of $117 million on inpatient days since 1982. It evaluates quality of care in the review process and believes that this has had a substantial impact on physician behavior. It reports a 100 percent compliance rate, and physicians "fight" to stay off of intensified review. Of a total of 3,600, about 150 physicians are on the list at any one time.

The organization expressed concern about service underuse, which it is unable to track.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Organization 11

Organization 11 is an IPA model HMO. It has been operating since 1974 and began preadmission review in 1981. It has 175,000 members and 2,000 participating physicians. Most activity is concentrated in the local area. The organization offers preadmission certification, preprocedure review, concurrent review, case management, retrospective claims audit, discharge planning, second surgical opinions, and some outpatient procedures review. It also reviews claims and conducts physician profiling.

The organization states its utilization management objectives as follows: (1) to monitor the medical needs of patients; (2) to monitor the level of care; (3) to ensure that appropriate resources are used; and (4) to develop and evaluate utilization data and identify potential utilization problems. It emphasizes education and physician cooperation but has strict sanctions for noncompliance. Physicians are fined $25 of the fee the first time, $50 the second time, and $100 the third time they fail to comply with the preadmission review program within 1 calendar year. Sanctions also are imposed for allowing unnecessary days of care (20 percent of hospital per diem for the first offense, 50 percent for the second offense, and 100 percent plus an appearance before the membership committee for the third offense) and referral to nonplan physicians (20, 50, and 100 percent of nonplan charges, respectively). In addition, time limits are set on referrals. Physicians are paid on a discounted fee-for-service system and split a surplus risk pool at the end of each year. The pool is accumulated from savings derived from hospital days saved.

The organization has a utilization review and quality assurance committee composed of five physicians who hold monthly meetings. They review physician utilization patterns and assess the utilization review program annually. They also conduct some special studies.

The preadmission review process can be initiated either in writing or by telephone. The IPA physician is responsible for beginning the process. Clerks take the preadmission calls and ask physicians (or their representatives) a series of questions from a one-page questionnaire. The questionnaires identify conditions for admission for a variety of disorders. The criteria are used by the state PRO. If the clerks receive a yes response to any of their questions, they give the questionnaire to one of two supervisors, who signs the form and authorizes the admission. The clerks can tell physicians that they will receive certification. The organization believes that this procedure is more efficient than having nurses handle the calls, because a vast majority of the admissions are routine.

Concurrent review begins on admission and continues every 2 days thereafter. Nurse reviewers work on-site at the hospital, review medical charts, and may negotiate with the attending physician. They use the

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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InterQual criteria and professional activity study lengths of stay for their region. Standards for any new procedures are developed by the firm's health care standards committee, which meets every 2 months. Medical necessity standards for about 12 medical procedures have been developed by the utilization review and quality assurance committee.

If criteria are not met, the nurse reviewer refers the case to one of the two supervisors or to the medical director, who is a full-time employee in charge of the utilization review program. The medical director then discusses the case with the attending physician. He may also ask two members of the utilization review and quality assurance committee to review the case. Denials are rare. Only the medical director can deny a case. Appeals may be made to the grievance committee. If a physician is sanctioned she or he may appeal to the utilization review and quality assurance committee and then to the HMO board of directors.

The organization has decreased its days of care from 560 days per 1,000 members in 1980 to 319 days per 1,000 in 1988. It believes that it has had an impact on quality of care. Reviewers use a generic quality screen developed by the utilization review and quality assurance committee on all discharges. The nurse reviewer conducts a retrospective chart review on cases that do not pass the screen. Quality problems are categorized into three levels of severity. If there is any potential harm associated with the quality discrepancy, the attending physician will be called before the utilization review and quality assurance committee. The physician is reviewed by three peers. The committee evaluates the case and recommends corrective action. Corrections can take the form of continuing education, intensified review of the physician's cases, or limiting the physician's services within the IPA. This process takes place only occasionally. The organization also monitors members and has a grievance committee that receives member complaints.

The organization expressed the concern that assigned lengths of stay can become a floor and that assigned days will be used even if they are not necessary. Therefore, reviewers do not assign specific lengths of stay.

Organization 12

Organization 12 is a PRO that was begun by the state medical society in 1970. It started conducting private reviews in 1976; currently, more than half its business is private review. It covers about 600,000 employees. Reviews are conducted for 40-50 relatively small companies and for part of the CHAMPUS program. The organizations offers preadmission review, concurrent and retrospective review, second surgical opinion, case management, hospital bill certification, bill audit, claims administration,

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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long-term-care review, workman's compensation reviews, discharge planning, substance abuse review, and quality reviews of hospital care.

Because it was one of the original PSROs, this organization claims to have set precedents in many programs. One strength is its historical and political base in the state. Leaders of the organization know the state, and providers in the state know them. Most nurse reviewers conduct reviews on-site in the hospitals. They claim to have strong support from the physicians. Ninety-five percent of the county medical societies participate in the PRO. The organization has a 23-member board made up of physicians, administrators, business representatives, and a consumer representative, and it also has five regional councils with the same composition. These

representatives "have made a commitment to make the system work" and devote a good deal of volunteer time to the program.

The organization emphasizes cooperation with physicians and providers. It takes an educational approach to solving problems. Written agreements with each hospital allow private reviews on-site.

Physicians are responsible for initiating reviews. Most are very familiar with the process. The PRO also accepts information from a physician's designee. About 15 percent of admissions in the state are reviewed by nurses operating from the PRO office. These admissions are mostly in small rural hospitals. The remaining 85 percent of admissions are reviewed by nurse reviewers on-site. This provides a direct check on the diagnostic and clinical information reported by physicians.

Nurse reviewers can certify cases that meet the PRO criteria. Criteria were developed by an internal health care standards committee and cover intensity of service and severity of illness. Quality of care is considered in each review. There are guidelines for making exceptions to the criteria. Nurses have some authority to negotiate.

About 15 percent of the cases are referred to physician advisers. About 200 physicians serve as advisers, working part-time out of their own offices. They may certify or deny a case based on their own clinical judgment. They may decide on the basis of the record provided by the nurse reviewer, or they may call the attending physician. The organization denies slightly more than 3 percent of cases. Denial is a last resort. Appeals go to a second physician adviser. The patient or physician requesting the appeal may ask for a physician of the same specialty.

The organization claims to reduce client admissions rates by 10-15 percent. It claims to have had a dramatic effect on preoperative days, which used to be common practice and are now rare. Reviewers have criteria to screen cases for certain quality-of-care problem and can refer any case with a potential quality problem to an internal committee for review.

The organization expressed several concerns. (1) Some hospitals bill

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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patients for care for which the PRO has denied certification. (2) Most medical admissions are emergency admissions, the necessity of which is evaluated only through concurrent review. (3) Sometimes it is difficult to get physicians to act as advisers in remote rural areas where the physicians all know each other. (4) Specialists who develop review criteria tend to be too generous.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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TABLE E-1 Summary of Volume of Business at Sites Visited

     

Reviewer to Population Ratio

Site

Number of Covered Lives or Employees

Average Number of Cases Reviewed

Nurse

Physician

1

70,000 lives (comprehensive review)

450 cases/mo

1:15,000

1:70,000

 

2 million lives (case management)

550 cases/mo

1:285,000

1:400,000

 

3 million lives (independent physician review)

2,000 cases/mo

 

1:850,000

2

1.1 million lives

2,000 cases/mo

1:16,000

1:16,000

3

2.3 million lives

NA

1:7,500

1:365,000

4

2 million lives

Up to 4,500 cases/mo

1:32,000

1:200,000

5

600,000 lives

NA

1:10,000

1:80,000-100,000

6

8.5 million lives

NA

1:20,000

1:180,000

7

1.7 million lives

NA

1:25,000-30,000

1:375,000

8

1 million employees

2,000 cases/day

1:5,000

1:125,000

9

235,000 lives

NA

1:47,000

1:47,000

10

NA

1.5 million cases/year

1:8,000

1:8,000

11

175,000 lives

NA

1:2,500

1:25,000

12

600,000 employees

NA

1:15,000

1:3,000

NOTE: NA indicates not available.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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TABLE E-2 Profile of Nurse Reviewers

Site

Experience

Training

RN Staffing

Supervision

1

5 yrs

1:1 supervision

5 RNs; 1 RN director

Informal observation

2

5 yrs

FTE trainer; 2 wks; review all decisions for 1 month

25 RNs; 2 supervisors; 1 UM director; 1 trainer

Accuracy of work; consistency; number of cases/mo

3

5 yrs

3 wks

17 RNs; 2 supervisors; 1 manager

Telephone monitoring; listen, review 5 cases/wk; weekly meetings

4

1 yr and some UR

4 wks

81 RNs; 5 LPNs; 1 supervisor per team

Telephone monitoring; listen, report daily on telephone activity, productivity

5

5 yrs

4-6 wits; in-house CE

56 RNs; 7 supervisors

Telephone monitoring; listen, review a percentage of cases weekly

6

Clinical, UR

2 wk class; 2-3 wks in unit

53 RNs; 7 supervisors; 1 director

Telephone monitoring; biweekly evaluation

7

5 yrs

2 FT trainers; 4 wks; CE

130 RNs; 1 supervisor per team

Telephone monitoring; random sample of cases; meetings

(Table continued on next page)

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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(Table continued from previous page)

Site

Experience

Training

RN Staffing

Supervision

8

Clinical, several yrs

6 wks; in-house CE

200+ RNs; 1 supervisor per team of 18 RNs; 1 manager/4 teams; 1 director

Telephone monitoring; referrals

9

Hospital experience

1:1 supervision

5 RNs; 1 supervisor

NA

10

5 yrs clinical

2 wks

76 RNs; 1 supervisor

MD advisers fill out questionnaire reviewing RNs; internal committee monitors decisions for 95% accuracy of documentation; application of criteria; referrals; turnaround time

11

Clinical

NA

7 RNs; 1 supervisor; 1 director

Medical director does random clerk review

12

3-yr med/surg, ICU or ER

Orientation, 1:1 supervision

40 RNs; 1 supervisor; 1 director

Telephone calls/hr; number of reviews/hr; sample of cases; appropriateness of referrals and consistency, number of cases/reviewer

NOTE: Abbreviations are as follows: RN, registered nurse; FTE, full-time equivalent; UM, utilization management; UR, utilization review; LPN, licensed practical nurse; FT, full-time; CE, continued education; MD, physician; ICU, intensive care unit; ER, emergency room; NA, not available.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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TABLE E-3 Profiles of Physician Advisers

Site

Experience

Training

Physician Staffing

Payment

On- or Off-Site

Full- or Part-Time

1

Board-certified

On-site

Med dir +60a; 7 FTE MDs

Per case; incentive for more cases/hr

On-site; work together

PT

2

Board-certified; in practice

l-day orientation; ongoing contact with med dir

25 do most reviews; FT med dir

Per call; assume 15 min/call

Work in own offices; 1 MD adviser on-site; med dir on-site

PT; on call

3

Board-certified; UR experience; in practice

In UR

21 MD advisers; 1 PT director

By hr

Work in own offices

PT, 3 hrs/wk

4

Board-certified; in practice

Several days

18 MDs (10 FTE on med/surg; 2.5 psych); 1 FT dir

Salaried or by hr

On-site (consultants off-site)

PT; 60% more than 20 hrs/wk

5

Experienced and respected; most board-certified

Briefed and observed for a couple days

Med dir; 6 FTE med/surg; 4 psych

By hr

On-site

PT; 1; 1 on-site at all times

6

Board-certified; UR; in practice

Manual; meet with director

6 MD advisers; 40 on call; 1 PT director

Per hr or per case

Some on-site; some in own office

PT

7

UR; PRO

Med dir trains on UR issues

8 MD advisers

Per case

1 on-site; rest offsite; in group

PT; 1 FT on-site

(Table continued on next page)

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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(Table continued from previous page)

Site

Experience

Training

Physician Staffing

Payment

On- or Off-Site

Full- or Part-Time

8

Clinical

CE in-house; attend grand rounds at local hospital

24 MD reviewers; 3 MD middle management; 1 FT director

Annual salary

On-site

FT

9

Clinical

1:1 supervision; CE

1 from each medical specialty; clinical supervisors; dept heads; med dir

Salary

On-site

PT

10

In practice

1 day

200 MD advisers; 1 PT med dir

$54.00/hr

Work in own office

PT

11

In practice

NA

5 MD reviewers; 1 med dir

$250.00/mo

Work in clinic

PT

12

Board-eligible; PRO credentialing process

1 yr of experience in hospital UR/QA

200 MD advisers; 1 PT med dir; 5 regional managers

By hr

Off-site

PT

NOTE: Abbreviations are as follows: med dir, medical director; PT, part-time; FT, full-time; MD, physician; UR, utilization review; FTE, full-time equivalent; CE, continuing education; QA, quality assurance; NA, not available.

aMost physician review time is not devoted to prior review but to a review contract with an insurer. Most reviews are done by about five physicians.

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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TABLE E-4 Case Managers

Site

Staffing

Patient Contact

Authority

Monitoring

1

1 RN

By telephone

Selects cases; identifies services

None

2

3 RNs; 1 supervisor

By telephone; site visits every 30-90 days

Develops care plan; negotiates for services

Supervisor oversees

3

7 RNs; 1 manager

By telephone; may visit; contract with home health agency for site visits

Selects cases; negotiates for services

Weekly meetings; staff discusses cases

4

9 RNs

Contract with home health agency for site visits

Identifies cases; compares costs

None

5

2 RNs

By telephone

Develop care plan; negotiate for services

Staff meetings and case conferences with MD advisers

6

258 nurse coordinators; 25 supervisors; 5 regional supervisors

RNs make site visits, work out of 130 local offices

Develop care plan; can negotiate for services

Supervisor evaluates RNs; regional supervisors evaluate random sample of cases; clients audit cases

(Table continued on next page)

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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(Table continued from previous page)

Site

Staffing

Patient Contact

Authority

Monitoring

7

8 RNs

1 initial visit; 1 follow-up visit 2-3 months after case terminated

Identify cases; negotiate for services

Monthly reports on cases

8

Physicians; 1 director

Contact with patients if care (home health) is planned for longer than 1 wk

Negotiates with provider for early discharge

None

9

10 RNs; 5 discharge planners; 1 supervisor

Site visits; provide services

May negotiate for alternative services

Med dir monitors all cases

10

None

None

None

None

11

7 RNs who do CM part-time; consider physician as case manager

None

RNs negotiate with MDs and hospital discharge planner for alternative services

Med dir oversees

12

1 coordinator who does CM part-time

Site visits; provide services

Puts together teams for each case; team develops care plan; provides care

Med dir oversees

NOTE: Abbreviations are as follows: RN, registered nurse; MD, Physician; meal dir, medical director; CM, case management

Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Suggested Citation:"Appendix E - Summaries of Committee Site Visits to Utilization Management Organizations." Institute of Medicine. 1989. Controlling Costs and Changing Patient Care?: The Role of Utilization Management. Washington, DC: The National Academies Press. doi: 10.17226/1359.
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Next: Appendix F - Analysis of Agreements Between Utilization Management Organizations and Their Clients »
Controlling Costs and Changing Patient Care?: The Role of Utilization Management Get This Book
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Utilization management (UM) has become a strong trend in health care cost containment. Under UM, some decisions are not strictly made by the doctor and patient alone. Instead, they are now checked by a reviewer reporting to an employer or other paying party who asks whether or not the proposed type or location of care is medically necessary or appropriate.

This book presents current findings about how UM is faring in practice and how it compares with other cost containment approaches, with recommendations for improving UM program administration and clinical protocols and for conducting further research.

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