Pr Kongstvedt Chapter 5 Utilization Management Quality Manag

Pr Kongstvedtchapter 5 Utilization Management Quality Managemen

Understand the different approaches to managing wellness and prevention; understand the basic metrics and measures used for cost and utilization in health plans; understand the basic components of utilization management for medical and ancillary services, including prospective, concurrent and retrospective review; understand the basic concepts for disease and case management; understand the basic components of quality management, including structure, process and outcome; understand the purpose and scope of external review and accreditation of managed care plans.

Common utilization and/or cost metrics include Per Member Per Month (PMPM), which refers to the average cost or use spread across all members every month; for example, $30.00 PMPM indicates each member costs the plan $30 monthly on average. Per Member Per Year (PMPY) measures average annual costs or utilization, such as an average of 10 prescriptions filled annually per member.

Inpatient and ambulatory utilization are often tracked using metrics like Bed Days per Thousand (BD/K), Procedures or Admissions per Thousand, and Average Length of Stay. Bed Days per Thousand quantifies the number of occupied beds per 1,000 members over a specified period, typically a year. Calculations involve multiplying the number of bed days by 365 and dividing by the average membership and 1,000. For example, with a census of 300 in a hospital with 500,000 plan members, bed days are calculated by multiplying 300 by 365, then dividing the total bed days by the product of the plan membership and 1,000, deriving a standardized utilization figure.

Similarly, in outpatient settings, metrics such as procedures per thousand help manage and analyze service utilization. Using these metrics provides insight into resource use, capacity planning, and identifying trends in healthcare consumption.

Medical necessity in benefits determinations refers not merely to what members or providers believe is necessary but is based on evidence-based medical guidelines. These guidelines, supported by peer-reviewed research, ensure services are reasonable, necessary, and appropriate. Many exclusions exist, such as services primarily for convenience, more costly alternatives without clear benefit, custodial care, investigational treatments, or care deemed not medically appropriate according to accepted standards of practice.

Utilization Management (UM) encompasses various activities, primarily categorized into prospective, concurrent, and retrospective reviews. Most routine services, like office visits or routine lab tests, typically do not require prior authorization. Conversely, elective inpatient admissions or costly outpatient procedures often necessitate precertification, which must be secured before the service.

Precertification, or prior authorization, is conducted before services are rendered for elective cases. Concurrent review involves ongoing evaluation of inpatient stays exceeding authorized lengths or outpatient therapies such as physical or occupational therapy, ensuring continued medical necessity. Retrospective review evaluates claims post-service to verify coverage and utilization patterns, identifying possible overuse or misuse of services.

Benefit authorizations can be categorized into pre-service, concurrent, and post-service reviews. These reviews help control costs, ensure appropriate utilization, and uphold quality standards. Denials occur when services do not meet medical necessity criteria, while pended authorizations await decision pending further review. Sub-authorization allows specific authorizations to trigger additional approvals, streamlining complex cases.

Disease management and case management strategies aim to coordinate care for complex or chronic conditions, optimizing health outcomes and controlling costs. Disease management involves proactive intervention, patient education, and adherence to clinical guidelines. Case management focuses on individual patient needs, especially high-cost or high-risk cases, facilitating access to appropriate services and ensuring continuity of care.

Managing ancillary services costs, such as pharmacy, involves benefit design features like separate cost sharing, formulary restrictions, tiered drug plans, and utilization controls like drug utilization review (DUR), step therapy, prior authorization, and mail order programs. Use of external pharmacy benefit managers (PBMs), long-term contracts with pharmacy networks, and promotion of generic drugs are common strategies to optimize medication costs and utilization.

Approaches to quality management are rooted in Donabedian’s model, which assesses healthcare quality through three primary domains: structure, process, and outcome. Structure refers to the setting, resources, and infrastructure of healthcare delivery; process involves how care is provided; and outcome measures the results or health status change attributable to care.

The Institute of Medicine (IOM) emphasizes six aims for healthcare quality: safe, effective, patient-centered, timely, efficient, and equitable. Continuous improvement and peer review are integral to maintaining and enhancing quality standards. Accreditation plays a crucial role, with most HMOs and POS plans striving to attain recognition from organizations like NCQA, URAC, or AAAHC, which evaluate compliance with quality standards and performance metrics like HEDIS and CAHPS.

Accreditation efforts ensure plans meet legal and regulatory requirements, foster transparency, and serve as market differentiators. The Centers for Medicare & Medicaid Services (CMS) recognizes accreditation by these bodies for plans offering Medicare Advantage. These accreditation organizations evaluate clinical quality, organizational management, and patient safety, among other standards, reinforcing the quality and accountability of managed care organizations.

Paper For Above instruction

Utilization management and quality assurance are critical components of modern healthcare systems. They serve to optimize resource use, ensure cost-effectiveness, promote high standards of care, and improve patient outcomes. This paper explores the various aspects of utilization and cost measurement, the principles of medical necessity, strategies for managing health services, and the role of accreditation in maintaining healthcare quality.

At the core of healthcare management is the effective measurement of utilization and costs. Metrics such as Per Member Per Month (PMPM) and Per Member Per Year (PMPY) provide valuable insights into average costs and resource use, enabling providers and payers to monitor trends, identify anomalies, and develop targeted interventions. These metrics standardize data across populations, facilitating comparisons and benchmarking, which are essential for financial planning and management.

Inpatient and ambulatory utilization metrics, particularly Bed Days per Thousand (BD/K), are instrumental in capacity planning and resource allocation. Calculating BD/K involves a standardized process, often using a 365-day year to maintain consistency. For example, in a hospital census of 300 with a plan membership of 500,000, bed days are calculated by multiplying the census by 365 and dividing by the total membership scaled by 1,000. This approach reveals utilization patterns and helps identify opportunities for reducing unnecessary stays or enhancing efficiency.

Evidence-based medical guidelines underpin the determination of medical necessity, emphasizing the importance of scientific support and peer-reviewed research. Services deemed necessary must align with these guidelines, excluding interventions primarily driven by convenience, investigational purposes, or non-standard practices. By adhering to evidence-based standards, payers and providers can avoid unnecessary procedures, reduce costs, and ensure optimal patient care.

Utilization management is categorized into prospective, concurrent, and retrospective reviews. Precertification, or prior authorization, is a key element of prospective management, required for elective and high-cost procedures. Concurrent review involves ongoing assessments during inpatient stays or outpatient therapies, ensuring continuous medical necessity. Retrospective review evaluates claims after services have been delivered to verify appropriateness and adherence to coverage policies.

Managing high-cost services necessitates a structured review process that helps in decision-making, cost containment, and quality assurance. Denials might occur if services do not meet medical necessity criteria or if documentation is inadequate. Conversely, pended or pending authorizations indicate cases requiring further review or documentation before approval. Sub-authorization mechanisms facilitate cascading approvals for complex cases, streamlining decision flow and reducing delays.

Disease and case management strategies are integral to improving health outcomes and controlling costs. Disease management emphasizes proactive care, patient education, adherence to clinical guidelines, and early intervention to prevent disease progression. Case management focuses on high-risk individuals with complex needs, coordinating services across providers, ensuring access, and managing high-cost episodes effectively.

Ancillary service costs, especially in pharmacy, are managed through benefit design, formulary restrictions, tiered drug plans, and utilization controls. Strategies such as drug utilization review (DUR), step therapy, prior authorization, and mail-order prescriptions are employed to encourage cost-effective drug use. External pharmacy benefit managers (PBMs) and contracted pharmacy networks further aid in controlling expenditures while maintaining access to essential medicines.

Quality management in healthcare is founded on Donabedian’s model, which evaluates structure, process, and outcome. Structure assesses the environment and resources, process examines the delivery of care, and outcomes measure health results and patient satisfaction. The Institute of Medicine (IOM) expanded these concepts, emphasizing six dimensions of quality—safe, effective, patient-centered, timely, efficient, and equitable—that serve as guiding principles for healthcare improvement initiatives.

Accreditation remains a cornerstone of quality assurance in managed care. Recognized accreditation organizations like NCQA, URAC, and AAAHC evaluate healthcare plans against rigorous standards, including clinical quality performance, organizational management, and patient safety. The HEDIS and CAHPS reporting requirements serve as benchmarks for quality performance, fostering transparency and accountability. Accreditation not only fulfills regulatory mandates but also demonstrates a plan’s commitment to high-quality care, fostering consumer trust and competitive advantage.

In conclusion, utilization management, quality assurance, and accreditation are interconnected elements essential to the integrity and efficiency of healthcare systems. They facilitate the delivery of evidence-based, patient-centered care while simultaneously controlling costs and ensuring regulatory compliance. Ongoing advancements in metrics, guidelines, and accreditation practices will continue to shape the landscape of health plan management, ultimately benefiting patients, providers, and payers alike.

References

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• Institute of Medicine. (2001). Crossing the Quality Chasm: A New Health System for the 21st Century. National Academies Press.
• National Committee for Quality Assurance (NCQA). (2023). HEDIS & CAHPS summaries. Retrieved from https://www.ncqa.org
• Centers for Medicare & Medicaid Services (CMS). (2022). Medicare Advantage accreditation standards. https://www.cms.gov
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