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Employers faced with rising health care costs are exploring various means to control them. One way is prospective utilization review, although this may pose significant legal risks. Another is the capitation form of payment in which an employer contracts with a health care provider either directly or through an employer-sponsored HMO. The authors discuss these alternatives and the implications for employers.
OBJECTIVES: The objectives of this study were 2-fold: (1) to examine the association of pharmacy closures with prescription drug use by Medicaid recipients in Iowa; and (2) to evaluate how drug utilization patterns differ between patients whose pharmacies closed and patients whose pharmacies remained open. DESIGN: A 2-group pretest-posttest study of Medicaid enrollees who may have been affected by pharmacy closures. Prescription medication use during the periods preceding and after pharmacy closures was compared. A comparison group was used to account for extraneous factors. PATIENTS AND METHODS: Sixteen community pharmacies were selected from a pool of pharmacies that closed during 1994; 1092 patients were identified as the main users of these pharmacies, and a comparison group of 3491 patients whose main pharmacies had not closed also was identified. The average number of each patient's prescription claims for the 6 months preceding closing and the 6 months after closing was computed. Multiple regression analysis was conducted to determine whether any association existed between pharmacy closures and the use of prescription drugs. RESULTS: Patients whose pharmacies closed during 1994 had fewer prescription claims after the closings than before the closings. In contrast, patients whose pharmacies remained open had more prescription claims. This difference remains statistically significant after controlling for other factors, such as patient demographics and health status. CONCLUSIONS: A decrease in prescription drug use was associated with pharmacy closures. Attention should be directed to patient access to prescription medications in rural areas, as relatively more pharmacies close in rural areas.
This final rule will create a new process to allow certain Medicare beneficiaries to challenge national coverage determinations (NCDs) and local coverage determinations (LCDs). It will implement portions of section 522 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. The right to challenge NCDs and LCDs will be distinct from the existing appeal rights that Medicare beneficiaries have for the adjudication of Medicare claims.
Integrated delivery systems (IDSs) that enter into risk contracts with payers need sophisticated data analysis and reporting capabilities to ensure proper payment and to manage utilization. An IDS can develop these capabilities by following a six-step process: It should develop an IDS data management structure, obtain all requisite data, review and refine the data, consolidate the data, create a relational database, and develop a reporting structure. The reporting structure should consist of a set of standard reports and the ability to generate additional targeted reports that facilitate analysis of specific aspects of utilization and financial performance.
Focused Psychiatric Review, Aetna's inpatient mental health utilization review program, reduces length of stay and stabilizes admission rates and, as a consequence, reduces expenses, according to the study reported in this article. The program has greater impact on psychiatric than on substance abuse treatments. The best estimate of annual net program savings is $34.90 per covered employee, a return of $12.60 saved for each program dollar spent.
Despite widespread concern about denials of coverage by managed care organizations, little empirical information exists on the profile and outcomes of utilization review decisions. This study examines the outcomes of nearly a half-million coverage requests in two large medical groups that contract with health plans to deliver care and conduct utilization review. We found much higher denial rates than those previously reported. Denials were particularly common for emergency care and durable medical equipment. Retrospective requests were nearly four times more likely than prospective requests were to be denied, and when prospective requests were denied, it was more likely because the service fell outside the scope of covered benefits than because it was not medically necessary.
This is a discussion of the cost-saving measures designed by American corporations to reduce expenditures on employees' health care. These measures include utilization review, cost sharing, alternative delivery systems, outpatient treatment, self-insurance, preventive care programs, and business coalitions. The author concludes that although some cost-containment measures lower corporate expenditures on health, they may be detrimental to the quality of care. At the same time, measures that have clearly beneficial effects on both quality and cost-efficiency are not fully utilized. The study is based on an analysis of available literature on the subject.
The authors have developed a two-tiered method for utilization review of outpatient mental health services. The methodology looks at initial and continued treatment evaluation and uses diagnosis, symptoms, plan of treatment, and the Global Assessment Scale (GAS) among other indicators to determine appropriateness of treatment. Preliminary program experience has been positive and is included.
Medicare's "medically unnecessary" letters are frustrating puzzles to the many Texas physicians who receive them. While the letters question the medical necessity of care, they provide physicians with no basis for understanding and responding to that allegation. Medicare uses computerized screens to review claims, and it is those screens that are primarily responsible for the generation of "medically unnecessary" letters. The accompanying list of Medicare review screens provides a general clarification of what Medicare is looking for in the review process. The word "general" is an important qualification: there is no guarantee that a physician will be able to identify from the list the particular screen that has caused Medicare to request more information about a particular claim. But the list will help the practitioner in understanding what Medicare sees as the boundaries of customary medical practice and, in some instances, will help the physician respond to Medicare's request for additional information. With that broad introduction Texas Medicine presents the following guide to Medicare's claims screening criteria. It was prepared by the Texas Medical Association's Division of Medical Economics based on materials published by Medicare.
This paper examines the performance of a utilization review program using data from Aetna's utilization review (UR) customers compared to a representative sample of its customers which had no utilization review during the study period. Statistical adjustments were made for the utilization management status, employee demographics, plan benefits, group size, year effects and seasonality. The study period covered from the first quarter of 1987 through the last quarter of 1988. The data suggest that UR reduces overall medical expenses by 4.4 percent, and inpatient expenses by 8.1 percent after a year of experience, largely by reducing length of stay.
PURPOSE: This study explored how state managed-care patient protection laws affect health insurers' criteria for medical necessity, using bariatric surgery for weight reduction as a case in point. METHODS: Six states and three national insurers were selected for in-depth case studies to represent a range of market, demographic, and legal conditions. In each state, 10-12 qualitative interviews were conducted in 2002 with insurers, regulators, providers, and healthcare attorneys, for a total of 71 interview subjects. RESULTS: Denials of coverage for bariatric surgery are a frequent source of appeals to external review, and external reviewers frequently overturn these denials. However, few insurers feel pressured to approve most or all requests for coverage because external review decisions do not set binding precedents. Instead, insurers continue to assert their own criteria for medical necessity, relying on the insurance contract's general definition of medical necessity. Some insurers, however, specifically exclude all weight reduction surgery because of the difficulty of defending case-by-case denials on appeal. CONCLUSIONS: Unlike most areas of medicine, in which health insurers have greatly scaled back their past efforts to scrutinize medical necessity, for bariatric surgery, many insurers continue to apply a more stringent standard for medical necessity than the one that independent practicing physicians use.
Concerns among patients and physicians that health plans would deny coverage for medically necessary services has brought about legislation mandating independent medical review (IMR) of denied services. Among 1,400 cases submitted in California, the most common areas for dispute were cancer care, endocrine/metabolic care (especially for obesity), orthopedic care, and neurological disorders. Surgery and pharmacy services constituted 52 percent of cases. In 58 percent of cases, IMR upheld the health plan's decision, while in 33 percent of cases the health plan's decision was overturned, which suggests that external IMR provides additional patient protection in California's health care system.
Mr. Cogan and Mr. Johnson discuss the judicial review provisions of the Medicare Act, codified at 42 U.S.C. section 405(g) and (h), and the Supreme Court cases including Illinois Council that interpret the scope of the "arising under" language. They also examine the history of section 205(h) of the Social Security Act, including the most recent amendment contained in the Deficit Reduction Act of 1984. The relationship between 205(h), DEFRA, and section 405(h) is explored as well as the caselaw addressing and applying section 405(h) in light of Congress' 1984 amendments.
Complaints from patients about dental treatment are on the increase internationally and especially in the USA. The Swedish system for dealing with patients' complaints embraces four different pathways which are described in this paper. One of those is a no-fault-compensation system, which is wholly separate from a procedure under the control of the Swedish licensing authority which deals exclusively with assessing professional negligence. A further, voluntary procedure for dealing with patient complaints is mediated by the Swedish Dental Association and its branches. The paper analyses the type and number of complaints and their assessment under the different procedures.
Medicare will continue to increase its efforts to cut spending through aggressive review of claims and the use of new fraud and abuse regulations. Providers must be especially careful to provide correct procedure codes that define precisely what services have been provided and accurate diagnosis codes that link those procedures or tests to an appropriate diagnosis. Medicare reimbursement rules for clinical laboratory procedures are explained, including the proper use of procedure and diagnosis codes. Coding and payment for new automated test panels are discussed, as well as the economic consequences of using smaller panels. Medicare coverage requirements, including medical necessity, are described, as well as the proper use of advance beneficiary notices and the Medicare appeals process.
BACKGROUND/PURPOSE: Billing and reimbursement for pediatric surgical services is a complicated process that has not been rigorously evaluated. This study evaluates pediatric surgery billing and reimbursement and compares the process between third party payors. METHODS: The authors tracked all noncapitated bills from submission to final payment for all cases performed during 1 month. Data included operation, insurance type, amount billed, and amount collected. If payments were denied, the reasons were ascertained and the appropriateness verified. Chi-square and Student's t tests were used for comparisons. RESULTS: The billing process for all noncapitated pediatric surgical cases during May 2000, was reviewed (n = 136). The majority of bills (79%) were paid outright. Of the rejected bills, 76% were denied inappropriately. Inappropriate denial of payment was most frequent among patients insured by Medicaid. Mean time to complete payment was longest among patients insured by managed care groups. Percent of total charges reimbursed for surgical services was significantly lower for patients insured by Medicaid and Health Maintenance Organizations (HMO). CONCLUSIONS: A significant number of bills for pediatric surgical services are rejected inappropriately. Careful analysis of one's rejected bills can recoup up to 20% of revenue. HMO's and Medicaid are more likely to deny payment inappropriately, take longer to make payments, and reimburse less for pediatric surgical services.
This report is a study of the rates of hospitalization of two similar groups of patients with a diagnosis of medical low back pain resulting from an injury. It is based on a 7-year experience with utilization review. None of the patients had met the minimal criteria for hospitalization described by the "Reference Criteria for Short-Stay Hospital Review" of the American Medical Association (1). One of these two groups was required to undergo a preservice review (precertification) before hospitalization. The other group did not undergo this precertification. This study tests the hypotheses that there is a significant incidence of unnecessary hospitalization of patients with medical low back pain and that precertification does reduce this rate of hospitalization. It also tests the hypothesis that race, age, and gender correlate with this unnecessary hospitalization. Further, it examines the relationship between the precertification process and the time of admission and the length of stay once admitted. The methods used are defined, and the controversy surrounding precertification and unnecessary hospitalization in general, and for low back pain in particular, is described.
OBJECTIVES: A review of dental consultant actions during predetermination of benefits in the publicly insured indemnity program in Manitoba under which Social Allowances Health Services certificate holders receive dental care was undertaken to determine the value of this process as a cost-containment mechanism. METHODS: Dollar amounts of services denied by a dental consultant during eight predetermination sessions selected to represent the 96 sessions during the 1990-91 fiscal year were determined and grouped according to category of service. RESULTS: Approximately one-third of average total expenditures each month were reviewed by the dental consultant through the predetermination process. Of the requested dollar amount reviewed, 26 percent was denied, a savings of 8.5 percent of average total monthly expenditures. The categories of services that made up the denied requests were: prosthodontics (30%); endodontics (32%); restorative (5%); periodontics (12%); and miscellaneous (21%), including diagnostic, surgical, preventive, orthodontic, and adjunctive. CONCLUSIONS: A properly administered predetermination process can save a third party 8.5 percent of total plan expenditures; dollar changes to altered treatment plans amount to a 26 percent reduction of expenditures relating to these requests. A predetermination process with an unbiased appeal mechanism provides a system to advise and protect providers regarding what treatment is covered.