Vol. 1. No. 2

Taking Stock of Your Medical Management Tools

"What are we doing to manage our medical costs?" cries the CEO. How ready are you to answer that question? As the Medical Director or the Health Services Administrator, it is imperative that you understand each factor that contributes to the financial health (or distress) of your organization, and know what questions to ask about each. The following describes programs universally found in any entity that is taking on financial risk, whether it is an HMO, MCO, health plan, medical group, PHO or IPA, and suggests certain lines of inquiry about their effectiveness.

Network Development

MCOs are comprised of networks of physicians who provide medical care for their members, usually under contracted arrangements rather than through employment. However structured, these employment or network contracts must be aligned with the MCO's medical management programs to ensure financial success.

Questions:

Is physician compensation aligned with your utilization review programs? If physicians are capitated, do they submit encounter data so you can determine whether capitation payments are adequate or excessive, whether they are over-treating or, just as important, under-treating? Is the data from encounter forms analyzed and the information used to modify utilization programs and physician prices? Are you paying physicians outside your contracted network? If so, does this suggest that you need to change your provider network -- that you may have too few physicians, or they are not accessible (i.e., long waiting times for appointments or geographically), or your members are not satisfied with their care? Do your contracts bind your physicians to accept new members and participate in new, soon-to-be-required products, such as Medicare Risk or Medicaid Managed Care?

Care Management

Financial success is achieved by managing the care of members so that the cost is no greater than the budgeted amount of premium payments -- a simple financial

principle. The key to successful performance is nurse care managers. MCOs have employed care managers for many years to manage members with high-cost, complex conditions. Their role is critical in serving Medicare members -- a population which has lived over 60 years with a variety of illnesses, injuries and disabilities that impact upon their health status, present and future. Nurse care managers identify the "at-risk" members, develop care plans, coordinate the care with multiple physicians, hospitals, home care and other providers, providing the linkage between the patient, family, medical and social realities and requirements and resources.

Questions:

Is there a program in place to stratify members, either by past utilization of medical services or by a formal questionnaire (i.e., health risk appraisal) designed to identify members who are at risk for hospitalization or other high-cost services? Do you have proper data mining through computerized programs to identify potentially high-cost members from the claims history, and to compare the costs and outcomes of alternative treatment modalities? Do the questionnaires successfully identify new members for care management? This historic and baseline information, not only medical but social as well, can be predictive of future medical care needs and the preventive measures (such as updating immunizations and identifying environmental, social or medical factors with the potential to complicate illnesses) that can improve and/or maintain their health status. Do the programs have adequate staffing ratios? Is there data to support their effectiveness? Are appropriate policies and procedures in place to withstand scrutiny by accrediting and regulatory agencies? Do. your computerized case-tracking system support the program, and is it robust enough to maintain or increase the efficiency of the nurse care managers using it? Is it linked into the MCO's overall information system to produce cost and outcome information?

Disease Management Programs

Disease management programs identify, monitor, and manage patients with chronic illnesses such as asthma, diabetes and congestive heart failure. These programs, typically under the direction of nurse care managers and specialists, track high-risk patients, review medications for interactions and effectiveness, facilitate appointments with physicians and other professionals, all of whom have demonstrated the most cost-effective out-comes, and coordinate/arrange for non-acute care in whatever settings are most appropriate. Many are capitated to assume financial risk for caring for this population.

Questions:

Is the full spectrum of disease management programs in place and designed for the care of the specific population enrolled by the MCO? Are the programs supported by the primary care physicians and specialists participating in this MCO? Did they help to develop it, monitor and evaluate outcomes? Are incentives consistent with overall MCO medical management and financial objectives?

Pre-authorization

Hospital admissions, specialty referrals and certain high-cost ambulatory procedures often require review by the MCO's clinical staff. Once approved, the information is entered into the computerized claims payment system that authorizes reimbursement to the service providers. Pre-authorization is the symbol of what many physicians and patients detest about managed care -- it is often characterized as "1-800-ask-permission from an out-of-state clerk who is trained to say NO."

Questions:

Is the pre-authorization system based upon clinical protocols reflective of clinical standards of practice, supported by outcomes data, under the direction of competent physicians? Does the claims system pay only for pre-authorized services? Is there data supporting the cost and clinical effectiveness of pre-authorization procedures? Or would the MCO be better served through provider capitation, creating a "gold card" system that exempts physicians with appropriate utilization performance from pre-authorization requirements, or with a "paperless" system that examines physician behavior retrospectively?

Conclusion

These questions are by no means exhaustive. They only scratch the surface of the evaluation processes necessary to ensure the MCO's financial health and the clinical health of your patients. Many more areas need examination and questioning. The chief medical officer and medical directors must take leadership in evaluating medical management programs at least annually and ensure that the information is available routinely to support decision-making that can stand the scrutiny of peer review and the press. Don't wait! Assess and evaluate now. Prevention is always the least costly method to assure a "clean bill of health." Identifying this need, SMG has created its unique MCORE (Managed Care Operations and Revenue Enhancement) three-day evaluation program to specifically provide you with the answers to these and other critical questions. MCORE's assessment and evaluation provides solutions, the prescription and plan of treatment for good clinical and financial health. To find out more, call us at 617-969-7500 or email us at insider@scheur.com.