What Are the Challenges? Management of Patient Care

Pharmacy Practice in Focus: OncologyDecember 2013
Volume 1
Issue 3

Online tools are shaping the ways in which utilization management is deployed.

Online tools are shaping the ways in which utilization management is deployed.

Online utilization management (UM) has been part of pharmacy claims processing for nearly 3 decades. Its goal is to focus on the cost-effective use of therapeutically effective health care resources.

It has traditionally been the realm of payers seeking to reign in costs associated with expensive and, from their analysis of data, medically unnecessary or unproven therapies.

Traditional UM services include preferred drug lists, quantity limits, step therapy, and, chief among them, prior authorization (PA). While the claims submission process is relatively uniform, exception handling and PA submissions can be expensive to a health care ecosystem with high volumes of UM activity—upward of $20 per denial for payers alone and $40 per denial when you include provider and administrative costs.1 For average denial rates of 5%,2 PA programs may cost payers alone upward of $400 and incur total costs upward of $800. For this reason, PA programs have typically been reserved for the most expensive or non-conformant therapies.

Consider the following factors and how they may influence UM programs over the next 5 to 10 years:

Payment reform­—The long-established model of paying providers fees for episodic services is beginning to wane against a variety of models of paying providers based on performance, outcome, and value. In most of these models, some form of risk is being transferred to the health care provider, often with some financial incentive to keep costs down, but also to maintain or improve quality of care simultaneously. This transition is beginning to influence how utilization management is deployed.

Cost transparency—With a wealth of data at their disposal, a mandate to drive down costs, and an expectation that a more open “market” will encourage more efficient choices, payers are beginning to publish information about the comparative cost and quality of competing health care providers and services in the community. They are making this information available to their members and network providers, and making it actionable through accountable care contracts with the providers they deem to be the highest value performers.

IT reform—The Affordable Care Act, particularly its HITECH provisions, establishes staged incentives to encourage providers to adopt electronic health record (EHR) technology built on standards intended to facilitate the capturing and sharing of patient clinical information.

The Stage 1 and 2 incentives emphasized carrots over sticks, and the Stage 1 and 2 standards for meaningful use of EHRs emphasized simple adoption over information sharing. Beyond 2013 and beyond Stage 2, incentives and meaningful use criteria will increasingly focus on clinical information sharing.

Other federal programs have established the health care networking standards and infrastructure to allow these various EHRs to begin to connect and share information with one another.

Bringing Payers and Providers Together

These disruptions are working to bring payers and providers together and to give each greater insight into and influence over UM and clinical management (CM):

Providers as partners in UM—Providers are joining payers as drivers of utilization management, guiding patients to high-value services and resources and educating patients about their choices as health care consumers.

  • Providers have an increasing stake in utilization management by virtue of changing payment models.
  • Providers will be able to make better value-based decisions by virtue of greater cost and quality transparency, compliments of government and commercial payers.
  • Providers will also have an increasing ability and responsibility for clinical management of all of their patients, not just the sickest few, as more clinical information is routinely captured and shared among all of a patient’s providers.

More CM-based UM rules and tools—Expect payer-mandated UM rules and tools to become more numerous, more dynamic, more automated, and more clinically sophisticated and nuanced.

  • Payers will make UM rules and tools accessible online through web-based applications that displace today’s phone- and fax-based processes. For example, North Carolina (NC) Medicaid has implemented 3 such applications to date—the A+KIDS registry to monitor safe use of atypical antipsychotics with children, the BRANDS registry to document the medical necessity of prescribing a brand drug when generic equivalents are available, and the Synagis PA system that automates the process for requesting Synagis and authorizing individual doses for approved requests.
  • Fewer UM decisions will require manual intervention, as these online UM tools implement more sophisticated clinical rules and leverage richer clinical data about the individual. This will tend to drive down a payer’s administrative cost of UM and encourage its application to a wider scope of therapies. As an example, during the 2011-2012 flu season, NC Medicaid’s Synagis PA system processed 87% of the approved requests automatically; only 13% of the approved requests required manual review.3

​Online automated UM leads to immediate decisions, allowing therapies to start without delay. For example, NC Medicaid’s Synagis PA system decreased time to coverage for the requests that flowed through as automated approvals from 3.4 days to zero.3

Online automated UM tools can also expedite the manual review process. NC Medicaid’s Synagis PA system decreased the time to coverage for the requests requiring medical review from 18.4 days to 11.4 days.3

  • Online automated UM tools can drive compliance. The same tool that approves a particular therapy can also provide guidelines, reminders, and alerts to help providers help their patients comply with the approved therapy. The NC Medicaid A+KIDS registry and Synagis PA systems send reminders to providers to help them avoid lapses in drug therapy.

Of course, there are many challenges that accompany these changes, many coming to rest with providers, including:

More information to consider—More data can mean additional time spent considering which sources can be trusted, which data are actionable information, and which can be ignored. Systems that enable actionable information to be presented in context will become increasingly valuable.

More information to report—Reporting requirements will continue to increase, as information produced during the care of patients will be expected to be collected, shared, and reported in different ways to different entities.

More rules and tools to manage—A growing set of UM rules and tools from different payers, or different payer—provider networks, can be increasingly difficult to manage.

More IT expense— Providers’ bottom lines are already squeezed by unexpected IT expenses, and these changes involve more IT, not less. Realizing new value through improvements in work flow automation and outcomes will be critical to offsetting these investments.

More revenue risk—Providers’ reimbursements will increasingly be tied to the health outcomes of the overall population they and other providers treat, and their success with clinical management and utilization management will determine a growing portion of their revenues and profitability.

Greg Moyer is vice president of product management with Infina Connect, a health care information technology firm in Cary, North Carolina, which has partnered with Access Care, Community Care of North Carolina, and North Carolina Medicaid to develop and support the A+KIDS, BRANDS, and Synagis applications mentioned in this article.


  • Krieger L. Prescription for prior authorizations: a better way. PolicyMatters Journal Online. www.policymattersjournal.org/krieger.html. Published Spring 2011.
  • LaPensee KT. Analysis of a prescription drug prior authorization program in a Medicaid health maintenance organization. J Managed Care Pharm. 2003;9(1):36-44.
  • Lundeen K, Pfeiffenberger T, Jacobson Vann J, et al. Evaluation of a novel web-based prior approval application for palivizumab prophylaxis of respiratory syncytial virus in a state Medicaid program. J Managed Care Pharm. 2013;19(2):115-124.

Related Videos
Practice Pearl #1 Active Surveillance vs Treatment in Patients with NETs
© 2024 MJH Life Sciences

All rights reserved.