We are in San Francisco this week at the America’s Health Insurance Plans (AHIP) Conference. This is a great event, and there are a lot of conversations going on among conference attendees. One hot topic from our AHIP Trend Watch post is the pressure health insurers are under with regards to Utilization Management.
Utilization Management is generally defined as reimbursement restrictions from a health insurer for a medical service. Utilization management takes three basic forms: 1) prospective or pre-authorization of service, 2) concurrent review, and 3) retrospective review after the service has been rendered.
Utilization management is often viewed as a form of non-price rationing taking the operational form of a denied claim or ‘redirected’ service. Utilization Management within healthcare insurers is under pressure from four fronts:
- Shifting focus towards healthcare consumerism: People want to shop for their choice of healthcare provider services, thus challenging preauthorization processes
- Healthcare insurers working to reduce administrative costs to meet government regulatory pressures: This makes it important to find an easy way to manage provider service contracts
- Pressing need to modernize legacy IT systems: This includes implementing more flexible service oriented architecture to allow for more automated business processes
- Moving away from paper: The shift from paper claims, scanned documents and faxes to electronic claims, email and electronic content management (ECM) systems
Tackling the modernization of legacy IT systems is key to addressing all four sources of pressure. Forward thinking healthcare insurers are “wrapping” those mainframe applications as web services that can be integrated into business process management systems (BPMS). BPMS software allows the flexible management of case creation, clinical review, appeals, audits and communication with the providers. In addition, these more automated business processes can be depicted in easier to use web portal pages that are tailored to the work process of the individual. That same portal can review a case, examine the electronic claims, review documents from the ECM system, and pass cases for approval to managers. Newer BPMS software includes business rules and work routing that can escalate cases and, in some instances, provide the health plan member with immediate feedback.
Instead of viewing the rise of healthcare consumerism as a challenge to utilization management, there is an opportunity for a healthcare insurer to gain competitive advantage. By automating Utilization Management groups, the health plan could offer concierge service to help their members select not only a provider within the plan, but one that really satisfies their health goals. By coordinating members into chronic condition management programs or wellness programs, the goal of reducing costs and utilization will be much easier. Integrating information into automated workflows will speed up responses to members, thus increasing member satisfaction, too.
Finally, adopting business processing management software will yield greater business flexibility. One of the positive side effects of modeling business processes is that all of the steps that utilization management must do today become visible, thus allowing the analysis of where redundant steps are taken or shortcuts are available. The pressures to reduce costs and allow healthcare consumers more freedom can be the impetus for taking a fresh approach to traditional utilization management processes. Don’t let your competitors get there before your organization does!
