The slippery slope of utilization management

“The patient has a severe infection of the hand and is not improving on the current antibiotics,” I explained to the medical director at the insurance company.

“I understand. However, the patient has no elevated white count or fever, and I cannot get it to meet the criteria, so I will have to deny the necessity for the patient to stay in the hospital,” she explained.

I felt my voice rising and my face turning red as I continued, “Well – where is this patient supposed to go then? As a fellow provider – what do you suggest I do?”

I knew this wouldn’t end well, but I couldn’t help but get outraged again. Eventually, the medical director even agreed the patient needed treatment; however, based on the guidelines, she could not approve the hospital stay. I let out a sigh of frustration and hung up the call.

Prior authorization (one part of the utilization management processes) is a widely known frustration among patients and health care providers. At the start of the pandemic, the Centers for Medicare & Medicaid Services (CMS) provided hospitals with several waivers to help them focus on direct patient care. Understanding that these processes were a hindrance to patient care. In the face of crisis, there was the recognition to remove administrative obstacles and allow hospitals to care for a community in need.

Inherently this puts into question the necessity of such processes. There has been a clear demonstration of the rise of administrative costs contributing to the overall cost of care in the U.S. When we increase regulations, the administrative burden increases. Is this increase justified? Has utilization management processes had the intended impact to justify the means?

The utilization management process largely came into play after the creation of CMS in the 1960s. During this time, health care costs were rising under the fee-for-service model. There was already a need to combat unnecessary testing and services. With the formation of CMS, there would be a massive undertaking by the federal government to provide health insurance to the elderly, poor and disabled. With this large expansion – cost containment was pushed to the forefront. The need was there and now the opportunity aligned with the ability of the federal government to mandate it.

Out of this bore the basis of utilization management (UM). The initial intent was to review the medical necessity of hospital stays, various procedures, and tests. Companies created “guidelines” to determine if medical decisions were made appropriately and if services were utilized correctly. If they were deemed “unnecessary,” the people and places performing them would not be paid.

Before my frustrating conversation with the insurance company’s medical director, these UM processes did occur. A utilization review nurse on both the hospital and insurance side reviewed the patient’s current information against the criteria. The nurses were unable to justify the patient’s medical status based on laboratory values, vital signs, or imaging results. What these guidelines often fail to factor in is scenario-specific information. This patient had a severe infection of his hand, which necessitated us to treat him differently. If he didn’t improve, he could lose function in his hands, and his life would suffer greatly. While practicing medicine, there is always an element of judgment required that is hard for software to account for.

Under our current payor model, UM processes are a necessity. We need them for payors to understand the care being given by health care providers. Guidelines are a necessity as well. They aid in reducing unnecessary care and spending. There is good necessary work here. But what I fear is that, in allowing and adhering to these guidelines and processes, we have also opened ourselves to their abuse of them. Under the guise of utilization, payers can cut reimbursement for essential care. UM has become a wall for payors to hide behind without providing any room for clinical reasoning or flexibility.

Earlier this year, the DOJ filed a federal suit to stop the acquisition of UnitedHealth Group (one of the largest private insurers in the nation) of Change Healthcare. Change Healthcare maintains InterQual Criteria, one of the largest guidelines set for inpatient medical care. These guidelines are often cited as the reasoning behind the denial of payment or prior authorization. Now the largest private insurer would own these products and possibly be able to further impact outcomes to their benefit.

Commenting on the lawsuit, Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division stated, “The proposed transaction threatens an inflection point in the health care industry by giving United control of a critical data highway through which about half of all Americans’ health insurance claims pass each year.” He says, “Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to vital health care technology innovations. The department’s lawsuit makes clear that we will not hesitate to challenge transactions that harm competition by placing so much control of data and innovation in the hands of a single firm.”

I shudder to think what my earlier conversation with the medical director will look like now.