UR: from cost cutting to managing care - utilization review is becoming utilization management - includes related article on trends followed

Business & Health, Sept, 1993

Seeking the most appropriate care for patient and payer, utilization review is becoming utilization management.

Employers are asking utilization review vendors to shift away from simply cutting costs and toward focusing on delivering the best and most appropriate health care, say employers and UR vendors.

This shift has been occasioned in part by the realization, employers and UR vendors say, that the best quality care is often the most cost effective and the most appropriate from the patient's and the payer's perspective. In addition, payers and UR vendors have seen over the last few years that simply second-guessing primary care doctors' decisions is cumbersome and costly. Such second-guessing has not helped to improve the quality of care, the say.

Moreover, lawsuits against UR firms and managed care organizations for denial of care have forced UR firms to be more willing to negotiate with primary care doctors rather than deny care that is not covered under a patient's plan.

"Like other employers, Mobil is looking to find the middle ground between effective cost containment and ensuring quality and appropriate care," says Dennis Derr, the manager in Princeton, N.J., of employee assistance programs for Mobil Corp., based in Fairfax, Va. "We realize you can simply deny people care, but they are going to come back into the system somewhere. And when they do, the services that they will require will be more costly."

Emphasizing the point, James Oher, health care manager of benefits and a consultant at Texaco Inc., in White Plains, N.Y., says employers are asking UR vendors to spend less time seeking cost savings and more time making decisions based on delivering the best health care that is also the most cost effective. "Getting UR to shift gears can be difficult, however," he says. The difficulty arises because some employers "want UR to stand sentry over their employee benefits plan, but they find it difficult to get a UR nurse to understand that he or she doesn't need to rule against all requests for health care services," says Oher.

Comments Derr, "Employers are realizing that they have been pennywise and pound foolish."

UR firms have reached similar conclusions. Says Alfred Lewis, president, Peer Review Analysis (PRA), a UR firm, in Boston. "This used to be a business of yes or no. You used to be able to decide easy cases in eight to 10 minutes, but not anymore."

The effect of litigation

Using physician specialists dealing with primary care doctors, PRA has seen the number of cases involving negotiations--rather than simple yes or no decisions--rise to 19.8% of its total cases, Lewis says. "That's far higher than it was several years ago."

Since denial of care has led patients to sue UR vendors and managed care organizations, self-insured employers are more conscious of the dangers in simply denying care. In addition, employers recognize that as they become more involved in the design, implementation, and operation of their managed care plans, their risk of liability also increases. Two cases, Corcoran v. United Health Care and Wickline v. State of California, involved denials of health services to benefit plan recipients. (See "On ERISA protection, employers beware," June.)

"Lawsuits are surfacing based on the proposition that UR firms are practicing medicine without a license," says Elgin Kennedy, M.D., a diplomat for the American Board of Quality Assurance and Utilization Review Physicians, in Tampa, a certification organization. Exacerbating the situation, physicians in some UR firms routinely do not oversee denials of care, leaving a patient's attending physician, in some cases, to discuss casework with a UR agent who probably lacks the training and experience of the attending physician, Elgin says. To be sure, most UR firms have doctors discuss denials with primary care physicians. In fact, the Utilization Review Accreditation Commission (URAC), a nonprofit corporation in Washington, requires such consults on denials.

"There is far more recognition among our customers of the potential for litigation," comments Lewis. "If you think a case is going to end up in court, you go out of your way to get a litigation-resistant audit trial." At PRA, employers, other UR firms, and managed care organizations seeking such litigation-resistance have increased the number of cases involving negotiations, says Lewis. "If you have any question, then you use an outside appeal panel or individual to create an objective audit trail, an audit trail that includes an independent appeals adjudication."

In general, UR firms that have used physicians and physician specialists when making denials have had some litigation protection, says Dorothy Dugger, M.D., chief medical officer and senior vice president for Intracorp, a UR and health care manager, in Berwyn, Pa. As a UR firm, Intracorp has always focused on delivering quality care and thus has not changed hot it does business, she says. "There's no dichotomy between costs savings and quality," she says. "In fact, the best quality is sometimes the most cost effective.