Managed Care Cost Reduction Strategies

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A Methodology Review

By Staff Writers

There are many methods that payers use to control healthcare costs – from the perspective of the practicing physician – as some are reviewed below:

Cost Control Types:

Utilization Review [UR] refers to all the ways a managed care organization or HMO attempts to assure contracted physicians use available resources in the most cost-effective ways, either through prospective, concurrent or retrospective means.

Pre-Certification [PC] is a form of prospective review, while discharge planning and case management are a form of on-site and remote case management, respectively.

All are examined in light of medical guidelines and medical standards.  

Guidelines are interventions or treatments where the outcome of therapy is considered certain, or occurs more than 80 percent of the time. Guidelines are used for the more mundane, ordinary or usual medical problems.  

Standards are interventions or treatments where the outcome of care is considered uncertain, and a favorable outcome occurs less than 20 percent of the time.

Concurrent Case Management [CCM] was specifically developed as a response to soaring medical costs since it is been estimated that one percent of the American population is responsible for 30 percent of all medical costs, and five percent is responsible for half of all costs. Some claim that case managers save between $3-7 for every dollar spent and can reduce an HMO plan’s overall costs, by one to four percent.  

Retrospective Utilization Review [RUR] consists of peer and patterns review to purge physician outliers from the system through a form of economic credentialing.

Claims Review [CR] scrutinizes medical claims for improprieties, overcharges, surcharges or mistakes. For example, individual instances of the following medical services and billing practices are not “prima facie” evidence of over utilization. Reviewed in a larger context however, they may be indicative of an abusive pattern or trend that has developed or may be evolving, like these: 

  • Bill Fragmentation: Concurrent billing for services on separate forms, or at different times, or for services considered an integral portion of the primary service or procedure (“split fee billing”).
  • Claimant Billing: Claimant payment for services normally disallowed, reduced or denied.
  • Common Referral: Excessive patient referral among similar providers, for unnecessary diagnostic tests.
  • Cross Billing: Bill submissions to different payers which would normally be reduced.
  • Double Billing: Duplicate bill submission to enhance payment.
  • Missed Modifiers: Excluding code modifiers to upgrade payment.
  • Non-Disclosure: Referral in the face of financial interest.
  • Non-Rendered Services: Billing for services not rendered or required at the level required.
  • Over-Billing: Exorbitant billing beyond UCR to third party payers.
  • Over-Itemization: Claims submission for services normally considered an integral part of the primary service (“fragmentation” or “unbundling”).
  • Over-Prescribing: Prescription of services in excess of those not considered medically necessary.
  • Over-Utilization: Performance of medically unnecessary services.
  • Substandard Care: Care or services not meeting acceptable or professional national standards.
  • Unnecessary Follow-up: Prolonged care without medical need.
  • Upcoding: Billing for services at a level greater than provided.

When faced with the above, further physician review and/or discussion with the provider/plan may be required for the amelioration of any disputes.  

What has been your experience with the dispute resolution process – friend or foe?

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2 Responses

  1. MedPAC Advisory

    Did you know that CMS has taken an interest in the Medicare Payment Advisory Commission’s recommendation to increase payments to primary care physicians and may address the issue in future rulemaking?

    It’s true! According to Modern Physician, CMS Deputy Administrator Herb Kuhn told the House Small Business Committee that MedPAC recommended Congress establish a budget-neutral adjustment to increase payments for doctors who provide primary care services. If MedPAC’s suggestion is addressed, it is likely to appear in the CMS’ proposed rule on the 2009 physician fee schedule.

    Any more thoughts on the subject?


  2. Seeking a Bundled Payment Demonstration Project [Beta]

    Seeking to find the nexus between improving patient outcomes and reducing costs, the Patient Protection and Affordable Care Act requires that the Department of Health and Human Services establish Medicaid bundled-payment demonstration projects for episodes of care that include hospitalizations in 2012.

    The act also calls for the establishment of a national Medicare bundled-payment pilot program in 2013 for acute inpatient hospital services, physician services, outpatient hospital services, and post-acute care services for an episode of care that includes three days prehospitalization and 30 days posthospitalization.,0,5443012.story

    Hope Hetico; RN, MHA
    [Managing Editor]


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