Evolve from Restrictive to Supportive Medical Management, or Die

I am continually amazed by how many health plans in Medicare Advantage (MA) and Medicaid still cling to restrictive, “Dr. No”’90’s-style managed care practices like pre-authorizations, referrals, and concurrent review. With massive policy changes looming in Medicaid, and the influence of Star Ratings in MA greater than ever, health plans may soon have a gun to their heads: evolve medical management from restrictive to supportive, or die.

No function in a health plan suffers more from “that’s how we’ve always done it” than medical management. Restrictive practices continue to have solid support from medical directors and actuaries alike. Even in the face of compelling new research showing these practices don’t work, and knowing they piss off members and providers alike, there’s been precious little evolution in medical management. Our industry is long overdue for an upgrade of the function that dictates 85% of premium dollars and often comprises the biggest headcount in a health plan.

The benchmarking wizards at Sherlock Company recently released a study on medical management functions in two dozen MA plans it has tracked longitudinally for 20 years. It found that while restrictive managed care practices do save money, net of costs, they don’t. That is, the cost of staffing and equipping the function eclipsed the savings generated. It also found, for the first time,  the more a plan spends on medical management, the lower the profit margin is. Sherlock found that plans averaged $11-12 per member per month (PMPM) on medical management expenses, or roughly $1.5% of premium. Above that, medical management expenses dug deeply into profit margins. This would argue the low end of PMPM expense is about right, and plans need to re-task existing personnel and tools to be more person-centered and holistic, improve the value of services provided, and enhance Star Ratings, especially the member experience.

Star Ratings are now dominated by member experience measures, which comprise over half of the rating. A recent Deft Research study found the biggest drag on the member experience is specialist referrals. Narrowing the list of services requiring referrals and pre-authorizations had direct, positive impact on member retention and experience measures.

And there is longstanding and growing evidence a holistic, person-centered approach to medical management is central to successful care of the elderly and disabled. The experience of Kaiser, SCAN Health Plan (CA), Peoples Health (LA), Fallon Community Health Plan (MA), and other longtime stalwarts in MA shows the path to medical management evolution. Medicare beneficiaries need to see their doctors and take prescriptions much more than commercial populations. A winning medical management strategy in MA is “spend more on Part B and Part D to spend less on Part A.” So what are the first steps to evolving medical management?

First, evaluate the function for people, processes, and tools. Do they still support your goals of improving care and the member experience? Start with your utilization management (UM) system. Is it still compliant with MA and Medicaid regulations, and does it promote an efficient function? Having humans handle decisions that can be automated wastes precious staff dollars. At many organizations, a single referral costs the organization around $6-13 per referral for processing – and that’s just the labor cost and doesn’t include licensing, overhead, and cost of mailings. If your organization has thousands of members receiving multiple referrals per year, this is an enormous burden that consumes the savings generated. Make sure your UM software has high auto-approve rate logic that has been soundly tested and the list of services requiring referrals and pre-authorizations is as narrow as possible.

Second, now rethink your staffing model in light of greater automation and less “Dr. No.” Modernization has enabled you to re-task medical management staff to more supportive activities like direct care coordination and interventions. Staff can be re-tasked into interdisciplinary “pods” of nurses, social workers, pharmacists, and service staff on a stratified basis: low-, medium-, and high-risk members, with the most experienced and credentialed staff assigned to high-risk pods. Each pod is paneled to members within their strata, and pods meet daily to assess progress. Policies and procedures and workflows will differ across risk strata, but all must be updated to reflect new responsibilities.

Third, arm your pods with actionable clinical data. A huge industry focus now is on Big Data and billions invested in slick analytics when most health plans already know who their “5 percenters” are who are generating 65% of their medical expense. There is no point to putting an expensive scope on a rifle that shoots blanks. Health plans’ care coordination deficiencies are not so much about optics but much more about execution. Spend those millions on caseworkers and support personnel, and use the data you have more effectively. For instance, most plans do not use the data collected for risk adjustment in medical management, which is where it belongs. All inputs from claims extracts, chart pulls, and especially home visits should be immediately posted to medical management and for distribution to primary care providers (PCPs).

Fourth, get out there! The most effective supportive care management is high-touch and home- and community-based, not telephonic. Clogs on the street, not headsets. Some pods and team members will find they work best from affiliated medical groups or clinics, others (especially medium- to high-risk pods) will be more mobile, often making house calls.

Finally, evaluate, adjust, and excuse the failures that will inevitably occur. There is no losing, only learning, when overhauling a function as integral and complex as medical management.  We’re here to help.




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