Utilization Management: What Patients Need to Know
What is Utilization Management?
One of the major themes dominating health care discussions today is the fact that healthcare costs in the United States are proving unsustainable. In 2016, the U.S. spent $3.35 trillion, or approximately 18 percent of gross domestic product, on health care (Centers for Medicare & Medicaid Services, 2018). Hospital care alone accounts for 33% of these costs, while clinical and physician services make up another 20% and retail prescription drugs account for an additional 10% of costs (Centers for Medicare & Medicaid Services, 2018). Concerns are particularly heightened in the field of cancer where costs have nearly doubled over the last decade (Journal of Cancer Policy, 2014). The costs of cancer care are rising more quickly than costs of health care in other medical sectors and account for five percent of total U.S. health care spending (Journal of Oncology Practice, 2017). From the Cancer Support Community (CSC) perspective, we are particularly concerned about rising copayments, co-insurance, premiums, deductibles, and other out-of-pocket costs facing cancer patients and their loved ones.
Practices known as “utilization management” (UM) are one of the major ways the high cost of health care has been addressed. While there is no uniform definition of UM, the Institute of Medicine (IOM) recognizes UM as “...a set of techniques used by or on behalf of purchasers of health benefits to manage health care costs by influencing patient care decision-making through case-by-case assessments of the appropriateness of care...” In other words, methods used to reduce or contain health care costs. Those using these methods include insurance companies funding health care, insurance companies providing administrative services for employer funded health care plans, Medicare, Medicaid, Veterans Administration, and TRICARE.
These UM techniques take several different forms, all aimed at improving care and reducing and controlling costs across the health care system including drugs, imaging, etc. When implemented appropriately, they can enhance the patient experience—leading to cost-effective, seamless care. However, they also can negatively impact patient access to care as well as contribute to provider burden.
While this seem be both concerning and complicated, the Cancer Policy Institute (CPI) at the CSC will be releasing a series of blogs aimed at educating patients about the different UM practices and techniques listed below. The upcoming blogs will contain information that patients need to know, including how that particular technique impacts access to care, as well as advocacy opportunities to address those barriers to care.
In these upcoming blogs, we will explore:
- Prior Authorization: Prior Authorization is a common UM tool where a physician must obtain approval from a patient’s health insurer before a specific drug, procedure, service, or device will be covered by the health insurance plan. In a recent CSC report, “Access to Care in Cancer 2016: Barriers and Challenges”, which surveyed approximately 800 people about prior authorization, we found that nearly half of respondents reported that they were told the treatment prescribed to them would require prior authorization. This can lead to high wait times patients in delays to optimal drug access and treatment abandonment. Physicians are also seeing that prior authorizations for medical services, like MRIs, CT scans, PET scans, and home infusion therapy, are on the rise (American Medical Association, 2018), and the Kaiser Family Foundation found that nearly four out of five Medicare Advantage enrollees are in plans that require prior authorization for some services, such as inpatient hospital stays, skilled nursing facility stays, and durable medical equipment.
- Step Therapy: Step therapy, also referred to as “Fail First or “Try and Fail” is a policy where a patient is required to try an alternative medicine to the one that the doctor prescribes. Only if that less expensive medication doesn’t work well (not respond, experience complications, etc.) will the insurance company cover the originally prescribed drug. When step therapy policies are put in place, patients may have to start taking a therapy that is different than what their doctor originally prescribed. This can cause delays in treatment, increased distress, and unexpected costs (Cancer Support Community, 2016).
- Coverage with Evidence Development: Coverage with Evidence Development (CED) is an UM tool where health insurers agree to pay for promising new technologies and treatments under the condition that clinical data is collected. The ultimate goal is for CED data to help the federal government decide if a treatment is “reasonable and necessary” and determine how future coverage decisions will be handled (Journal of Oncology Practice, 2007).
- Clinical Pathways: Clinical pathways are standardized treatment protocols developed by payers. They seek to reduce variance in care, and in turn reduce the cost of care (Cancer Support Community, 2016). Most clinical pathways are based on the results of clinical research and are therefore evidence-based treatment recommendations. Clinical pathways include specific treatment details such as the names of medications, appropriate dosing levels, and administration schedules (Journal of Oncology Practice, 2011).
What is the Cancer Support Community Doing?
CSC is committed to fostering conversations that inform and engage all stakeholders in the creation and implementation of patient-centered UM strategies that include the patient perspective and incentivize cost-efficiency through improved patient care and outcomes. The goals of a patient-centered UM model are:
- Effectively reducing out-of-pocket costs for patients
- Efficiently improving patient health and wellbeing
- Adequately reflecting individual patient needs and preferences
- Supporting timely access to appropriate treatments and services
- Improving adherence
CSC is taking a leadership role in this effort through the development of the Forum on Utilization Management which, over the past year, has hosted roundtable discussions—intimate briefings that have provided an opportunity for patient advocacy groups to engage in open and honest discussions with UM industry leaders, with the intent to:
- Foster thoughtful discussions that engages a broad range of healthcare stakeholders and keeps the focus on patients;
- Ask tough and nuanced questions about when various UM approaches are acceptable and when they have the potential to harm patient health outcomes; and
- Identify new ideas and promising practices that optimize care based on evidence-based healthcare.
As CSC continues to foster partnerships on UM, we understand that it is important to provide a clear, transparent picture of reasonable UM strategies that help improve care, balance costs, and contribute to the health and well-being of patients. This is why CSC is developing vital materials to ensure that patients are central to all UM federal and state policy decisions and that we’re using scare resources as effectively as possible. We look forward to sharing these materials with you in the upcoming blogs.
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Centers for Medicare & Medicaid Services. “National Health Expenditure Accounts.” December 2018
Batty, N., Shatzel, J., Wiles, S., Kabalan, M., Sharma, R., Pang, J.,…Wetzler, M. (2014). Deficiencies of methods applied in cost effectiveness analysis of hematological malignancies. Journal of Cancer Policy, 2, 40-44.
American Society of Clinical Oncology. (2017). The state of cancer care in America, 2017: A report by the American Society for Clinical Oncology. Journal of Oncology Practice, 13(4), 256-e392.
Cancer Support Community. (2016). Access to care in cancer 2016: Barriers and challenges. Washington, DC: Author.
American Medical Association. “2018 AMA Prior Authorization Physician Survey.” 2018
Kaiser Family Foundation Analysis of CMS Medicare Advantage Enrollment and Benefit Files, 2019.
American Society of Clinical Oncology. (2007). Medicare’s coverage with evidence development: A policy-making tool in evolution. Journal of Oncology Practice, (3)6, 296-301
Gesme DH, Wiseman M. Strategic use of clinical pathway. J Oncol Prac. 2011;7(1):54-56.