Utilization Management in the COVID-19 Era
By Robert Hall, JD, MPAff
Picture this: In May, a patient in New York develops COVID-19.
Luckily, their body’s response of a hacking cough, spiking fevers, and wracking pain recede after a three-week hospital stay. Their stay in the hospital results in a slight loss of function, and they are told by their care team that physical therapy can help them make a full recovery. While still in the hospital, the patient is assigned to a physical therapist who develops a care plan after an initial visit. The insurer states that the patient must seek prior authorization for future visits.
In another example, the patient, a weekend warrior triathlete, has been seeing a Florida physical therapist regularly for back pain but comes down with COVID-19 in April. Because they are in better shape, their immune system fights off the virus but they miss a few appointments with their physical therapist as they try and confirm they are not contagious. The physical therapist tries to start up physical therapy visits again – this time via telehealth – but is confronted with a prior authorization request from the insurer.
In the first example, the insurer may have broken the law. In the second example, they probably have not. This is because the New York Department of Financial Services issued Circular Letter No. 8 on March 20 barring utilization management (UM) until June 18, 2020 for group insurance plans. No similar order has been issued in Florida. While New York has been hard-hit by the pandemic, this situation raises the obvious question of why the laws are so different in different parts of the country when a pandemic does not respect state borders. It also challenges the rationale behind UM as a practice during the era of COVID-19.
Other responses to the COVID-19 pandemic also impact UM. The second federal COVID-19 response legislation, known as the Families First Coronavirus Response Act, was signed into law on March 18. Loaded with a slew of hastily-drafted provisions with a price tag of $3.47 billion, the Act included section 6001, which barred group and individual health insurance plans from prior authorizations for COVID-19 testing. Section 6003 does the same thing for Medicare Advantage. But these bans on prior authorizations are limited to testing, and while it seems like a worthy public health goal to make COVID-19 testing as easy as possible to access, treatment — including physical therapy for rehabilitation after a hospital stay — does not enjoy the same protection.
To the consumer, it is deeply troubling that patients who have health insurance and a COVID-19 diagnosis are probably being denied services based on prior authorization and other UM tools across the country. For physical therapists, it may seem strange that UM exists at all, especially because it seems like insurance — which is supposed to make it easier for patients to afford access to the health system — creates this impediment to care and resulting health all the time. So why do we have UM in the United States and what can we do to blunt its impact on patient care?
UM generally refers to activities by which payers manage and reduce health care costs. These tools include precertification, prior authorization, case management, and demand management, which vary in how they involve the consumer or patient. The UM techniques that directly affect consumers’ benefits or create financial incentives to receive or avoid care are also known as contingent coverage, whereby the consumer’s cost of care depends on the health plan’s or provider’s approval. For example, precertification, prior authorization, and continued stay review are protocols set by health plans that judge whether the care is medically necessary, and then determine the patient’s share of the cost. With these utilization management practices, patients’ benefits and both patients’ and providers’ financial liability are largely affected by health plan approval.
What is interesting about the assumptions behind prior authorization and other utilization management techniques is that insurers believe that patients will still access some level of care if they are denied coverage. This is essentially the theory behind patient cost sharing as well — even though patients are already paying a premium for their insurance, they still must have “skin in the game” above and beyond the premium to decrease utilization. In the era of COVID-19, what can be the justification for limiting care to individuals who may be trying to improve their function? The health system should be structured to encourage health, not manage cost by limiting it.
I agree with Dr. Jason Falvey, a post-doctoral fellow at the Yale University School of Medicine. He told Home Health Care News, “Protecting hospital utilization and trying to keep hospital beds free for a surge of patients coming in with COVID-19 related illness is important, and something that I think therapy services in the home can have a really strong impact on.”1 What he is saying attacks the underlying rationale of UM – before they occupy a hospital bed, Americans need to get healthier and to do that they can benefit from access to physical therapists. Insurance and the health system should be preventing stresses to acute care settings by improving health prior to the need to access them. Physical therapy strengthens patients and insurers should not be using UM to discourage access to physical therapists as the health system continues to be stressed by the pandemic. The patient recovering in New York and the weekend warrior in Florida both deserve access to physical therapy to keep them healthy. Throwing impediments to access the care that physical therapists provide is counter-productive in this era of infection.
1Famakinwa J. Dropping Therapy Utilization May Leave Seniors at Risk During COVID-19 Crisis. Home Health Care News website. https://homehealthcarenews.com/2020/03/dropping-therapy-utilization-may-leave-seniors-at-risk-during-covid-19-crisis/. Published March 25, 2020. Accessed May 11, 2020.
Resources on Utilization Management
- PPS “The Value of Physical Therapy” www.ppsimpact.org/the-value-of-physical-therapy
- APTA Utilization Management Toolkit www.apta.org/UMToolkit
- APTA Third-Party Administrators (TPA): Utilization Management & Utilization Review www.apta.org/Payment/PrivateInsurance/TPAUtilizationMgmtReview
Robert Hall, JD, MPAff, is a senior consultant for PPS working to advocate with private payers. He may be reached at email@example.com.