Impact of a Pandemic

Impact of a Pandemic

Introduction

To enable the deployment of medical providers during the COVID-19 Pandemic, BlueCross / BlueShield of North Carolina announced they would process credential requests for providers with temporary licenses within three days (CAROLINA, 2020).  Recently, due to the COVID-19 Pandemic, the American College of Obstetrician and Gynecologists encouraged its membership to provide preventative services via telehealth platforms (BHATLA; SINGHAL, 2020).  Humana announced that it has “simplified and expedited” the processing of claims and reimbursement payments during the COVID-19 Pandemic (MORSE, 2020).  While pandemic relief grants have appropriated more than $100b towards securing the financial future of the USHCs’ hospitals, a large “chunk” of those funds were diverted to developing, negotiating, credentialing, and paying large complex provider networks never considered (ABRAMS, 2020).  

Each of these examples represents a transformational change within the Managed Care industry.  With the continuation of the COVID-19 Pandemic, industry organizations are rushing to adopt new treatment protocols, new standards of care, new ways of recruiting resources and created new challenges in maintaining financial health (ANOUSHIRAVANI; O’CONNOR; DICAPRIO; IORIO, 2020).  

As the Managed Care industry continues to adapt to the COVID-19 Pandemic, it must attack the administrative burdens hindering patient care.  Administrative burdens are requiring immediate attention; medical governance (e.g., prior authorizations, claims reviews), expanding and re-orienting healthcare resources (e.g., allocation of facilities, provider credentialing), and leveraging technology to engage broader bases of patients (e.g., telehealth).  This article explores the impact of the COVID-19 Pandemic upon the Managed Care industry and proposes the use of the SHIFT framework as a tool for transforming the Managed Care Industry. 

 

1. Pathway to Transformation 

 

The managed care industry now finds itself at a crossroads.  As evidenced by the foundational changes adopted by CMS, many of the administrative burdens payers and providers experienced and adopted are dramatically changing.  Payment of provider claims, for example, frequently depended on the payers’ ability to review medical records.  The COVID-19 Pandemic has limited the ability for payers to conduct on-site medical records review (STRATEGIES, 2020).  Revisions to the rules governing provider and facility credentialing are changing from a process governed by a mix of State, CMS, and Payer rules to one allowing the flow of healthcare resources across state lines (SERVICES, 2020b).  Recognizing the scale of change evolving within the Managed Care industry, action must take place.  The SHIFT framework (Study, Hypothesize, Inform, Finalize, and Track) is a transformative framework.

Figure 1 – ARC Healthcare SHIFT Transformation Framework

ARC Healthcare’s SHIFT™ implementation requires an understanding of Managed Care Organization functions before the COVID-19 Pandemic, what vulnerabilities have occurred as a result of the Pandemic, and identification of post-pandemic best practices to ensure stability within the healthcare industry.

 

2. Before the COVID-19 Pandemic

 

Administrative burdens existed in the Managed Care industry long before the emergence of the COVID-19 Pandemic.   Studies conducted before the COVID-19 Pandemic found that administrative burdens such as credentialing, contracting, and compliance accounted for more than 30% of healthcare costs.  How is it that the Managed Care Industry was not aggressively tackling these costs?  If one considers the practice of payers conducting medical reviews, requiring prior authorizations, and sometimes questioning a physician’s treatment plan, for example, it is possible to understand how administrative burdens became embed within standard operating procedures.  Prior authorization requests require that providers or facilities (e.g., hospitals) submit a formal request to access certain types of treatments or medications (@SLABODKIN, 2019).  There are many reasons why a payer might request a prior authorization request, but the requests generally relate to cost-cutting strategies (@SLABODKIN, 2019).  

The transformation away from administrative burdens included new approaches to expanding medical provider networks, new approaches to delivering care via telehealth, new approaches to streamlining paperwork, and new approaches to engaging with patients.  As recently as 2019, the United States Senate began work on a bill entitled “Reducing Administrative Costs and Burdens in Health Care Act of 2019” (SMITH, 2019).  This bill, if enacted, would establish a goal of reducing costs and unnecessary administrative burdens across the healthcare system (SMITH, 2019).   

 

3. The COVID-19 Pandemic – A Catalyst for Change

 

Recently, Yale-New Haven hospital had 25 floors dedicated to treating COVID-19 patients (WATERS, 2020).  A stay within Yale or any other COVID-19 treatment center may cost from $20k to $70k (WATERS, 2020).  Costs to treat the uninsured may exceed more than $14b (MENSIK, 2020).  A three-week stay in an ICU may cost upwards of $160k (WATERS, 2020).  The scale and magnitude of potential financial impacts resulting from the COVID-19 Pandemic should light a fire under the need to provide more provider care while reducing the costs of administrative tasks.  

Medical governance, an administrative burden requiring immediate attention, includes activities such as prior authorization requests and medical claims review.  The cost of these activities is substantial; one study determined that the cost for a provider to generate a prior authorization request manually increased from $6.61 in 2018 to $10.92 in 2019 (FINNEGAN, 2020).  While some level of medical governance is necessary, we must find a strategy not just to reduce the cost of medical governance but eliminate it where possible.

Where medical governance includes tasks associated with oversight, the costs and activities associated with expanding and reallocating healthcare resources include credentialing physicians, licensing, and establishing new facilities.  Before the COVID-19 Pandemic, providers, facility operators, and payers navigated a diverse environment where State and Federal regulations hindered the reallocation of resources.

The adaptation of technology into the Managed Care industry has been profound.  Hundreds of millions of dollars have been invested in the implementation and use of Electronic Health Records (EHR).  Telehealth options have increased across most, if not all, medical specialties.  Protocols such as the Fast Healthcare Interoperability Resources have promised new levels of integrated medical care and the ability to share electronic medical records.  Even with State and Federal funds, the costs of these technologies are embedded into administrative burdens and require a new, more managed approach.

Foundations of Change

The Centers for Medicare and Medicaid Services (CMS) have begun to lead the way in identifying and adapting to the changes required to reduce the cost of administrative burdens and increase the quality and access of patient care.  CMS has begun to address the burdens associated with medical governance.  Before the COVID-19 Pandemic, Medicare has strict rules regarding the use of respiratory devices.  Today, CMS has amended the rules on the use of respiratory devices and services so that “Medicare will now cover respiratory-related devices and equipment for any medical reason determined by clinicians” (SERVICES, 2020a).  This revision to the rules surrounding prior authorization of respiratory devices and services is one example of a foundational change that should be considered by the Managed Care industry.

In another significant change, CMS has provided providers with the flexibility to redeploy their resources in manners consistent with State laws but allowing the providers to receive Medicare payments for the new locations or resource deployments without cumbersome paperwork requirements (SERVICES, 2020c).

The use of telehealth to serve more patients has been dramatically expanded under post-COVID-19 Pandemic rule changes.  Recent rule changes have eliminated many of the rules and paperwork associated with telehealth to the point that CMS is waiving limitations on the types of clinical practitioners that can furnish Medicare telehealth services (SERVICES, 2020c).

 

4. Terminology

 

  • Pandemic – A pandemic represents the outbreak of a disease previously not encountered(@CDCGOV, 2020)  
  • Administrative bureaucracy – includes the set of people, processes, and systems that includes administrative healthcare and health insurance works, which play no direct role in providing patient care.  
  • Administrative Burden – Includes the costs and resources expended to adhere to and process tasks not associated with providing healthcare services.
  • Managed Care – A system of health care delivery that influences utilization and cost of services and measures performance.  The goal is a system that delivers value by giving people access to quality, cost-effective health care.
  • Managed Care Plan – one or more products which integrate financing and management with the delivery of health care services to an enrolled population; employ or contract with an organized provider network which delivers services and which (as a network or individual provider) either shares financial risk or has some incentive to deliver quality, cost-effective services; and use an information system capable of monitoring and evaluating patterns of covered persons’ use of medical services and the cost of those services.
  • Payer – a public or private organization that pays for or underwrites coverage for health care expenses.
  • Provider –  A physician, hospital, group practice, nursing home, pharmacy or any individual or group of individuals that provides a health care service.

 

References

 

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