Legislative Program Review and Investigations Committee

Regulation and Oversight of Managed Care
Chapter V - Final Report

Regulation and Oversight of Managed Care
Chapter V  Benefits, Utilization Review, and Protocols
 

While there is a lot of variation in the types of HMOs, there is some similarity in the benefits offered in Connecticut and elsewhere.  As discussed in the earlier briefing report, to qualify for federal funds HMOs had to comply with the standards of the Federal Health Maintenance Organization Act, including offering basic benefits.  The same federal act lists services that HMOs are not required to provide, and those are contained in Table V-1 on the following page.

Although most health maintenance organizations are currently not federally qualified, most benefit packages continue to meet those standard benefits requirements. In fact, Connecticut statutes governing health maintenance organizations require that, at a minimum, HMOs provide the benefits contained in the federal act, and they must also provide most of Connecticut’s statutorily mandated benefits.  The committee reviewed all approved health plan policies on file at the Connecticut Department of Insurance and found that most HMOs also specifically exclude the benefits that are not required. The committee file review found other services commonly excluded are: artificial hearts, transexual surgery; private duty nurse; services required by a third party including insurance, school, camp, employment, and court-ordered treatment; marriage counseling; and expenses related to a learning disability. 

Often providers and consumers complain that certain benefits are not included in an HMO plan.  However, the committee found that, as Table V-1 indicates, many of the benefit exclusions are sanctioned by the Federal Health Maintenance Organization Act that authorized HMOs, and which established the framework under which HMOs operate.

In addition to these basic benefits HMOs= health plans in Connecticut must also offer a number of state-mandated benefits. These benefits are required of all licensed health insurers in the state, although there are minor differences between benefits required of HMOs and of other health insurers.  As explained above, the Insurance Department reviews all health plans to ensure the policies offered include these benefits. Appendix B contains a list of all state-mandated benefits for HMOs and other health insurers.

Once a health plan=s benefits have been approved, the plan may be marketed and sold.  In contrast with health plans offered by regular health insurers, health plans offered by HMOs must provide each enrollee with evidence of coverage.  This proof of coverage must not contain statements that are Aunfair, inequitable, misleading, deceptive or which encourage misrepresentation.@ (C.G.S. ' 38a-182) The proof of coverage must include several provisions in order to comply with statutory requirements.  Those provisions must include: 

C                  the name and address of the health care center (health maintenance organization);

C                  eligibility requirements; 

C                  subscriber responsibility for co-payments, deductibles, and other out-of pocket expenses; 

C                  list of services or benefits covered and period covered, and a detailed statement of services or benefits to be excepted, provided that at a minimum they conform to the federal HMO requirements;

C                  terms and conditions for canceling or terminating the agreement; 

C                  claims procedures; 

C                  procedure for filing a grievance; 

C                  continuation and extension of benefits, and conversion of policy; 

C                  description of service area, and out-of-area benefits and services; 

C                  statement of amounts payable in fees and premiums by the subscriber and others on his/her behalf, and a statement of the payment grace period; 

C                  statement describing any endorsements or attachments included in the agreement; and

C                  a statement that nothing attested to by the subscriber in the application can void the application or be used in any legal proceedings, unless there is a declaration of that as part of the application.

Utilization Review 

Demand for health care grew out of control in the 1980s and early 1990s, and was spurred by two factors.  First, patients want health services -- treatment and new technology -- that might help whatever illness or condition afflicts them. Coupled with consumer demand is physician motivation to do everything possible for the patient, either to more accurately diagnose the patient, or to treat a condition after a diagnosis is made.  Physicians repeatedly confirmed this notion at focus groups and public hearings, stating they view their role as advocates for their patients.  When consumers of health services and their physician advocates worked in tandem, they created a demand that was in exhaustive and resulted in annual double digit per-capita health care cost increases in Connecticut. 

Employers, as the primary health insurance payors, demanded their insurance companies and health plans do more than just collect premiums and pay claims. Businesses demanded that health care services be better managed, and utilization of those services overseen. Managed care organizations and insurers responded by establishing a utilization review function.  Utilization review staff employed by, or under contract with, insurers, health plans, or employers determine which services will be covered and in what setting. As a result, while benefits may be covered in a health plan, the enrollee is not necessarily entitled to receive them in all circumstances. 

Most hospitalizations and outpatient procedures need prior authorization from the HMO or its utilization review company. Utilization review also occurs for prescriptions.  Companies known as pharmaceutical benefit managers monitor the kinds and amounts of drugs physicians prescribe.  Sometimes mental health benefits are also handled by a separate utilization review company that specializes in behavioral health.

Generally, the physician or the patient can call the utilization review company via an 800 number to determine if the procedure will be covered   also Once the health plan is operational, health maintenance organizations, as well as most regular health insurers, oversee how those benefits are used by subscribers. In other words, while benefits may be offered in the plan this does not mean that every enrollee is entitled to receive them in all circumstances.  The procedures in place to determine which services will be covered and in what setting -- called utilization review -- is a crucial facet of managed care. 

Licensure requirements.  Since October 1, 1992, (via P.A. 91-305) Connecticut has regulated the companies that conduct utilization review functions.  The statute requires the licensure of organizations Ainvolved in the prospective or concurrent assessment of the necessity and appropriateness of the allocation of health care resources and services given or proposed for an individual.@  (C.G.S. Sec.38-226 to 38a-226(d)).  Some of the regulatory components for utilization review have already been listed in the table comparing regulatory requirements contained in Chapter III, but a more thorough explanation of them is contained below.

A number of health maintenance organizations conduct their utilization review activities in-house, while others contract out for these services.  In either case, the utilization review company or operation must be licensed.  The Insurance Department annually licenses utilization review companies. 

Prior to initial licensure each utilization review company must submit documentation that demonstrates:

C                  it meets certain statutory criteria concerning notification, appeal, and clinical review procedures;
C                  health professionals making the utilization review decisions have current licenses or certifications from a state licensing agency in the U.S.;
C                  staff  are available via toll-free telephone during normal business hours;
C                  no staff person receives compensation based on the number of denials made;
C                  practitioners in related specialties are reasonably available to review appeal cases not decided in patient’s favor;
C                  it will abide by all applicable state and federal laws regarding confidentiality of records; and
C                  it allows a minimum of 24 hours for notification by enrollee after emergency care.

The law requires that hospitals allow utilization review company personnel on hospital premises to conduct their reviews, unless the hospital and the company have a signed contract to the contrary.  The law also requires utilization review company personnel in hospitals to carry picture identification that clearly indicates their employer. 

Once the companies have submitted the documentation prior to being licensed, they need file only any material changes with the Insurance Department within 30 days of the change.  Annually, the companies are required to submit the name, address, and phone number of the contact person and the company, as well as its business hours, and submit a $2,500 annual licensing fee. 

Licenses issued and fees collected.  Table V-2 shows the number of utilization review licenses issued and the aggregate licensing fees collected each fiscal year, since licensing began in October 1992.

Filing requirements.  The program review committee found several deficiencies with utilization review regulation and the way in which the laws are implemented.  Until August 1996, the insurance department had been collecting the $2,500 annual fee but had been doing little oversight of utilization review companies after the initial licensure.  The annual licensing fees, which were to be used for oversight of these companies only, had accumulated to slightly more than $1 million in the four years since licensure began.  In August 1996, the insurance commissioner appointed two people to oversee utilization review activities and one person to general managed care issues. 

Because of the lack of staff dedicated to this oversight function, the committee found that utilization review companies have not fully complied with some statutory requirements, and the insurance department has not fully exercised its statutory authority in other areas. 

First, the insurance department needs to ensure that all businesses operating like utilization review organizations are licensed.  The identification responsibility becomes more difficult as more HMOs are Acarving out@ parts of their health care business. This means the HMO separates specific health services from the majority of the plan=s business for purpose of compensation and utilization review. The HMO then subcontracts with other companies to oversee those specific health components. 

Almost all of the nine HMOs that responded to the committee=s request to provide information on Acarve-outs@ indicated that at least one part of the plan was separated, typically behavioral health or pharmacy.  As carve-outs become more popular, the insurance department staff must oversee whether these companies are licensed for the functions they are performing.  For example, if these carve-out companies are only paying claims then licensure as a utilization review company is not necessary.  However, if their responsibility extends to authorizing services, then those companies must be either licensed or accredited.

Second, the Department of Insurance needs to expand its initial filing requirements to require utilization review licensees to indicate which health plans they are serving.  Further, utilization review companies need to provide more current information to the insurance department about organizational changes, staffing updates, and standards used for medical reviews. 

Currently, the statute requires that any material changes be filed with the department within 30 days of the change. Only name, address, and phone number along with business hours must be updated annually.  However, a file review of 12 of the 129 utilization review companies, the program review committee found none of the files had updated information on company staffing, changes in protocols used, and the like since initial licensure of the company.  Companies need to comply with the material change notification, and the department needs to do a better job of verifying that no material changes have in fact occurred.  The Department of Insurance recognizes the need for better information and has recently surveyed all licensed utilization review companies to assess their operations. 

Utilization review data.  In addition to organizational information, there is also a need for the utilization review companies to file actual utilization review statistics with the Department of Insurance.  Currently, the statute gives the insurance department authority to require data relating to requests for services, denials, and appeals, but until the recent survey, DOI had not utilized that authority.  Thus, there currently is no one location where these utilization review statistics are kept in Connecticut.   

Therefore, the Legislative Program Review and Investigations Committee recommends that annually each utilization review company must file with the insurance department: 

C                  any organizational or staffing changes that have occurred within the company since the date of the last filing; 

C                  the names of all businesses, HMOs, or other entities that the utilization review company services in Connecticut;

C                  any health care services which the utilization review company or HMO has contracted out for servicing, and the name of the company servicing that part of the plan; 

C                  any changes or revisions in protocols being used; and 

C                  utilization review data including requests, approvals, denials, and appeals and their outcomes.  

Utilization Review Staffing  

Physicians complained in focus groups that they and their office staff must deal with clerks when they are seeking an approval for a medical procedure or treatment.  However, all of the 12 companies whose files the committee reviewed indicated they had professionals on staff.  

Further, while the statute does not currently require that health professionals make all utilization review decisions, it does require that Anurses, practitioners, and other licensed health professionals making utilization review decisions shall have current licenses from a state licensing agency or appropriate certification from a recognized accreditation agency in the United States.@  

Data obtained from the insurance department=s recently conducted survey of utilization review companies, and displayed in Table V-3, indicate that most decision-making responsibility lies with health professionals and not clerks.  While clerical staff are part of the utilization review operation, just as they are for almost any business, their decision-making ability is already limited via their own organizations.  As the table shows, only four of the 23 clerks have approval authority and none can deny or negotiate the use of a treatment or procedure. In the other 19 companies, while clerks are the first contact they only gather the information; the decisions are made by health professionals. 

The program review committee believes that requiring all utilization review decisions to be made by health professionals would be imposing a staffing standard unnecessary for a great percentage of the decisions that must be made in a review operation.  Further, University of Connecticut consulting staff who issued the report on which the 1991 utilization review legislation law was based told the committee that it was not the intent of the legislation to restrict all review decisions to only health professionals. 

 However, to eliminate statutory confusion and give greater assurances to the practicing medical community regarding who performs utilization review functions at what level, the program review committee recommends that any utilization review decision to initially deny services be made by a health professional.  This would allow staff who are not health professionals to approve routine certification requests.  These approvals can be done over the phone with a minimum exchange of information. If the request cannot be approved based on the information given, or if it appears the request should be denied, then that request should be handled by a health professional.  Further, according to the data in the table, authorization for denials (and most approvals) is only given to medically trained personnel.  Therefore, this recommendation would not require utilization review companies or HMO internal review operations to incur additional administrative expenses for hiring additional or replacement staff. 

Whatever the level of staff making the utilization review decisions, it is crucial that they are all well-trained -- able to gather data on requests, have a basic understanding of the medical standards being used to make decisions, and relay the decision to the requesting party.  Even if the staff are health professionals, utilization review is different than actively delivering health care, and utilization review staff persons need instruction and preparation.  The program review committee recommends that utilization review companies shall submit information on their staff training as part of the annual filing report to the insurance department.  The committee does not recommend any set number of hours of training for utilization review staff.  

Utilization review decisions.  By statute, utilization review companies must notify the patient or provider within two days of receiving all information upon which a decision can be made.  However, in the committee=s review of complaint files, it is apparent that often cases involve complicating factors, further information is required, and decisions take longer and not as well-communicated as they might be.  In some cases, health plans were making preauthorization approvals Apending@ a more complete review of all the pertinent medical records, and then denying just prior to the scheduled treatment or procedure. In other cases, companies denied the claim after the enrollee had the procedure or treatment.  The patient in these cases believed the procedure had been approved, when the utilization review company indicated that it had not. 

The committee believes that most of these cases could have been averted with a clearer exchange of information. Recognizing that communication is crucial to effectively execute managed care, the Legislative Program Review and Investigations Committee recommends the following: 

(1) Utilization review companies shall make and communicate a utilization review decision, only if all the required documentation to make that decision has been received.  Approvals Apending@ receipt of all the information shall be prohibited. 

(2) If additional medical documentation is necessary before a decision can be made, the utilization review company shall clearly indicate to the physician or patient what information is still needed.  (The statute already requires that the provider of record is responsible for providing all relevant information necessary to make a decision, and failure to submit the documentation may be grounds for denial of the service.) 

(3) Utilization review companies shall communicate the decision to patients within 48 hours of having received all the medical documentation, as currently required by statute.  Patients must be given written confirmation of an approval and a confirmation number until a written authorization is received. 

If these procedures are followed, it should significantly lessen any ambiguity about whether a procedure has been approved or not.  It would give the consumer or the physician a verification confirmation number or written authorization that would serve as a guarantee that the treatment was approved.  Eliminating Apending@ decisions should also reduce confusion about whether an approval was actually granted.  Consumers or providers who believe these processes are not being followed may report potential violators to the insurance department for further action. 

Appeals Decisions and Medical Necessity 

When consumers are denied a health care service, they often will not agree with the decision.  When the decision deals with whether a particular benefit is covered or excluded, a review of the subscriber contract usually provides a clear answer.  That document spells out in great detail which benefits are provided and which are not.  When the decision is based on whether the service is medically necessary or not, the result is not always clear cut.  Each subscriber enrollment agreement contains a plan=s definition of Amedical necessity@.  A typical definition states: 

health services that are required for illness or injury.  Physician determines the medical care, but coverage is subject to medical necessity as determined by XHMO.  Health services that are not medically necessary shall not be covered health services under the agreement. 

Of course, disagreement over medical necessity can arise between the health plan and the treating physician.  The committee believes the method by which those conflicts are resolved is currently deficient, because the statutes are unclear, and because they do not provide the consumer with sufficient procedural redress if disagreement occurs. 

State statutes governing utilization review currently include a requirement that companies establish a written appeals process, including those appeals involving medical necessity.  The company must inform the patient or provider of their right to appeal when any medical service is denied.  Appeal decisions must be made as soon as practical, but no later than 30 days after the appeal is received.  Statutorily, on appeal all determinations not to certify an admission, service, procedure or extension of stay shall be made by a licensed medical practitioner, which is usually the medical director of the HMO or utilization review company. 

The statutes also state that Ain cases where an appeal to reverse a determination not to certify is unsuccessful, each utilization review company should assure that a practitioner in a specialty related to the condition is reasonably available to review the case@ (C.G.S. Sec. 38a-226c (7)).   The program review committee finds this statutory section is unclear in terms of what type of medical review it grants to patients or providers where a denial is upheld by the utilization review company on appeal. 

To ensure that consumers have a guaranteed opportunity for review outside of the health plan on issues of medical necessity, the program review committee recommends that Section 38a-226c of C.G.S. modified to specify that: 

In certain appeals that have been denied, the utilization review company shall have the case reviewed by an actively practicing Connecticut specialist in the field related to the medical condition that is the subject of the appeal. 

This specialist review shall be granted in cases where an appeal to reverse a determination not to certify has been unsuccessful, and the reason for the denial is based on medical necessity, including whether a treatment is experimental or investigational.

The utilization review company shall be financially responsible for the review, and shall obtain the review within 30 days of the denied appeal.  The actively practicing physician=s decision shall be final. Documentation of the review, the name of the physician who performed it, and the decision will be kept at the utilization review company, so that insurance department staff may verify the process was followed.

The committee believes this recommendation recognizes there is no one definition of  Amedical necessity@, nor can one be legislated.  The determination of medical necessity will vary depending on the case and the patient and will change as medical advances are achieved. Thus, a practicing physician in Connecticut should make that decision based on the specific circumstances and his/her medical judgment.  Committee members believe this recommendation is the best option for reviewing denials involving medical necessity. 

The recommendation ensures a final review of a denial based on medical necessity is done by a physician who is not the medical director of the HMO or utilization review company.  Medical directors must ensure that medical decisions are applied uniformly among all enrollees, but some critics charge they deny health care to increase company profits.  The recommendation also removes the final decision of conflicting medical opinion from the treating physician, whose objectivity is also in question since he or she is advocating on behalf of the patient. 

This recommendation places the decision to resolve conflicting medical opinions in the hands of a qualified third party. Consulting fees for the medical review of the denied appeal will be paid by the utilization review company or the HMO.  The program review committee concludes that a certain level of trust must be placed in the physician community in Connecticut to serve as objective medical consultants, regardless of payment source. 

The recommendation does not call for review responsibility by a governmental agency or an agency on contract to conduct medical necessity reviews for a number of reasons.  The program review committee considered assigning responsibility to the Connecticut Peer Review Organization (CPRO), which handles all utilization review functions for Medicare in Connecticut. However, CPRO told the committee that it also contracts out to one or more specialists when an issue of medical necessity arises. Further, the committee considers the responsibility of handling utilization review for a government-sponsored and largely tax-supported system with a set benefits package, significantly different from reviewing decisions on dozens of different employer-paid plans, and thus does not consider CPRO an appropriate option. 

Likewise, the program review committee believes a state governmental agency would be ill-suited to staffing such a function with specialty physicians, while selecting and contracting with such physicians on each case would be too time-consuming and costly.   Further, health care is not a state-mandated program, like unemployment compensation or workers= compensation, where the state has an adjudicatory function to ensure eligible persons are receiving their government-entitled benefits.  Health care is still a benefit purchased largely by employers in the marketplace. State government should ensure that health plans have consumer protection features, and that those processes and procedures are followed. It should not create an alternative medical appeals mechanism. 

Finally, the recommendation clearly limits the outside specialist review to questions of medical necessity, including whether treatments are investigational or experimental.  It would involve questions of medical interpretation only, and not legal questions of denials that are limited because of benefits clearly excluded by contract. 

Market Conduct of Utilization Review Companies 

In addition to reporting requirements to the insurance department, utilization review companies must be responsible for their conduct in the market place including being accessible to consumers and providers, as well as meeting the statutory process for making health services utilization decisions in the statutorily prescribed time-frame. 

Access to utilization review companies.  Control of utilization of medical services is a key platform upon which managed care is based.  But managing those health resources must be done through an appropriate process -- by receiving requests, reviewing the request using written standards, and communicating those decisions in a timely fashion.  To do that, utilization review companies must be accessible.  

One of the statutory requirements of utilization review companies is to have a toll free A800" number available at least 40 hours per week.  Physicians and other providers have complained that utilization review operations are not accessible, that providers get taped messages, that reviewers do not return calls or written requests, and that review companies do not make decisions in a timely fashion. 

To ensure that utilization companies are accessible and responsive to consumers and providers, the program review committee recommends the Division of Consumer Affairs within the Department of Insurance be notified if utilization companies are continually inaccessible, if they lose materials or documents sent to them, or if they fail to make or communicate decisions in a timely fashion. These complaints should be coded and tracked, and reviewed by department staff assigned to utilization review functions.  Companies whose market practices in this area appear to indicate a problem should be targeted for further attention, either by the Market Conduct Division or utilization review staff, and if violations of the statute are occurring, companies could be penalized, after a hearing, as already outlined in C.G.S. 38a-226b (1) through (4). 

Section 38a-15 of the statutes allows that the expense of any market conduct examination be paid for by the company being examined. Therefore, the committee does not anticipate that financial or staffing resources at the Department of Insurance should be an obstacle in carrying out these market conduct responsibilities.

Protocols 

The standards used by the utilization review companies or health maintenance organizations to approve or deny a procedure are known by a number of different terms – e.g., protocols, clinical criteria, practice standards, or practice guidelines.  These standards have been and continue to be developed by a wide variety of organizations inside and outside of government.  A recent GAO study on the development and use of these practice guidelines stated that about 75 organizations have developed 2,000 guidelines over the years.  Federal agencies like the National Institutes of Health and Centers for Disease Control have a strong involvement in this area as do physician associations like the American Medical Association and American Academy of Pediatrics.  Other guidelines have been developed by private for-profit companies such as Milliman and Robertson(M&R) an insurance actuarial firm based in Seattle, and Interqual, a medical review specialty company based in Marlborough, Massachusetts. 

While there are no requirements for what protocols should include, how they are used, or availability to providers, Connecticut statutes do require that each utilization review company list the protocols used with the insurance department prior to being licensed. The law also requires that the protocols be written, periodically evaluated, and updated with appropriate involvement from practitioners.   According to insurance department records, and the HMO responses to the committee requests for protocol information, Connecticut HMOs are using a variety of protocols.  Ten different nationally developed criteria are used -- the most common are Interqual and Milliman and Robertson -- and a number also use internally developed standards. 

Managed care organizations may adapt prepared standards to meet their needs.  The GAO study10 stated that most of the 19 health plans in their review did not use the guidelines off the shelf, but modified them for a number of reasons.  For example, physicians are more likely to accept the guidelines if they have been adapted to local practices.  Other justifications for changing practice guidelines are to: better fit the health care delivery system of a certain area; promote a more cost-effective approach to treating an illness: or to simplify complex procedures that might include complicated formulas or algorithms.  Most HMOs indicated in their response that protocols are used as guidelines only and that treating physicians set the length of stay, or that a concurrent review of patients in hospital takes place daily, and that is what determines length of stay, not the standard. 

Protocols also exist for prescription drugs.  Managed care organizations develop drug formularies -- a list of  prescription drugs approved for use by that health plan -- that are dispensed to patients by participating pharmacies.  These formularies may be developed either because the listed drugs have proven benefits over other similar drugs, or because the health plan has a contract with a pharmaceutical company or companies to purchase the drugs on the formulary at a discounted price. 

Use of protocols.  Physicians have claimed that they are not informed about what the protocols are, that they are Acookbook medicine@ prescribing how they should practice medicine, and that some of the recovery standards are unrealistic.  Many cite Milliman and Robertson standards as an example. 

In addition to the controversy over the protocols themselves, there is disagreement about how they are implemented.  Physicians at focus groups indicated that they had to make repeated calls and sometimes Afight@ with an HMO or utilization review company to obtain approval for a procedure that might not be indicated in the protocols. However, in phone interviews committee staff conducted with staff of Milliman and Robertson (M&R) and Interqual, both insisted that the protocols are guidelines, and not hard and fast rules. 

Milliman and Robertson sent written clarification of their protocols termed Aoptimal recovery guidelines@, stating that the Aguidelines define what clinical progress the patient will have if they do as well as one expects without complications, and what clinical care should be provided to help that patient achieve that level of recovery. Therefore each diagnosis has an assigned goal length-of-stay for each admission.@  &R states that in its experience approximately 80 percent of patients under the age of 65, and 40 to 50 percent of Medicare (over age 65) patients should be able to meet the standard.  However, M&R further cautions that in order to achieve optimal recovery and meet their length-of-stay goals, the necessary healthcare delivery system infrastructure must be in place. 

To better assess how the protocols are being used, program review staff selected seven procedures11 and requested Connecticut HMOs provide the standards each used during 1995 for pre-certifying a length of stay for that procedure. They were also asked to provide what their actual utilization statistics were on the range of stays and the average and median length of stay for each of the procedures for the same year. 

There are several shortcomings with the data that need to be noted. First, not all HMOs responded even though staff did make repeated attempts.  Second, not all HMOs that responded provided all information. For example not all supplied median length of stay, thus staff chose to use average length of stay (LOS) in its analysis to capture as many elements as possible. Third, because HMOs capture their utilization data using different codes, it is likely that some utilization statistics of the procedures were missed because of coding variations.  Fourth, because of this coding problem or due to actual low utilization of some procedures, the average LOS may be based on very low numbers (5 or 6 cases).  However, noting their limitations, the data do give some indication of what is happening with medical standards and actual utilization in Connecticut, and are presented in Table V-4.  For three of the seven selected procedures committee staff developed two timelines.  The top one in each case provides the HMO=s estimated or standard length of stay, while the second one provides the timeline showing what the average length of stay was using the HMO=s actual utilization data. 

 Based on the data reported in Table V-4 above, the program review committee found that: 

C                  use of pre-established standards not universal among HMOs -- Physicians Health Services, Kaiser, and Oxford all indicated that they had no pre-established standards for these procedures; 

C                  variation between standard and practice -- almost without exception, the HMO=s average length of stay varies from the standard or protocol; 

C                  actual stays typically longer than standards -- for all three procedures, most HMOs had average actual length of stays longer than their standards; 

C                  standards can lag behind practices -- Connecticare had longer pre-established stays than the actual average length of stay for all three procedures.  Staff inquired about this and was told that Connecticare had been using Interqual standards in 1995, which were lagging behind actual medical practices.  Connecticare has since switched to Milliman and Robertson standards;  

C                  standards used as guidelines -- the differences between the standard and the actual average length of stay indicate that the protocols are being used as guidelines; and 

C                  outpatient mastectomies are not common but were performed prior to adoption of a new, controversial protocol --  based on the data filed and the codes used, HMOs indicated that only five mastectomies were performed on an outpatient basis during 1995.  These outpatient mastectomies would have preceded the adoption of new M&R protocols in July 1996, indicating these were physician/patient decisions. 

One of the results of managed care and its use of protocols and utilization review methods has been the continuing drop in hospital stays.  As cited in Chapter I, the average length of hospital stay in Connecticut has declined from from 6.3 days in 1993 to 5.5 days in 1995 -- a drop of almost 15 percent in two years.  Data analysis performed by the Connecticut Hospital Association, at the committee’s request, on readmission rates for the same selected procedures confirms that length of stay for the procedures has indeed decreased from October 1992 through March 1996, and the data show no clear evidence that readmission rates following discharge have risen.  The CHA report indicates that the actual numbers of patients readmitted are small, and that no clear trends on readmission rates can be identified. 12

The program review committee believes that requiring a minimum length of stay for any procedure could obstruct progress at further reducing length of stay under sound medical practices, and is an unnecessary intrusion into the area of medicine.  Establishing standards in law does not allow for the medical technology that makes a certain surgery outdated, or a recovery period unneccessary. 

Further, the committee concludes that protocols are being used largely as guidelines, and therefore makes no recommendation that certain protocols be used nor that others should be banned.  Finally, Connecticut has recently witnessed what can occur when protocols don=t match with the public expectations.13  The program review committee believes that when the media, the medical community, and the public react negatively to an HMO practice (even a guideline), the HMO will change it.  Good public relations matter to HMOs, as with any enterprise, but the committee believes it is better that the public and the marketplace demand it and not have the legislature set it.

While the program review committee does not recommend legislative adoption of any standard, nor prohibiting a particular protocol, that does nor mean that the way protocols are developed and implemented does not need corrective action.  The recommendations adopted by the committee for improving these processes are contained below. 

Local input to protocols.  The purpose of protocols is to bring more uniformity to the practice of medicine, as well as to control costs.   However, two important factors concerning protocols were repeatedly noted during the course of this study.  First, input from local practicing physicians is necessary if protocols are to be accepted as workable.   Second, there must be a recognition that delivery systems vary in different areas of the country.  Even the protocol developers recognize that optimal recovery goals assume a certain delivery structure.  Local practicing physicians have an appreciation for the state or region=s health care delivery system, and can recognize where aspects may differ from the delivery system where the protocols are developed.  For example, California may have greater access to sub-acute care than Connecticut and that must be acknowledged in implementing protocols. 

Local input does not mean that physicians should serve as obstacles to medical progress or impede legitimate reduction in hospital stays and changes in treatment settings. It does mean that health plans ought to consider reasonable local concerns and delivery constraints raised by physicians before implementing standards developed in other areas of the country.

Currently, the Connecticut statutes require that plans Autilize written clinical criteria and review procedures that are established and periodically evaluated and updated with appropriate involvement from practitioners@. However, as currently written, the laws allow those practitioners to be located in another area of the country.  And, while it may be assumed the statute means actively practicing physicians, it does not clearly say that.  The program review committee believes this requirement does not ensure adequate input from actively practicing physicians in the immediate geographic area.

A recent GAO study on practice guidelines states that when published guidelines differ from a plan=s clinical and financial objectives, they are typically customized with the active with the active participation of network physicians, and local adaptation may be necessary when the standards are too complex or inconsistent with local practice.  Further, courts have held medical plans whose standards significantly differ from the community are acting in bad faith and can increase the likelihood of liability for bad medical outcomes.  Finally, if a protocol was so contrary to local practice that physicians were continuously being granted exceptions, it would appear to be more administratively efficient and cost-effective to change the standard. 

For all these reasons, the Legislative Program Review and Investigations Committee recommends that the statute be modified to require that, prior to implementing new or revised medical protocols or utilization review procedures, health plans shall obtain input from physicians actively practicing in Connecticut.  Such input should be obtained from a number of providers in a variety of medical specialty areas, and should be documented so that it can be verified by the insurance department.  Input from the medical community objecting to new or revised standards could not prevent a health plan from implementing such protocols, but the health plan would have to document why practitioner objections were not warranted, or how the original standards were changed to accommodate objections. 

Health maintenance organizations assured staff during this review that local physician input was always sought, a position not substantiated by physician groups.  This recommendation would assure physicians that their input is important to the protocol implementation process, but would not allow physicians the power to approve or deny the protocols before their implementation.

Instead, the recommendation would allow the Insurance Department to use the documented input as it deemed appropriate. If a health plan implemented protocols despite continued physician protests, the Department of Insurance may want to report that as part of a consumer education tool.  On the other hand, if a health plan did not use revised or updated protocols, the insurance department could note that in the report card. 

Access to protocols.  Even after protocols are developed and being implemented, opinions differ on how informed physicians and other practitioners are about protocols.  Physicians claim they are kept in the dark about protocols because HMOs fear doctors will be able to have more treatments approved if they know what the standards are.  HMOs claim they welcome physician input to the development and revision of standards and that the plans make very effort to inform and educate physicians about standards and revisions. 

Regardless of their involvement in the development prior to implementation, physicians must be informed of the guidelines and criteria under which they are expected to practice.  Committee members recognize the standards can be voluminous, or computerized, and that health plans cannot be responsible for making copies of every guideline available to every practicing network physician.  On the other hand, if a physician wishes to examine the standards or guidelines, committee staff believes the health plan has a responsibility to accommodate the provider.  Further, the committee concludes that when a denial of service runs contrary to an established protocol, the physician must be furnished with a copy of the protocol. 

Therefore, the Legislative Program Review and Investigations Committee recommends that upon the request of a network provider, each plan make its protocols -- those standards upon which decisions to approve or deny a service -- available for that provider=s examination at a location and time determined by the health plan.  Further, when a health plan denies a treatment because the treatment, procedure, or service is in conflict with a protocol, the physician shall be furnished a copy of the protocol, with any supporting criteria, and an explanation of why the request did not meet the protocol. 

Disclosure of protocols under which physicians are expected to practice is only reasonable.  These standards are developed to help change practice patterns, eliminate bad practices, and promote uniformity.  If doctors are expected to conform to these guidelines, they at least have to know what they are. HMOs have to trust physicians in their network to use the criteria to practice good medicine in an informed way, not to Agame@ the system to have more treatments approved. Further, the utilization review laws in Connecticut currently establish prohibitions and penalties against providers or enrollees who furnish misleading or fraudulent utilization review information.  If a health plan or utilization review company finds that it is not being given truthful information, it should inform the commissioner of insurance so that the department can determine whether a violation has occurred and assess a civil penalty against the violator.

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