Tailoring Medical Benefits Administration Solutions to Attain Government Healthcare Program Missions

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By Natalie Sirois, Medical Management Manager for World Trade Center Health Program and co-author Scott VandeSand, WTC Director

Government-sponsored healthcare benefit programs develop and implement medical policies aligned to their mission. Agencies must balance commercial best practices aimed at controlling costs with specific legislative mandates and unique mission goals. Federal and State sponsored healthcare plans are mission-defined and driven. Each program is created to deliver a specific benefit to a specific population.

Congress has created government healthcare programs to serve senior citizens, low-income individuals, persons with disabilities, at-risk mothers and children, active-duty military and their families, veterans, federal inmates, Native Americans, and special beneficiary groups who have suffered injury or illness due to environmental exposures. For example, Congress created Medicare to provide medical and prescription drug benefits to seniors at significantly lower costs than if those individuals were forced to secure commercial insurance via private individual and/or group coverage alternatives. Government healthcare plan sponsors must balance these mission priorities as they design medical benefit plans, Utilization Management (UM) services and criteria, pricing methodologies, and provider network solutions.

Since government healthcare programs are designed for a specific population, agencies must tailor medical policies governing eligibility and benefit coverage to implement legislated criteria. Each government healthcare program has unique and specific eligibility criteria and mandated benefit structures that conflict with broad-based industry-standard medical benefit policies and procedures. It is not as easy as determining if a potential beneficiary is an employee of a commercial health plan sponsor. As a result, government agencies cannot implement commercial Third Party Administrator (TPA) beneficiary enrollment and medical benefits solutions without significant tailoring to ensure they are fulfilling their mission. For example, limited benefit plan government programs must tailor TPA solutions with business rules and logic to assign an individualized benefit plan based on a beneficiary’s eligibility and personal circumstances. In these efforts, government healthcare programs can benchmark and evaluate proposed eligibility and benefit assignment policies against other Federal programs such as Medicare, TRICARE, Veterans Affairs (VA), or the Department of Labor (DOL), as well as to commercial payors in workers compensation or Medicare Advantage markets to ensure that they are in line with both Federal and commercial best practices.

Agencies must also tailor underlying benefit plan structures to ensure compliance with legislative mandates. Sponsors must evaluate covered procedures and diagnoses within benefit plans to keep program services mission-aligned as standards of care evolve. External forces such as public health emergencies, wars, terrorist attacks, natural disasters, or new legislative mandates can also cause government health programs to reassess and update underlying benefit policies. Agencies can and should monitor other Federal healthcare programs and industry trends to identify potential changes and/or additions to covered medical diagnosis and procedure codes. They must also select and implement flexible administrative processing systems that allow for initial tailoring and ongoing maintenance of these specialized benefit plans. Modern administrative processing systems that are built around configurable and auditable rules-engines are a powerful tool for government healthcare programs.

Government healthcare programs must design and manage UM services such as prior authorizations to operate within complex program stakeholder environments. These UM services must also reflect approval criteria tuned to support access to care priorities aligned to the program’s mission and legislative mandates. Plan sponsors must balance UM service design and decision criteria to simultaneously meet their mandated mission and be a good steward of tax-payer dollars.

Government healthcare programs must document and consistently apply policies, procedures, and decision criteria to promote the repeatable and transparent application of UM policies. They must also create and manage UM services, such as prior authorization solutions tailored specifically for their mission and beneficiaries. Prior authorization business rules should support mission-appropriate approval and denial criteria. In practice, this often means that prior authorization approval criteria for government healthcare programs are appropriately tuned to support higher approval rates for service requests compared to commercial health plans. Government healthcare programs should retrospectively review prior authorization decisions and trends to maintain alignment of business rules with the program mission. In particular, for retrospective and concurrent claims reviews and audits, programs should review claims data and medical records to determine potential fraud, waste, and abuse and ensure that all services are medically necessary and are aligned with program policies and procedures. Unlike the commercial sector, the focus of UM services within a government healthcare program is not on maximizing profits and having strict limits to aggressively drive down costs — but rather on ensuring the government program is maximizing mission attainment in the most cost-effective manner.

Efforts around UM and minimizing fraud, waste, and abuse are further complicated where beneficiaries have healthcare coverage via multiple government and/or commercial programs. Government health program legislation often dictates a payment order for Coordination of Benefits (COB) where government programs pay secondary (or tertiary, or as the payor of last resort depending on the number of coverages) to commercial coverage. Further, when beneficiaries are enrolled in multiple government healthcare programs, there is often a defined COB order. Program sponsors must consider these COB scenarios when developing and implementing UM policies. For example, it may be appropriate for a government health program to approve a prior authorization request and pay for associated claims where a commercial carrier would typically deny that service, especially if the program’s mission is to support access to care aligned to that service request.

Legislation governing Federal and State healthcare programs often requires application of explicit pricing methodologies. Many of these methodologies are defined by government agencies and do not support individual reimbursement level negotiations with providers. This creates challenges for agencies looking to either build a single-purpose provider network or leverage existing commercial provider networks. Plan sponsors face significant upfront investment and ongoing maintenance costs when they choose to build a custom single-purpose provider network. The benefit of this approach is compliance with legislated mandates in that each provider must agree to the government health plan’s terms and conditions as well as the mandated pricing methodology.

Conversely, many programs choose to leverage existing commercial provider networks, such as Preferred Provider Organization (PPO) networks, in an attempt to limit network investment and operating costs. However, utilizing a commercial PPO network solution can create significant risk of non-compliance with legislative mandates and increase the incidence of fraud, waste, and abuse because proprietary provider agreements signed between a commercial PPO and a provider most likely would not reflect the specific government reimbursement rate or standards of conduct required by governing legislation. In our next blog post, we will explore how agencies can blend these provider network management solutions in a way to maximize compliance and attainment of access to care standards while minimizing administrative costs.

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