The Managed Care Technology Toolkit.

Look beyond the claims payment system at supplemental capabilities to position your organization for more effective management of care costs.

Last month's column focused on the search for a core managed care information system for capitated organizations. Core capitation systems focus on supporting four key management processes: benefit plan and eligibility; provider network management; authorizations and referrals; and claim and capitation payment. This month we will look at the supplemental capabilities offered by specialty software vendors that better position organizations to manage care cost effectively.

With increased pressures to reduce the cost of both administration of managed care organizations and their associated medical costs as well as the need to improve clinical and business decision making, core capitation systems alone cannot suffice to meet the needs of managed care organizations. Capitation systems have historically been viewed as an automated solution to assist in the payment of claims for organizations receiving inbound capitation or paying out capitation to other providers. Even with the level of automation delivered by a dynamic claim system to administrative processes such as enrollment and claims processing, a large number of personnel are required to handle the managed care work processes.

Business needs require that organizations look at capitation systems more globally to address a variety of management needs, not solely claims payment. A better definition to use today for a managed care system would be a set of tools that facilitate managed care processes and decision making through a suite of information system applications and technology tools.

Software Tools

A variety of niche software applications have been developed for interfacing into existing core capitation systems to enhance their use. The inner circle in the module illustration below shows the application modules found in most core capitation systems. Surrounding the circle is a variety of specialty applications that enhance the operation of the core application. Selected applications supporting four general areas: claims; authorizations/referrals; provider contract administration; and data analysis. These applications represent some of the more popular additions to today's core managed care systems.

Claims Auditing Software: While claims examiners are generally trained to review billing irregularities by providers they cannot and do not find all occurrences. Specialty software developed by third party vendors automates the process of screening for a wide variety of patterns of inappropriate billing. These applications automate the review process thus even allowing electronically submitted claims to pass through such an edit. In addition they offer consistent edits for unbundling, upcoding, medically inappropriate/duplicative services, logical errors and other problems. Experience shows that these products pay for themselves by reducing claims' overpayments.

Case Management: Claim systems automate the ability to authorize and track referrals. They seldom address the more complex workflow that occurs in the utilization management office. Case management software addresses the need for automating the work of nurse reviewers, including the ability to target cases for disease management and preventive programs, track cases and support outcomes reporting. A variety of applications exist. Most incorporate clinical guidelines or protocols into the software to assure the use of consistent criteria to efficiently manage a variety of outpatient referrals and inpatient certification requirements.

Demand Management: Nurse triage systems began as products targeted for hospitals to use in their physician referral services. These applications have been found to meet the needs of capitated organizations to provide after hour clinical advice and triage. In addition to facilitating referral to contracted providers and providing information on how to use their managed care benefits, demand management systems support a library of patient information which can be readily delivered to members by phone or through the mail. For optimal use of these applications, interfaces from the core capitation system's membership eligibility and provider network files are required.

Provider Contract Administration

Credentialing: Accreditation requirements are causing managed care organizations to rethink manual (and outsourced) provider credentialing operations. Organizations with more than several hundred providers cannot support the manual effort required to request and authenticate all of a provider's training and performance. A variety of vendors have developed software applications that take the basic demographic data and further automate the process. These applications are built with a variety of reporting tools to track providers in the initial credentialing process, identify providers ready for recredentialing, as well as automate correspondence needs to both providers and their affiliated institutions. Advanced systems provide for electronic query into electronic data sources such as the National Practitioner Database and allow for recording of results from office visits and chart reviews required by the National Committee for Quality Assurance (NCQA).

Data Analysis

Decisions Support: Although most core capitation systems come with reporting tools, these tools do not offer the flexibility and ease of use of separate decision support applications. These separate systems often provide superior ability to perform ad hoc reporting, data analysis and graphic representation of information. The system furthers an organization's ability to monitor, query, analyze and report on a variety of measures including cost, utilization, resource consumption, and financial performance. Some applications provide for the reporting of Health Plan Employer Data and Information Set (HEDIS) data and some support provider profiling and risk adjustment needs.

Provider Profiling: These applications analyze referral patterns, costs, utilization, profitability and resource consumption of individual providers or groups within a network. The systems evaluate the clinical appropriateness, frequency and intensity of professional services. The systems allow for comparisons of performance by specialty, risk group or for the total network. They support the identification of inappropriate and unnecessary patient care, adjustment of risk on capitation arrangements, evaluation choices needed in making network selection decisions and generation of HEDIS measures by provider.

Evaluating Your System

Many organizations purchase a core capitation system and assume that their software investment is complete. With today's increasing complex business needs, it is imperative to recognize the variety of specialty applications on the market as well as their applicability and potential benefit to your organization.

In selecting a core capitation system, organizations are beginning to realize that one vendor's application is unlikely to meet all of their needs. When selecting your core capitation system consider the availability and connectivity of additional software to further automate the work processes and enhance the data analysis capabilities of your organization.

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Pam Waymack is Managing Director of Phoenix Services Managed Care Consulting, Ltd., Evanston, IL. She will be a featured speaker on the topic "Solutions to Managing Risk--Looking Beyond the Core Capitation System" at RiskCon '99's IT Summit on April 19 in Orlando, Fla.