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New challenges for medical directors.

New Challenges for Medical Directors

The activities traditionally performed by medical directors for managed care organizations, such as reconciling disputes on fee schedules and mediating "problem" claims, although important, will not continue to constitute their primary responsibilities. Medical directors increasingly will be called upon to render decisions and develop strategies to deal with more complex issues. They will be expected to determine medical necessity, to initiate creative approaches for physician recruitment and retention, and to document the financial savings achieved through participation in managed care programs. Medical directors will also be called upon to significantly influence new product development and contribute to the enhancement of existing products.

Medical Necessity

HMOs, particularly PPOs, play a prominent role in advising insurance carriers, third-party administrators, and self-insured employers on the medical necessity of procedures and modalities. Payers are increasingly concerned with the potential liability associated with denying reimbursement for a treatment. Both the managed care organization and the payer will look to the medical director for direction and justification when confronted with nebulous cases.

It is imperative that the medical director possess the clinical experience, a pragmatic perspective, and diagnostic inquisitiveness to be successful in this role. Perhaps most important, however, is the ability to be decisive in rendering judgments. Many situations require negotiation and even compromise, so it is vital that the medical director project the image of a reasonable but firm negotiator. On the other hand, some instances do not require negotiation but rather definitive action in confronting a physician who may be abusing the system. Although less common, these situations do occur, and they must be dealt with deliberately and expeditiously.

Physician Recruitment

Medical directors must possess sound negotiation skills but also must be perceived as persuasive and trustworthy communicators. Increasingly, the medical director is viewed as a critical spokesperson by the managed care organizations in their attempts to recruit physicians. It is recognized that many physicians prefer to deal only with other physicians when evaluating the merits of various managed care programs.

Often, physicians are skeptical and even cynical about participating in HMOs, PPOs, or IPAs. This skepticism intensifies if they perceive that nonphysicians will financially benefit from what should be the purview of physicians. By presenting managed care agreements as truthful and fair, the medical director can influence physicians to participate.

The challenge for medical directors will be to recommend and then implement creative strategies and programs to recruit physicians. Different techniques will be required to successfully recruit primary care, specialist, and hospital-based physicians. It is imperative that the medical director be cognizant of the motivations, concerns, and interests of all physician specialties, because this understanding will be advantageous in gaining credibility. It is recognized that physicians will be inclined to participate in managed care programs if they perceive an economic advantage and if they trust the principals in the managed care organization, particularly the medical director, who will often be introducing the program.

The medical director should be familiar with fee schedules and relative value scales and should possess at least a cursory understanding of third-party billing and the reimbursement implications of procedures lerformed on an inpatient vs. an ambulatory basis. An appreciation of Medicare provisions will also be helpful, as the diversity of the patient mix of a physician's practice will directly correlate with the physician's interest in participating in a managed care program.

Data Analysis

Medical directors need to be articulate in communicating elements of the reimbursement structure and advantages of the program. They must be able to inform employers of the savings to be realized from participation in managed care plans. Many argue that the predominant measure of success of managed care programs will be their ability to document savings. Utilization data and utilization review documentation are the objective measures by which savings can legitimately be claimed.

The challenges for most managed care organizations will be to:

* Determine which data should be collected.

* Develop automated systems to accommodate data needs.

* Interpret the data, including identifying trends and evaluating ramifications.

* Present the data in a cogent and comprehensible form.

The medical director will be instrumental in recommending the type of data to be collected and how they can be presented to employers. Employers have been inundated in the past with data, but they have often lacked the expertise to interpret the data. The medical director can play a vital role in identifying the salient findings from the data, in meeting with employers, and in responding to questions. On the basis of these findings, benefit plan changes and medical prevention programs can be recommended.

New Product Development

Analysis of utilization by medical directors will enable employers to better understand general utilization trends and the particular utilization patterns of their employees. Interaction with employees will assist medical directors in creating new utilization review products. For example, based on utilization data and discussion with employers, new products dealing with ambulatory care review, psychiatric review, and case management for catastrophic conditions may be developed. The medical director offers clinical expertise in evaluating the merits of new products and enhancements of existing products.

Characteristics Ensuring


To be successful, managed care organizations should look for the following characteristics when recruiting a medical director:

* Knowledge of utilization review--i.e. current practices, protocols, issues, and trends.

* Experience in product development and a penchant for new and innovative ideas.

* Aggressiveness in developing and implementing more rigorous protocols and guidelines in the practice of utilization review.

* Board certification in internal medicine or general surgery (other specialties, however, can be considered).

* Evidence of support for the marketing department in generating prospects for new business and making attempts to retain business.

* Experience in a managed care organization--e.g., HMO, PPO, IPA, utilization review firm, or insurance carrier offering managed care products along with traditional indemnity plans.

* Strong understanding of and sensitivity toward physician problems and concerns.

* Excellent verbal and written communication skills and ability to address audiences of all sizes.

* Strong decision-making and negotiation skills.

* Ability to interpret data and offer recommendations based on characteristics unique to an organization.

* Pro-activeness not only in planning but also in implementing new programs.

* Intensity and tenaciousness in keeping abreast of the latest trends and in projecting the future directions that utilization review and managed care may take.

The challenge for managed care organizations will be to recruit medical directors capable of being integral members of the management team. This is imperative, because medical directors will potentially have the most influence on the future direction of managed care organizations.

Allan Fine is a Senior Associate, Witt Associates, Inc., Oak Brook, Ill. He heads up the national practice in managed care.
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Title Annotation:Managed Care
Author:Fine, Allan
Publication:Physician Executive
Date:Mar 1, 1990
Previous Article:Chief of staff and medical director: conflict or cooperation?
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