By Linda Chase, Medical Risk Consultant, Symetra Life Insurance Company

Cost containment is one of the most important aspects of claims adjudication. Whether a claim is a first-dollar bill processed by a third party administrator (TPA), or an excess loss claim reviewed by a stop-loss carrier, cost-containment has an important impact on the outcome.

The most successful cost-containment programs result in a "win-win" outcome for all parties involved in the management of a self-funded employer benefit plan:

• The TPA wins by providing cost-containment solutions that ensure the best care for the patient for the most reasonable price.
• The broker wins by recommending claim administrators and stop-loss carriers that value excellence in cost-containment programs.
• The self-funded plan wins by having lower experience ratings resulting in lower stop loss premiums, as well as by passing the savings on to their plan participants in the form of lower premiums.
• The stop-loss carrier wins by having the ability to issue competitive rates at renewal.
• Ultimately, the plan participant wins by stretching the individual lifetime maximum under the plan.

In order to apply sound cost containment solutions to claims, the underlying plan document provisions should be clear and concise. Listed below are several questions that TPAs and excess loss carriers generally review when they are considering the effectiveness of cost-containment solutions in relationship to the underlying plan document provisions.

Does the underlying plan document offer combined skilled nursing facility (SNF) and long-term acute care facility (LTAC) benefits?
If so, are the benefits generally limited to 30 days/24 months, 30 days/2 calendar years or 30-60 days/lifetime?

Are there benefits for acute inpatient rehabilitation?
If so, is the limitation 45 days/24 months, 45 days/2 calendar years or 45 days/lifetime?

Does the plan exclude or eliminate private duty nursing (PDN) benefits?
Industry trends show that while occasionally PDN may be medically appropriate, it is rarely more cost effective than LTAC or SNF confinements.

Does the plan contain a clear "managed care" provision?
Plan documents often contain a provision which allow case managers to recommend alternative treatment plans and benefit exceptions. These exceptions are intended to provide equal or better quality of care in lieu of other more costly proposed treatment plans. It is important to provide prompt notice of such alternatives to the excess loss carrier in order to allow the opportunity for additional questions.

Here are some questions that exemplify how questions on claims may arise in connection with the underlying plan document's managed care provision:

• Does the plan document provision clearly indicate that a letter from the attending physician is needed in order to approve certain benefits? It is uncommon for SNF, LTAC and/or acute rehabilitation confinements to extend beyond 30-45 days. If the extended stay is medically necessary, the attending physician should provide written documentation explaining the need for the prolonged treatment plan.
• The case manager can explore options, do a cost/benefit analysis and determine if an out-of-plan extension of benefits would be appropriate. If truly medically necessary, and more cost effective in lieu of hospitalization, then the case manager can recommend an out-of-plan exception. Additionally, making an out-of-plan exception will provide the case manager with leverage in negotiating a discounted rate with the facility to help conserve the patient's medical benefits.

Is there a home healthcare (HHC) provision?If so, does it include a general limitation such as 100 visits per calendar year? Does the provision include a statement about the limit being applicable to all medical disciplines combined? (i.e. physical therapy, occupational therapy, speech therapy, respiratory therapy, home health aide, registered nurse, licensed practical nurse and licensed social worker)

Is there a physical, occupational and speech therapy benefit?
If so, does it include a general limitation such as 60 visits/sessions per calendar? Does the provision include a statement about the limit being applicable to all medical disciplines combined?

Does the underlying plan document offer incentives to employees for utilizing generic medications?
If so, are the plan participants aware of generic medication alternatives? Have the members been provided with a list of the most commonly prescribed brand drugs and their generic equivalents? Have members been instructed to check with their physician to make certain generic substitution is permitted and obtain recommended generic equivalents? To encourage use of generic medications, is there an increase in co-pays for brand name medications?

Does the plan offer pre-certification/pre-authorization and concurrent review?
If so, does it clearly specify for all inpatient confinements, surgical procedures, high cost diagnostic procedures and dialysis? Requiring precertification for dialysis will enable early intervention and cost containment in the event the dialysis supplier is out-of-network. Additionally, dialysis centers are often willing to offer greater discounts on new dialysis referrals. Having concurrent review along with pre-cert allows monitoring for ongoing medical necessity of confinements.

Does the plan have clear and sound "medical necessity", "usual and customary", "experimental/investigational" and "custodial" plan wording?
Is this verbiage detailed, defined and explained in the covered benefits, definitions and exclusion sections of the plan document?

A Win-Win for All

Having clear and concise plan document wording will allow for better alignment of claims adjudication and containment solutions, thus applying cost containment appropriately and enabling a "win-win" environment for all.

If you have questions or would like assistance with cost containment, please contact your designated Symetra medical risk consultant.

Linda Chase, BA, RNC, CCM, is a medical risk consultant for Symetra Life Insurance Company. She has more than 26 years combined experience in the medical field and health insurance industry and holds degrees in nursing and business administration.