The Many Faces of UM: The Next Two Decades

Utilization management has the power to perform many jobs. Will it?

Well before the Affordable Care Act, CMS defined the highest aim of utilization management: Value. In its 1991 UM study, the agency (then the Health Care Financing Administration) identified UM as “an important means for assessing the value of health care services.”

The study added: “With large and growing expenditures for health care, payers want to know how their money is spent and what it produces in terms of health care quality (process and outcomes)” — noting within this context that “UM can play a significant role in improving the efficiency of the delivery system.”

“Modern UM programs” — Modern UM problems?

The expanded UM strategies the CMS study called for were:

• Reform fee-for-service reimbursement
• Partner with preferred and/or employed providers
• Deliver care rooted care in evidence-based medicine
• Generate more data and better systems to facilitate timely complex decisions
• Incentivize it all

These 1991 requirements for “modern UM programs” should sound familiar. They’re still applicable. The 90s may be back, but if these are still the components of a modern UM program . . . how are they doing?

The role of FFS reform and VBC incentives

If FFS reform is vital for modern UM programs, the modern age has not yet arrived.

As noted in Part 1 of this UM series, a 10-year review by CMMI of its programs noted that only six of 50 alternative payment models had generated savings for Medicare since 2012. On the commercial side and also from Part I, a 20-year review of payer VBC programs showed “mixed and modest effects” on quality, cost, or utilization, with none impacting all three consistently.

There is no question that the number of value-based contracts has grown. CMS wants 100% of Medicare beneficiaries in VBC by 2030. But whether quality and cost outcomes will improve in parallel — and help UM achieve the same — remains to be seen.

The role of provider networks and evidence-based medicine

Conversely, if greater use of preferred networks and more employed physicians is a key contributor to UM success, providers must be all in on utilization management. Hardly.

• Fact: Preferred provider networks now make up 43% of Medicare Advantage plans (Chartis) and more than 77% of physicians are employed — most by health systems but 10% by UnitedHealthcare alone (Advisory Board; HealthLeaders).
• Theory: Contracts that benefit physicians should increase their alignment with and adoption of payer practices.
• Reality: Physicians remain generally frustrated by UM. In 2023, the U.S. Surgeon General cited “bureaucratic” requirements like prior authorizations (PA) as a contributor to physician burnout.

The news isn’t all bad. It’s vital to curb “bad actors” who bilk FFS with unnecessary or excessive healthcare claims. Corey Ewing, CEO-WellCare of Kentucky, has shared that the state Medicaid program’s continued suspension of PA for behavioral health and substance use disorder services — a pandemic provision — has attracted more than 300 new providers to Kentucky (from the 2024 Inspire Recovery conference, covered by HealthLeaders).

“Provider differentiation” that supports UM — through the consistent use of evidence-based medicine (EBM) guidelines — can combat such scenarios. This strategy was highlighted by Dr. Cathy Moffitt, Senior Vice President and Aetna Chief Medical Officer at CVS Health, in Part 3 of this Many Faces of UM series: “We are looking for more opportunities to differentiate those providers and free them up on a case-by-case basis from the utilization management process.”

The role of health information technology

Aetna’s Moffitt also noted the importance of real-time UM engagement, an opportunity for payers and providers to lean in together at point of care, not after care.

“Engaging with members in real-time not only increases the probability of improving health outcomes — as engaged members tend to be more adherent — but also allows health plans to reduce administrative and operational costs. Additionally, this timely engagement helps in avoiding unnecessary medical expenditures, further optimizing the overall efficiency of health management strategies.”

So notes a 2024 report from Medecision based on a Sage Growth Partners survey, which calls out the need for more data and better clinical decision systems.

“Access to data in near real-time or real-time is vital for reaching members at critical inflection points, where their likelihood of engagement is highest.”

UM, Meet DM, CM and PHM

No matter how far payment reform, provider collaboration, and data platforms evolve, cost-cutting UM alone will never equate to “modern UM.”

Three decades after the CMS UM study, the National Library of Medicine wrote: “UM programs are part of the delicate ecology . . . to deliver the right care to the right patient at the right time.”

This etiology is complex.

“Payers and health care organizations, along with providers and patients themselves collaborate via UM programs along with disease management, care coordination, and population health offerings to control costs, increase collaboration in healthcare delivery, improve the quality of care, and to optimize the patients’ experience with the healthcare system.”

Moffitt with Aetna-CVS Health highlights these UM needs as well: “In the broader sense, utilization management does allow us to look at the [member’s] case holistically and say, ‘Does this person need discharge planning? Do they need home health? Do they need durable medical equipment to go home? Do they need care coordination do we need to refer them to one of our complex care managers?”

So many jobs to be done

And so, we end where we began with The Many Faces of UM: Is utilization management a payer profit-protection mechanism or a vital part of value-based care?

It is both. And the “Jobs to Be Done” theory can help explain why.

Jobs to Be Done dives deep into how and why people make decisions. Proposed by The Christensen Institute, the theory explores the “functional, social, and emotional dimensions” why people “hire” products or services for the jobs they need help with.

Moffitt at CVS-Aetna believes in UM’s job beyond cost control.

“This is something I'm passionate about. I have been in the payer space now for more than 20 years, and I spent a lot of those years as a medical director actually reviewing utilization cases on a daily basis. I can give you a number of examples where we have really enhanced the quality of the care.”

Still, UM is a payer invention. Providers and patients didn’t hire it, but they do work alongside it in order to deliver and receive healthcare.

Dr. Chirag Patel, CMO-WellCare of Kentucky, has noted: “We want to see utilization come down, but not all utilization is the same” (HealthLeaders Inspire Recovery coverage).

UM has the power to perform many jobs beyond cost control. Just as all utilization is not the same, all UM cannot be either.