Understanding the Impact of Medical Loss Ratio On Case Management and Other Direct Patient Services

A significant milestone was reached recently in the implementation of the Patient Protection and Affordable Care Act: the calculation of the medical loss ratio (MLR).
The MLR is the percentage of premium dollars that insurance companies must spend on healthcare to directly benefit patients.  Under healthcare reform legislation, starting in 2011 insurers must meet a minimum MLR of 80% for individuals and small groups and 85% for the large group segment. The remainder may be used to pay administrative expenses such as salaries, overhead, and advertising.

In August 2010, the National Association of Insurance Commissioners (NAIC) made a recommendation to the U.S. Department of Health and Human Services (HHS) to include case management and related activities in the MLR, which will have positive implications for the delivery of quality and comprehensive care for patients.  Specifically, the NAIC said that “effective case management, care coordination, and chronic disease management” should be included in the MLR.

Assuming that HHS accepts the NAIC recommendation, the determination to include case management and related services in MLR is momentous. This is further recognition that these services make a difference in the health and wellbeing of patients, particularly those with complex cases, and in the delivery of quality, cost-effective care.

Studying the MLR Issue

The NAIC had been tasked to study the MLR issue. One issue was whether case management, care coordination, and disease management should be classified as direct services to patients and/or quality of care services and thus be part of the MLR, or whether they are administrative in nature and therefore excluded from the ratio.

Recognizing the crucial importance of this issue, the Commission for Case Manager Certification (CCMC), the Case Management Society of America (CMSA), and the DMAA: The Care Continuum Alliance each submitted statements to the NAIC as to why case management, care coordination, and disease management should be included in the MLR. Each organization spoke out strongly that these services directly benefit patients. As the CCMC stated in its letter to the NAIC: “…By facilitating access to the right care and treatment at the right time – and by avoiding unnecessary and duplicative tests and treatments – case managers are able to improve the cost-effectiveness of care delivery, while also pursuing clinical outcomes including enhanced patient safety….”1

Although viewed by many as an issue affecting only insurers, the MLR calculation has far-reaching impact on many stakeholders, such as providers, purchasers, payers, and consumers. In addition, the outcome of the NAIC determination was crucial to the future of care coordination, which has increasingly captured attention as an important means to realize the quality, efficiency, and efficacy goals outlined in healthcare reform. As stated in our recent article, Pursuing the Promise of Care Coordination With Qualified, Credentialed Professionals, healthcare reform legislation has put the spotlight on care coordination.  Many factors, including the aging population and more patients with pre-existing conditions now having access to healthcare, are contributing to an urgent and growing need to facilitate and streamline what can often be a fragmented and inefficient process. [Link: http://healthcarereformmagazine.com/article/pursuing-the-promise-of-care-coordination-with-qualified-credentialed-professionals.html ]

Unless case management, care coordination, and related services were part of the MLR, there could conceivably be less impetus for insurance companies to offer and pay for these services. Without inclusion in the MLR, case management could have been limited or otherwise restricted even for patients who would most benefit from case management and care coordination. These patients include the frail elderly and people with chronic conditions and/or multiple co-morbidities affecting their physical and mental health along with those having catastrophic events.  One can even imagine a worst-case scenario in which case management was handled by administrative personnel who “manage cases,” rather than paying for licensed and credentialed professionals to deliver clinical services. Such an arrangement would clearly be substandard and unacceptable. As the CCMC stated in its position statement to the NAIC:

“…The consumers of case management services are individuals with health and human services needs, including those who have complex medical issues such
as catastrophic health issues, chronic conditions with several co-morbidities, the frail elderly who are particularly vulnerable at transitions of care, and others who rely on the knowledge and expertise of a case manager to help them access the right care and treatment at the right time. Thus, the CCMC is most concerned about the quality of services delivered to people needing case management, care management, and care coordination, regardless of the settings in which those services are provided. It should also be noted that insurance companies are major employers of case managers….” 2

The NAIC recommendation is consistent with the CCMC’s views that case management directly benefits patients (also known as “clients,” meaning the people receiving services) and contributes to the pursuit of clinical, financial, and patient-satisfaction outcomes. As the CCMC states in its Philosophy of Case Management, “The case manager links clients with appropriate providers and resources throughout the continuum of health and human services and care settings, while ensuring that the care provided is safe, effective, client-centered, timely, efficient, and equitable. This approach achieves optimum value and desirable outcomes for all—the clients, their support systems, the providers, and the payers.” 3

CCMC advocates that, in order to be most effective, case management should be practiced only by licensed and credentialed clinical professionals. CCMC defines case management as a “collaborative process that assesses, plans, implements, coordinates, monitors, and evaluates the options and services required to meet the client's health and human service needs. It is characterized by advocacy, communication, and resource management and promotes quality and cost-effective interventions and outcomes.” 4 While there may be certain administrative case management tasks that can be delegated to non-clinical professionals, the role of the clinical case manager—just as with other clinical practices—must be clearly distinguished from that of para-professionals and non-licensed personnel.

As the first and largest accreditation body for case managers, the CCMC sets standards for the attainment of the Certified Case Manager (CCM) credential. These standards are based on comprehensive field research conducted by the CCMC every five years. The latest survey, known as the role and function study, has resulted in the identification of six essential activities and six knowledge area domains of case management. The essential activities currently identified in the study are: case management process and services, resource utilization and management, psychosocial and economic support, rehabilitation, outcomes, and ethical and legal practices. Knowledge domains identified from the study are: case management concepts, healthcare management and delivery, principles of practice, psychosocial aspects, healthcare reimbursement, and rehabilitation.

As these activities and knowledge domains clearly show, case management directly benefits patients and plays an important role in the achievement of desired outcomes. Further, the CCMC believes that these outcomes can only be realized by competent, credentialed case managers. This is an important distinction that also draws attention to the MLR issue and the need for cost efficiency and efficacy. In order to provide the most value to patients, insurers, and other stakeholders, case management should be practiced only by those who have the proven skills, knowledge, and experience, as demonstrated through certification.

Although the MLR issue is settled for now, it is a reminder that as the rules around healthcare reform are written and implemented, all involved parties and stakeholders—healthcare providers, licensed and credentialed professionals, policymakers, professional organizations and certifying bodies, and even consumers—need to consider the impact of all decisions. Given the sweeping scope of reform, intended and unintended consequences are to be expected. The only way to prevent a problem from occurring that would seriously undermine the delivery of quality services to patients is by listening to the healthcare field. The NAIC is to be applauded for doing exactly that.

At the same time, the burden is on practitioners of all disciplines, to remain alert and informed regarding issues related to healthcare reform. As rules are developed and implemented, certifying bodies, professional organizations, individual practitioners, and consumer advocacy groups must be ready to respond with helpful information and insight to improve the efficiency and efficacy of healthcare services to ensure that high quality is a hallmark of the new American health care system.

REFERENCES:

1. Commission for Case Manager Certification (CCMC), letter to NAIC, July 16, 2010. http://www.ccmcertification.org/pdfs/NAIC_Letter.pdf
2. Ibid
3. Commission for Case Manager Certification (CCMC), Philosophy of Case Management, http://www.ccmcertification.org/secondary.php?section=Case_Management. Accessed August 31, 2010
4. Commission for Case Manager Certification (CCMC), Definition of Case Management, http://www.ccmcertification.org/secondary.php?section=Case_Management. Accessed August 31, 2010

About The Author

Annette C. Watson, RN-BC, CCM, MBA, is Chair of the Commission for Case Manager Certification (CCMC) (www.ccmcertification.org). The CCMC is the first and largest nationally accredited organization that certifies case managers. She is also Managing Director of Global Emerging Business for CARF International, a leading accreditor of health and human services programs worldwide.

Ellen Fink-Samnick, LCSW, CCM, CRC, is a Commissioner of CCMC and past Chair of the Commission’s Ethics and Professional Conduct Committee. She is also president of EFS Supervision Strategies, LLC in Burke, Va., and has 27 years of experience developing innovative case management models for health and mental health care. She also serves as Adjunct Faculty for George Mason University’s College of Health and Human Services.