Managing prior approval for site-of-service referrals: an algorithmic approach

• Published in: BMC health services research Vol. 22; no. 1; pp. 201 - 7
• Main Authors: Dada, Maqbool, Mundly, Vishal, Chambers, Chester G., Alamdar Yazdi, Mohammad Ali, Ha, Changhun, Toporcer, Sonia E., Zhou, Yi, Gan, Yunong, Xing, Zhihua, Mooney, Mark, Smith, Ernest, Kumian, Edward, Williams, Kayode A.
• Format: Journal Article
• Language: English
• Published: England BioMed Central Ltd 14.02.2022; BioMed Central; BMC
• Subjects: Algorithms; Ambulatory Care Facilities; Cost control; Costs and Cost Analysis; Demographic aspects; Emergency medical care; Environmental aspects; Health care expenditures; Health Personnel; Health services; Humans; Managed care; Medicaid managed care organizations; Medical care; Medical care, Cost of; Medical referrals; Patients; Postal codes; Prior Authorization; Referral and Consultation; Reimbursement; Site of service referrals; Social aspects; Terminology; United States; United States; United States > US; Maryland; Managed care; Medicaid managed care organizations; Site of service referrals
• ISSN: 1472-6963; 1472-6963
• DOI: 10.1186/s12913-022-07523-3

Many payers and health care providers are either currently using or considering use of prior authorization schemes to redirect patient care away from hospital outpatient departments toward free-standing ambulatory surgical centers owing to the payment differential between these facilities. In this work we work with a medium size payer to develop and lay out a process for analysis of claims data that allows payers to conservatively estimate potential savings from such policies based on their specific case mix and provider network. We analyzed payment information for a medium-sized managed care organization to identify movable cases that can reduce costs, estimate potential savings, and recommend implementation policy alternatives. We analyze payment data, including all professional and institutional fees over a 15-month period. A rules-based algorithm was developed to identify episodes of care with at least one alternate site for each episode, and potential savings from a site-of-service policy. Data on 64,884 episodes of care were identified as possible instances that could be subject to the policy. Of those, 7,679 were found to be attractive candidates for movement. Total projected savings was approximately $8.2 million, or over $1,000 per case. Instituting a site-of-service policy can produce meaningful savings for small and medium payers. Tailoring the policy to the specific patient and provider population can increase the efficacy of such policies in comparison to policies previously established by other payers.