California struggles with preauthorization

State forces payers to respond

Frustrated to the point of bewilderment, emergency physicians nationwide tell similar stories about working under managed care. The bottom line, according to Daniel Higgins, MD, is that preauthorization, as a contributor to medical quality and efficiency under managed care, is a fiasco.

The double-edged sword is the dilemma that preauthorization imposes on emergency physicians. On one hand, it is the only way to ensure payment from a contracting health plan. But for providers it almost always defeats the purpose of the effort, says Higgins, medical director of emergency services at St. Francis Medical Center, a 512-bed hospital in Lynwood, CA.

But in California, where emergency physicians have scored a victory of sorts on preauthorization, this hasn’t occurred as often. In 1994, state lawmakers passed a measure that requires health plans to return phone calls to emergency provi ders within 30 minutes. (A similar measure limits plans to one hour for Medicare and Medicaid cases in the federal Balanced Budget Act of 1997.) It also does away with telephone preauthorization for medical screenings in a manner similar to but not exactly like the "prudent layperson" standard.

HMOs have steadfastly claimed that preauthorization calls help reduce cost and inefficiency by screening out non-emergencies and unnecessary medical care. But emergency physicians counter that the calls only get in the way.

Does the California law, known as the Bergeson Act, offer a solution? Can other states faced with increasing HMO hurdles benefit from California’s experience? And is legislation the ultimate solution to force health plans into thinking more about patients than the way services are used?

"Until we had the Bergeson Act, it was an outright nightmare in California," says Loren A. Johnson, MD, director of emergency medicine at 49-bed Sutter Davis Hospital in Davis, CA. "There is no doubt that the law has improved things enormously." While problems associated with preauthorization calls haven’t disappeared entirely, the law offers providers the promise of curbing abuses, Johnson says.

And the abuses have been considerable, Johnson adds. Typically, when emergency physicians have called in compliance with health plan procedures, they’ve encountered busy signals, voice-mail messages, or low-level employees who answer at the other end. And when they’ve left messages or spoken with someone on the line, getting a return call confirming anything was a gamble, Johnson says.

Usually, the physician calls the plan rep or the patient’s assigned PCP to obtain approval for the patient disposition, which often involves either an admission or consultation. In many cases, the call is made when the patient needs additional diagnostic testing such as a CAT scan, which could end up being disapproved by the plan.

But registrars routinely run into the same problem when calling for screening preauthorization. "These tactics used to go on all the time and were clearly intended to dodge the payment issue," Johnson says.

In essence, the Bergeson Act reduces the power health plans wield over providers in requiring that they obtain telephone preauthorization as a condition for payment approval. The law does this by:

• stipulating that a health plan may not deny payment to the provider "unless the health plan enrollee [patient] reasonably should have known that an emergency did not exist"

• dropping the requirement that providers make preauthorization calls in order to be paid for services to a patient;

• limiting the time that a health plan, such as a physician network, can delay payment to a provi der to 30 working days and limiting the payment delay for HMOs to 45 working days (in either case, each payer has the same number of days respectively to respond to a provider if the medical claim is being contested or denied);

• requiring health plans, including their reps and the patient’s PCP, to take early responsibility for post-stabilization case management for emergency patients being treated at an out-of-plan hospital when requested by an emergency physician.

This last provision requires that the plan return a call from an emergency physician within 30 minutes. It also requires that if a disagreement occurs between the plan and the attending physician over post-stabilization levels of care, including patient disposition, the plan’s physician must assume personal legal responsibility for the patient. In these cases, according to Johnson, the plan’s PCP has to come to the ED to personally take responsibility for the patient’s care.

In effect, the Bergeson Act addresses two built-in problems with the present system, says Tom Hafkenschiel, MD, chairman of quality assurance in emergency medicine at 550-bed Santa Clara (CA) Valley Hospital and the original author of the Bergeson Act.

It forces the PCP to take a more personal stake in the patient’s emergency case management, and it counteracts existing incentives created by plans to pay PCPs to discourage expensive utilization (such as an inpatient admission) unless deemed absolutely necessary.