Sample Contract Language: Utilization Management

Utilization management is a system for reviewing the appropriate and efficient allocation of health care services under a health benefits plan according to specified guidelines, in order to recommend or determine whether, or to what extent, a health care service given or proposed to be given to a covered person should or will be reimbursed, covered, paid for, or otherwise provided under the health benefits plan. 

The system included, but is rarely limited to: preadmission certification, the application of practice guidelines, continued stay review, discharge planning, preauthorization of ambulatory care procedures and retrospective review.

Sample Language:

Payer shall provide the following information concerning utilization management and the processing and payment of claims in a clear and conspicuous manner through an Internet website no later than 30 calendar days before the information or policies or any changes in the information or policies take effect:

    (1)  a description of the source of all commercially produced clinical criteria guidelines and a copy of all internally produced clinical criteria guidelines used by the payer or its agent/designee to determine the medical necessity of health care services;

    (2)  a list of the material, documents or other information required to be submitted to the payer with a claim for payment for health care services;

    (3)  a description of claims for which the submission of additional documentation or information is required for the adjudication of a claim fitting that description;

    (4)  the payer’s policy or procedure for reducing the payment for a duplicate or subsequent service provided by a health care provider on the same date of service; and

    (5)  any other information requested by the patient or his/her provider of services

    (6) the identity and description of the qualifications of any peer reviewer, and any potential conflict of interest (local market competitor, etc.) who is engaged to opine on the matter.

    (7) any changes in the information or policies required to be provided shall be clearly noted on the Internet website.

Payer shall respond to a hospital or physician request for authorization of health care services by either approving or denying the request based on the covered person’s health benefits plan. Any denial of a request for authorization or limitation imposed by a payer on a requested service shall be made by a physician under the clinical direction of the medical director who shall be licensed in this State and communicated to the hospital or physician by facsimile, E-mail or any other means of written communication agreed to by the payer and hospital or physician, as follows:

    (1)  in the case of a request for prior authorization for a covered person who has been referred for inpatient hospital services, the payer shall communicate the denial of the request or the limitation imposed on the requested service to the hospital or physician within a time frame appropriate to the medical exigencies of the case but no later than 15 days following the time the request was made;

    (2)  in the case of a request for authorization for a covered person who is currently receiving inpatient hospital services or care rendered in the emergency department of a hospital, the payer shall communicate the denial of the request or the limitation imposed on the requested service to the hospital or physician within a time frame appropriate to the medical exigencies of the case but no later than 24 hours following the time the request was made;

    (3)  in the case of a request for prior authorization for a covered person has been referred to receive health care services in an outpatient or other setting, including, but not limited to, a clinic, rehabilitation facility or nursing home, the payer shall communicate the denial of the request or the limitation imposed on the requested service to the hospital or physician within a time frame appropriate to the medical exigencies of the case but no later than 15 days following the time the request was made; and

    (4)  if the payer requires additional information to approve or deny a request for authorization, the payer shall so notify the hospital or physician by facsimile, E-mail or any other means of written communication agreed to by the payer and hospital or physician within the applicable time frame set forth in paragraph (1), (2) or (3) of this subsection and shall identify the specific information needed to approve or deny the request for authorization.

    If the payer is unable to approve or deny a request for authorization within the applicable time frame set forth in paragraph (1), (2) or (3) of this subsection because of the need for this additional information, the payer shall have an additional period within which to approve or deny the request, as follows:

    (a)  in the case of a request for prior authorization for a covered person who will be receiving inpatient hospital services, within a time frame appropriate to the medical exigencies of the case but no later than 15 days beyond the time of receipt by the payer from the hospital or physician of the additional information that the payer has identified as needed to approve or deny the request for authorization;

    (b)  in the case of a request for authorization for a covered person who is currently receiving inpatient hospital services or care rendered in the emergency department of a hospital, no more than 24 hours beyond the time of receipt by the payer from the hospital or physician of the additional information that the payer has identified as needed to approve or deny the request for authorization; and

    (c)  in the case of a request for authorization for a covered person who will be receiving health care services in another setting, within a time frame appropriate to the medical exigencies of the case but no more than 15 days beyond the time of receipt by the payer from the hospital or physician of the additional information that the payer has identified as needed to approve or deny the request for authorization.

    Payers and hospitals shall have appropriate staff available between the hours of 9 a.m. and 5 p.m., seven days a week, to respond to authorization requests within the time frames established pursuant to subsection a. of this section.

    c.    If a payer fails to respond to an authorization request within the time frames established pursuant to subsection a. of this section, the hospital or physician’s request shall be deemed approved and the payer shall be responsible to the hospital or physician for the payment of the medically necessary services delivered pursuant to the hospital or physician’s contract with the payer.

    d.    If a hospital or physician fails to respond to a payer’s request for additional information necessary to render an authorization decision within 72 hours, the hospital or physician’s request for authorization shall be deemed withdrawn.

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