Macroeconomic forces are changing the rules of the business game for both payers and providers. Under the old rules, providers could do what they thought best with little regard for cost, while payers paid claims with little regard for what medical interventions worked. And both sides could win. Under the new rules, payers and providers win only when they work together to produce the best possible clinical outcomes at the lowest possible costs.

In fact, a recent survey of nearly 500 payers and providers commissioned by McKesson found that more than two-thirds of the respondents expect value-based payment models to be the norm between payers and providers by the year 2020.

The most important skills to possess in the new game, or core competencies for payers and providers, are the willingness and ability to share information and ultimately put actionable clinical and financial data in the hands of caregivers and utilization managers at the point of service.

I see three first steps payers and providers can take together to make the above happen and lay the foundation for a broader, more comprehensive, collaborative relationship between two stakeholders that traditionally sit on opposing sides of the aisle

  1. Automate the Utilization Management ProcessThe utilization management (UM) process through which payers approve provider requests to deliver care to patients is largely a manual process. Requests for treatment approvals are done by fax, by phone and even, in some cases, by regular mail. This manual approach is inefficient, increasing the administrative burden on both payers and providers and leading to unnecessary treatment delays for patients.
    A better approach would be to automate the UM process. Fax, phone and mail can easily be replaced by a variety of electronic tools to speed and streamline the process. For example, a provider can set up a payer-specific web portal through which the two parties exchange clinical information (such as requests for diagnostic tests and medical treatments) and financial information (such as insurance eligibility determinations, benefits, copayments, deductibles and claims) in real time.
    Also known as multi-payer portals, cross-payer web portals perform the same function as single-payer portals but allow provider organizations to exchange clinical and financial information with multiple payers through one secure web service. Some proprietary software programs and systems also allow payers and providers to automate the utilization management process.
  2. Agree on an Exception-Based Utilization Management System
    Any analysis of utilization management and review data will find that certain types of medical treatments requested by providers are routinely approved by payers and other types of medical treatments routinely require further review and documentation before being approved. By using that data, payers and providers can set up transparent, mutually-agreed-to business rules to guide their automated UM systems.
    The rules would allow specific medical treatments to be automatically approved if certain conditions are met. Exceptions to those rules automatically go under review. Under this approach, both sides know ahead of time what gets approved and what gets reviewed, allowing everyone’s attention to focus on what needs to be done to get the right level of care delivered to the patient in the most appropriate setting and time frame.
    Ideally, automatic approval of care should take two minutes or less with an exception-based utilization management system. And, the majority of cases that need more information and documentation should be resolved within 24 hours.
  3. Adapt to Flexible Collaboration Process
    Payers and providers that are serious about collaboration should make evidence-based clinical guidelines part of their exception-based, automated utilization management system. Both parties now win when they work together to produce the best possible clinical outcomes at the lowest possible costs, and alignment on evidence-based clinical guidelines is essential to that effort.
    Each side should know what treatment protocols produce the desired clinical and financial results. When that’s baked into the UM process, payers and providers begin working in tandem on patient care rather than behaving as adversaries trying to gain an edge on the other. That said, both sides need to be open and flexible enough to adjust the clinical guidelines based on new medical information and treatment evidence that are flooding the healthcare industry daily. The bottom line is to do what’s best for the patient for the lowest possible cost. That produces value for all parties involved.
    Some payers and providers have adopted these three strategies and have taken the next step to allow payers direct access to patients’ electronic medical records held by providers. This streamlines the process even further by allowing payers direct access to medical information to make informed utilization management decisions. That requires a great deal of trust, and most payers and providers have not reached that level of trust in their relationship just yet.

Still, by taking the three steps outlined here, payers and providers are laying the foundation for further collaboration and putting themselves in a better position to thrive in the new healthcare world that uses value as its currency.

Where are you in the utilization management process? What solutions have you found particularly useful or, not useful? Let me know, and we may discuss it in a piece on payer-provider collaboration for Creating a Healthier Future.

Three steps to achieving payer-provider collaboration in the new healthcare world:

  1. Automate the Utilization Management Process: Replace antiquated systems with new electronic tools that can accelerate and streamline processes.
  2. Agree on an Exception-Based Utilization Management System: Create business rules that allow specific medical treatments to be automatically approved if conditions are met. Exceptions to those rules can automatically go under review.
  3. Adapt to Flexible Collaboration Process: Payers and providers need to be open and flexible enough to adjust the clinical guidelines based on new medical information and treatment evidence.


Editor’s note: Download a copy of Holly Toomey’s May 6 presentation on payer-provider collaboration delivered at the Dorland Health 6th Annual Care Coordination Summit in National Harbor, Md.

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About the author

Holly Toomey, RN, BS, HCA is director, product management at McKesson Health Solutions. You can reach Toomey at For more information, visit McKesson Health Solutions.


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