TAR Priorities – All Providers

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					TAR Priorities – All Providers

Medi-Cal often takes longer than other payers – including commercial HMOs that have such a
poor reputation in this regard – to pay its providers after services are rendered that require
treatment authorization requests (TARs). Furthermore, the state often does not process these
“pre-treatment” requests until well after services are provided, thus making the process
ineffective at containing costs or tracking utilization. Coupled with Medi-Cal’s inadequate
provider reimbursement (among the lowest in the nation), these delays ultimately reduce
reimbursement, negatively impacting providers’ bottom lines, which directly affects access to
care for Medi-Cal beneficiaries. In an era of decreasing reimbursement, the state should consider
options to reduce administrative burdens and unnecessary payment delays, thereby increasing
funding available for patient care.

The delays reviewing and processing TARs have been exacerbated by the state’s fiscal
challenges, resulting in even longer payment delays – up to several months – and an unwarranted
increase in denials for medically necessary services (due to often inexperienced temporary
staffing and arbitrary application of ambiguous out-of-date medical criteria). The increase in
denials results in unnecessary additional costs and administrative burdens for the state and
providers as these inappropriate decisions are often appealed.

The Medi-Cal Policy Institute’s July 2003 report, “Medi-Cal Treatment Authorizations and
Claims Processing: Improving Efficiency and Access to Care,” found several problems with the
TARs system and made recommendations to overhaul it. The report found that Medi-Cal
providers are dissatisfied and frustrated with the process, which results in financial risk to
providers and medical risk for Medi-Cal beneficiaries.

Based on the findings of the report and the experiences of California providers with the TARs
process, the Medi-Cal provider community makes the following recommendations to streamline
and update the Medi-Cal authorization process to make it more cost-effective for both providers
and DHS alike, while continuing to hold providers accountable:

1. Reduce the number of TARs required

      Sampling: Require providers to submit TARs as they do currently, but perform pre-
       payment reviews on only a random sample of the TARs. Random, scientific sampling
       will ensure that the sampling plan is statistically valid, eliminate TARs delays, and
       reduce the number of staff required to process TARs.
           o An increasingly higher percentage of TARs will be reviewed for providers and
               services/procedures that have a statistically significant higher denial rate (e.g., one
               standard deviation above the statewide mean for a particular provider or
               service/procedure). For example, if sampling is at 5 percent, then go to 10
               percent, then 20 percent, etc. Denials will apply to processed TARs in the
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March 5, 2004

      Reduce the number of services that require TARs: Utilize treatment plans and nationally
       and state-recognized industry standards to designate diagnoses and procedures as TAR-
       free. Many tools are available to assist with the objective determination of those services
       appropriate for TAR-free designation, including Solucient, Ingenix, MedPAR, etc. (See
       Example 1.)

2. Develop a standard set of adjudication guidelines

      For institutional providers, require institutions to document their generally accepted
       medical necessity criteria (Interqual, for example) and require DHS to accept this criteria
       as they determine medical necessity on the TARs being reviewed. This will eliminate the
       need for DHS to purchase cost-prohibitive proprietary products (such as Interqual), while
       also significantly reducing the number of denied TARs (which are ultimately appealed,
       therefore adding costs to the system) based on the arbitrary application of current
       ambiguous and out-of-date Medi-Cal medical necessity criteria.

      For non-institutional providers, adopt consistent standards for medical necessity and
       “lowest cost service.” Publish common instructions for both field office staff and
       providers so that everyone is operating off the same set of expectations. (See Examples

3. Develop standard turnaround timeframes

   By reducing the number of TARs required, DHS should be able to approve TARs within the
   NCQA standard of two-days turnaround time. The need for retroactive TARs would be
   reduced substantially.

4. Develop alternative review processes for fraud and abuse detection

   DHS audits and investigatons have been provided additional staff to ensure fraudulent
   providers are not enrolled in the Medi-Cal program in the first place. DHS also should
   contract with the fiscal agent to run sophisticated claims algorithms to identify fraudulent
   behavior before payments are made rather than utilizing TARs to identify fraud and abuse.
   (See Example 3)

5. Make each TAR cost effective

      California hospitals report spending approximately $80 in staff time on each TAR. The
       review of TARs done by DHS would cost the department significantly more than this per
       TAR, therefore, a conservative estimate of the cost of processing each hospital TAR is
       more than $175. Consideration should be given to eliminating TARs altogether for
       specific items and services below a certain cost. Enhanced automated claim screening by
       the fiscal intermediary could be substituted for TARs in these cases.
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March 5, 2004
6. Utilize electronic information for home health and skilled nursing

      Home health agencies and skilled nursing facilities are required to electronically submit
       to DHS patient assessment information. (For home health, the assessment form is known
       as OASIS; for skilled nursing, it's the MDS.) These assessment forms contain virtually
       all of the information DHS needs to make a determination of medical necessary.
       (DP/NFs would need to supplement the MDS with information showing that the Hudman
       Kizer criteria were met.) Currently, however, DHS does nothing with this information,
       instead requiring the submission of paper documentation.

Long Term Care Reforms

1. Develop and implement an automated utilization control process. Use the MDS data to
determine whether Medi-Cal long term care patients meet medical necessity criteria, initially and
on an ongoing basis as their medical condition changes. To validate MDS integrity, conduct
sampling, evaluations or rely on federal reviews.

2. Delegate TAR approval authority to the Regional Centers. The TAR process for ICF/DD
facilities is duplicative because DHS staff rely upon the Regional Centers assessment as
justification. The Regional Center should be used as prior authorization and a monitoring
process should be established under DDS or DHS to ensure that system integrity concerns are
already addressed.

3. Extend prolonged care TAR approval process to 3 years for patients with chronic
disease. After a TAR from the initial admission expires, re-authorization TARs for prolonged
care in all long term care facilities may now be approved for up to 2 years. For certain
diagnosis/conditions, less frequent TAR processing would make sense.

DME Reforms

1. Raise the limit on repair TARs from $250 to $750. This can only be for equipment that is
currently being utilized by the patient and we believe that these TARs are routinely approved.
The $250 limit was last raised almost 10 years ago. Most of these repairs are for custom
wheelchairs where the parts and labor can be substantial.

2. Eliminate TARs for replacement of wheelchair tires or batteries. They either need to be
replaced or they don’t and there is nothing that a TAR Field office employee can do to validate
that by looking at a TAR. An alternative would be to require a TAR only if the tire or battery is
being replaced within a certain period since the item was purchased new, i.e. no new batteries if
it is being replaced within 6 months of purchase.

3. Eliminate duplicate documentation requirements for wheelchairs. Current wheelchair
TARs require submission of a 2-page form signed by the prescribing physician which documents
the medical necessity for the equipment. In addition, the Field Office also requires the ordering
physician to submit a letter of justification for the equipment, which basically reiterates the same
information on the form. One or the other should be eliminated.
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4. Eliminate duplicate catalog requirements for unlisted items. On any item of DME that is
unlisted, common in wheelchair components and accessories, the provider is required to submit a
copy of the manufacturer’s catalogue page to indicate product number and price to the Field
Office for TAR approval. When the TAR is approved the provider is required to submit copies of
those same catalogue pages to EDS for claims payment. We would suggest that once the TAR is
approved and the items are priced for approval that the provider is not required to repeat the
same process for payment. The whole E-TAR possibility is negated for these claims because of
the need for including attachments.

Medical Supply Reforms

1. Establish ICF DDH/N TAR threshold. Exceeding the $165 utilization within a 30-day
period triggers the current TAR requirement for incontinence supplies. The exception is for
patients residing in an ICF-DDH or DDN facility which requires a TAR for any quantity even 1
diaper per day. DHS should either apply the $165 threshold for those patients as well or establish
a lower dollar amount for a TAR to exempt TARs that are commonly approved.

2. Eliminate excessive documentation. Incontinence TARs require the provider to submit a 2-
page form signed by the prescribing physician, which documents the diagnosis and quantity use
for the patient. We do not object to the form but do object to requests from Field Office staff for
actual chart notes from the physician in addition to the 2-page form. The form should be more
than sufficient to provide documentation of medical necessity.

3. Establish threshold for quantity controls. The current utilization controls refer to
quantities of medical supplies that can be provided to a patient in a 30-day period without the
necessity of a TAR. Those are actual numbers and patient use in any given month can vary
based upon a variety of circumstances. We believe that the utilization control numbers are valid
but DHS must recognize that the 30-day limit may prohibit a provider from dispensing needed
supplies until the 30 days elapses. We have suggested that those controls be amended to allow a
provider to ship/deliver a 60-day quantity at one time.

MSSP Reforms

1. Eliminate MSSP TAR requirements that are not cost effective and could contribute to
poor medical outcomes. MSSP (a Medi-Cal waiver program) serves clients in the home who
are age 65+ and certifiably frail enough to be in a nursing home. Often they have multiple
chronic conditions for which they take 6+ medications; in addition, many have memory loss.

MSSP is charged with the responsibility to address medications compliance issues, which we
historically and commonly have done by purchasing pill boxes with waiver funds. However, now
in order to obtain an $18.00 pill box for a client, we must to pursue the TAR process. And of
course while awaiting the decision, the client remains at risk for medications errors and poor
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Home Health Reforms

1. Eliminate Excessive Use of TARS and the Burdensome TAR Process: Home infusion
pharmacies provide an excellent example for excessive TARs, where some items should not
require TARs, as well as the TAR process, itself, being excessive. Additionally, they also point
to the need for timeliness of the TAR process regarding provider risk of not being reimbursed as
well as a need for standardization of criteria from field office to field office. (See Example 4)

2. Increase length of TAR – Making the TAR period longer in shift nursing (EPSDT) and
Home and Community Based Service Waivers (e.g. IHMC Waiver; NF A/B Waiver; NF Sub
acute) could help increase the timeliness for other services that require more frequent TARs.
These home and community based waiver services are for patients who have chronic diseases
and will likely be receiving shift nursing for the rest of their lives. The waiver substitutes for
facility based care at a hospital or a nursing home. It allows the pediatric child or adult to remain
at home. These types of patients in home care should have a TAR similar to the nursing homes,
which is for 2 years.

3. Reward/Create a System for Unused TARs: Create a program to allow for unused visits on
TARs. Some times home health agencies and (possibly other providers) are able to provide the
recipient all the services they need with less than the amount authorized by the TAR.

Radiology Reforms

Eliminate duplicate TARs. There is a TAR requirement for an MRI in the hospital setting. TARs
should be eliminated for MRIs of certain anatomic areas for hospital patients. It is the only
radiology procedure that requires a TAR. The professional and technical components of the
procedure are usually separately billed by the radiologist and the hospital. Each party has to get a
TAR; hospitals only TAR for outpatient because of per diem reimbursement. An MRI requires
two TARs, where at most one should be sufficient.

Other Considerations

There is a need for detailed information from DHS on the results of the current TAR system in
terms of the number of TARs for different types of services that are currently received and the
results of their review, i.e. TARS approved, deferred and denied. This information currently is
lacking from DHS.

March 5, 2004
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                                    Attachment -- Examples

Example 1 –
For example, Medicare beneficiaries in DRG 005 (extracranial vascular procedures) had an
average length of stay of 3.11 days (in the 50th percentile). Therefore, Medi-Cal would allow
three days of acute hospitalization for this diagnosis as TAR-free. A patient who required a
fourth day (or more) would need a treatment authorization request. Likewise, a physician
treating a patient for allergies could develop a treatment plan and receive TAR approval for a
six-month treatment plan including 12 shots/office visits. Anything more than the 12 shots
would require an additional TAR.

Examples 2 --
One such example recently appealed by a hospital was for a patient with a hip fracture. Payment
was denied since the field office determined the fracture was two to three weeks old and the
procedure was therefore elective. The department’s implication is that the Medi-Cal beneficiary
should have walked around on a malaligned and unstable hip or lain in bed causing further
debilitation for the amount of time that it would have taken to get an elective TAR. The
individual would still have required surgical intervention, but perhaps more damage would have
been done or medical deterioration occurred resulting in a prolonged recovery, with greater risk
of morbidity and mortality. This type of decision for denial would not have been made had the
field office been given an appropriate, up-to-date tool containing medical necessity criteria.

From the current Medi-Cal Manual, Hysterectomy, Signs and Symptoms refers to “abnormal
uterine bleeding.” What is abnormal? Providers need measurable medical indicators. Clinical
criteria from the indicator set used by a large California health system evaluates the severity of
the bleeding and potential causes of it based on laboratory results and impact on the health of the
woman based on specific clinical findings to determine if acute intervention is necessary. These
issues need to be addressed and reviewers provided tools that are evidence based, predictable and
eliminate as much inconsistency for the providers and field office staff as possible.

Example 3 –
In December 2003, the LA Times reported that dishonest medical providers were stealing tens of
millions of dollars from Medi-Cal by overcharging for compression stockings. It took years to
discover that a weakness in Medi-Cal’s computer system was allowing unscrupulous operators to
use the same patient’s name to bill, as one official put it, for more socks than “a normal person
could use in a lifetime.”

An internal memo obtained by The Times shows that the tab for stockings leaped from $1
million to $5 million a year in the early 1990s -- much faster than program enrollment -- and kept
climbing. In May 1998, Medi-Cal's billing consultant, EDS, found that the program was paying
too much for stockings. Rather than address the issue raised by EDS, DHS instead required
TARs for the stockings, adding another level of bureaucracy rather than addressing the issue.

A more simple and inexpensive solution rather than requiring TARs in the above instances
would have been for DHS to direct EDS to implement a front-end claims edit to require further
review of claims for stockings provided to teenagers (as the Times article references) without the
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very few diagnoses where these stockings would be medically necessary or after a threshold was
reached per beneficiary. A claims edit is electronic and those few claims could have been
returned to the provider to submit additional documentation, including a TAR.

Example 4 –
A home infusion pharmacy, which is treated the same as a retail pharmacy, must TAR separately
for medical supplies and pumps and drugs, even though the supplies and pump are necessary for
the patient to receive the drug. Additionally, each of these TARs requires each supply item,
pump and component of the drug to have a line.
For example, a patient receiving Total Parental Nutrition (TPN) is a good example of the
excessive use of TARs. TPN is the nutrition fed to a patient, who has non-functioning bowels
and can not absorb their food through their intestines. The current Medi-Cal TPN process
requires a TAR for the drug, and a separate TAR for the bag to hold the drug, and the pump used
to dispense the food into their veins. These separate TARs are required even though the pump
and bag are absolutely necessary for the patient to receive the drug (nutrition/food). One way to
fix this issue would be to have a dollar item allowed in home infusion pharmacy similar to DME,
which allows provider to dispense up to $100 worth of item(s) (for related groups) for purchase
per day of service to an individual patient without prior authorization. Currently, they have a
medical supply formulary that they must follow, requiring a TAR for items not on the formulary,
including, for example, the bags to hold the TPN.

TPN also serves as an example of the Burdensome TAR process: Each component in the TPN,
which is up to 25 drugs (e.g. zinc, selenium, dextrose, sodium chloride), is required to be
itemized separately in the TAR. Therefore, there are 25 lines itemizing the units required,
National Drug Code, the quantity, and the item for each drug component. This is further
complicated, because supplies and pumps are authorized at a 30-45 day TAR process, while the
drug is authorized within 24 hours. However, the patient needs the bag, pump and supplies in
order to ingest the food. Therefore, because there is not a standard criteria and timeliness with
the TAR for the supplies and the pump, the provider does not know if they will be reimbursed.
Most Medi-Cal providers will tell you that it just depends on who is reviewing the case that day.

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