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UnitedHealth has pledged to make a series of improvements in response to initial external reviews of its business practices, as the healthcare giant works to improve waning consumer trust.
The independent analyses, conducted by FTI Consulting and Analysis Group in November and released Friday, did not find compelling evidence that UnitedHealth is exploiting its control over the industry to inflate its profits, as some critics claim.
However, the reviews found persistent problems in three highly scrutinized areas: UnitedHealth’s Medicare Advantage risk assessment and coding, UnitedHealthcare’s care review and approval processes, and how pharmacy benefits manager Optum Rx transmits drug discounts to its customers.
UnitedHealth CEO Stephen Hemsley launched the external audit shortly after taking over as chief executive this spring, as health insurers try to rebuild their relationships with the American public amid growing backlash over frequent delays and denials of care.
“We know that our actions and decisions have significant impacts on patients, healthcare providers and the healthcare system as a whole, and we are committed to upholding the highest standards,” Hemsley wrote in a letter released with the results of the independent reviews.
UnitedHealth presented these findings as a much-needed step toward greater transparency and outlined 23 specific “action plans” that it will complete by the end of March to implement recommended reforms.
MA risk adjustment
The analyzes focused on areas where the company has found itself under fire from patients, lawmakers and regulators in recent years. Overall, FTI Consulting and Analysis Group found UnitedHealth’s policies to be robust and consistent with industry standards, but also recommended numerous steps the company could take to streamline processes and better communicate its operations to the public.
Regarding risk assessment in the privatized Medicare program, FTI said UnitedHealthcare and Optum document their operations well, conduct necessary oversight, and are able to revise policies in response to any CMS changes.
However, UnitedHealth could better clarify how its risk assessment policies work, according to the Washington, D.C.-based consulting firm.
“Some documents appeared to be in draft form or contained no evidence of having been reviewed within the past year,” while it is not always clear which policies apply to which UnitedHealth divisions, FTI said in its report.
At the same time, although Optum’s internal coding practices comply with ICD-10, a standardized system used to code medical conditions, and its associated rules, they could be better organized, FTI said. UnitedHealthcare could also better document its oversight of risk adjustment operations, according to the consulting firm.
In response, UnitedHealth said it would review its risk assessment policies at least annually and improve its governance structures for policy oversight, compliance monitoring and risk assessment.
The company also plans to share the results of a review of its HouseCalls program in the first quarter. Critics criticize HouseCalls, in which clinicians conduct an at-home assessment of a Medicare member’s health needs, as a key avenue for UnitedHealthcare to update the code.
UnitedHealth is currently the subject of criminal and civil investigations by the Justice Department over its Medicare billing practices. Research suggests the company inflates the risk scores of its MA beneficiaries to get higher reimbursement from the federal government, although UnitedHealth denies these allegations.
Usage management; drug discounts
UnitedHealthcare has also faced significant criticism for its onerous utilization management policies. Insurers say these practices, such as pre-authorizations or post-treatment exams, are important safeguards to avoid unnecessary or costly medical care. However, doctors and patients say they clutter the medical delivery system with bureaucracy and can worsen health outcomes.
FTI also analyzed UnitedHealthcare’s utilization management practices by reviewing 62 regulatory audits of the company over the past two years. Although UnitedHealthcare’s Medicaid and commercial plans are fully compliant with the highest external standards for managed care, there are steps the payer could take to improve, FTI said.
For example, the way UnitedHealthcare responds to audits is not standardized and the payer failed to take documented corrective actions in 9 of 62 audits reviewed, FTI said.
Similarly, payer quality management appears focused on maintaining external accreditation rather than truly improving the quality of utilization management, which could “give the erroneous impression, particularly to external stakeholders, of a lack of coordinated quality improvement activities related to utilization management,” the consulting firm wrote in its report.
In response, UnitedHealth said it would create a process for tracking and monitoring audit results, including formal due dates, escalation protocols, and reconciliation of external quality review reports with internal monitoring.
Meanwhile, the analysis group studied how Optum Rx, UnitedHealth’s PBM and one of the “big three” pharmaceutical middlemen in the United States, collects drug rebates from manufacturers and passes them on to customers.
PBMs are increasingly reforming their rebate practices, under the watchful eye of lawmakers who worry that companies are prioritizing access to high-cost drugs to increase rebates and keep more of the savings as profit.
The analysis group’s review found “no deficiencies or need for corrective action” but recommended ways Optum Rx could improve its practices, including reviewing customer-initiated audits and refining escalation processes for any disputes.
Optum Rx said it would improve escalation protocols, while improving the clarity of reporting on discount exclusions and automating “high-volume, low-complexity” processes.
The criticism comes amid a larger crusade by Hemsley to renovate UnitedHealth’s image after taking the reins from former CEO Andrew Witty in May. This is seemingly a Sisyphysian task, given the regulatory and legislative spotlight on UnitedHealth and the company’s control over multiple areas of the complex and confusing healthcare industry.
UnitedHealthcare, for example, is the largest private insurer in the United States and has therefore received the lion’s share of the growing animosity against health insurers. The insurer’s CEO, Brian Thompson, was shot to death in Manhattan just over a year ago, a killing that appears to have been motivated by anger at health insurers. The event kicked off a reckoning for payers and led major carriers to commit to a series of voluntary reforms this year.
In addition to engaging in an independent review in July, Hemsley also formed a new board committee to “monitor and oversee financial, regulatory and reputational risks” as the health care giant attempts to improve its position.
Despite these measures, UnitedHealth’s stock is down more than 35% year to date, pressured by deteriorating public sentiment and regulatory burden from DOJ investigations, but also the ramifications of a massive cyberattack last year and high costs at the insurance division that derailed profitability forecasts.
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