Conduent Incorporated (CNDT) Earnings Call Transcript & Summary

Hi, and good afternoon. We'd like to thank everybody for joining our webcast today on how to unlock more value from utilization review. My name is JJ Schmidt. We do have a few people that are in the queue right now waiting to log on. So we're going to give them a few more seconds here to let them join us and then we will get started. We will have some questions and answers towards the end and we'll have some instructions that we will provide to show how to ask any questions. And we'll also be providing some follow-up information after the webinar to all of the people who are joining us today in attendance. So I'd say in about 10 or 15 seconds, we'll get ready to kick things off. And again, I'd like to thank everybody for joining us today. And so with that, I'm going to turn it over to Colleen, who's going to get our program started.

Hi. Good afternoon, everyone. My name is Colleen Seal and I'm the Senior Director of Sales here at Conduent for the Medical Claims Management team. Along with JJ, I would like to welcome everyone to today's webinar, how to unlock more value from utilization review. On behalf of Conduent, I'd also like to thank each of you for participating as we are excited to share some great information with all of you today. I'd like to start by introducing our speakers for today. First, we have JJ Schmidt. JJ is our Managed Care and Claims Consultant, with over 25 years' experience in property and casualty. He is focused on strategy, process and IT. Next, we have Carol Valentic. Carol is our Senior Director for Commercial Healthcare where she oversees our clinical health care solutions, including medical bill review, medical management and clinical review services. Next we have Michael Sauls. Michael is a Portfolio Executive for our Healthcare Payer Solutions team under our Commercial Healthcare Group. He is responsible for operational and strategic planning and is focused on optimizing value and outcomes for our health care plans and its members. And last we have Janelle Sheen. Janelle is a residency trained Pharm.D. with clinical experience in both managed care and pharmacy benefit management. She is also a subject matter expert in drug utilization review solution. I'm going to start by providing you a quick overview onto Conduent. So Conduent, basically, the slide shows the 6 divisions that Conduent is broken into. They include Commercial Healthcare, Customer Experience Management, HR Services, Business Operations, Government and Transportation. This next slide dives a little bit deeper into the 6 solutions and shows you the different product offerings and solutions within each area. As I know we all want to dive into the program today, I'm not going to go ahead and review each area specifically, but this slide demonstrates the extensive offerings and the depth of Conduent. As JJ mentioned, at the completion of today's presentation, you will all receive a copy of the slide deck for further review as well. Conduent offers a comprehensive health care portfolio as listed on the left side of this slide. We have cross domain subject matter experts that fall under the comprehensive portfolio, including data scientists, analytic experts, engineers, medical professionals and pharmacists. We are committed to providing the best solution for our clients, and we have made the technology investments on the right side of this page to ensure success and client satisfaction. At this time, I would like to turn things over to JJ and he'll kick off the presentation.

Thanks. So we've got a really good group of speakers with a balance of business, operations people as well as clinical experienced folks that are going to be reviewing some of the content today. The things that we want to try and cover in the webinar is really level setting, utilization review. So looking at it just at a high level from an overview and process, we're going to talk a little bit about some of the different kinds of clinical guidelines and evidence-based medicine that are typically used in utilization review. We'll highlight the regulatory environment that often a company's utilization review programs and that's across all different lines of insurance. We have some clinical examples and case studies that we'll review that will help to demonstrate utilization review in action and how it can help to benefit your particular claim program. We're going to talk a little bit about some analytics and predictors, so that you can understand how data can help to drive not just the operational areas of utilization review, but also the strategic areas and how you can use some of this information to then manage reporting and looking at your overall program effectiveness. And then finally, we just have some takeaways that we'll look at some specific ways to improve the utilization review program that you use today. And then we'll have some questions and answers towards the end. Oftentimes, when we think about utilization review, we look at it as something that is required. So whether it is jurisdictionally or mandated through various regulations or through some sort of plan design, we look at it as something that is just a requirement that we have to do. And part of what we want to talk about today is extending the value of that, so that we can look at it more strategically and not just as kind of a requirement. Utilization review is not something that's new, and it's obviously been around from a managed care perspective for a number of different years. It's one of the ways that we help to manage health care costs, really looking at ways that we can influence patient care through a variety of techniques like case assessments and looking at the appropriateness of care both from the appropriateness of it being used for that particular condition or injury or diagnosis as well as the timing of that care. UR is important for different reasons, but when we think about unnecessary or inefficient care being offered to a patient, that's one of the reasons that utilization review has proved beneficial. It helps to prevent the overuse and misuse of different services or equipment. And it does this by really involving the use of different kinds of evidence-based medicine and clinical practice guidelines that help to really improve the clinical decision-making that goes on. And in the end, it helps to provide not just the appropriateness of the care, but it can also, at times, yield significant savings. One of the things that we find is that when people think about utilization review, they tend to focus just on the precertification piece or pre-authorization components of utilization review. There are a number of terms that are oftentimes used interchangeably. And depending upon who you're talking to and what kind of insurance plan they're reviewing or discussing, some of these words can be often used in different settings. So what we've got here is just a high level review of the different kinds of terminology that represent the different types of utilization review that you might see in a health plan, the different types of utilization review that might be used in a health plan and how those different types of utilization review might take place and at what point they might take place during the continuum of care. So going from pre-certification through a concurrent review that might be taking place during the care episode itself, retrospective reviews that are looking at services that have already been rendered. And then we'll also talk a little bit about some of the more specialized utilization reviews around medications and pharmacy reviews. So one of the things that we want to do also is talk a little bit about utilization review from a process perspective. So Carol is going to walk us through the process because many times, depending upon the type of utilization review that's being done, the process is very similar, again, across multiple lines of insurance.

Thank you, JJ. What we're looking at is a pretty standard workflow process for utilization review, whether you're reviewing for workers' compensation or commercial health. The first step is that you have to enter the request for authorization into your system, which then takes it to an auto review component. The auto review component allows for the application of specific customer rules, it allows for the application of planned document requirements for care, and it also is a quick review against evidence-based medical guidelines to determine if that care can be authorized without additional review. If the guidelines match up, one of the outcomes of the auto review component is a certification that allows that letter to go out and meet the providers' needs in a very quick time frame. There are two other outcomes from an auto review. The first can be a straight up non certification that would go straight to peer review for additional review services. As we all know, a non-certification has to come from a medical provider of similarity in terms of licensure. So the noncertified that comes straight from auto review, go through peer review, go through the peer review process and then an outcome comes through. Most frequently, though, the auto review component renders up what we would call a no decision, that it's unable to automatically certify the care or automatically non certify the care. At this point, it goes for a level one RN review. And based on that outcome, it then either goes for the second level review through clinical peer review services or it becomes a certified request for authorization. The goal of automation in this process is to get those requests for care that appeared to be going down a path of non-certification into the hands of the peer reviewer as soon as possible, so that we can drive additional time for peer-to-peer discussion. The goal of the outcome of a program is to reach an appropriate pattern of care for the injury. And so additional time for peer-to-peer discussion allows for more modifications rather than denials. JJ?

Yes. And Carol, one question I had, maybe if you could estimate how long this process typically takes?

So the process is oftentimes defined from a time frame by regulatory requirements. But on average, it is approximately 5 days for the whole process.

And that's regardless of if it's electronic or paper?

Regardless.

Got it. Okay. All right. So we're going to talk a little bit about some of the clinical guidelines and resources. And Janelle is going to review some of this information with the group.

Thank you. So utilization review programs are driven by many types of guidance. Sometimes, it depends on your population. Some evidence-based criteria is applicable to all forms, whether it's workers' comp, government or commercial. As an example, in government health, our state pharmacy programs must comply with not only state regulations, but also federal policies from CMS. Those things are changing all of the time. So it's kind of a constant stream of monitoring new guidance while at the same time, our clinicians are applying evidence-based literature results from clinical trials and studies and also reviewing guidance from leading health organizations so that we can draft prior authorization criteria. In compliance with those, we can create preferred drug list that are supported by the evidence that's in the literature that's out there and also identify opportunities to improve care through retrospective population based interventions. As you can see on the slide, there's all kinds of information out there. NCCN, I think, is a very popular reference for cancer guidance that's used across the different populations. I think really, the key here is to have the expertise that knows where the recommendations should be coming from and how to obtain those and then to apply them to your program in an effective and timely manner. Even on the clinical side, with the way things are today, we have an abundance of medications that are being approved for very rare diseases that sometimes we don't have experts for. Oncology, as I mentioned, is an area in itself that requires a lot of expertise and the guidance changes frequently. So having access to that and being able to apply it timely is very important.

And just a clarifying question maybe and Janelle or Carol, either of you could answer this. Are any of the criteria that we would see or use, are they all applicable to one line of insurance, say, workers' comp or commercial health? Or are some of the guidelines applicable across multiple lines of insurance?

So JJ, the guidelines are across very different lines of insurance. Some states have regulation in terms of what guidelines you should use. Some of it is driven by your accreditation and then some may be driven by disease conditions.

Okay. So with that, I think Mike is going to talk a little bit about -- let's see here, yes, Mike is going to talk a little bit about the payment integrity process.

Yes. Thank you, JJ. Yes. So as JJ said earlier, in addition to UR managing the delivery of care for the members and patients it's also -- a major component is to manage the medical spend. Most health plans have payment integrity functions where they do data mining and they do fraud, waste and abuse. And your typical errors in billing, things like that, that they manage, and many of them manage it quite effectively. Some of the other areas that aren't managed effectively and are often overlooked are areas like durable medical equipment. Again, durable medical equipment is something that is -- especially if you're looking at the Medicare population. If you go to their house, you might -- they can probably open up a storefront. They've got [ 3 ] wheelchairs and crutches and oxygen tanks. And so it's not very well-managed by the health plan. In fact, most health plans for durable medical equipment don't even authorize anything under $500. So anything under $500 is automatically approved. So very much overutilized. It's very expensive and people -- most health plans don't really keep an eye on that very well. A second area is medical pharmacy. And we're not talking about pills and bottles, we're talking about the very expensive drug infusions that are performed in a clinical setting. Some of these are up to $50,000 per dose. With the ACA going into effect, that lifted the lifetime maximums for a plan -- maximum spend for a single member. It used to be $1 million. Now there's no limit at all. So it went from $1 million maximum spend in a lifetime to unlimited. So some of these drugs actually increase these medical specialty drugs actually increased several thousand percent when that happens. In fact, some single members today are receiving millions of dollars, $4 million, $5 million, $6 million every year in just medical specialty drugs. So again, the pharmaceutical community has taken full advantage of the fact that there's no more limit. And then thirdly is diagnostic imaging. Again, very much overutilized, especially in the Medicaid population. So people are going and basically getting their brain fried when many times it's not necessary. But if you look at these 3 areas and then you add that to the payment integrity and the controls that health plans are currently have in place, you can squeeze another maybe 4%, 5%, 6% as the total medical spend. So for example, if you've got a regional health plan that has maybe $1 billion per year medical spend, which would be common for maybe a 300,000 or 400,000 member plan. And these guys are -- they're not making any money. If you look at last quarter's top 50 health plans, 21 of them lost money. The other -- most health plans, if they're doing well, they're doing 2% margin. Most of them are doing 1% margin or less or worse, they're losing money. So if you've got a health plan that's doing a 1% margin with a $1 billion medical spend and you can decrease that medical spend by 4%, that's $40 million. So you -- those are needle movers. Those are game changers for those health plans. And in fact, you've probably more than tripled their profit margin just by doing that, in these 3 specialty areas that are not managed well and are overlooked. So a lot to be saved in these areas. So back to you, JJ.

Okay. So we've touched on this a little bit. The regulatory environment, and Mike was making reference to some of these things. And we talked a little bit about this from the clinical criteria perspective, but utilization review is typically part of a very heavily regulated component of health care. So one of the things that we've been talking about today is kind of the difference between some of the different types of plans that might be participating. So whether it's workers' compensation or commercial health care or government programs, the regulatory environment can sometimes be very different. So when you think about the workers' compensation elements, that's some of the stuff that you see here on the left. The map kind of details out where the different programs are regulated, whether it's mandatory, whether the state is involved, that sort of thing. And on the other types of plans, so for health plans, for Medicare, for Medicaid plans, those are often controlled and regulated at the federal level. So when you think about things like ERISA and the Affordable Care Act, they're going to have provisions that are going to talk about, how care is delivered and what's covered and what's not covered. And then utilization review is a way that you can manage those elements determining what's covered and what's not covered and what's appropriate, what's not appropriate. We have URAC mentioned down here. They are an accrediting agency. So when you think about a utilization review program or a vendor that you might be working with, whether it's on the workers' comp side or on the health plan side, that is one accrediting agency that you can look towards. And they do have some good background information as well. If you visit their site that provides some much more detailed explanations around utilization review and some of the things that you want to look for. So they're a really good resource. When we think about utilization review, and we've talked about it at high level from a process perspective, from a clinical background perspective and from the aspects of, kind of, what's included and what's not included and how it's governed, one of the things that we found when we were putting some of this information together is that there are a number of providers, patients that kind of view utilization review as a burden or as a hurdle. And oftentimes, it comes out of when something is mandated, there is potentially less flexibility in the way that something is administered. So what we did find was that there are some differences from a private insurance perspective and a Medicare perspective on the way that providers view either the favorability or the unfavorability of the UR programs that they have to participate in. And again, it's because many of these UR programs are mandatory and some of the feedback that you'll see more from a qualitative perspective, is that providers feel like this sometimes gets in the way of how they deliver and administer care to their patients. And on the right, what we've kind of isolated is around the prior authorization process and just looking at, some providers feel like that process -- that prior authorization process has created in some instances, an adverse event for a patient that's in their care. And a subset of that has found that some physicians have even said that it's led to a patient's hospitalization. So as you think about your UR program, obviously, the patient is important, the payer is important, but it's also important to think about the perspective of the provider and how you engage with the provider on this process to help them be a part of the actual process itself. And from an administrative perspective, making the process as smooth as possible. One of the -- we've talked about this in a couple of different instances, but just looking at how utilization review is not just for surgical procedures. So Mike touched on this a little bit, talking about some of the medical equipment, talking about diagnostic testing, medications. And this just serves as a reminder that there are a number of different kinds of procedures that would be covered under utilization review. And what we want to do is talk about some case examples of some of these different kinds of procedures and treatments that would be part of utilization review and use that in the context of clinical criteria. And what I want to do is talk a little bit about how some of the clinical criteria might get created and why some of the treatments drive how that criteria gets created, and then that becomes adopted as evidence-based medicine. So when we think about imaging for lower back pain, what many studies and what many of the clinical criteria will tell you is that there's an appropriate time for it to take place. And it's not oftentimes in the very beginning of the claim that the efficacy of that kind of diagnostic treatment doesn't really warrant or support it being done. So what happens is that kind of treatment and procedure has been looked at over a number of different data sets where they can show where the imaging has taken place versus situations where the imaging has not taken place. And what the outcomes of the medical claims have been, where it's been performed and where it hasn't been performed. And that kind of evidence-based medicine, those studies, then become the formulations of different kinds of clinical criteria. That criteria is then adopted and used, so that it can help to make sure that, again, the right treatments are being done at the right times for an individual patient. Because when they're not, it means that there can be very high direct and indirect costs for managing some of that treatment. So what we're also going to do now is talk a little bit about some specific examples of how clinical criteria and utilization review can be used in a program. And I know that we've all seen and heard a lot about opioids and how they're used from a health care perspective. So Janelle is going to talk a little bit about this in this instance around our utilization review program.

Thanks, JJ. Sure. So this case study is a great example of both prospective and retrospective utilization review. I think the opioid epidemic has been a big topic across health care industry. Certainly, it has been in the government sector. It's affected probably some of us personally, our programs, both financially. We've seen lots of lives. And while the -- while opioid use disorder is not new, there's a lot of trends around it today that are very different from what we saw 20 years ago. And we know this because many clinicians and experts in the industry have studied the utilization patterns. We've seen the shifts in abuse of illicit drugs like heroin back in the 1980s. And then we went into mid '90s, and it was crack cocaine. And starting the 2000s, methamphetamine was big. And then we kind of went into a little bit of the prescription opioid abuse paradigm that we're kind of dealing with now. And then in the last couple of years, we're starting to see abuse and introduction of some of the synthetic fentanyl products that are out there. So through utilization review, we've been able to study these shifts to adapt our policies and regulations, such as the Support Act, and recommendations from CDC and CMS around this data to help control the epidemic. So in one Medicaid fee-for-service program, we were able to use utilization review to help the client develop a long-term opioid management strategy. And I say long term, with a heavy emphasis because I think this was part of the key to their success. When we sat down at the table to talk about opioids, it wasn't something that we knew that we could solve today or tomorrow. It was something that we knew was going to be a management program that was going to be adapted over a period of 3 to 5 years, maybe longer, as the trends continue to change. So through this strategy, part of it included automating prior authorization criteria to allow those who have pain to have access to opioids. And that's really important because when it comes down to treating patients, there are still people out there that have pains. And I think sometimes there's oversight on that because we're so quick to control what we know is part of the epidemic. So being able to allow access to those who need it and in a safe manner was important and was a big priority. We were able to do this by monitoring dosing of opioids through limitations on morphine milligram equivalents. We targeted criteria for new fills for opioids. We monitored drug seeking behavior for individuals, in addition to coordination of care when you had multiple pharmacies, multiple prescribers involved, looking at quantity limits for opioids. And all of this was done at the same time in this particular state that they rolled out a new program to simultaneously allow for coverage of physical therapy, acupuncture and then also chiropractic services as an alternative to opioids. So at the same time, when we were trying to identify an appropriate use of opioids and on safe use, we were able to provide a safe alternative to some patients. So we were able to set realistic goals by looking at the data. We developed a strategy that was feasible over multiple years. We implemented interventions that, in the end, reduced the overall number of prescriptions being dispensed and the units that were contained in those prescriptions. In the end, that means less drug on the street that can be abused or sold or used unsafely and hopefully means safer population, less overdose from opioids. I think we'll go to the next case. And Carol is going to present some information around medical marijuana in the workers' compensation space.