The Technical Assistance and Consulting Services Division of Managed Healthcare Unlimited (MHU-TACS) assists health plans in achieving their regulatory compliance and customer service goals, building upon MHU’s valued role as an impartial third-party reviewer for leading regulatory agencies. Customized consulting engagements are crafted to address health plans’ regulatory needs assessment and evaluation, medical survey and audit preparation, corrective action planning, and staff training:

  • Regulatory Needs Assessment and Evaluation is a core tool to ensure an organization’s ongoing compliance in the areas of quality management, utilization management, grievances and appeals, access and availability, language assistance programs, and timely access regulations. Included is assessment and evaluation of health plan vendors and providers delegated to perform specific tasks within these areas.
  • Medical Survey and Audit Preparation guides health plans through routine and non-routine regulatory surveys and audits
  • Corrective Action Planning assists health plans in their efforts to address deficiencies identified during regulatory surveys and audits
  • Staff Training prepares managers, staff, and clinicians to deliver quality care while complying with clinical standards and state regulations as an ongoing part of health plan operations. Focused education and training prepares staff to navigate specific surveys and audits.

Rose Leidl, RN, is an expert in managed care, and she concurs with the industry consensus that training in this field is a vital, nationwide need – one that is not being met.

Managed care has imperfectly defined the delivery of modern healthcare in the world, and managed care principals are the theoretical core of our modern healthcare systems. However, in the U.S.A, there exists a significant training gap among clinical and non-clinical healthcare professionals in terms of a boots-on-the-ground, working knowledge of managed care operations. Based upon her observations during audits of over 100 health plans, Ms. Leidl has decided that now is the time to do something about it.

Utilizing her firm’s physicians, nurses, mental health specialists and regulatory experts, who have a wealth of knowledge to share about managed care, Ms. Leidl is launching a Managed Care Academy (MCA). The curriculum will be based on the following major cornerstones of managed care operations – utilization management, quality management, enrollee grievances and appeals, and access and availability of services.


  1. Utilization Management (UM)

Utilization management is a critical component of managed care because of its central role in approving and denying healthcare services. By ensuring that cost-effective care is medically appropriate and safe, UM functions as the concierge of managed care.

UM in the healthcare industry is most notably recognized for day-to-day monitoring of service delivery, enrollment and institutional capacity. In particular, UM is responsible for monitoring and reporting on over- and under-utilization of specialty care, which demonstrates how referrals to specialists and diagnostic and treatment modalities reflect a health plan’s quality of care and cost effectiveness. However, UM’s reach goes far beyond these functions, affecting other elements of managed care. If done properly, UM influences the workings of diverse administrative functions and departments, such as member services, provider relations, human resources and regulatory affairs.

As an acknowledged expert in utilization management, Ms. Leidl will lead this module. At the end of the program, academy graduates will be able to:

  • Identify Knox Keene Act (KKA) citations that regulate health plan managed care decisions
  • Evaluate the application of clinical criteria to authorization decisions and write denial letters to enrollees and providers in a way that effectively ties the decision to the clinical criteria, and most importantly, ties the clinical criteria to the patient’s medical condition
  • Develop policies and procedures that reflect both organizational practice and regulatory requirements
  • Identify discrepancies between practice, policy and regulation that may result in audit deficiencies
  • Construct data analysis tools that provide actionable information on important UM processes, including over- and under-utilization of services
  • Manage the process of an authorization request for a healthcare service from the provider’s initial request to health plan approval or denial, to the health plan’s appeals process, and to a complaint submitted to a regulator for adjudication.
  1. Quality Management (QM)

Quality management (also called quality improvement and quality assurance) in health plans, health systems and hospitals is charged with ensuring the provision of quality care by physicians and other healthcare professionals. As a result, QM activities must be overseen by physicians in medical plans, by ophthalmologists in vision plans, by psychiatrists in mental health plans, and by dentists in dental plans. QM is the ultimate watchdog of managed care.

QM involves monitoring and investigation of specific quality of care cases across provider networks and health plans. Network monitoring, conducted as part of the UM, GA or AA process, can reveal overarching quality issues that may need to be resolved through policy and procedure changes or training. Network monitoring also uncovers specific incidents where a provider’s patient care and service level is questionable, often called potential quality issues  or “PQIs,” which require investigation and a corrective action plan (CAP) where the investigation confirms deficiencies in care or service. PQI activities are usually overseen by a quality management committee, using specific agreed-upon evaluation measures (e.g., outcome severity levels). Corrective action can range from warning letters to expulsion from the provider network and reporting to regulatory review agencies.  

MHU physician staff will lead this module. At the end of the program, academy graduates will be able to:

  • Collaborate with other managed care departments so that important QM issues are identified, addressed and followed up
  • Analyze patterns and trends from various sources and alert the health plan, facility or provider group to potential quality of care issues
  • Select meaningful quality improvement projects, conduct a study, and report on the results
  • Identify individual cases that may present potential quality of care issues
  • Understand the steps in a QM investigation, and formulate a corrective action plan, when indicated
  • Understand the steps in a CAP, launch a CAP, ensure that the CAP has been implemented by the provider, and follow up to assess the effectiveness of the CAP
  1. Grievances and Appeals (GA)

A health care organization’s handling of enrollees’ grievances/complaints and appeals is a lens into to organizational performance. If a health plan or provider rebuffs or dismisses enrollee complaints or considers them to be nuisance calls, quality of care suffers. GA serves the same purpose as the canary in the coal mine.

GA departments have several key functions. The customer service representative (CSR) serves as the front line, and a knowledgeable managed care executive knows that consistent, in-depth training and monitoring of CSRs is of primary importance. Other key functions in GA management are the informed analysis of grievance categories and identification of potential quality and service issues for further investigation (e.g., review by clinical staff). Focused analysis of GA data can initiate policy and procedure revision across the organization, and the investigative process can serve as a corrective tool. By its nature, GA  facilitates communications issues between enrollees and other organizational units, which can impact organizational success.

Accomplished and experienced MHU clinical and non-clinical managed care experts will lead this module, which will focus on the tasks that result in effective management of the GA process. At the end of the program, academy graduates will be able to: 

  • Develop training policies and procedures for managed care GA departments
  • Articulate the steps in grievance investigations
  • Oversee development and management of data analysis systems for GA that weed out quality issues for further review and identify trends and patterns that suggest system-wide problems
  • Utilize the internal overturn rates in the appeals process to construct better decision-making with regard to authorizing and denying services
  • Collaborate with other organizational units on improving communications between enrollees, providers and administrators based on GA interactions
  1. Access and Availability (AA)

Access to care addresses the obstacles that enrollees experience in obtaining the services that they have contracted with a health plan to provide. These issues often involve geographic barriers or an insufficient volume and diversity of providers in the plan’s network. In particular, lack of access to specialty care can seriously compromise health and well-being. Availability of care addresses barriers to an enrollee’s ability to obtain care from providers as a result of inordinate wait times to schedule appointments, tests and procedures as well as wait times in providers’ offices. AA is the timekeeper with regard to delivery of health care services.

For many years, DMHC and MHU struggled with individual health plan and provider interpretations of acceptable parameters for access and availability of services. For instance, one health plan may have established a 200-mile roundtrip standard for an enrollee traveling to an in-network specialist in a rural area, while another plan may have established a more appropriate 50-mile roundtrip standard. One health plan may have established a four-week wait for an initial obstetrical appointment, whereas another plan may have established a two-week standard.

In 2010, the Department of Managed Health Care was charged with enforcing Timely Access Regulations (TAR). These regulations identify permissible wait times for the various types of health care appointments as well as enrollee telephone inquiries and provider call-backs. MHU designed the survey format for these standards, which are reviewed during regulatory audits of health plans.

MHU Vice President Pat Schano, MEd, who worked with the Department on the TAR regulations, will lead this module. The MHU team will present and discuss the Timely Access Regulations so that academy graduates will:

  • Be able to develop prospective AA standards using the California TAR as an example
  • Understand how AA standards can be harnessed by health plans and providers
  • Oversee data collection mechanisms and produce AA reports
  • Evaluate the delivery of health care services based on exemplar AA standards

Good managed care is achieved when these four key components – utilization management, quality management, grievances and appeals, and access and availability –  come together like the parts of a smooth-running engine. Training is the only way to achieve this goal.

by Rose Leidl, RN, BSN; Patricia Schano, MeD; Annalisa A. Almendras, PsyD; Barbara Pawley, MPH, MPW

In California, the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), also called “the Parity Act,” is rolling out under the auspices of the state’s Department of Managed Health Care (DMHC) in partnership with the consulting firm, Managed Health Care Unlimited, Inc. (MHU), a leading review agency for full-service and specialty health plans. California is one of the first states to implement MHPAEA, making the DMHC/MHU team an innovative collaboration.

MHU’s job was to assist and review the work of the health plans in their initial efforts to align the treatment and financial parameters of their medical, behavioral health and substance use disorder benefits. The task required in-depth teamwork and an effective working relationship.

Implementation began in early 2014 with a DMHC request for compliance filings from the 26 California health plans that offered medical and mental health/substance use disorder (MH/SUD) services at that time.

Phase 1: Compliance Filings (2014 – 2015)

Compliance filings enabled California health plans to demonstrate how they intended to achieve parity between their medical and MH/SUD benefits. The process involved both a qualitative and quantitative analysis. The qualitative analysis was performed first in order to establish a framework for the comparability of benefits.    

Qualitative Analysis

MHPAEA provisions require health plans to undergo a substantive test for parity of benefits between medical and MH/SUD services across six classifications: Inpatient In-Network, Inpatient Out-Of-Network, Outpatient In-Network, Outpatient Out-Of-Network, Emergency Services, and Prescription Drugs (Pharmacy Services).

The DMHC/MHU team created additional review areas: Other Items and Services within the Outpatient In-Network and Outpatient Out-Of-Network classifications to better compare medical and MH.SUD services that do not fit into an office visit paradigm, Prescription Drug Formulary Design, and Case Management. These classifications were assembled under three umbrellas that reflect how health plans ascribe benefits: prior authorization, concurrent authorization, and retrospective authorization.

To facilitate the compliance filings, the team developed a template (Table 1) to help plans organize their responses and explain their rationale for alignment of benefits.


Table 1: Template for Qualitative Analysis in Compliance Filings







A. Definition of Medical



B. Prior Authorization



Inpatient, In-Network


Outpatient, In-Network: Office Visits


Outpatient, In-Network: Other Items and Services


Inpatient, Out-of-Network


Outpatient, Out-of-Network: Office Visits


Outpatient, Out-of-Network: Other Items and Services


C. Concurrent Review

Inpatient, In-Network (etc)


D. Retrospective Review

Inpatient, In-Network (etc)


E. Emergency Services


F. Pharmacy Services


G. Prescription Drug

     Formulary Design


H. Case Management



The DMHC/MHU team was a resource to the plans, offering support and giving advice as they worked through the qualitative analysis. In particular, the plans’ explanations for grouping services within the required classifications prompted frequent discussions in order to refine thought processes and rationales. MHU’s staff included clinicians, whose expertise was critical in parsing the intricacies of specific services and procedures.

While the grouping of medical and surgical services was relatively straightforward, complications arose in ascribing across-the-board comparisons with MH/SUD services, especially in the outpatient classification, as the following examples demonstrate:

  • MH/SUD group therapy sessions cannot easily be compared to individual therapy sessions or to medical office visits.
  • MH/SUD office visits may incorporate multiple clinical consultations (e.g., chemical counseling and mental health counseling) into a single visit, unlike medical office visits, which usually involve one consultation from a single provider per visit (sometimes involving multiple issues).
  • Behavioral health treatment for autism spectrum disorder is scheduled in the setting where the behavioral problem occurs – usually at school or in the home – not in a provider’s office, thereby adding travel time to what is termed in medical services as an “outpatient office visit.”
  • Partial hospitalization for MH/SUD is considered by most plans to be outpatient treatment but is calculated by number of days or hours and cannot be easily compared to medical office visits, procedures or tests.

The Outpatient Other Items and Services classification proved to be the most challenging. For medical services, this classification describes outpatient health care that cannot be delivered as standard office visits. Complexities in many MH/SUD services set hurdles for comparability. Table 2 exemplifies how a plan might organize and describe its medical and MH/SUD benefits for the Outpatient Other Items and Services classification.

Table 2: Example of Plan Descriptions for

Outpatient Other Items and Services


Medical Benefits

MH/SUD Benefits

Outpatient tests and procedures:

  • Non-emergency air or ground transportation
  • Chondrocyte and cochlear implants
  • Clinical trials
  • Custom orthotics
  • Certain dermatology procedures
  • Dialysis services (notification only)
  • Durable medical equipment
  • Experimental/investigational services & new technologies
  • Genetic testing
  • Home health services
  • Occupational and speech therapy
  • Certain outpatient diagnostic procedures
  • Outpatient surgical procedures
  • Prosthetics
  • Radiation therapy
  • Referrals to non-participating providers
  • Transgender services
  • Transplant-related services
  • Rehabilitative and habilitative therapy

Outpatient services:

  • Travel (visits to patient’s home)
  • Psychological testing
  • Neuropsychological testing
  • Outpatient detoxification
  • Outpatient ECT
  • Transcranial Magnetic Stimulation (TMS)
  • Partial hospitalization, day treatment, half-day partial hospitalization
  • Intensive outpatient program
  • 23-hour outpatient observation
  • Behavioral health treatment, including Applied Behavioral Analysis (ABA)


After listing and grouping the menu of medical and MH/SUD benefits, the plans were required to explain how and why they arrived at the comparability of services. Plans also had to describe their utilization management processes, including their criteria for approving, modifying or denying requests for services during prior-authorization, concurrent and retrospective reviews.

The qualitative analysis entailed multiple drafts by the plans. Each draft was assessed by the DMHC/MHU team, and amendments to the filings were suggested until a refined and compliant product was produced.


Quantitative Analysis

As outlined in MHPAEA, the quantitative analysis is a process by which a plan establishes parity between its medical and MH/SUD benefits in terms of enrollee financial requirements (e.g., copay or coinsurance) and/or treatment limitations (e.g., hospital days or number of outpatient visits). In most cases, the basis of this analysis is the development of a predominant financial requirement for each classification (e.g., Inpatient, In-Network), which is a two-step process.

The first step determines if a plan must apply a predominant financial requirement to the medical and MH/SUD services in a classification. The statute states that if a plan applies any financial requirements to at least two-thirds of all the medical services within a classification, it must develop a predominant financial requirement for that classification. If a classification does not meet the two-thirds threshold, then the Plan does not need to develop a predominant financial requirement for the classification. Table 3 shows that in the Inpatient, In-Network category, the plan met the two-thirds threshold as three of the four types of medical services provided by the plan have a financial requirement, i.e., enrollee coinsurance.

The second step determines the level of the predominant financial requirement within a classification if a two-thirds threshold is met. The level is determined by the financial requirement, e.g., copay or co-insurance, that the plan applies to more than one-half of the medical services in the classification.

Table 3 shows that the plan meets the one-half threshold – three of the four types of medical services within the Inpatient, In-Network category require a coinsurance. Developing the predominant financial requirement in this case is a simple extrapolation because in all of the plan’s medical services, with the exception of hospice, the coinsurance is the same, i.e., 20%. Therefore, the predominant financial requirement is a 20% coinsurance. This analysis creates a bar for MH/SUD services: The plan may not charge more for its MH/SUD services than the predominant financial requirement established for its medical services, even if the plan previously charged enrollees a higher coinsurance for some MH/SUD services. The plan may, however, charge less than the 20% coinsurance for MH/SUD services.

DMHC’s Office of Financial Review (OFR) performed the quantitative analysis, which was more complicated in categories (e.g., Outpatient Other Items and Services) where the range of financial requirements or quantitative treatment limitations were significant.

The DMHC/MHU team served in a consultative capacity throughout the quantitative analysis, helping the OFR to understand the medical services in comparison to the MH/SUD services in each classification.

Table 3 demonstrates the final product of the quantitative analysis in one classification.

Table 3: Example of a Predominant Financial Requirement

in the Inpatient, In-Network Category

Inpatient, In-Network Medical


Predominant Financial Requirement

Inpatient, In-Network MH/SUD


1.  Inpatient admission – room and board in a medically necessary private room, semi-private room or ICU with ancillary services (includes maternity services).



1.  Inpatient psychiatric admission – room and board in a medically necessary private room, semi-private room with ancillary services (includes laboratory, and ECT facility services).


2.  Confinement in a skilled nursing facility.


2.  Inpatient detoxification admission – room and board in a medically necessary private room, semi-private room with ancillary services (includes laboratory services).


3  Inpatient hospice care


3.  Residential MH treatment and




4.  Physician visit to hospital or skilled nursing facility (excluding care for mental disorders)


4.  Physician visit to hospital, behavioral health facility or residential treatment center (includes professional services for ECT, psychological testing, and neuropsychological testing)



Phase 2: Audits (2016 – 2017)

Upon completion of the compliance filings in 2015, the DMHC/MHU team launched Phase 2, a series of desk and onsite audits for all of the participating health plans to determine whether they were meeting parity expectations.

While the compliance filings show how the plans intend to maintain parity between their medical and MH/SUD services, the audits show where and how the plans are in (and out of) compliance with their own guidelines, in practice.

The audits were conducted through retrospective file reviews and interviews with plan staff. The focus was on plan oversight of delegated services, which is a key component of traditional medical and behavioral health audits required under California’s Knox-Keene Act, the regulations governing health plan oversight.

Most plans delegate medical services to health systems, clinics, doctors and hospitals, which can require oversight of a hundred or more delegates who have their own policies, procedures and practices – including individual criteria for medical necessity decisions and authorization of services. Under Knox-Keene, if delegates do not conform to plan policies, which have been reviewed and approved by DMHC, the plan is found to be deficient in its oversight responsibilities.

The Parity Act added a layer of difficulty to plan oversight of its delegates because plans routinely delegate their MH/SUD services to other specialized health plans, including ones under the auspices of city and county governments. As part of the parity audits, the plans had to demonstrate that MH/SUD delegates’ guidelines and criteria complied with those of the plan and had parity with delegated medical services in terms of utilization, authorization, cost-sharing and quality of services.   

Upon completion of each audit, the DMHC/MHU team prepared a preliminary report, outlining their findings. Final reports released to the plans will serve as guidelines for the adjustments they need to make in their operations in order to comply with the Parity Act going forward.

Managed Healthcare Unlimited (MHU) was founded in 1995 as an independent third-party reviewer and managed care consulting firm. MHU’s business model of sustained growth is built on exemplary clinical and regulatory expertise, personalized service, rapid response, and operational flexibility. A byproduct of MHU’s work over two decades is the creation and design of review protocols and technical assistance guides that are widely utilized in regulatory compliance audits and investigations.

MHU’s path to leadership in the field of independent healthcare review began with successive contracts with HCFA (now CMS) to conduct monitoring and investigative audits of federally qualified health plans across the country. This work led to long-term contracts with state authorities in California, including the Department of Managed Health Care, involving hundreds of routine audits directed at commercial and government insurance plans in addition to focused investigations of specific regulatory and healthcare issues.

In addition to regulatory review, MHU’s experience and expertise in managed care has led to participation in the development and implementation of new healthcare programs, such as the California Mental Health Parity Act in 2005, California’s Timely Access Regulations in 2010, and the Federal Mental Health Parity and Addiction Equity Act (MHPAEA) in 2015.

Managed Healthcare Unlimited employs a cadre of diverse and highly experienced professionals who provide rapid, comprehensive responses to challenging issues that confront the healthcare regulatory environment. Joining the team, as needed, are consultants from across the clinical spectrum, including dentists, ophthalmologists, psychiatrists, and subspecialty experts.


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