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In the current era of managed care, hospitals are experiencing a dramatic change in reimbursement structures. Some hospitals are losing up to $1.5 million per month because of claims denials, according to industry experts. One hospital alone faced a loss of $6 million. Is your facility trying to bridge this perilous gap? If so, there’s something case managers can do to help fix the bottom line: As demonstrated in a presentation at the Case Management Society of America’s (CMSA) recent Hospital Case Management Summit, a one-day conference held in November, 2000, in San Diego, a structured denial management program can help improve your overall reimbursement numbers.
Jon Mayer, RN, FNP, MBA, a management consultant with Chicago-based Milliman and Robertson Inc., emphasizes that case managers can play a vital role in helping recoup those staggering reimbursement losses. "Denial management programs are in place in several organizations as they interface with managed care organizations (MCOs)," Mayer says, but not in all organizations. "It varies by size and type of facility, and by the amount of managed care in the particular area," he says.
Since there doesn’t seem to be a standard definition of denial management, many different individuals within the hospital might be addressing denials. But, Mayer asks, "Are they effective? Does what they’re doing prevent denials?"
In some cases, recouping the funds from denied claims can take more than a little change — it can require a major overhaul. That’s what Dan Wassailchalk, MHA, RHIA, director of performance improvement/utilization management for The Johns Hopkins Hospital in Baltimore, found out. For fiscal year 2000, his facility began a multiphase program it called the "Revenue Recovery Initiative," which examined not only claims denials but also ineffective relationships with payers, lingering appeals, inaccuracies at registration, coding and case mix intensity, bills processing, and poor clinical documentation. The result: Johns Hopkins recovered more than $8 million — $2.6 million of which came from a reduction in payment denials.
"We knew there was $20 million on the table and we were going to get something," Wassailchalk says. In fact, Hopkins’ denial rate had been climbing since 1998. Every 0.1% in the denial rate was equivalent to about $340,000, he explains. "We realized that to drop it 0.3% was worth $1 million."
Wassailchalk’s plan included many different components, but one of the most important ones was integrating what he calls a "triad case management team," made up of a nurse case manager, a social worker, and a performance improvement/utilization management member, who would be able to follow a patient from admission to discharge. "That would provide continuity within the case management program," he says, and create better communication among everyone.
Mayer says case managers have specific responsibilities when it comes to denials, because of their function as communicators. Typically, denials management is assigned to the business office of a hospital, the people who negotiate contracts with MCOs, or utilization management, he explains. If it’s a large system of several health care facilities, denials may be handled centrally, even in another city. "But there are specific functions that are localized, or decentralized, and those are the ones the case manager handles," and should handle, he argues, because they’re on-site, talking to physicians, and interfacing with the patient.
Ultimately, Mayer stresses, case managers should get involved at the base level: contract negotiation. "Let’s go a step beyond," he says. Rather than the finance department identifying a fee or rate for managed care, case management should be involved at the earliest stage. The best way for it to work, he suggests, is for there to be a meeting at the time of contracting between the hospital staff — including case management — and the payer.
Depending on the size of the organization, the head of the case management department or individual staff members might attend that meeting. This is the optimal way for the case manager to understand the payer’s criteria, and in order for denials management to work, case managers must understand the criteria as well as, if not better than, the payer, Mayer says.
At Johns Hopkins, the contract implementation team is responsible for the planning, coordination, review, and ultimate approval of a contract. Again, the idea is that different people bring different perspectives to that process.
Wassailchalk’s other initiatives included:
1. Improving accuracy at registration. They made sure registrars were trained to ask the right questions so that more days were certified up front and fewer denied on the back end.
2. Becoming clinically efficient. "We needed to reduce delays in service, improve documentation, move patients more efficiently through the system, and keep the payer as informed as possible."
3. Better communication with payers. One of the strategies Johns Hopkins employed was to bring more payer reviewers on site. "We set them up with the tools they need and the access to staff," so they could meet weekly with clinicians, reduce phone calls back and forth, and make decisions in a timely manner.
4. Increasing appeals. "We realized you can’t win if you don’t play," Wassailchalk says. Because Johns Hopkins had improved its clinical documentation early in the performance improvement process, it also had more to work with and more reasons to initiate appeals.
5. Picking up strays. In addition, the team needed to address reimbursements that remained in limbo in the system. Some appeals that Johns Hopkins had initiated had never been addressed by the payers, so there was money — $1.9 million, to be exact — that had never been recovered. The hospital hired someone to focus solely on these cases and recovered $900,000 of the deficit.
6. Watching for problem cases. "Finally, we focused on problem-prone cases, assigned by DRG, and then channeled our frequency of phone calls to payers based on those cases," Wassailchalk says. "Almost immediately we saw a 24% increase in calls to insurance companies, and that led to a 35% increase in days that were certified up front," he adds.
[For more information, contact:
Jon B. Mayer, RN, RNP, MBA, Health Care Management Consultant, Milliman & Robertson Inc., 15800 Bluemound Road, Suite 400, Brookfield, WI 53005-6069. Telephone: (262) 784-2250.
Dan Wassailchalk, MHA, RHIA, Director of Performance Improvement/Utilization Management, The Johns Hopkins Hospital, Baltimore. Telephone: (410) 955-2940.]