Combatting Denials NJ HFMA January 10, 2017 1
Denial Challenges PAYER INDUCED Aggressive Commercial Payer Denials (Concurrent and Retrospective) Pre-Payment Review Denials for Medicare Unilateral Payer Implementation of Medicare Guidelines Ever-changing Regulations - 2 Midnight Rule Number of Chart Audits Increasing (MAC, RAC, QIO, ZPICs) Audits impacting revenue, Hospital and Physician - (Transmittal 541) PROVIDER SELF IMPOSED Quantification and Reporting Denials Self-Denials Defensive over-use of Observation Clinical Documentation Improvement (ICD-10) Resource Constrained Fragmented or Siloed Departments and IT Systems Inappropriate Registration, Pre-auths, pre-certs, etc. 2
These are the challenges... What s the Solution? 3
Combating Denials Quantification and Validation of Denial Impact How big is our issue? Route Cause Analysis Deploy Strategy to Prevent Denials Patient Access Policies and Procedures and workflow Appropriate Case Management/Utilization Management/Physician Advisor Processes Denial Recovery Fight EVERY Denial through a well defined Denial Management Process Establish Denial Management Committee comprised of: Case Management Patient Accounting Patient Access Clinical Leadership (CMO, ED Director, Hospitalist, etc.) Physician Advisor HIM Director Managed Care Leadership External Vendor if applicable 4
Quantifying Denials Understanding Gross and Net Denial Rates Recurring reporting necessary for tracking progress (at least monthly) Trended information by: Service Location Registration Point Types of Services Denial Reason Attending/Treating Physician 5
Denial Rates Dependent on accurate capture of denial adjustments and well designed denial code structure Benchmark Total Net Denial Rate 2% 1% Net Technical Denial Rate 1% Clinical Denial Rate Utilize payer, service line, and physician level groupings to identify targeted areas of opportunity.
Denials by Attending Physician
835 MN Denials by Attending Physician sliced by Payer
Denial Write-Offs, sliced by Denial-related adjustment code
Gross 835 Activity
835 Denials, Sliced by Denial Type
835 Denials, Sliced by Payer
Gross Denial Rate
DENIAL PREVENTION 14
Preventing Medical Necessity Denials Significant Financial Impact Medical Necessity/Regulatory Compliance critical A sound CM/UM /PA Process needs to be in place Medical Staff Awareness/Education - A MUST Clinical Documentation All relevant information is not always in the Medical Record Well defined Peer-to-Peer Process Enterprise Initiative 15
The Inpatient vs. Observation vs. Self Denial Avg. Medicare Inpatient Claim $9,100* Avg. Medicare Observation Claim $2,375* Avg. ED plus Ancillaries Claim $1,200 *CMS.GOV 16
The Single Most Important Factor In Successfully Dealing With These Challenges Is Placing The Patient In The Appropriate Level of Care At The Time Of Admission. Medical Necessity Compliance 17
Medical Necessity Compliance Medical Necessity Documentation + 2 Mid-Nights = COMPLIANCE 18
Two Midnights Billed as Inpatient Helps Prevent Denials Day 1 Day 2 Final Bill Denial/Audit Risk IP IP IP LOW* OBS IP IP HIGH IP Discharge IP VERY HIGH** **(Exceptions) OBS OBS IP EXTREMELY HIGH OBS OBS OBS LOW* *with appropriate documentation 19
Some Examples You place the patient on Observation Status prior to Midnight #1 for Asthma Exacerbation. During the first full day of hospitalization, the patient does not improve as expected and requires a second medically necessary midnight. What should you do? 1. Keep the patient a second midnight at the Observation Level of Care. 2. Admit to Inpatient if you expect the patient to stay two more midnights. 3. Admit the patient to Inpatient prior to Midnight #2 by writing Admit to Inpatient. 20
Some Examples A patient is admitted to inpatient at the time of hospitalization and the attending clearly documents the expectation of two medically necessary midnights as well as WHY he/she expects two midnights. The patient is a 90 year old male with severe baseline COPD who has a significant exacerbation. The patient is unexpectedly much better the next day and is discharged after only one midnight in the hospital. How should the hospital bill this case? 1. Bill as Observation since the patient only stayed one midnight 2. Bill as Inpatient Part B since the patient was at the inpatient level of care but only stayed one midnight and never had an Observation Order 3. Bill as Inpatient after the Attending Physician documents that the patient had an Unexpected Rapid Recovery 21
Some Examples A patient is admitted to inpatient at the time of hospitalization and the attending documents the expectation of two medically necessary midnights as well as WHY he/she expects two midnights. The next day the patient is much better. The CM/UM/PA review the case and, after discussing with the attending, all agree the pt. should have been placed in OBSERVATION. The patient has not been discharged yet and is still physically in the hospital. What should be done at this point? 1. It is too late to change anything. Discharge the patient at the Inpatient Level of Care and expect a denial from the MAC or RAC. 2. Do not submit a Bill and Write Off the Hospitalization. 3. Change the patient to Observation and complete the steps necessary to accomplish a Condition Code 44. 4. Discharge the Patient at the Inpatient Status and then Bill Medicare using Inpatient Part B. 22
Some Examples You admit the patient to Inpatient prior to Midnight #1 and the patient does not remain in the hospital Midnight #2. What could have happened? Choose all that apply. 1. The patient made an unexpected rapid recovery. 2. You made a mistake on the day of hospitalization and you should have placed the patient at the observation level of care. 3. The patient was transferred to inpatient hospice with comfort measures. 4. The patient was transferred to another hospital because your hospital does not provide an advanced treatment option like CABG or Valve Replacement Surgery. 5. The patient died. 23
January 2017 AUDITS MAC, QIO, RAC, ZPIC, OIG, DOJ OIG 2017 Work-plan Hospital s Use of Outpatient and Inpatient Stays under Medicare s Two-Midnight rule Transmittal 541 Claims that are Related The most dangerous weapon that Medicare has at its disposal is the Zone Program Integrity Contractors (ZPICs). The most perilous thing about the ZPIC is its ability to initiate a fraud investigation. Therefore, in responding to a ZPIC audit, it is important that the provider s documentation establish that no fraud occurred. The bottom line is that the provider s does not want the Medicare contractor to turn its file over to the Department of Justice (DOJ) or the Office of Inspector General (OIG). 24
DENIAL RECOVERY 25
Retrospective Denial Recovery Process Quantification and Segmentation of Denied Claims Data from all sources PAS, CM, ERAs, ITD Letters Establish an organized Denial Management Process with defined responsibility Utilize tools to help manage the workflow process Dedicated Team in Business Office for Coordination and Follow-up Dedicated Clinical Team for Appeals Understand Payer Contracts and Manuals Aggressive and Timely Appeals Aim to appeal over 90% of denied claims within 7 days of denial Reporting to track progress and mitigate issues that lead to denials Hold Regular Denial Management Committee Meetings 26
Payer Contract And Manuals Denial Team needs to have an understanding of the varying time limits for appeal and number of appeal levels that are available for each Managed Care agreement Third Party payers have their own policies for determining medical necessity and may have exclusions for the following reasons: Payer considers procedure to be experimental Procedure is unproven for a specific diagnosis Drug requires documented failed trials of other medications before proven medically necessary Limits on the number of times a provider may render a specific service within a specified time frame 27
Denial Process Workflow Hospital receives ITD letters Parse raw 835 files, identify denial CARC codes Mine PAS data for denials identified via Follow-up or EOB Processing team Denial Mgmt. Team reviews denial letters Denial Mgmt. Team receives output file from case management system Merge discrete data sources to identify all denials that have been either upheld completely, partially upheld, or not worked during peer-to-peer. Place unique identifier on relevant accounts in PAS to alert staff claim is in review by denial team Download medical record from EMR Denial rep confirms denial day/service with payer, validates appeal timeframe & $, and assigns case to dedicated clinician Clinician reviews case, generates appeal letter or closes if no clinical merits Denial rep packages appeal letter and medical record, submits to Payer Denial rep commences follow up activity, noting receipt date of appeal Appeal overturned, posts cash, denial rep validates and notes in PAS Appeal partially overturned, posts cash, Denial rep validates and notes in PAS, refer back to clinician for Level II or III Appeal Appeal upheld, Denial rep validates and notes in PAS, refer back to clinician for Level II or III Appeal
Aggressive Appeals Of Managed Care Denials Retrospective Appeals should contain: Logical structure Sense of clarity High Level of clinical proficiency External appeal option External appeal process should be pursued for clinically worthy cases Legal Remedies Challenges based on contractual issues Challenges based on ERISA and other regulatory issues
REPORTING YOU CAN T MANAGE WHAT YOU CAN T MEASURE 30
Denial Rate by Physician
Denial Rate by Payer
Resolved Report by Payer
Resolved Report by Reason
Clinical Denials by Payer
Outpatient Resolved by Payer
Outpatient Denials by Service Location