Increase your value by projecting cost of care
Put financial knowledge to work for you
As a case manager, you are in a unique position to help your organization accurately project its health care costs and stay profitable in the future.
That is because you know the patients and the treatment they require.
But many case managers don’t know how to take the knowledge they have and express their value to their organizations, says Joann C. Milne, RN, BSN, CRRN, PHN, assistant vice president of medical management programs with IOA Re, with headquarters in Plymouth Meeting, PA.
"Clinical knowledge, along with financial knowledge, is a very powerful tool for case managers working for an HMO, an employer group, or a direct insurer to use to validate their worth. Knowing this, case managers should be able to speak up and better communicate their worth," she adds.
Unfortunately, many case managers in all areas of the industry do not understand how to look at a case and determine what it will cost financially over a period of time, Milne says.
"This is not part of the curriculum we are taught in school or part of our employers’ standard expectations. Why? Because the concept of how our clinical knowledge, coupled with financial awareness, can impact an organization’s profitability, is just evolving.
However, she adds, it’s essential that case managers take it upon themselves to learn to determine and project their worth in a multitude of ways to the people who hold the keys to their professional and financial futures.
"Case management faces a lot of challenges. Either we produce savings and effectively communicate our value, or we tend to perish. We’ve got to be able to show a return on investment," she says.
It’s not enough to do a claimant/member-specific return on investment report. These are open to being torn apart by the financial people, who don’t understand the role of case managers and who could say that the physician might have discharged the patient two days early anyway, without the intervention of the case manager.
"Case managers are scrutinized when we report hard and soft savings. People ask if the savings were truly due to our intervention. As a profession, we need to learn new ways to make our value stronger within an organization," she says.
Understanding cost
One of the hurdles case managers face is that they often view themselves as nurses and not "financial people." In addition, in some people’s minds, there is a conflict between knowing the finances of managing a case and managing a case with patient advocacy in mind, she adds.
"Some people feel that if they are looking at cost, they can’t be looking at patient advocacy, but this is not true," she says.
As a case manager, you must understand cost. A key part of the practice of case management is to promote high-quality, cost-effective care.
"We can’t promote cost-effective care without a strong knowledge of what care costs. If you take the cost-of-care knowledge and couple it with your clinical knowledge, apply it to determining the financial risk of a potentially catastrophic case for your employer, and then communicate that risk to your employer, you will be viewed as an invaluable asset," she says.
Your employer can use the information to set more appropriate financial reserves based on claims expenses that are incurred but not reported.
"Setting appropriate financial reserves affects the overall profitability of the organization in which a case manager works. This results in the company’s ability to have operating capital allocated to other departments rather than being set aside in reserves, a possible reduction in overall claims experience, and thus the potential for a better rating that affects many premium levels, including both insurance and reinsurance premiums, Milne says.
Two scenarios
Case managers need to be able to look at an individual case, understand the resources that the specific treatment (past, current, and future) will involve for this particular case, and pull together an appropriate cost analysis, Milne says.
Here are two scenarios, cited by Milne, in which a case manager’s expertise can have an impact on his or her organization’s finances.
If you have a heart patient whose condition is stable at present but, due to your clinical expertise and assessment skills, you know he or she is likely to end up needing a heart transplant in the very near future, you can go to your organization’s chief financial officer (CFO) and make sure he or she is aware of the case and the potential costs involved. The CFO can use the information to make sure there are enough dollars allocated in the reserves to cover the costs if he or she does have to have a transplant. Then, when the claim comes in, there are no surprises that could result in a real financial disaster for your organization.
The CFO at your organization may project that the care for a critically ill patient is going to cost $500,000 next year. If you know this case, know what costs have been incurred, what treatment the patient will need, what the cost will be, and it doesn’t add up to the projected $500,000, you can, and should, present your information, showing the care isn’t going to cost that much, which will free up the money in the reserves and make the overall claims experience look better.
An actuary often works with the CFO to predict costs for a specific population based on demographics. However, the actuary cannot use those models to accurately predict the high-dollar, low-frequency cases, such as the ones mentioned above, Milne says. Those cases are hit or miss for actuaries.
"If a case manager could get into the financial discussions and offer his or her input on what is actually happening with the patients, the company could make more accurate reserves," Milne says.
Focus on the cases that are extensive in nature, expensive and/or unusual, or both, cases that will hit hard on the company’s bottom line, Milne suggests.
Among these would be transplants, high-risk pregnancies and preemies below 28 weeks gestation or above 28 weeks with congenital deformities, lymphomas, leukemia, and stage 3 or stage 4 solid tumors, complicated cardiac cases, traumatic injuries, and rare disease or disorders, such as hemophilia.
When you encounter one of these cases, make sure to provide the management in your organization the information it needs to appropriately set reserves.
If you can’t communicate directly with management, make sure your supervisor knows what’s gone on and shares the information.
Tying yourself closer to the administration and financial people in the organization for which you work can only be to your benefit.
"When it comes time to cut back, often case management is first on the chopping block. But if you have been able to identify several cases that were going to have a financial impact on your organization — whether it was positive or negative — the upper management will think twice about eliminating your job," Milne says.
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