What you can do to optimize your hospital’s reimbursement
June 1, 1999
What you can do to optimize your hospital’s reimbursement
Case managers can help avoid compliance problems, payment denials
Even if you’re doing everything else right in your case management program, if you’re not paying attention to how coding is done at your hospital, you’re missing the boat on potentially huge cost savings and revenue generation.
"The trend is to assume that when money isn’t coming in, it must be because of coding problems," explains Lynne Northcutt-Greager, CPC, a consultant with Medical Group Management Association in Englewood, CO. For one thing, coding affects not only reimbursement but also a provider’s exposure to fraud and abuse charges. If the hospital starts getting claims denials and has to file appeals, then both clinicians and staff will spend more time on the claims, compounding the cost.
That’s where case managers come into the picture, says Deborah Hale, CCS, president of Administrative Consulting Services in Shawnee, OK. "Compliance is really all about documentation of medical necessity," she says. While physicians may protest that everything they do is medically necessary, Hale points out that local medical review policies provide clear criteria to establish, for example, when a diagnosis will support medical necessity for a particular diagnostic test. "As they make referrals for those types of services, case managers can make sure there is communication of the diagnosis, or the sign or symptom, that is directly responsible for that test being ordered," she says.
Case managers also should take coding into account when performing data analysis. For example, when looking at profitability, consider that a lack of cost-efficiency could be the result of coding the wrong DRG. "Make sure the data’s accurate," Hale says. "If the coding data is inaccurate, then the strategies that you utilize to improve efficiency and effectiveness of care might be directed totally inappropriately."
One of the best ways to identify opportunities for improvement is by effectively analyzing case mix index (CMI) — a deceptively simple statistic calculated by adding DRG relative weights for all discharges and then dividing the result by the number of total discharges.
A common mistake is to look at CMI without taking into account possible variances in the severity of your patient population. For example, if a surgeon at a small hospital takes a one-month sabbatical, his or her absence could create significant changes in how patients are cared for. Those changes could be reflected in the volume of procedures performed, as well as in the length of stay and cost per case of individual patients. "A lot of hospitals work at length of stay and cost per case and just assume that all things stay the same all the time. And they may not," Hale says.
Large facilities can have problems, too, when it comes to analyzing costs. For example: A large hospital begins performing a new procedure in cardiovascular surgery. Initial results look good; length of stay and costs are down. "But if you’re not measuring that in light of the case mix index, then you could be inappropriately celebrating," Hale says. "It could be that you’ve just taken some of your big services out of the mix for a while, so the length of stay is skewed. You’ve got to look at it in relationship to the services being provided, and the case mix index is one measurement of that."
CMI also can serve as a good barometer of whether or not your hospital is at risk of a health care fraud investigation. That’s because the Department of Health and Human Services’ Office of the Inspector General (OIG) routinely examines CMI to see whether or not a hospital has been upcoding. (See related story on the OIG and overpayment rates, p. 99.)
OIG investigators also look at the percentage of cases assigned to various "high-risk" DRGs that they believe are commonly upcoded. "And if they’re in a high range in terms of CMI, that would probably target a hospital for investigation," Hale says. "It doesn’t mean that the hospital is upcoding. It may mean that they’re just doing a better job of documenting and working with their physicians to support the care they provide. Of course, that would come out in an investigation, but it certainly might put you on the front lines to be looked at."
Indeed, the OIG recently concluded an 18-month investigation of upcoding at hospitals in 12 states. That investigation looked specifically at DRG 482.89, the code for bacterial pneumonia, when it is used instead of the lower-weighted code 486, which is for unspecified pneumonia. The national average for coding 482.89 is 3% of all pneumonia cases. Hospitals that deviated from the average were targeted for investigation, says Melissa Ferron, principal of Melissa Ferron Healthcare Consulting in Redondo Beach, CA, which represented one of the targeted hospitals.
CMI accuracy is crucial
"Be afraid if you discover upcoding to game the system for additional reimbursement," Ferron cautions. "The recent OIG investigations are a warning to everyone that staff need to be educated on how important it is to be error-free and to follow official guidelines."
One other negative consequence of having a case mix index that’s inappropriately high is that it will falsify your data and cause you to look like you’re much more efficient than you really are.
On the other hand, an inappropriately low CMI can make you and your hospital look terrible. For one thing, your mortality rate will appear higher than expected. That’s because you assess risk of mortality based on the diagnoses reported. "If they’re undershooting [those diagnoses], then they’re going to have a high mortality rate, and it’s going to look like their length of stay and cost per case are higher than their competitors."
Hale stresses that while coding has always been regarded as a reimbursement problem, it’s really a data issue. That means, as a case manager, it’s your business, too. "All those codes drive how many dollars you’re going to get," Hale says. "They also draw a picture of your hospital, telling the world what kind of health care you deliver. And if the data’s not accurate, it’s not going to paint the right picture."
A lack of knowledge about coding issues also can undercut the effectiveness of your clinical pathways, Hale notes. This problem typically arises when case managers initiate a performance improvement strategy by examining what can be eliminated without damaging the quality of patient care. Team members may, for example, question the need to do sputum cultures for certain patients, or whether it’s necessary to do three blood cultures or to do arterial blood gases in the emergency department.
It’s fine to question expenditures, Hale says. But it’s also important to know what impact changing the standard of practice will have on reimbursement. For example, say you stop doing arterial blood gases in the emergency department and rely instead on non-invasive pulse oximetry. That may cut costs, but it also doesn’t fulfill Medicare’s criteria for validating a respiratory failure diagnosis. If you can’t validate the diagnosis, your hospital can’t bill for it and reimbursement suffers.
Similarly, if you decide to replace sputum cultures with gram stains for pneumonia patients, you won’t be able to prove which kind of bacteria is causing the patient’s pneumonia. Consequently, you’ll be cutting the hospital out of a possible extra $2,500 in reimbursement for identifying a gram-negative bacterial pneumonia.
"When you’re looking at what to include in a clinical path and in a particular set of standing orders for a given sign, symptom, or diagnosis, you need to look not only at the clinical significance of what you’re doing but also at the financial significance," Hale says. "And you need to have a knowledgeable coder on your multidisciplinary improvement team."
In fact, sometimes it’s possible to optimize reimbursement just by choosing more appropriate terminology. For example:
• dehydration instead of azotemia;
• chronic renal failure instead of chronic renal insufficiency;
• atrial fibrillation instead of cardiac arrhythmia;
• blood loss anemia instead of anemia.
Even if your knowledge of coding doesn’t include the finer points of coding terminology, you still can help optimize reimbursement by identifying that a patient has a secondary diagnosis (defined as an additional condition that affects patient care). Many secondary conditions that can serve to increase reimbursement are frequently overlooked or simply not documented. These include:
• dehydration;
• malnutrition;
• fecal impaction;
• chronic obstructive pulmonary disease;
• stable angina;
• compensated congestive heart failure;
• aortic/mitral valve disease.
"Simply identifying malnutrition in an elderly patient can benefit the patient and the hospital," Hale says. "So often, physicians don’t give much attention to the patient’s nutritional status." Hale notes that many studies have established that addressing a patient’s compromised nutritional status can shorten length of stay and lower the cost of treating the primary diagnosis. This holds true for diabetes as well. (See related story, p. 103.)
"The case manager certainly can screen for impaired nutritional status by assessing the findings of the dietary consult," Hale says. "By directing the physician’s attention to the patient’s nutritional status, they’re not only going to have the potential to increase their reimbursement, but they’re going to increase their measurement of severity of illness as well."
For more information about how case managers can optimize reimbursement, contact:
Deborah Hale, CCS, president, Administrative Consulting Services, P.O. Box 3368, Shawnee, OK 74802. Telephone: (405) 878-0118.
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