Managed care numbers game can help ICU outlook
June 1, 1999
Managed care numbers game can help ICU outlook
Use your patient data to strengthen unit finances
Those who say managed care is a numbers game are inherently correct, according to Sandra Swanson, RN, MSOD, nurse manager of the neonatal intensive care unit at The Ronald McDonald Children’s Hospital in Maywood, IL.
Ironically, in critical care, most hospitals and managed care organizations (MCOs) do not keep good data to measure cost according to patient acuity. Consequently, they are incapable of making accurate assessments about payments for ICU care, she adds.
The process used by MCOs to determine payment rates is both complex and esoteric. Health plans use insurance actuaries to determine what it probably costs to render medical care by diagnosis at a specific hospital, and they negotiate payment rates on these calculations.
The key term is "probably." Says Swanson, "MCOs don’t understand what critical care units do from a cost standpoint. They don’t know what data sets are significant and what to do with these numbers in setting rates." Hospital officials themselves have difficulty defining cost-effective care in the ICU.
The reasons are obvious, according to nurse practitioner Patricia Johnson, RN, MSN, former interim executive director of the National Association of Neonate Nurses in Chicago. Critical care units have high patient acuity, severe morbidity, and high mortality rates, compared with other departments.
Yet, the process of setting ICU rates involves studying volumes of patient data and making comparisons with national and local benchmarks, including Medicare and Medicaid morbidity and mortality statistics. Much of this data are available free or at a price; but in most cases, they aren’t hospital-specific.
Nurse managers are in a good position to change the situation, according to Swanson. Here’s how:
• View your patient data in a new light. By seeing the unit’s performance data as a financial resource, you can consider the relevance of reimbursements to patient care, Swanson says. For example, the data you generate on readmission rates, average length of stay (ALOS), average cost per admission, and discharge or diagnosis are hospital-specific quality indicators that can help determine more equitable payments for you facility, Swanson says.
• Work with your hospital to understand the numbers. The probability is great that administrators don’t know how to interpret your ICU’s performance, Swanson notes. Critical care is a special situation.
Reduce return appearances
A short length of stay in your ICU may sound great on paper, but it means something else if patients are readmitted within 48 hours because you got them discharged too soon, Swanson observes. Less focus on lowering ALOS and more on appropriate discharge planning may reduce repeat admissions costs and boost quality and patient satisfaction, she adds.
• Determine what’s important in managed care. Learn the language through reading and discussion groups, Swanson adds. Find out what health plans mean when they agree to "risk withholds" or when they pay within a "risk corridor." Understanding these concepts will help explain administrators’ insistence on early discharge planning.
Risk withholds are portions of payments kept by plans and paid later if providers meet expected targets. Risk corridors are specific limits under which payers will pay for medical care. They usually refuse to pay, or pay at a lower rate, beyond the stated corridor. The more you know, the more effective you will be as a manager, Johnson states.
• Question the status quo. Many contracts pay ICUs on a per diem basis. The fixed, packaged-pricing per diagnosis is meant to cover the cost of each day of inpatient care. But in reality, per diems pose a disincentive to lower lengths of stays, says Swanson.
Most nurses know that the last few days of ICU care are the cheapest. The patient is usually stable and nearing transfer. "These are the days when the hospital can actually make money. There’s actually no motivation to cut your LOS," she observes. Hospital officials need to know these effects on payments when negotiating equitable contracts.
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