Provider gets a grip on payment denials
Payers, physicians brought in line
Armed with the findings of its comprehensive denials database, Baycare Health Systems in Clearwater, FL, has begun taking some aggressive strategies for avoiding and, if necessary, challenging third-party payment denials. (For more information about the database, see story, p. 107.)
Baycare now requires physicians to have authorizations for most outpatient procedures by 10 a.m. the day before the scheduled service, says Martine Saber, CHAM, regional director of admitting for the 10-hospital system. "If they don’t, we ask for the procedure to be rescheduled."
Emergent cases are excepted, of course, and the cooperation of the health system’s clinical departments has been crucial in that regard, she says. "If we notice that a [supposedly emergent] case was scheduled two weeks ago, I’m not in a position to argue, but the clinician is."
Baycare is looking into going one step further, and is refusing to schedule nonemergent outpatient procedures without an authorization, Saber says. "We did a survey within our county and found that no other hospital has such a policy. But when we said we were considering doing it, they said, Great. If you do, we will.’ [The problem is that] no one wants to be the first one."
A concerted effort at physician education already has had dramatic results in increasing the number of procedures scheduled with authorizations, she says. Although the improvement is anecdotal at present, the health system’s denials database soon will provide hard evidence, Saber notes.
Outpatient surgeries and cardiac catheterizations rarely have to be rescheduled because the physicians have a strong incentive to get the authorization. Unlike other outpatient procedures, if physicians don’t get the approval, they don’t get paid, she explains.
Even with the surgeries and cardiac catheterizations, her department would like to be informed of the authorization in a more timely manner, Saber says. "What happens is the physicians book the procedure before authorization, which they’re not supposed to do, and we usually have to make one or two phone calls." That’s a decrease, however, from the 10 or more phone calls it took previously, she adds.
"We now call [the physician’s office] at preregistration and ask for the authorization, and again one day before [the service date]," she says. "If we don’t get it then, we tell them we’ll reschedule."
Her department also is increasing its use of faxes to obtain authorizations from physicians, and has an on-line connection with Blue Cross Blue Shield that allows registrars direct access to authorizations that already have been obtained by physicians. Plans are under way to set up similar connections with other insurers, Saber adds.
For the most part, physicians have been cooperative with the efforts to reduce denials, and much progress has been made, she says. The ongoing frustration is that "the insurance companies are playing so many games with us. We’re spending so much money fighting to get paid."
Finding out the hard way
As part of compiling a "managed care cookbook," Saber says her department requested insurers send a comprehensive list of services that require authorization. "Very few wanted to do that. They said, We don’t have a list. You just have to call.’ So we’re making our own list, finding out through getting denied."
Through information gleaned from the denials database, Saber says her department is discovering past mistakes and finding ways to correct them. For example, there were 10 designated codes for tagging a denial, with 0 indicating a patient didn’t provide proper information and therefore was not eligible for the service; 1 meaning the authorization was never obtained; 2 meaning the insurance company was notified too late; and so on, she explains. "We really didn’t do a good job of tagging denials correctly, and it is important to know those reasons. Some were tagged as denials, and they were not really denied."
As a result, Baycare is now creating a tool, which includes an explanation of the codes with examples so that whoever is tagging a denial will do it correctly, Saber explains. "If it’s tagged because of medical necessity, we [in access] don’t work it; utilization review will. But if it’s tagged because there is no authorization, we will work it." Before, personnel wasted time determining who should handle a particular case.
Another benefit of the denials database is that it compiles information from all 10 Baycare hospitals, making for more compelling challenges to the third-party payers, she says. "We’re working right now with two of the biggest insurance companies, CIGNA and Aetna. We now can combine all of the information, drop it in their laps, and say, You denied us this. You need to pay us.’" The argument is more convincing when it involves more than $1 million, as opposed to $100,000, she adds.
Bring on the lawyers
Although Baycare’s managed care contracts specify that it will be notified within so many days if a new procedure goes on the "must be authorized" list, insurance companies do not always comply, Saber points out. When they do send notice of changes, they often send them to the wrong person, she says. "They do it on purpose. What we’re doing now is putting it into the contract that they must notify us of changes by registered letter." The health system is hiring legal counsel to enforce the requirement, she notes.
"We’re getting better at the contracting level," adds Donna Miller, MHS, special projects coordinator for Baycare’s continuum department. "The people who write our contracts are getting very savvy in the ways in which managed care companies find opportunities to deny us. We’re trying to work out contractually that if we’re providing care at the direction of the physician, who is their agent, it is not our job to police their physician. We are only the provider of the care that physician orders. We can’t admit or discharge without an order from a physician."
Correctly designating the patient’s level of care continues to be a challenge that often leaves the health system caught between the demands of managed care companies and the requirements of the Health Care Financing Administration (HCFA), says Miller.
The issue revolves around whether a person is deemed an inpatient or an observation patient, Miller notes, with the latter theoretically requiring a lesser level of care for which hospitals receive a lesser reimbursement.
"The real problem has been that a patient may come in with chest pain or abdominal pain and be admitted as an inpatient through the emergency department," she adds. "We do some diagnostic tests and may decide the patient can go home that day or the following day. The managed care company decides the patient didn’t meet acute care criteria and wants them categorized as an observation patient. It sends a letter saying it will pay the observation rate but not the inpatient rate."
The dilemma is that the hospital may decide after having provided treatment that the patient meets observation criteria. Medicare guidelines don’t allow switching patients from one status to another, especially after discharge, Miller explains.
"Our corporate compliance director has made a stand that we won’t treat patients differently — we won’t change their status — because of payer source," she says. "It gets a little gray when there is a contractual agreement and we are willing to accept a lesser payment. What has happened is we have all of these accounts that we agree should have been observation, but we can’t change them, and the managed care companies won’t send us money because they want a bill that says observation.’"
As a result, she notes, "there are literally millions of dollars sitting out there that is our money. It’s almost like the managed care companies have figured out a way to hold onto it. They know we can’t change patient status, but they ask us to."
Avoiding risks
Although some facilities do change the patient status, they are risking sanctions from HCFA by doing so, she adds. "We have an interpretation that says if you can determine within 12 hours that a patient has been inappropriately identified as an inpatient, and if a physician writes a clarifying order, you can [change the status]. But our director of corporate compliance is not comfortable with that."
Another complication of changing patient status is that the bill would have to be re-coded, which means hospital statistics would change, she points out. "Even though we treated a patient and provided care, that wouldn’t show up to the same degree [in the statistics]."
In one instance, a managed care company questioned the inpatient designation. The patient, who had a history of colon cancer, spent three days in the hospital getting a work-up, was in severe pain requiring an analgesic pump, and was experiencing rectal bleeding, Miller says. "[The managed care company representative] asked, How much rectal bleeding?’"
The tracking, trending, and reporting database that Baycare created to help manage its denials is so effective, the health system may make it available to other hospitals, she says. "We’re still tweaking it, but we’re very close to being able to offer it."
The software has made it possible for various hospital departments to measure avoidable days and devise action plans for how to reduce them, Miller adds. "The continuum department has goals related to avoidable days, denials, and write-offs, as do patient accounting and patient access services. This is part of Impact Care,’ our measure of service, outcomes, and cost, for which we set goals every year."
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