Knowledge of denials is power, Baycare finds
New system holds payers accountable
A "denials database" at Baycare Health System in Clearwater, FL, is helping correct misconceptions about lost reimbursement and putting pressure on physicians and other clinicians to become part of the solution, says Martine Saber, CHAM, regional director of access management.
The new system has shown that by far the most payment denials in number and dollar amount are for "clinical" reasons, such as medical criteria not being met, rather than for "technical" reasons, such as access personnel not calling for authorization, Saber says. (See samples of database reports, p. 55.)
Armed with the information the database provides, hospitals throughout the 10-facility system are setting goals for reducing writeoffs and denials, and clinical departments are joining the effort, she adds.
"Once they learn they’re doing services for free, they say, Of course we won’t do that,’" Saber says. "It’s really an education issue."
Better communication with MCOs
Already the hospital has brought to the table one large managed care company and said, "We expect payment on these denials that we consider to be unjustified," says Donna Miller, MHS, special projects coordinator for Baycare’s continuum department. "We’re moving forward in our communication with managed care companies."
Also as a result of the database, she adds, "we realized that a lot of the issues we thought were related to the hospital service side turned out to be related to the physicians."
One example, she says, is when physicians cover for each other over the weekend and don’t feel comfortable discharging someone else’s patient. Another is when patients are admitted who don’t meet inpatient criteria, she adds.
In some cases, Saber notes, physicians are giving access personnel the wrong authorization number for a procedure. "Just because they got an authorization to do a consultation doesn’t mean it will cover the procedures ordered [as a result]."
What got the ball rolling with the denials database, Miller explains, was the continuum (case management) department’s desire to look at the patient days in the hospital that were avoidable — those that occurred, for example, because a procedure didn’t get ordered in a timely fashion.
"We came up with a list of 30 reasons we have avoidable days," she says. "We code those and run a report every month. Then we said, How often are avoidable days costing us? How often are we being denied reimbursement for that day we identified as being avoidable?’"
Top 10 reasons identified
Baycare has identified the top 10 reasons for avoidable days, Miller notes, and is working to reduce those as part of its quality improvement focus for this year.
Meanwhile, she says, patient accounting was "starting to feel the brunt of managed care denials, but there was no central place where they could be processed, reviewed, documented, and worked. Since we didn’t have a united front in fighting denials, we were not very successful at showing, one, that we needed to be paid for a day, or two, that we agreed with the managed care company and accepted responsibility."
There also was no tracking mechanism that allowed the continuum department to know how successful it was in getting denials turned around through the appeals process, Miller points out. One of the biggest discoveries the database brought to light was that, in many cases, her department had been writing letters and appealing denials for accounts that already had been written off by patient accounting. "There was no central way for everyone to communicate."
The denials database works like this:
1. Whoever receives the denial enters the information in a special field in the registration system, created by Malvern, PA-based SMS. The account is tagged with an "X" for a technical denial and a "Y" for a clinical denial.
2. At midnight, the SMS system sends to the database all the accounts that were denied.
3. Contained in the information that is automatically sent to the database are the names of the primary care physician and the insurance company, expected charges for the account, expected reimbursement, the amount outstanding from the insurance company, and how much is written off.
4. The continuum department manually enters its findings on whether the denial was justified, how many patient days met medical criteria, and how many did not.
5. Anyone working on denials can go to the database and can see, for example, that for one case the continuum department already has decided the denial was justified, and for another, an appeal letter has been written.
6. If an employee identifies a denial and, for example, calls the insurance company or corrects an authorization number, that person tags the account as a rebill account, which alerts patient accounting to reissue the bill.
7. If it’s determined that an error was made and the denial is justified, patient accounting knows to writes off the bill immediately, thus reducing accounts receivable days.
Among the misconceptions the database has cleared up, Saber says, was her belief that access personnel were causing many denials in the outpatient arena by forgetting to call for authorization. That happens, she adds, but not nearly as often as she had thought.
Instead, Saber says, most of the denials are clinically based, and the biggest problem of all is failure to properly designate an observation patient vs. an inpatient.
Physicians get partner option
The database has illustrated, Miller adds, that "there are a lot of opportunities for physicians to partner with us when trying to determine a discharge plan for the patient." When physicians fail to classify a patient properly, she notes, the hospital is not allowed to get an authorization number.
"The physician is responsible and accountable for the correct authorization," Miller says. "The managed care company might say [to the physician], We’ll pay you for that as an observation [account], even though we initially gave you an inpatient authorization.’"
The physician can change that designation and still be paid, she says, but according to Medicare rules, a hospital cannot change a patient’s status for reimbursement purposes only. "We’ve been trying to get a determination from the Health Care Financing Administration as to whether we can change [an account] from inpatient to observation as long as we’re looking for a lesser payment."
[Editor’s note: In the next issue, Hospital Access Management takes a look at some dramatic action Baycare Health System is taking to turn its denial rate around. For more information, contact Martine Saber at (727) 462-7139, [email protected], or Donna Miller at (727) 462-7149, [email protected].]
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