1. Medical Necessity Closing the Door on Un-necessary Write-Offs Rebecca Kidder, RN, CS-P Sr. CDM Consultant, MedAssets

2. Outline i. payer's cost control perspective ii. provider's cost of denied claims iii. common denial types and their causes iv. measuring denials and their impact The impact of denied claims on the revenue cycle i. identifying access points ii. assessing key participants' knowledge iii. questions to be asked at doorway Engineering effective patient access processes

3. Outline i. accurate information ii. insurance limitations and requirements iii. defining medical necessity iv. ABN issues v. impact of ICD-10 Avoiding denials i. assessing need and ROI ii. staffing issues iii. resources iv. standardized screening processes v. outpatient vs. inpatient assessments Creating a pre- encounter unit

4. Insurer Cost Controls In 2009, the United States federal, state and local governments, corporations and individuals, together spent $2.5 trillion, $8,047 per person, on health care. This amount represented 17.3% of the GDP, up from 16.2% in 2008. [1] Health insurance costs are rising faster than wages or inflation, [2] and medical causes were cited by about half of bankruptcy filers in the United States in 2001. [3] [1] [2] [3]

5. Insurer Cost Controls 70% of the differences in spending cannot be explained by the claim that “my patients are more poor or more sick.”

6. Insurer Cost Controls The Annual Utilization Rates and Spending on Hospital Services and Selected Physician Services in Regions with Various Levels of Intensity of Care, shows that as compared with Medicare beneficiaries in the lowest-spending regions, patients in the highest-spending regions: Spend more time in the hospital (an average of 2.1 days vs. 1.4 days), Have more frequent physician visits (14.5 vs. 10.7 per year) Undergo more magnetic resonance imaging (MRI) procedures (21.9 vs. 16.6 per 100 beneficiaries) and computed tomographic (CT) scans (61.4 vs. 46.9 per 100 beneficiaries). [4] []

7. Insurer Cost Controls “This is one of the dark corners of the black box that is private health insurance” [5]... [5] Data on how often insurance claims are denied and for what reasons is collected and analyzed by the insurance companies themselves. Except in California, the companies aren't required to provide those records to any state or federal agency. "The number is knowable, but not known by regulators or policy makers or patients." [ 6] [ 6]

8. Types of Denials Technical Denials Medical Necessity Insurance Eligibility Out-of-network issues Coordination of benefits Non-covered Codes Referrals/ Authorizations Duplicate Claims Invalid Codes Modifiers NCCI Edits MUE Edits Missing Records Date of Service

9. Providers’ Cost of Denials Compliance Impact on A/R days Revenue impact- denials can vary among hospitals in terms of volume and cost, roughly 12% to 15% of gross charges are initially rejected by payers. [7] 1% of $150M outpatient gross revenue = $1.5M lost due to denials and failed medical necessity versus 0.1% = $150,000. Resubmissions Clean vs. delayed Not recorded as bad debt

10. What Issues Are Keeping the Door Open? Failing to identify root cause of denials Multiple points of entry Lack of intake policies and processes Variations in workflow Lack of Staff Communication Resources Incomplete or illegible documentation Constant regulatory changes Poorly written contracts

11. Closing the Door... Without slamming it in the face of your physicians or patients

12. Expand Your Thinking Measure Denied claims as % of whole Pending claims Impact on A/R days Reasons for denials Remittance codes MUE Denials by service area Physician Registrar Payer CPT or DRG Dollars lost and won ABN rates (GY and GZ modifier)

13. Engineer Effective Patient Access Processes Doorways Public relations Scheduling Insurance eligibility Authorizations Medical necessity screening

14. Where and How Do Patients Access Services? Centralized scheduling Outpatient center Laboratory Send-ins from providers Emergency Department Observation Changes to admission Clinics Cancer Centers Wound Care Center Radiology Catheterization Lab Off-campus sites

15. What Happens at the Doorway? Who is assessing the need at the doorway? Do you have a valid order? Who is determining the payer at the doorway? How is the determination done? Are scheduled patients handled differently than unscheduled patients?

16. Questions To Be Asked at the Doorway Under what conditions is payment made for service? How and to what degree is service covered? Where and by who may the service be rendered? What ICD-9, HCPCS codes or modifiers are required? Are there limits on the number of units covered? What revenue code is required to report the service? Are any provider locations prohibited ? [8] []

17. Educate Ordering Providers Clarity of orders Current quality reporting initiatives Access Staff Coding expertise Access to resources Patients Benefit limitations Patient handbooks/brochures Informed choice

18. Start at the beginning... Scheduling Centralized vs. Departmental Communications/I.T. Systems Timing Routine Urgent

19. Details Count Insurance Eligibility Correct insurance information Names correctly spelled Correct ID numbers Correct dates of birth Coverage current and active Coordination of benefits Out-of-network/not preferred provider

20. Approved Services Authorizations Types Referrals Pre-certifications Prior authorizations Centralized vs. Departmental Communication Duration/Timing Tracking Tools

21. Medical Necessity Clarify this key difference: “Medical Necessity” vs. “Medical Judgment”

22. Medical Necessity Screening What staff and tools are dedicated to the medical necessity screening process currently? Where in the process is the screening taking place Access to LCD/NCD Coding expertise Physician role Orders Physician query process Documentation

23. Medical Necessity Screening How and when are ABNs generated? How and where are ABNs kept on file and communicated to billing? How do you respond to ADR requests?

24. Medical Necessity Screening Impact of ICD-10 Increase in specificity and number of code choices Documentation issues Retraining of access staff Revision of order forms Interfaces Need to allow insertion of alpha-numeric code Non-HIPAA entities Reimbursement mapping

25. Create a Prospective Prevention Process Return On Investment

26. Dedicated Staff Space/location Qualifications Training

27. Resources Work lists Demographic and insurance info Coding information Payer updates and guidelines Communications

28. E-tools Electronic advantage Regular, frequent updates Real–time updates Multiple user access Training How complicated Who will provide How long does it take

29. E-tools Technical requirements Web-based Hospital server I.T. issues Compatibility issues Compliance Report capabilities Shows process & defensible in audit

30. Standardize Procedures Access and HIPAA issues Screening processes Timing Urgent services Physician queries Patient communications ABN processes Cancellations and rescheduling Documentation

31. Access and HIPAA

32. Screening Process Lead time Timeframe for scheduled services Notification of add-on patients E.D. post-discharge procedures Urgent procedures Scheduled EMTALA

33. Screening Process Communications Physician queries Amending orders Documentation Notifications Physician Patient ABN Rescheduling and cancellations

34. Screening Process Improve and maintain physician relations Include in training Address their concerns Reduce duplication of information requests Stress cooperation Make it simple Share mutual concerns for patients

35. Educate Plan and schedule education/training Repeat training as needed Measure effect of training Educate all staff, physicians, managers involved Update training in orientation schedules Document training

36. Reporting Productivity Success rates Denial rates Audit results Physician scorecards Screener scorecards Satisfaction

37. Medical Necessity Inpatient vs. Outpatient

38. Inpatient Medical Necessity The hospital Conditions of Participation require hospitals to have a utilization review (UR) plan Hospital must ensure all the UR requirements are fulfilled A UR committee consisting of two or more practitioners carry out the UR function

39. Inpatient Medical Necessity The determination that an admission or continued stay is not medically necessary must be made by: One member of the UR committee if the practitioner responsible for the care of the patient either concurs with the determination or fails to present their view when afforded the opportunity Two members of the UR committee in all other cases. Per Change Request (CR) 7545, effective October 1, 2011, condition code 44 will not apply In no case may a non-physician make a final determination that a patient’s stay is not medically necessary or appropriate

40. Vocabulary Two patient statuses at a hospital: Outpatient Inpatient “Admit” refers to an inpatient admission Observation is a service not a status

41. Inpatient Definition An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. [9] []

42. Observation Definition The use of a bed for physician periodic monitoring and active monitoring by the hospital's nursing or other ancillary staff, for the patient care which are reasonable and necessary to evaluate an outpatient's condition or determine the need for an inpatient admission. [10] []

43. Admission Orders Physician’s order required Order must be part of the medical record The order should clearly define what service is being requested Clearly differentiate outpatient Observation from an order for an inpatient admission Admit as inpatient Place in Observation

44. Screening Tools/Criteria The Centers for Medicare & Medicaid Services (CMS) does not require nor endorse any particular brand of screening guidelines Payment is not based on “pass” or “fail” when screening tools are utilized Milliman InterQual Reviewer must apply clinical review judgment in the determination of the medical necessity of an inpatient stay Based on the medical documentation submitted Admissions are not covered or non covered solely on the length of time the patient actually spends in the hospital Lack of inpatient admission medical necessity does not equate to outpatient observation [11] []

45. Admission Considerations Patient’s medical history Current medical needs Facilities and services available Hospital by-laws and admission policies Relative appropriateness Severity of signs and symptoms Intensity of services Severity of illness Medical predictability Need for diagnostic studies Availability of diagnostic procedures

46. Observation Services Must be patient specific Intended for short term Generally does not exceed 24 hours Greater than 48 hours would be seen rare and exceptional cases Number of units reported with G0378 must equal or exceed 8 hours to receive separate payment Supervision

47. Observation Services Observation is only medically necessary when: The patient’s current condition requires outpatient hospital services Can treatment be provided on an outpatient basis or home health basis or at home? Are these alternatives more economical and effective than inpatient care? Does the patient’s physical condition and family/social support system allow them access to the care option? There is a significant risk of deterioration in the immediate future Observation services for the convenience of the patient or others are not medically necessary [12] [

48. Observation Post-Operative Exceeds normal recovery time due to an unforeseen complication that prolongs the patient stay requiring additional care beyond the standard Develops new symptoms/condition not related to the surgery (e.g., hypoglycemic event) Exhibits an inordinate reaction such as difficulty awakening from anesthesia or drug reaction

49. Condition Code 44 Decision to change patient status is prior to discharge and while still a patient No inpatient claim has been submitted Physician concurs with Utilization Review (UR) committee’s decision; and, Physician’s concurrence is documented in the patient’s medical record

50. Condition Code 44 When Condition Code 44 is appropriately used, the hospital reports on the outpatient bill the services that were ordered and provided to the patient for the entire patient encounter Observation cannot be ordered retroactively If a patient’s status changes in accordance with the requirements for use of Condition Code 44, the change must be fully documented in the medical record

51. Condition Code 44 Entire episode of care should be treated as if the inpatient admission never occurred Medically necessary Part B services should be billed as an outpatient episode of care Do not report G0378 for care prior to physician’s order Report charges on an un-coded line with revenue code 762

52. Reporting Time Prior to Order Example: Patient is admitted as inpatient and receives 12 hours of care Hospital Utilization Review (UR) changes status from inpatient to outpatient Physician orders Observation services for additional 24 hours before patient is sent home Revenue Code CodeDate of ServiceUnitsCharges 076210/01/201112$600.00 0762G037810/02/201124$1200.00

53. When Condition Code 44 Does Not Apply Do not report CC 44 if physician changes the status without UR involvement Do not report CC 44 if attending physician does not concur with decision Do not report CC 44 if the decision to change patient status from Inpatient admission to Outpatient status was after patient discharged

54. Claim Recovery Denials procedures Response to ADR requests Appeal writing Defense audits RAC processes Tools and services

55. References 1."Medical expenses have 'very steep rate of growth'". USA Today. Jones, Brent (2010-02-04). http://www.usatoday.com/news/health/2010-02-04-health-care-costs_N.htm. Retrieved 2010-02-07. "Medical expenses have 'very steep rate of growth'"USA Today http://www.usatoday.com/news/health/2010-02-04-health-care-costs_N.htm 2."Health Insurance Premiums Rise 6.1 Percent In 2007, Less Rapidly Than In Recent Years But Still Faster Than Wages And Inflation" (Press release). Kaiser Family Foundation. 2007-09-11. http://www.kff.org/insurance/ehbs091107nr.cfm. Retrieved 2007-09-13. "Health Insurance Premiums Rise 6.1 Percent In 2007, Less Rapidly Than In Recent Years But Still Faster Than Wages And Inflation" http://www.kff.org/insurance/ehbs091107nr.cfm 3."Illness And Injury As Contributors To Bankruptcy", by David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler, published at Health Affairs journal in 2005, Accessed 10 May 2006."Illness And Injury As Contributors To Bankruptcy" 4. Getting Past Denial — The High Cost of Health Care in the United States, Jason M. Sutherland, Ph.D., Elliott S. Fisher, M.D., M.P.H., and Jonathan S. Skinner, Ph.D., New England Journal of Medicine 2009; 361:1227-1230, September 24, 2009. 5.Karen Pollitz, Professor Georgetown University Health Policy Institute. 6.“In Health Care, Number Of Claims Denied Remains A Mystery”, Huffington Post.“In Health Care, Number Of Claims Denied Remains A Mystery 7.“Denials Management Strategies” Lisa A. Eramo, For The Record Vol. 22 No. 2 P. 10, February 2010; Karen Bowden, RHIA, ClaimTrust. 8.“Effective Claims Denial Management Enhances Revenue”, HFMA, Copyright 2002, Jackie Hodges.

56. References 9.Inpatient Definition; Centers for Medicare and Medicaid Services (CMS) Publication 100-02, Chapter 1, Section 10. 10.Observation Definition: Centers for Medicare and Medicaid Services (CMS) Publication 100-2, Chapter 6, Section 20.6. 11.Highmark Medicare Part A Presents Hospital Case Studies and Billing Scenarios: Inpatient or Outpatient? October 19, 2011. 12.Highmark Medicare Part A Presents: Inpatient versus Observation. October 19, 2011.

57. QUESTIONS Rebecca Kidder, RN, CS-P MedAssets Senior CDM Consultant rkidder@medassets.com 304-482-7899