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Revenue Cycle Management: Dealing with Denials Fred J. Pane, B.S.Pharm. Sr. Director of Pharmacy Affairs Premier Inc. Linda Pearson, R.N., M.B.A.,CCM,

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Presentation on theme: "Revenue Cycle Management: Dealing with Denials Fred J. Pane, B.S.Pharm. Sr. Director of Pharmacy Affairs Premier Inc. Linda Pearson, R.N., M.B.A.,CCM,"— Presentation transcript:

1 Revenue Cycle Management: Dealing with Denials Fred J. Pane, B.S.Pharm. Sr. Director of Pharmacy Affairs Premier Inc. Linda Pearson, R.N., M.B.A.,CCM, ACM, CPHQ Manager, Case Management Department H. Lee Moffitt Cancer Center & Research Institute Erica Egri, M.S. Premier Management Engineer South Florida Baptist Hospital

2 Why revenue cycle management? American Hospital Association: –Hospitals across the U.S. are under pressures of escalating debt. Uncompensated care approached $25 billion in 2003. –A survey of 130 hospital CFOs in 2004 revealed a leading financial priority to reduce accounts receivable (A/R) days. The Advisory Board Company developed a white paper on revenue cycle management in 2005 for CFOs Those affected: –Hospital bond ratings and cash on hand –Capital expenditures and future building plans –FTEs and payroll expenses American Hospital Association and The Advisory Board Company

3 Why revenue cycle management? Reducing days in A/R is tough! Challenges: –Self-pay and uninsured patients –Billing errors –Insurance underpayments –Operational inefficiencies Some hospitals have placed cashiers in their EDs, other departments to collect co-pays before the patient leaves

4 Revenue cycle business model Start IS support Medical records coding Claims submission Third- party follow-up Rejection processing Payment processing Appeals Contract management Charge capture/CDM coding Encounter services provided Scheduling/ registration Patient access Revenue generation Outpatient prospective payment system Front-end Back-end Created by Fred J. Pane, B.S.Pharm.

5 We need to know ALL of our payers! Payer A: Current MA rate Payer B: Cost plus 10% Payer C: 75% of charges Payer D: 70% of charges Payer F: 65% of charges Payer G: 80% of charges Payer H: Current MA rate plus 5% Payer I: Medicare rate Actual Hospital Reimbursement Rates

6 Ambulatory medical oncology unit payor mix Payor Hospital A payor % Hospital B payor % Combined locations % Medicare Blue Cross Managed Medicaid Self-Insured Commercial Medicaid Managed Care Self-Pay Medicare Managed Care Direct Contract 41 28 20 4 3 2 1 <1 48 19 27 1 2 1 <1 0 <1 42 26 21 3 2 1 0 Total100

7 What are the top profitable product lines? Percentage of total hospital profit 2005 –Inpatient-top 3 Cardiac 18% General Surgery 14% Oncology 9% –Outpatient-top 2 Radiology 26% Oncology 14% The Advisory Board Company, Innovations Center

8 Outpatient Reimbursement: Case Managements Role Linda Pearson, R.N., M.B.A., CCM H. Lee Moffitt Cancer Center & Research Institute


10 Objectives Identify case management role as Clinical Business Manager Describe the role of case management in Medicare reimbursement

11 Hx of Medicare Social Security Act National Health Insurance Program

12 Health insurance intended for people Age 65 or older Some under age 65 with disabilities ESRD

13 Medicare program overview Part A Hospital Insurance Benefits (automatic) Part B Medical Insurance Benefits (optional) Hospital inpatient care Hospital OP LMRP Nursing home care Home health care Hospice care Physician services Outpatient services Medical supplies ESRD services Medicare Administered by CMS and local contractors Part C Medicare + Choice (optional) Medicare managed care Provides at least comparable benefits Flexible benefit structure CMS Part D Prescription Drug Benefit

14 Decentralization of Medicare Section 1816(a) Section 1842(a) Intermediaries and carriers –To identify your local FI or contractor go to CMS

15 Responsibilities of carriers and FIs General overview –Implement integrity and safeguards –Oversee billing, payment and benefit functions Development of LMRPs / LCDs –Medical review of claims –Determination of medical necessity

16 Advance beneficiary notice Notifies the beneficiary of reasons services not covered Given before services rendered Beneficiarys financial responsibility –Secondary insurance –Charity –Appeal rights Actual Hospital Model

17 Advance beneficiary notice Beneficiary as informed consumer –Physician / patient communication Treatment options Quality of life issues –Active participant in healthcare decisions

18 Patient appeal process 1. Physician orders noncovered service 2. ABN issued to patient 3. Patient signs ABN; services rendered 4. Provider bills services with modifier 5. FI denies claim; notifies beneficiary 6. Beneficiary files appeal to FI 7. Medical records sent to FI 8. Wait….. Actual Hospital Model

19 Provider appeal process LCD Reconsideration Process Request to modify any section of existing LCD Must be submitted in writing and clearly state specific revisions Copies of published evidence supporting revision

20 Provider appeal process FI has 30 days to determine if request is valid If valid, within 90 days of day request received, FI makes a final reconsideration decision FI must provide rationale for decision regardless of final determination FI = Fiscal intermediary

21 LCD appeals The appeal process and changes to the final LCD is long and tedious.

22 Best practice: maximize outpatient reimbursement Revenue Improvement committee –Members (clinical and financial) –Identify Medicare reimbursement issues –Identify appeals Billing and coding process –Lead biller, QA coding specialist and Case management / Clinical business manager –Meet weekly –Identify noncovered charges –Review documentation –Recode and rebill as appropriate

23 Best practice: maximize outpatient reimbursement Pharmacy responsibility: new drug –New drug approval & formulary status –Determine drug and infusion charge –Ensure billing codes conform with CMS rules –Build standards into protocols and orders Pharmacy / radiology responsibility: individual patient –Identify non-covered items against LMRP –Notify MD for ABN –Justify non-indicated use if required for appeal

24 Best practice: maximize reimbursement Role of pharmacy / radiology 1. MD + core team formulates patient Tx plan 2. Orders reviewed by pharmacy / radiology 3. Pharmacist / radiologist checks LCD software for medical necessity (Caremedic) 4. Order passes; treatment continued 5. Order does not pass; pharmacy / radiology notifies MD to obtain ABN

25 Whats next ?

26 Additional step in ABN process: Patient Resource Center Patients receiving ABN will be screened by Patient Resource Center pharmacist for eligibility to drug replacement/co-pay or full assistance programs

27 The future of Medicare Changes to LCD –Name change to Local Coverage Decision (07/01/04) –Plan developed by Secretary to determine which LMRPs to adopt nationally –***Collaboration among FIs –FLASCO / FI meetings –Standard format for LCDs –Overall goal to increase consistency

28 Checklist for case managers Notify Financial Services of non-covered services Ensure proper CMS coding Update pre-printed orders and order pathways Check for claim denials Monitor rule changes Adopt changes into hospital processes Educate members of financial / clinical team Actively interact with LCDs and other rule makers

29 Reimbursement questions How does the reimbursement change impact your clinical and formulary decisions? How do you make decisions on inpatient and outpatient products? How closely do you assess payer mix?

30 Information sources www. www. (NEW) www. www. www. Co-payment assistance 800-272-9376

31 Cardiac Stress Medicare Denials

32 Goal: to decrease the percentage of Cardiac Stress Test Medicare denials on outpatients and observation patients from 42% to 13% by June 2006 Problem was identified through auditing of charts with Medicare denial charges for cardiac stress tests Project start date: December 2005 Project end date: June 2006 In 2004, SFBH lost $87,531 in total charges on cardiac stress tests. In 2005, total losses increased to $114,171 –2 drugs denied along with test: Cardiac Ejection Fraction Cardiac Motion Wall Team Members: –Jack Vasconcellos, Director, Operations –Tammy Gaschler, Manager, Patient Care Coordination –Erica Egri, Premier Management Engineer –Beth Player-Tancredo, Manager, Physician Relations –Milissa Sulick, Coordinator Cardiac Rehab Project overview

33 Changes implemented / interventions Use of new cardiac stress test script with diagnoses that meet Medicare Medical Necessity per LMRP guidelines –Physician is asked to select one of the diagnoses listed on script to perform the test Education provided to physicians and their office staff on financial impact of documenting inappropriate diagnosis on hospital –Cardiologists and biggest offenders were target audience Offenders identified by determining who ordered the test through the completion of chart audits If a patient chart does not list the appropriate diagnosis for the test, chart is to be held until appropriate diagnosis is obtained

34 Results / impact -$128,600 lost -$30,960 lost $97,640 *Denotes % denials of cardiac stress tests performed on Medicare outpatients

35 Statement of results Reduction in number of cardiac stress tests denied –Savings of approximately $100,000 based on reimbursement due to appropriate documentation of diagnosis Reduction in re-work caused by having to re-pull charts with denials to investigate cause of denial and provide appropriate documentation for reimbursement Physician satisfaction – with the use of the script, physicians will not receive as many calls from hospital staff requesting appropriate diagnosis to perform test

36 Success factors and lessons learned Keys to success –Team dynamics – everyone engaged and up-to-date –Physician willingness to use new script and attend education session Barriers to success –Resistance to change from physicians office staff –Coders goal to code charts as quickly as possible so bill can be dropped and hospital can be reimbursed Lessons learned –Medicare has a very strict reimbursement policy, and healthcare organizations need to increase physicians awareness on issues related to denials and their impact on the financial health of a hospital

37 Next steps Observation patients are currently checked for medical necessity –Unit clerk/cardiac rehab not entering patients on schedule – no way of knowing whether or not diagnosis meet Medicare medical necessity Monitor denials through the use of a dashboard to be reviewed on a monthly basis –Charts with a cardiac stress test denial will be audited and root cause analysis will be performed to determine cause of denial Solidify projected savings Focus on EKG Medicare denials, since it was our 2 nd largest denial in 2005

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