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Ten Steps to Reduce Denials, Win More Appeals, and Improve Hospital Performance

December 8, 2017
by Carol Everhart, RN, MS, IQCI, Senior Clinical Consultant, Decision Support Change Healthcare
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Carol Everhart, RN, MS, IQCI

Hospitals everywhere are striving to answer this question: How can we better manage denials?

Denials related to medical necessity account for about 5%[1] of denials nationally. But by closing common gaps that lead to medical necessity denials, your organization can quickly have a positive impact on the revenue cycle, while also enhancing care quality.


  1. Make a Case for Case Management Leadership

A hospital needs strong case management leadership with a clear vision, focus, and goals.

Case management isn’t just a department. It requires an enterprise-wide approach to reduce variation and use best practices.

Are nurses, physicians, and ancillary departments vested in length-of-stay and transition management and aligned around priorities? Does leadership help the CFO understand what case managers do, how their work helps close gaps, and how the CFO can help from a data perspective?

Every stakeholder has a significant impact, and needs to understand their role.


  1. Strengthen Your ED Case Management Program

ED physicians should understand how to work with case management effectively to ensure admissions from this important entry point are appropriate.

Spend time with ED physicians discussing key concepts, such as the Two-Midnight Rule, the role that evidence-based content has in admissions, the importance of documentation, the correct level-of-care assignment, and what an ideal onsite ED Case Management Model that functions 24/7 looks like.


  1. Ensure that Observation Management Works

Observation must drive a rapid course of testing, diagnosis, and treatment, because treatment gaps or delays can lead to denials. But many hospitals don’t do much testing after 5 p.m. or on weekends.

That means patients who would have been discharged after tests are conducted are instead kept in short-stay units. To fix this, dive into the admission data. Once the types of cases that get admitted to observation are understood, the organization can ensure testing is available for typical cases whenever needed.


  1. Take Level-of-Care Management to a Better Level

There are many cases in which admission is medically necessary, yet claims are still denied because care is not being rendered at the appropriate level. For example, a need for telemetry doesn’t necessarily require admission to a higher-level unit. Any patient can be monitored and yet not require an intermediate level of care.

Documentation must be specific to validate the level of care being requested.


  1. Have Consistent Processes and Frequent Reviews

Look at whether all entry points—ED, direct, transfers, elective admissions are covered around the clock. It’s crucial to validate medical necessity for all admissions prior to the patient being admitted. Encourage the care manager to proactively participate in the rounding process and to focus on interventions and plans that demonstrate medical necessity.

Next, look at the timing and frequency of medical necessity reviews. Ideally these would be daily or every other day. In many cases, it can take days after a patient is admitted before a case manager reviews the case again, using decision-support criteria, to determine whether the patient still requires a particular level of care and a discharge plan is in place.

Use decision support criteria to help drive appropriate length of stay. The criteria should provide benchmark data, an outline of expected course of care, response by episode day, and guidance to help address patients not responding as expected.


  1. Boost Clinical Documentation

By working with physicians and nurses, organizations can improve their documentation processes. Ensure the medical review demonstrates a holistic understanding of the patient, with clearly articulated medical and discharge plans. Documentation must support treatment and level-of-care decisions. Physicians must understand how cases are prioritized and how reviews are submitted to payers.


  1. Dedicate the Physician Adviser to the Care Management Team

Many hospitals employ dedicated physician advisers that spend time rounding on the unit, and who can assist the case managers. These hospitals can have fewer denials, because they can intervene proactively to ensure documentation is robust and processes more effective.

Physician advisers who perform this work on a part-time basis might not see themselves as part of the care management team or have sufficient dedication to care management processes and goals. For best results, retain full-time physician advisers.


  1. Train Staff on the Use and Role of Decision Support Criteria

Ensure that staff uses decision support criteria consistently and effectively to enable accurate medical-necessity determinations. Provide annual refresher training on the criteria, tools, and best practices—including condition-specific review processes, use of episode days, discharge screens, and so on.

Pull cases quarterly, or more, to identify variation across the staff. Where variations are found, build action plans or educational programs to reduce them.


  1. Engage the Staff with Data-Driven Insights

Share data at the staff service-line level to expand understanding of denial issues and close gaps that impede success.

While leadership might have an understanding of the resources wasted and revenue lost, and the case manager might have a strategy to improve performance, the staff rarely sees a report on denials. They don’t know length-of-stay or denial rates and they’re not being asked for input on how they can help improve processes.

Ensure operational reports from finance and revenue cycle are being circulated and reviewed. With the data on hand, teams can develop action plans and look for ways to reduce length-of-stay and cost, and help improve quality.


  1. Use Specific and Objective Criteria

Employ technology to support the medical necessity of care provided. Look for specific and objective evidence-based guidance, so there’s no gray area in determining whether a patient meets the criteria for necessary care. This can help increase appeals win-rates dramatically.

Denials are an increasingly serious problem at most hospitals and health systems. The good news is that, when denials relate to medical necessity, noticeable improvements can come early and easily. The positive impact to the hospital’s bottom line can be significant and, more importantly, can also help ensure patients receive the most appropriate care.

© 2017 Change Healthcare Operations, LLC. and/or its subsidiaries and affiliates. Change Healthcare, the Change Healthcare logos, are trademarks of Change Healthcare Operations, LLC. All Rights Reserved.

[1] Internal Change Healthcare data

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