Improving Denial Management

Christy Whetsell, RN, for HealthLeaders Media , March 11, 2008
During a medical emergency--or even during the most planned courses of treatment--there always exists the chance for unexpected procedures, complications and longer-than-anticipated hospital stays. When a patient is finally released from care, the recovery process can cause both physical and emotional stress. All too often, this stress is multiplied for patients and their families when insurance companies deny coverage for the patient's treatment or days spent in the hospital.

Stifling hospital bills that are not covered by insurance can quickly devastate a family's financial security. As a result, patients are unable to cover their bills, thus affecting the financial status of the hospital that provided the treatment.

A few years ago, West Virginia University (WVU) Hospitals administration realized the need to revitalize operational procedures, in order to reduce patient length of stay and improve the quality of care delivered. Reducing denied coverage, improving coordination of care and improving the bottom line became the goals.

Finding the right solution was a daunting task for our large health system, which is based in Morgantown, West Virginia. WVU has an annual inpatient discharge rate of more than 22,000 patients per month. WVU Hospitals had quite a list of operational goals --streamlining and coordinating the utilization of services, improving case and discharge management processes, as well as incorporating a new, coordinated denial management practice with financial services.

A team consisting of senior management, physicians and care management professionals researched numerous companies within the industry to find technology that would most effectively manage patient throughput. Recognizing the burden denials management created for case managers and other hospital staff, as well as the trend towards paperless, wireless solutions, WVU Hospitals decided to look to a case management system to streamline operations and organize an effective appeals process. After extensive research into various case management options, WVU Hospitals decided to implement Allscripts' Case Management system in 2001.

Reducing denials by reducing length of stay
Implementation of a case management system greatly affected the denials management process at WVU Hospitals by decreasing the patient's length of stay. Before the implementation of the case management system, a patient's medical team would depend on the bedside nurse to keep everyone updated on patient needs, plan of care and discharge status.

But now, the case management system streamlines communications so that all members of a patient's care team--doctors, nurses, social workers and case managers--are up-to-date on a patient's progress and anticipated discharge. In fact, the case management system keeps the team informed of the exact barriers keeping the patient from safely returning home, such as missing lab results, consultations, and family needs. Today, case managers can more efficiently and effectively orchestrate a patient's discharge with the help of this system.

In retrospect, case managers use the reporting capabilities of the system to produce concurrent medical service line reports for the medical services lines and senior management team evaluating length of stay compared to their benchmarks and analyzing avoidable day reports. As a result of this implementation, WVU Hospitals were able to reduce their actual length of stay by a half day in the first 12 months.

By 2003, WVU Hospitals were performing well below our average length of stay goal of 5.5 days. In addition, WVU Hospitals reduced length of stay and patient days for high-risk, complex patients who stay in the hospital for over 15 days.

Alerts, reports and appeals--fighting denied days
After implementation of the case management system, managing the process of preventing and appealing insurance company payment denials also improved. Before automation, utilization review nurses spent a large portion of their work week filling out endless paper work, searching for proper coding, and awaiting signatures from doctors in order to start the process of appealing a denied claim. Now, the process is proactive and seamless. While the patient is still in the hospital, the payer specialist sends a review to the insurance company--communication that documents the patient's acuity level according to established criteria.

Establishing how sick the patient is allows for the payer to authorize treatment and prevents them from claiming at a later date that the care was not necessary. Automation also allows more proactive census management as we know with more precision how many in-patient days authorized by payer--called "certified days"--we have in the system.

Proper coding is available to the specialists directly on the workstations, cutting back on small errors that can make a big difference. If a denial is reported to the facility after filing with the insurance company, the payer specialist can document the denial and alert the appeal coordinator to initiate the appeal process. This process happens while the patient is still in the hospital, and continues after discharge, as needed.

The reporting capabilities of the system keep all members of the team up to date on the specific needs of the denials management team from the initial threat of denied coverage, and through the entire appeals process. For example, an e-mail is sent to all members of a patient's care team, as well as various members of the hospital administration, to inform the team the patient's insurance has threatened a denied day.

In addition, the reports are used to track for trends and assist with workflow prioritization--a process which includes physician reporting, tracking and logging necessary documentation, and preparing for necessary hearings. Although this can be a complex process, the capabilities of the case management system have made the denials process at WVU Hospitals more efficient and has yielded positive results for both patients and the hospital.

Looking ahead
Due to the reduction in patient length of stay and increased effectiveness in denials management, WVU Hospitals have greatly improved operational efficiencies and financial security. The hospital has noticed greater success rates in winning denied day appeals. This success rate has made a significant fiscal contribution. By reducing excess days by about 400 per month and improving the facility wide appeals process, WVU Hospitals have been able to add an estimated $140,000 per month and $1.5 million per year to the hospital's bottom line.

With the comforts of a more controllable denials management process and a stronger bottom line, WVU Hospitals are prepared to continue their standard of excellence in patient safety, as well as look towards a future of steady growth. And most importantly, patients and their families can return home to continue recovery with the confidence in the organized, highly successful denials management system and care team working to protect them.

Christy Whetsell, RN, MBA, ACM, is director of care management at West Virginia University Hospitals in Morgantown, WV.
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