Preparing for RAC?

Strengthen Your Denials Management Process

December 19, 2008

Practical, Innovative, Medical Management Solutions

PREPARING FOR RAC ATTACK

Goal Develop a proactive attack plan to prevent financial risk for the organization
Assemble a RAC Taskforce Interdisciplinary approach with core players: Utilization Review Medical Records Risk and Outcomes Director Patient Financial Services Director Information Technology Representative Physician Representative (in-house or contracted)

PREPARING FOR RAC ATTACK

Determining the Action Plan

Establish line of authority for hospital wide RAC program Use existing data to analyze/identify denial drivers Perform in-house audits and determine hospital wide and system weaknesses Establish process improvement plans Develop an interdepartmental tracking system

PREPARING FOR RAC ATTACK

In-House Physician Advisors
PROS
Decrease hospital expense No contingency fees Existing internal peer relationships

CONS
Increases existing physicians work load Physician often not be specialized in denials management Difficulty persuading others to embrace practice improvements Limited ability to produce valuable educational reports and denial tracking reports

PREPARING FOR RAC ATTACK

Results Achieved: Denials Outsourcing
FYE 2005 - 29.54% of Total Cost denied - 21.00% overturned after in-house appeal FYE 2006 - 27.53% of Total Cost denied - 44.90% recovered utilizing physician appeal Summary
Significant Denials Decrease: - 19.50% is the average recovery prior to program launch - 29.00% is the sustained recoveries since 2006

PREPARING FOR RAC ATTACK Demonstration Project RAC Statistics 32% medical necessity denials 42% incorrect coding denials 9% insufficient clinical 88% inpatient 11% appealed 5% overturned 42% of hospitals had no denials issued

PREPARING FOR RAC ATTACK

Denials Increasing from Numerous Sources

CMS Denials RAC Denials Emergence of Medicare Never Events Denials Increased Denials Medicaid MCOs FFS Medicaid Commercial Payors

Use RAC Preparations as Catalyst to Revamp your Denials Management Process

PREPARING FOR RAC ATTACK

Key Components of an Effective Denials Strategy Primary Strategy - Proactive Prevention
Use data to identify key drivers of denials Develop processes to mitigate these drivers thereby further reducing denials Minimize denials through an effective Concurrent Review/Case Management and notification process

Supporting Strategy - Denials Recovery

Aggressive appeals process recover denied dollars Close the loop between approval and payment

PREPARING FOR RAC ATTACK

Primary Strategy: Data Management

Audit existing data to identify opportunities for improvement including areas of RAC emphasis Use audit results to develop processes that address identified areas of opportunity Enhance existing UM/CM/SW processes based on audit findings Develop educational sessions as needed Re-assess and monitor impact of newly implemented processes

PREPARING FOR RAC ATTACK

Using Data to Identify Opportunities
Audit charts for each RAC area of emphasis
Objective chart review using CMS medical necessity criteria (InterQual) Subjective chart review using physician medical judgment Data capture and analysis of denial variables

Analyze audited data and existing denials data

Diagnosis Physician Denial type Delay reason

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PREPARING FOR RAC ATTACK

Denials Management Tracking and Audit Application

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PREPARING FOR RAC ATTACK Building Processes to Minimize Denials

Obtain buy in from key stake holders to improve chances of success - Physicians, nursing, UM, IT Prioritize process improvement to maximize returns Select improvements with highest success rate - Broadest impact across all payor types - Simple implementation
Primarily systems enhancements Minimal resource allocation

- Enhance and strengthen existing processes

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PREPARING FOR RAC ATTACK

Building Processes to Minimize Denials
Examples of Process Improvement Activities Short stay denials
- RAC emphasis

UM/CM/SW process enhancements

- Improve communications with payors

Education
- Use data to identify educational activities for staff - Employ external resources as needed

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PREPARING FOR RAC ATTACK

Short Stay Denials

Case manager assigned to ER to review admissions for select diagnosis based on audit results Consult done in ER when possible prior to admission Consider implementing rapid chest pain protocol Educate ER staff on admissions criteria for commonly denied diagnosis

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PREPARING FOR RAC ATTACK

UM/CM Process Enhancements

Hold carriers to timely denial notification by denial log Use log to eliminate denials for no clinical and to drive peerto-peer process Use denials audit results to focus case management and discharge planning activities Work closely with payor case manager on complex cases

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PREPARING FOR RAC ATTACK

Education
Use denial audit results to guide educational initiatives Physician and UM/CM/SW educational sessions based on frequently denied diagnosis Hospitalist groups respond positively with impressive end results Individual physician improvements more difficult to accomplish

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PREPARING FOR RAC ATTACK Secondary Strategy Denials Recovery

Ensure processes are in place to maximize denied claims recovery Develop strong appeals capabilities Ensure aggressive payment follow through Ensure strong data capture and reporting capabilities Use data to identify areas of opportunity to enhance the entire process Close the loop on denials prevention CQI

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PREPARING FOR RAC ATTACK

Advantages of Physician Led Appeals

Recognized as clinical expert vs other clinicians Able to challenge payers and provide clinical conviction Peer-to-peer review shown to prevent 15% of denials RAC auditors must provide a physician for peer-topeer when requested Select payors now require a physicians name on the appeal

PREPARING FOR RAC ATTACK

The Appeal Process
Types of Appeals
Informal peer-to-peer as soon as denial is identified, 1 day of denial First Level appeal with medical records, 15 to 180 days depending on payor Second Level for some payors typically 30 to 90 days Third Level for some payors typically 30 to 90 days External appeals - usually through the MIA or CMS

Complexity of Appeals
Multiple payors Multiple rules Multiple levels Multiple time frames Multiple regulators

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PREPARING FOR RAC ATTACK

A Staged Approach to Appeals Management

Automation and Data Management Research & Approval Strategy Development MCO Submission

Denial Mitigation through Education

MCO Process Management

Denial Process & Intervention Reporting

Payment Management Process

Appeal Response Determination Process

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PREPARING FOR RAC ATTACK

Internal Appeals Process
A strong appeals process is critical in developing a successful denials mitigation program. The components of a successful appeals process include:
Identifying the denial as soon as possible Collecting medical necessity information Generating the appeals letter Managing the payors appeal response process Appeal response determination process Payment management process Data management, reporting and performance improvement

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PREPARING FOR RAC ATTACK

Identifying the Denial
The EOB is the gold standard and should be cross referenced with other denial sources to ensure denials are correctly identified For carriers with a short appeal response timeframe the denial must be identified before the EOB is received Most denials are identified through the denial letter sent from the payor or phone calls Payors daily log is a good source for identifying denials

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PREPARING FOR RAC ATTACK

The Medical Necessity Argument Critical components necessary for success

Timeliness is critical and requires a complex and efficient process to meet the varying requirements of numerous insurers. Medical necessity knowledge is key to a successful appeal and often requires the leadership and input of a UM trained physician Intimate knowledge of criteria sets (Milliman, InterQual etc.)

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PREPARING FOR RAC ATTACK

Managing The Appeal Response Process
All appeals documentation must be:
- Sent by certified mail - Tracking option activated - Follow-up calls to facilitate return of late appeals

Payors fail to return 35% of initial appeals for a variety of reasons Depending on the insurer, only 35% to 60% of appeals are completed within the required 30 days Process difficult to monitor without an appeals tracking system

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PREPARING FOR RAC ATTACK

Once an appeal response is received a decision must be made on next steps If approved, clearly payment must be pursued If denied:
Should a Level 2 or 3 be pursued? Should the account be closed? Should an external review be filed?

Between 10% to 25% of Level 2 or 3 appeals can be overturned Significant medical necessity knowledge is needed to assess which appeals warrant a Level 2 or 3

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PREPARING FOR RAC ATTACK

From Approval to Payment Assign accountability for payment follow-up Close the loop between approval and payment Follow-up with payor to ensure 100% of approvals are paid Pay close attention to TPAs

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PREPARING FOR RAC ATTACK Data Management, Reporting and Performance Improvement Provide monthly results to key players Status reports provide updates on the appeals process Actionable reports drive the CQI process Monitor impact of process improvement activities with tracking and trending of data

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PREPARING FOR RAC ATTACK

Summary
Preparation is key Minimize operational disruptions its just another denial RAC demonstration 42% of facilities had zero denials Use the opportunity to enhance your denials management process and come out ahead Reporting and continuous process improvement are critical

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Case Management Covenants, LLC

Case Management Covenants is a Maryland based healthcare consulting services company specializing in denial management, appeal management and RAC audit preparation services. Key Staff Contacts
President: Olakunle Olaniyan, M.D. still a practicing physician and former managed care VP and CMO. Chief Operations Officer: Iskla Chris Brown - nurse executive with many years experience in healthcare accreditation organizations, commercial and government health insurance entities. Vice President, Business Development: Doug Allen a strategic planning professional with significant experience in both the commercial and non-profit healthcare sectors. 410-715-4913

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