Case managers must take a proactive role in managing denials

Cooperation with billing departments, physicians crucial

With hospitals facing increasing financial challenges, a growing emphasis is being placed on proactive denial management. For case managers operating on the "front end," this has created the need to closely coordinate their activities with billing departments that handle denied claims on the "back end." In the process, it has created an opportunity for case managers to help hospitals improve their bottom line.

Beverly Cunningham, RN, MS, director of case management at Medical City Dallas Hospital, says case managers must be concerned with two different types of denials. The first includes denials that are difficult to avoid, either because the patient does not meet medical necessity criteria or the insurance company has a requirement such as a 24-hour notification rule that was not met. "These are usually very clear denials," Cunningham says.

Denials of the second type often leave room for a process improvement opportunity, she says. For example, the payer may indicate that no authorization was given when, in fact, it was. Or the claim may have lacked information or have been sent to the wrong payer.

"The second group of denials are problems that we created ourselves, and if we did something right upfront, we would not have that denial," she says. "We can do it ahead of time, or we can do it after the fact."

According to Cunningham, case managers may find that most of their denials occur in connection with certain physicians and consequently may focus their efforts with those physicians. Or they may find that patients from the emergency department are being admitted even though they don’t meet inpatient criteria. That creates a need for case managers to work with admitting physicians.

Also, case managers performing utilization review often are responsible for giving complete, timely information to the payer and determining if the patient is inpatient, outpatient, or outpatient observation, Cunningham says.

With Medicare, Medicaid, and even some private payers, sometimes patients who stay overnight are considered outpatients, she says. "That makes it important to make sure you have the right status, especially for Medicare and Medicaid," she says.

For example, a patient may come in for a surgical procedure, and the physician may wish to keep that patient overnight. However, Medicare may refuse to pay inpatient status, and the patient may not meet any criteria for observation status.

"If a hospital filed a claim stating inpatient or observation status, it could be committing fraud," Cunningham warns. "It is very criteria-driven. Hospitals have it in black and white."

These are the kind of things that case managers can do at the bedside to make sure denials are minimized, she says. "They can also help coordinate care. If we have a delay in care, such as if a physician ordered a consultant referral and nothing happens, case managers should follow up."

Day-to-day management of denials

According to Cunningham, the case management director typically is responsible for looking at aggregate data and determining the number of delays related to things such as surgeries not being performed on weekends. But the case manager still has the day-to-day responsibility for management of denials, she says.

John Englander, CPA, administrator of operations at the Cleveland Clinic Foundation, says the key ingredient to reducing front-end denials is solid registration. He says part of that means working with payers to issue insurance cards, which only can be done during negotiations with payers.

"That enables patients to tell you [what] the plan is and the plan code in addition to [what] the insurance is," he says. "Only then can you know what you can expect to be paid and what your obligations are before the patient gets there."

"One of the problems you run into is that you think you have a patient with all kinds of wonderful insurance, and then you find out it was a particular plan where there was no contract or a contract that requires a whole set of front-end parameters, such as notice," he adds.

According to Englander, there need to be solid systems in place at the front end to gather good information.

"You must be able to slice and dice it so that you know how many denials you have from whom and why," he asserts. "I describe it not as a database but as an inventory.

"The feedback is actually the most important part of any denial system," Englander says. "When I first drew up what I considered a good denial inventory system, the feedback was the key to the whole thing." At Cleveland Clinic, he says, case managers deal primarily with the coordination of care, while reimbursement specialists focus on capturing the right information.

"The real key is being able to find out the cause of denials and being able to eliminate them," he says. "What you can do at the back end is collect data to improve your front-end performance."

All of the 1,200 physicians are employed by the health system, segregated by division and department. That makes it important to determine how much feedback takes place between the reimbursement specialist and the registration staff who are responsible for insurance, Englander says. "You must have a system in place to compare department to department and division to division."

"If one department is getting no denials and another department with a similar insurance mix is getting a lot of denials, then you have a right to ask questions, and that is where the feedback becomes valuable," he adds

Catherine Foley, senior health care consultant at the Unicare Corp. in Cleveland, reports that hospitals increasingly are employing new processes to become more proactive in this area. These processes originally were designed to respond to denials that were hitting the business office, she says. "They were getting authorization and medical necessity denials that were strictly retrospective on the back end," she explains.

"We learned as we went along that they did not have any type of process to collect any kind of information to inform the front end and help control them," says Foley.

She says that is when her firm started writing data systems to capture that information and feed it back in a form that let them view their data by physician trends, department trends, and payer trends. That data then can be used to help admitting and registration as well as contract management staff who negotiate contracts.

Unicare also started to run multifunctional and multidepartmental process improvement meetings within hospitals that included admissions, case management, and business office staff.

"What has been interesting about it is the difference in the way it is perceived by case management and by patient accounting," Foley reports. She says the latter look at it strictly as money that needs to be recovered, while case managers pay more attention to the clinical trends.

According to Foley, the first step in terms of developing a system is figuring out who will "own and operate" that system — whether that is case management, the business office, or a combination of both.

The next question is whether that process should be integrated with the current system, she says. Also ask if it should be a system that inventories the claims so you can see an active inventory of denied claims at any given time.

In addition, Foley puts a lot of emphasis on reporting, she explains. "If you only work denials to get cash, you are only looking at half the picture. You are going to get cash today, but you are going to get denials tomorrow." To have a real impact, she says, case managers must look at the data and make corrections at the front end.

In the past, case managers typically have been independent and closely aligned with nursing, Foley says.

Her goal is always to incorporate case management with contract management, utilization management, and the business office, she says. "If they do not work hand in hand, they will have a hard time being successful in the long run."