In today’s healthcare environment with its focus on high-quality, cost-effective care, it’s more important than ever for case managers to understand the financial side of healthcare.

“Case managers are the clinical liaison between the patient care team, the financial team, the payer, and the patients and family. The financial side of patient care can sometimes be 80% of our job. If case managers don’t understand the financial piece in every aspect of the patient stay, they’ll never be able to tie it all together for the patient,” says Pat Wilson, RN, BSN, MBA, assistant vice president for case management and transplant services at Medical City Dallas Hospital.

Case managers impact many of the decisions that are made in the hospital, says Brian Pisarsky, RN, MHA, ACM, senior managing consultant at Berkeley Research Group, a healthcare performance improvement firm with headquarters in Emeryville, CA. They help avoid overutilization of services, improve quality of care, ensure that payers’ precertification requirements are met, make sure patients are in the right status, and ensure that the documentation supports the services provided so the hospital can get paid, he adds. In addition, case managers can provide valuable feedback to the billing office, the contracting department, and the rest of the financial team, he says.

“If nurses are not interested in the financial side of healthcare and the impact it has on patient care and the hospital’s bottom line, they may want to rethink being in case management,” Pisarsky says.

A case manager is one of the caregivers who is closest to patients throughout the stay and as the treatment team prepares patients to go home, says Karen Hornsby, CPA, associate director of revenue cycle at Berkeley Research Group. “More than anyone else, except maybe physicians, the case manager’s role can have a direct financial impact on a patient stay. They manage the services rendered overall, thereby driving the dollars associated with the episode of care,” she says.

Case managers are involved directly and indirectly with the revenue cycle from registration through patient billing, says Donna Hopkins, MS, RN, CMAC, vice president at Novia Strategies, a Poway, CA-based healthcare consulting firm.

“In the attempts to deliver the right care at the right level and keep the costs down and in order to effectively coordinate care, case managers need to be aware of what each patient’s benefits allow when they’re in the hospital and after discharge,” Hopkins says.

“Knowing limitation or lack of benefits upfront has huge implications for timely transitions/discharge planning and reducing avoidable days,” she says.

Patient access is responsible for verifying the insurance, but case managers may have to call the insurer to determine what services are covered and work with the insurance case manager to identify alternatives if a service a patient needs isn’t covered, Wilson says. If they find out that a patient’s insurance is different from what is on the chart, they need to communicate it to patient access, she adds. 

Roles within case management must also satisfy utilization review requirements and other payer expectations, Hopkins says.

“Utilization review, a necessary component of the revenue cycle, and common in the integrated case management role, has become a burden in many organizations. There are so many specific details in managed care contracts and changes from within Medicare and Medicaid, that some organizations are separating utilization review from clinical case manager functions,” she adds.

Frequent communication and having an open discourse between the case management leadership and the individuals responsible for the various financial sections is extremely important, Pisarsky says. “The collaboration between patient access, the billing office, and case management is essential,” he says.

Pisarsky suggests developing preadmission teams composed of one or two case managers and one or two members of the patient access staff who review direct admits from a community physician and those who are being transferred from another facility. Hospitals also need case managers in the emergency department to review those cases for patient status as well as preventing readmissions, he says.

“The case management team is critical in helping the financial department with clinical denials, particularly in situations where the billing office is not aware of a problem until a denial comes through. Case managers can help determine if the claim was medically appropriate, and then identify where the issues and opportunities are, and make sure there is a process in place to help avoid future denials,” Pisarsky says.

Having these discussions helps with appeals, Hornsby says. “This helps the business office avoid sending an appeals letter that doesn’t give the whole story about why the patient met medical necessity or the circumstances around which precertification wasn’t done. When both the clinical and business side discuss it, the appeals letter can contain specific information that makes the case for the hospital. Otherwise, the hospital may be stuck not getting paid at all,” she says.

Hopkins recommends that RN appeals specialists with advanced clinical competencies address appeals rather than having RN case managers write the appeals for their cases. “The most effective nurse I have ever worked with was an experienced nurse with critical care and paralegal experience,” she adds. “The world of appeals is so sophisticated that it works best to have individuals who are trained to write the appeals. Clinical case managers need to focus on patients in beds, care trajectory, and capacity management. There is no time to effectively look back and write a good appeal,” she says.

An interdisciplinary revenue cycle committee that meets regularly to discuss financial issues that arise is a collaborative way to identify trends and look for opportunities for improvement, Hornsby says. The committee should include representatives from case management, the billing office, and patient access, she suggests. “These areas are best suited to collaboratively assess the root cause of denials such as lack of precertifications, inpatient-only procedures, compliance with the two-midnight rule and other CMS regulations. Using the underlying data allows the group to improve upfront processes and develop strategies to prevent problems in the future,” Hornsby says.

People who are negotiating the payer contracts should communicate regularly with the clinical team, Hornsby says.

“Case managers are the key people who can report information on clinical operation problems back to the people responsible for negotiating the contracts,” she says.

For instance, when an insurance company precertifies a patient for a three-day stay and the stay needs to be extended, the case manager usually calls the insurance company for an extension and knows how agreeable the payer is, she adds. “The case managers know which payers are more collaborative and which have more strenuous rules, and the business office knows which issue more denials or are slow to pay. The hospital contracting team can use that information in negotiations,” she says.

Pisarsky recommends developing a managed care committee with representatives from the business office, case management, and whoever is responsible for contracting. The committee should meet on a regular basis and go through operational issues payer by payer. “Not only is everybody in the room, but it’s a great opportunity to build a collaborative arrangement that will help when the contract is up again. The person negotiating the contract can use the feedback from case management during contract negotiations,” he says.

Pisarsky advises case management leaders to collect data on payers, including denials, lack of coverage for post-discharge services, avoidable days and difficulties in collaboration and share that data with the finance office when it’s time for a contract to be renegotiated.

Having representatives from case management, patient financial services, and contracting meet regularly with payers and providing data to support issues is invaluable in enhancing hospital and payer relationships, Hopkins adds.

“It’s always a good practice for the director of case management to sit down with payers and talk about what is working and what is not. Person-to-person relationships accomplish a lot more than just addendums and electronic communication,” she says.