Case management and compliance: What every CM needs to know

Failure to act could result in jail, civil penalties

As the federal government, private payers, and accrediting agencies crack down on overutilization, underutilization, fraud, and abuse, hospital case managers need to keep an even closer eye on what is going on in their hospitals, experts say.

Case managers have the same obligation that every employee in the health care industry has — to take appropriate steps when they see inappropriate care, underutilization, or overutilization, points out Elizabeth Hogue, a Burtonsville, MD, attorney in private practice specializing in health care.

If a case manager knows something is wrong and ignores it, he or she could end up facing serious consequences. Those could include losing your job, losing your license, going to jail, and paying huge civil monetary penalties, Hogue says.

"The stakes are very high," she adds.

Case managers can create liability for their hospitals if they don’t do their job efficiently and point out problems with overutilization, fraud, and abuse, adds Alice Gosfield, JD, of Alice G. Gosfield and Associates, a Philadelphia law firm.

At the same time, they can help their hospitals avoid liability by going through the proper channels to report incidents that may be in violation, she adds.

"As fraud and abuse moves more and more into quality and medical necessity issues, the role of case managers is far more linked to what compliance is all about," Gosfield says.

Case managers’ clinical expertise gives them the ability to look at situation and see compliance issues or unethical practice, assess them, and understand what steps need to be taken to correct them, adds Mindy Owen, RN, CRN, CCM, past chair of the ethics committee and a member of the executive board of the Commission for Case Management Certification and principal of Phoenix Health Care Associations in Coral Springs, FL.

"Our clinical expertise, even prior to case management experience, builds us a foundation by which we can look at situations and issues and see this compliance issue or unethical practice and acknowledge the concerns we have about it," Owen says.

While compliance standards may vary among accrediting bodies and government agencies, the overall perspective is that if case managers and case management organizations come across potential fraud and abuse cases, they are obligated to address them.

"This goes right along the lines of the code of ethics for CCM [the certified case manager credential]. If a case manager observes a fraud or abuse situation, a medical error, or an incidence of underutilization, it is their duty and responsibility to report it and to ensure that the next steps are taken to correct the situation and make sure it doesn’t happen again," Owen says.

Case managers need to be acutely aware of the clinical validity of what they are doing, Gosfield points out, adding that the best defense is to follow national practice guidelines.

"Case managers need to be looking at trends in diagnoses or procedures that don’t meet the medical necessity criteria, and if they notice something that seems abnormal, they should report it," says Beverly Cunningham, RN, MS, director of case management at Medical City Dallas Hospital. Look for overutilization and underutilization of care, she adds.

"Case managers need to look at quality outcomes as well. As responsible case managers, we need to balance the clinical and quality scale," Cunningham says.

For instance, if a patient has a three-day length of stay with poor outcomes and another patient with a similar condition has a five-day length of stay with good outcomes, the first patient may not have gotten the care he or she needs.

Take into account the criteria for admissions and medical necessity based on the criteria of each payer, she adds.

In many states, Medicare criteria and Medicaid criteria are different. Each commercial payer may have its own criteria that must be taken into account for its particular patients. Private insurance companies also have active programs to take legal action on fraud cases, rather than just not paying the claim, Hogue adds.

"We are accustomed to thinking about fraud and abuse in Medicare, Medicaid, and other federal and state programs. Private insurance companies have begun to take action because they have been supported and encouraged because of actions taken in federal and state programs," she says.

Every state has a Quality Improvement Organization that is assigned to make sure health care providers do the right thing for Medicare patients, and they regularly scrutinize hospitals and other providers.

For instance, the Texas Medical Foundation is studying one-day stays, an area where there is some question about whether hospitals are putting patients in the right status, Cunningham says.

Admissions for one-day stays are getting increased scrutiny, she says. "With Medicare, hospitals are paid by the diagnosis-related group [DRG], and if it’s just a one-night stay, Medicare is questioning whether the patient should have been on observation status."

The one-night stays are becoming more common as procedures make it possible for patients to have shorter lengths of stays, Cunningham points out. For instance, many patients who once had open-heart surgery now receive stents, a procedure that involves only an overnight stay.

Compliance issues sometimes pose a Catch-22 situation for case managers. Do you do what you know in your heart is right? Or do you do what you know is going to keep you employed?

"This is uncharted territory and will present some very gray areas for case managers to navigate," Owen says.

For instance, one potential problem for case managers is admission vs. observation status.

Case managers have the hospital — their employer — telling them they need to get the patient admitted because it’s a better status for the hospital and they will be reimbursed more than for an observation stay. On the other hand, the family or patient may be refusing admission and want the patient discharged.

Additionally, Medicare is cracking down on the number of patients who are admitted instead of being kept on observation status.

"The issue comes down to what, in the case manager’s expert opinion, they feel is best for the patient. As a case manager, their role is to be the advocate for the patient," Owen says.

On the other hand, admitting the patient may be in the best interest of the hospital, which pays the case manager.

There may be conflicts of interests for case managers: For example, the employer wants a patient admitted, but the patient doesn’t want to be. The case manager needs to balance which public he or she is serving, Owen says.

"I’m not saying that a case manager will be doing anything wrong if he or she goes one way or another. It’s an issue that case managers may have to grapple with in their own practice," she adds.