Is your UR committee a dinosaur?

Evaluate its necessity

By Patrice Spath, ART

Brown-Spath & Associates

Forest Grove, OR

Demands for system efficiency improvements affect all facets of your hospital, including the structure of medical staff committees. Often it makes sense to merge groups responsible for similar functions and eliminate committees that are no longer needed. One group usually ripe for reorganization is the utilization review (UR) committee.

Changes in reimbursement mechanisms and concurrent review requirements are causing organizations to evaluate the continued need for a separate UR committee when medical staff have UR roles and responsibilities. In your analysis of the continued worth of your UR committee, two important questions must be asked: Is a separate committee necessary? And what tasks should be assigned to it?

Since the standards of the Joint Commission on Accreditation of Healthcare Organizations in Oakbrook Terrace, IL, don’t require a hospital UR committee, some organizations are considering eliminating this group and integrating its responsibilities with another committee. However, abolishing the UR committee could put you in violation of Medicare’s Conditions of Participation (COPs) for hospitals. (See article on the front page of this issue on proposed revised COPs.)

Medicare requires internal or external UR

Most Medicare-participating hospitals have an agreement with the utilization and quality control peer review organization (PRO) in their states, and in those instances the PRO review activities fulfill the UR requirements for hospitals. In cases where the PRO does not fulfill its UR obligations or the hospital does not have an agreement with a PRO, an internal UR committee is required (42 CFR, Part 482, Sec. 482.30).

In some instances, the hospital may rely on an outside UR group established by the local medical society and some or all of the hospitals in the locality. The only hospitals right now that don’t have Memoranda of Understanding (MOU) with their PROs are those affiliated with Veterans Affairs. All other hospitals should have such an agreement. Check with hospital administration or the PRO in your state if you are not sure about the status of your peer review organization MOU.

Those hospitals not required by COPs to have a UR committee can delegate UR functions to another committee, such as the Quality Management Committee or another oversight group responsible for organizationwide performance improvement activities.

One way to cut down on the number of meetings that physicians and professional staff must attend is to consolidate the basic UR functions with another oversight committee. However, consolidation may cause issues related to managed care and compliance to get lost in the shuffle. Committee members may not have sufficient time or expertise to fulfill their various UR-related responsibilities. It’s likely to be more advantageous to convert your traditional UR Committee to a Resource Management Committee. This committee, once educated in managed care and compliance issues, can effectively assume responsibility for all matters related to the efficient use of health facilities and services. A coordinated resource management strategy is far superior to a fragmented approach involving several committees and groups.

Hospitals may find that a Resource Management Committee, broader in scope and responsibility than a traditional UR Committee, is the best choice. This committee is charged with overseeing all aspects of your facility’s resource management systems, including UR activities and contracting and billing compliance issues. The members of the committee should have expertise in resource management issues and should be knowledgeable about Medicare’s utilization and billing requirements, as well as stipulations imposed by managed care contracts. Members should include representatives from medical staff service, nursing services, utilization and/or case management, business office, admissions office, health information management department, and outpatient services. The responsibilities of the committee encompass all issues related to the efficient use of hospital services:

• Ensure that the decision to admit, transfer, and discharge patients is based solely on the best interest of the patient so you can be sure treatment is appropriate to the patient’s needs and therapeutic goals.

• Ensure that patient services are medically necessary, and are provided in the least costly health care setting.

• Facilitate intrahospital communication about resource management activities and priorities.

• Maximize market share and net collections on contracts by promoting accurate and appropriate patient record documentation and billing practices.

• Evaluate managed care contracts prior to signing to ensure consistency with the hospital’s managed care strategy.

• Promote hospitalwide compliance with accurate and prompt billing practices, and ensure that all billing issues are resolved in accord with organizational policies and contractual responsibilities.

• Establish and oversee mechanisms for managing external review activities associated with managed care contracts, and monitor the impact of these activities on the quality of patient care and facility-patient relationships.

At the first meeting of the committee, provide members with basic education about managed care, including the "alphabet soup" of jargon associated with insurance plans and fraud and abuse legislation. Next, review the existing managed care insurance plan contracts the hospital now participates in, if any. Make certain to cover inpatient and outpatient financial reimbursement and the review components of the contracts in detail. The committee members will quickly realize that each contract is different and that different managed care strategies might be necessary. For example, one contract may pay the hospital on a per diem basis, while another pays a flat rate for the entire hospital stay.

The committee should then review the current policies and procedures of the hospital in relation to managed care contracts and billing practices. These policies and procedures should include at a minimum:

• process for periodic contract review;

• external review procedures;

• preadmission authorization procedures;

• telephone and on-site review policies and procedures;

• third-party payer bill audit mechanisms;

• handling of insurance denials and appeals;

• coordination of hospital discharge planning with external case managers;

• compliance with federal and state statutes designed specifically to prevent fraud and abuse activities (including overutilization and billing-related issues).

If the hospital lacks necessary policies or procedures in these or other critical resource management areas, the committee should spend time drafting the necessary documents. After being educated in managed care concepts and the current policies and procedures and contractual obligations of the facility, the committee selects resource management performance measures that will be regularly evaluated.

The Resource Management Committee should receive data that help them analyze the utilization and quality-related components of resource use. Shown below are some examples of the types of information that the committee could periodically analyze:

• number of inpatient discharges (report by service and/or primary insurer);

• average length of inpatient stay (report by service and/or primary insurer);

• number of patients discharged following stay for observation only;

• number of observation patients admitted as inpatients (see special section on observation status in next month’s issue of Hospital Peer Review);

• number of patients who met observation criteria but are who are admitted as inpatients;

• average number of hours patients stay in observation;

• number of denied days of care and reason for denial (report by payer);

• dollar losses due to denied days of care and denied services;

• number of precertifications performed (including % of admissions precertified);

• number of recertifications performed and results of medical necessity determinations;

• number of cases referred to a physician advisor and results of review;

• number of payment discrepancies (difference between expected payment and actual payment);

• number of day and cost outlier cases and results of UR activities;

• number of inpatient service delays and type (e.g, missed orders, cancelled tests, etc.);

• administrative time (business office, admitting, UR, discharge planning, medical records, etc.) spent in handling managed care contractual obligations;

• incidents of intentional or accidental billing practice misconduct;

• number of calls to compliance hotline or helpline (report by types of calls and professional category of caller).

Promote managed care awareness

In addition to overseeing resource management initiatives, the committee should promote communication about managed care issues throughout the hospital. For example, when a new contract is negotiated, all involved staff should receive a summary of the contract terms. Involved staff would include those in the business office, admissions, insurance verification, home health, nursing, UR, quality management, health information management department, surgical and outpatient test scheduling, and preadmission services. The summary should include the terms of every contract, whom to call, how to proceed, and the rates or a description of the payment methodology. (A sample one-page summary sheet is shown on p. 58.)

If this information is merely kept stored in a file in the business office, staff throughout the hospital won’t understand how managed care affects their jobs. The goal is to eventually integrate the concepts of managed care and the organization’s strategies throughout the facility.

Hospitals are finally realizing the importance of developing an overall managed care strategy in terms of contracting approaches. The members of the Resource Management Committee should be personally involved in setting the tone of organizationwide policies and procedures. Key components of your managed care strategy include implementing an information system that tracks utilization and patient mix by payer, communicating changes in contract terms throughout the hospital, and integrating managed care principles such as utilization management and discharge planning throughout the hospital.

Likewise, the committee should start now to design the systems and processes necessary to ensure effective utilization throughout the continuum of care. These are issues that will need to be addressed as the hospital becomes more involved in capitated insurance contracts:

• Perform an assessment of your community’s health care and wellness needs to determine the hospital’s future strategic objectives.

• Ensure that a sufficient number of qualified post-hospital providers are available to care for discharged patients — home health agencies, subacute care, rehabilitation, community health nurses, and assisted living centers.

• Follow-up care and wellness programs should become standard for all discharged patients.

• Ensure the availability of community-based case managers to coordinate the use of nonhospital services for people who are never seen in the hospital.

• To reduce hospital and emergency department admissions, employ care coordinators/nurse practitioners with geriatric experience to visit area nursing homes and assisted living centers to monitor the health of patients with chronic diseases.

• Nurse practitioners/physician extenders should be available to primary care physicians to assist with direct patient care activities.

Following are names and telephone numbers of sources quoted in this issue:

• Martin Merry, MD, health care quality consultant; Exeter, NH. Dr. Merry is a member of Hospital Peer Review’s editorial advisory board. Telephone: (603) 778-1531.

• Lynda L. Nemeth, RN, CPHQ, administrative director, quality, risk, and case management; Norwalk (CT) Hospital. Telephone: (203) 852-2732.

• Gail Apland, RN, CPHQ, quality management coordinator; St. Mary’s Health Center, Jefferson City, MO. Telephone: (573) 761-7000, ext. 1487.

• Rachael Weinstein, RN, senior health insurance specialist; Health Care Financing Administration, Baltimore. Telephone: (410) 786-6775.

• Robert Pollack, MD; Professional Quality Analysts, Casselberry, FL. Telephone: (407) 834-3553;

• Janet McIntyre, spokeswoman; Joint Commission on Accreditation of Healthcare Organizations, Oakbrook Terrace, IL. Telephone: (630) 792-5635.

• Robert J. Latino, vice president, strategic development; Reliability Center, Hopewell, VA. Telephone: (804) 452-3201.

• Brenton L. Saunders, JD, MBA, corporate compliance officer; Thomas Jefferson University and Jefferson Health System, Philadelphia, and vice president, Health Care Compliance Association, Madison, WI. Telephone: (609) 470-2110.

• Thomas H. Suddath, Jr., JD, partner; Montgomery, McCraken, Walker, & Rhoads, LLP, Philadelphia. Telephone: (215) 772-7459.

• Eric Kriss, CEO; MediQual Systems, Westborough, MA. Telephone: (800) 350-6444;

• Julia M. Roberts, spokeswoman; Joint Commission on Accreditation of Healthcare Organizations, Oakbrook Terrace, IL. Telephone: (630) 792-5914;