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CM departments are front-line troops in hospitals’ battle to stay viable
At teaching hospitals across the country, it’s make-or-break time for case management departments. Faced with plummeting reimbursement both for Medicare and graduate medical education, administrators are looking to case managers to help stop the red ink — and those who can’t produce may find themselves downsized out of a job.
In June, the University of Pennsylvania Health System in Philadelphia reduced its expenses and overhead by cutting 1,100 positions (9% of its work force) because of what it characterized as "increasing financial pressures" in the form of increased claims denials, slow payments by health maintenance organizations, and a 30% reduction in Medicare reimbursement under the Balanced Budget Act of 1997. The system lost $90 million in FY1998.
And Penn’s situation isn’t unique. This year alone, Georgetown University Medical Center in Washington, DC, reported losses of $120 million, and Mount Sinai Hospital in Cleveland, which had been affiliated with Case Western Reserve University, went bankrupt and shed its residency program. Meanwhile, the University of Minnesota, George Washington University, Indiana University, Saint Louis University, and Tulane University have all sold their hospitals for financial reasons.
"It’s much more expensive to run an academic medical center," says Maryellen Reilly, MS, MT, director of clinical resource management and social work at the University of Pennsylvania Medical Center in Philadelphia. "The process of training new nurses and physicians adds expense to the patient care process. With the advent of the Balanced Budget Act, that funding has been significantly reduced. Without the additional financial support to provide this training, academic medical centers will have to redesign their delivery models in order to survive."
The financial problems experienced by the residency program, coupled with the medical center’s reimbursement woes, have already trickled down to the clinical resource management department, whose case management staff was cut by eight positions. The loss of staff has forced Reilly to explore creative reorganization of the medical center’s case management delivery models. "There really isn’t a population of patients in the hospital that doesn’t need case management," she says. "So we have to continue to do the same amount of work with different people."
Rather than adopt a single care delivery model for all units, Reilly chose a unit-by-unit approach, matching the model with the needs of specific programs. "For example, on psychiatric and rehab units, we have what I call a full case management model," she says. "We have social workers and nurses who are cross-trained in the same role, so that each individual serves a certain number of geographically located patients." The case managers on these units "do everything," including utilization review, quality monitoring, patient and family counseling, and discharge planning.
On more clinically intense units, Reilly employs a utilization review/social work team model. On other units, teams include a separate utilization review nurse, a discharge planner, and a social worker who together serve a population of patients.
At Georgetown University Medical Center, the case management department also underwent a major restructuring and loss of staff in response to the medical center’s financial troubles. Since then, however, administrators have decided to beef up case management, gambling that a strong case management department can help the medical center better navigate its reimbursement problems.
"The hospital took a close look at what departments play a key role in the reimbursement cycle," says Nitza Fenwick, MSN, RN, director of case management at Georgetown. "Our department was identified as key. If we don’t have the right numbers [of staff] and resources, then what happens is, you can save a few hundred thousand dollars in salaries, but you’re going to lose a million dollars in denials. They had to weigh the facts and ask where they should make an investment and hopefully see a return on that investment." Fenwick adds, however, that if in a year’s time it’s found that the hospital’s losses haven’t decreased, then the administration’s support for case management could wane once more.
For now, however, Fenwick is pleased that her case management staff has been increased to the point where her department is able to screen 100% of the incoming patient population to make sure they meet criteria for hospitalization and to "proactively work on the discharge planning," she says. The goal is to increase resource utilization up front in an effort to avoid problems down the line.
The department is also considering using its increased budget to implement a software program case managers can use to improve data collection and tracking. The department has also added a utilization review specialist whose primary responsibility is to assist case managers in examining and appealing as many claims denials as possible.
That’s important, given the devastating effect claims denials have had, particularly at teaching facilities, which often care for high-risk indigent patients. "What we’re finding is that insurance companies will issue a denial by saying the patient should have been in another level of service" instead of acute care, Fenwick says. The problem is that because of diminished reimbursement under the Balanced Budget Act of 1997, skilled nursing facilities in particular are shying away from accepting certain types of patients, making discharge planning extremely difficult in some cases. (See "Outpatient woes are driving up hospital costs, length of stay," Hospital Case Man agement, July 1999, p. 117.) That means hospitals are having to keep some patients longer than expected, increasing the hospital’s cost of providing care. Adding insult to injury, many managed care organizations are denying the last several days of a patient’s stay "from the point where they felt that person should have been in a different level of care," Fenwick says.
At Pennsylvania, Reilly and her staff have tackled the problem of high-volume denials head on. The first step was identifying the most common reasons cited for denials. (See related story, above.) Then they developed strategies for dealing with the various types of denials. To that end, they initiated an educational campaign to increase awareness throughout the organization about the impact of denials and how to reduce them.
"We work closely with the payers to keep them abreast of new techniques and technology developed at our facility and the associated implementation costs. We have had to develop contract language to include use of new technology. We are currently struggling with the payers regarding reduction in reimbursement. The payers’ strategy of reimbursing the hospitals at a reduced rate for days that are determined not to be acute’ has effectively doubled the number of days that are not reimbursed at a full acute per diem rate." Reilly says hospitals must renegotiate reimbursement rate structures to ensure that the costs of providing care are covered regardless of the payer definition of the care provided.
The problem with reimbursement for skilled care doesn’t end with the Medicare program. Reilly reports that, in Philadelphia, managed care plans have reduced reimbursement for some acute care patients to skilled care rates. "The reimbursement is so low that most of the skilled nursing facilities in this area have canceled their skilled contracts with the payers," she says.
While long-term-care hospitals could provide relief for the skilled nursing crisis, those facilities have seen their reimbursement structure deteriorate as well — and with such hospitals scheduled for their own Prospective Payment System within the next few years, the outlook isn’t good, Reilly says.
For more information, contact:
Nitza Fenwick, MSN, RN, director of case management, Georgetown University Medical Center, 3800 Reservoir Road NW, Washington, DC 20007. Telephone: (202) 784-3750.
Maryellen Reilly, MS, MT, director of clinical resource management and social work, University of Pennsylvania Medical Center, 220 Blockley Hall, 420 Guardian Drive, Philadelphia, PA 19104-6021. Telephone: (215) 349-6021.