Hospital CM tackles cost of benefits program 

Program to cut costs, out-of-network referrals

When health care costs for its employees soared by 60% and out-of-network claims increased by 20% in just a few years, Davis Memorial Hospital in Elkins, WV, took action.

The 90-bed community hospital called on the expertise of Tod Thorpe, RN, CPC-H, its former case management director, to manage the health care of its 650 full-time equivalent employees.

"We were in the same boat as any other employer, continually struggling with health care costs," he notes.

The hospital, which is self-insured, considered cutting planned services and shifting more of the cost to the employees as an alternative.

"With this program, we’re hoping to continue to provide a broad range of services for employees without tacking on additional costs for them. If our health care dollars had kept going the way they were, we would have had to make an adjustment to the plan," Thorpe explains.

The program focuses on ensuring that out-of-network services are limited to those the hospital doesn’t provide, getting employees back to work as quickly as possible, and developing employee wellness programs to target conditions that affect a large number of employees.

The initiative, begun in November 2003, already has gotten positive results. In the first quarter of 2004, after the hospital expanded case management to employees, the hospital’s out-of-network usage dropped 10% compared to the first quarter of 2003.

Case managing your employee benefits is well worth the money it costs, Thorpe adds.

"The way health care is heading with the inflation factor and cost of coverage, the cost of the investment can easily be offset. As my CEO pointed out, any other multimillion-dollar budget would have a manager specific just for it, not just someone who is managing multiple other accounts," he says.

Before Thorpe — the only hospital employee dedicated to the program — began, he researched what other facilities were doing and found that few self-insured hospitals case manage their own employees.

"Some places do more aggressive benefits management, and others have workers compensation case management. I haven’t found any other hospitals similar to our facility that have a structured program up and running," he adds.

Thorpe examined the hospital’s plan of coverage and where the health care dollars were being spent. As a result, the hospital continued its contract with its third-party administrator (Benefit Assistance Corp.), which took care of claims, and switched to a different utilization company to handle its preauthorization.

"We didn’t feel that the utilization company was aggressive enough. In the years we had a contract with them, they had never denied any inpatient days," he says.

Thorpe uncovered a startling shift in health care expenditures. Five years ago, 75% of the employees’ care was provided by the hospital and its providers. In 2003, the figure had dropped to 55%.

"It’s money out the door. One of our big focuses was to be able to case manage these employees who were going out of network and get them back into our network," he said.

Because Davis Memorial doesn’t provide some specialty services, such as neurosurgery and gastric specialty surgery, employees have to go out of network for those services. But in many cases, the employees were going out of network for services that the hospital does provide.

One goal was to ensure employees get all the services that the hospital provides, rather than getting them at another facility.

For instance, if an employee is going to another facility for neurosurgery, he or she still can have an MRI and other preoperative testing and work-up procedures at Davis Memorial and take the records to the other facility.

"This kind of testing runs into thousands of dollars. Since we have the same equipment as the other facility, we want to make sure we provide these services," Thorpe says.

If an employee has a debilitating illness and needs follow-up treatment, the hospital’s rehabilitation services, home health services, or long-term care unit could provide the care after the critical portion of care is complete.

"We want them to come back to us and to keep our health care dollars here," he says. Before the new initiative in November, the human resources department approved the out-of-network services.

"The referrals to other providers were being managed by nonclinical personnel. We wanted to get a better control of why our people were going out of network," Thorpe notes.

Now the referrals for out-of-network care come to Thorpe, who examines them for medical necessity and takes them to a multidisciplinary benefits committee. If a decision can’t be made at the benefits committee, the employee can request an outside review service.

The hospital continues to work with the third-party administrator on the medical necessity portion, but everything is reviewed internally by Thorpe or the benefits committee, which includes several physicians, nursing staff, and employees from human resources. The committee calls in specialist physicians as needed.

"We know more about our system and what we can and can’t do here than an insurance company does, and that plays a big role. Our plan documents outline that services will not be covered if they can be provided without our network. We haven’t changed that. We’re just following it to the letter," he says.

Faster return to work

The program has another advantage — getting employees back to work sooner, Thorpe points out. "If we truly get involved in our employees’ health care and managing their care, we know what is going on with them and we can get them through the system quicker." For instance, if employees need to go to rehab, Thorpe can get them into the Davis Memorial rehab program and get them back to work quicker.

"These employees are not only utilizing our health care dollars, they’re off from work, and that also costs the hospital money," he says.

He works with the employees to get them back to work on light or modified duty whenever possible. Unlike workers’ compensation case managers, Thorpe manages the care of employees injured both on and off the job.

"When an employee is off work, it costs the hospital money. Somebody has to work overtime to take up the slack in addition to costing health care dollars," he notes.

In the short time the program has been rolled out, Thorpe’s interventions have resulted in a number of employees going back to work more quickly than originally anticipated.

For example, Thorpe says he worked with one employee to bring her back 54 days earlier than her physician had estimated just by clarifying her off-work slip. The move saved the hospital thousands of dollars.

"We no longer accept physician slips that just say the employee must be off work. We want the physician to specify what an employee can and cannot do," he adds.

Thorpe is working on ways to tie the employees’ clinical data into the financially oriented reports that the third-party administrator typically produces. He wants to find out exactly what health care services the employees are receiving and come up with programs to improve the employees’ health and minimize their health care costs.