Get involved in your insurance contracts

CMs’ knowledge is invaluable in negotiations

If you’re not involved when your hospital contracts with managed care companies, you may miss an opportunity to eliminate denied or avoidable days and maximize reimbursement.

"Insurance companies are scrutinizing claims more intensely, and they are adding a lot of penalties, more than we’ve ever seen before. This requires case managers to be more involved than ever before to make sure that the insurers’ requirements are being met," says Beverly Cunningham, RN, MS, director of case management and health information management at Medical City Dallas Hospital.

Hospital case managers should be involved when the contracts are written or negotiated and should stay in the loop after the contract is signed so that they will be aware of any addenda the insurer makes that would affect the way they do their job, she adds.

Cunningham attends contract planning meetings and payer operations meetings as the division case management representative with her division of HCA.

"Managed care contracting staff need to talk to case management when a new contract comes up for renewal. Case managers have the information and understanding of the impact of contract language on their job, and they are in a position to know if what the insurer is demanding is something they can or can’t do," Cunningham says.

At the very least, you should make sure that the people who are negotiating the contracts between managed care companies and your hospital understand the impact of contract language on the case management processes.

The best-case scenario is for a representative from case management to be involved before the contract is negotiated to make sure that the contract requirements can be followed.

"Case managers should be at the table when the contracts are negotiated or meet with the people who are handling the managed care contracting to assure they understand what provisions case management needs in the contract," Cunningham says.

For instance, if your hospital uses an automated call system to provide clinical information, make sure the insurance company will accept information in that manner.

The contract should specify which criteria the payer uses so the case managers will understand how the payer will determine medical necessity.

"Rather than having the insurance company write all the requirements, we need to have a say as to what goes into the contract," she explains.

All case managers in the hospital should be aware of what they need to document and how their work processes should change whenever there is a change in an insurance contract.

At Medical City Dallas Hospital, the case management department has a biweekly medical necessity meeting for all the nurse case managers. The focus of the meeting is payer medical necessity issues, including new provisions in managed care contracts.

At the medical necessity meetings, the staff walk through the whole process that is being required by the insurance company. If Cunningham has concerns about the contract operations with the payer, she calls the division managed care vice president and asks for a conference call with the insurance company.

For instance, insurers may change from one criteria set to another during the course of the contract. They may change their focus for post-acute care and prefer discharging patients to skilled nursing facilities instead of long-term acute care facilities or rehabilitation facilities.

"We look at the things that are going to affect case management. There are many contract terms that affect our case management processes," says Cunningham.

In the past, insurance companies imposed penalties when the hospital didn’t notify them of an admission, regardless of whether the admission was inpatient, outpatient, or observation. Now, more insurance companies want patients in observation but don’t require notification for observation status.

However, should the patient be moved to inpatient status, the insurance company must be notified, she notes.

For instance, insurance companies require notification when the hospital stay of new mothers or newborns is extended. If an insurer requires clinical information on patients when they are admitted and they don’t get it, they may deny those days, Cunningham points out.

"Case managers should be aware of this so they can act because the hospital will incur penalties if they don’t call in the clinical information to the insurance company in a timely manner," she says.

Managed care staff at the hospital don’t always realize how involved case managers are in helping avoid denials.

If they don’t let the case management department know when there are changes in a contract, the case managers could be missing something they’re supposed to do and never know it, says Cunningham.

For instance, most contracts are negotiated to last one to five years, but insurance companies often add an addendum or make operational changes during the course of the contract.

If the hospital contracting staff don’t pass the information on to the case management department, the hospital could be at risk for claims denials.

In a move that has a major impact on how case management works, Texas Health Network just added a requirement that the insurer must know the DRG the hospital will bill before the bill drops. If the DRG that is billed is different from the DRG that is pre-certified, the insurer will pay only for the pre-certified DRG. This poses problems if the patient is admitted and pre-certified with a working DRG and his or condition turns out to be much more serious, unless the insurer is notified of the new DRG.

For instance, a patient comes in with abdominal pain and is given a precertified DRG of abdominal pain. Should the patient have surgery and end up in the intensive care unit with cancer, if there is no notification of the change in the DRG, the hospital will be paid only for the abdominal pain DRG.

"We had a conference call with them to understand what it all means because it is requiring us to change processes," she says.

Hospitals need to establish a process that allows regular conversations between the hospital case management staff and the payer representative and medical management staff, Cunningham says.

"I have a great working relationship, and the flow of information back and forth is very open. They will call me or, if I have problems, I will call them," she says.

Cunningham has a computerized file with all of the contract terms for each insurer that contracts with the hospital.

"Case managers need access to those contract terms. They need to know where stop-loss starts and how we are paid. They must understand the appeals process and understand any carve-outs," she says.

In addition, the case management staff should be aware of how their hospital is paid in specialty areas, such as the neonatal intensive care unit and medical-surgical unit and how they are different.

"On my computer, I have all that information for every hospital in my division for all our contracts," Cunningham says.

If case management directors don’t already have detailed information on all of the contracts their hospital has with insurance companies, they should ask the person responsible for managed care contracts for the information.

"It’s essential to have all that information in order to do your job effectively," she says.