Medicare compliance team reduces denials

CMs collaborate with physician advisor company

Having a team of case managers dedicated to Medicare compliance reduced the number of admission denials from 221 in 2006 to just two by late December 2007 at The Valley Hospital in Ridgewood, NJ.

The goals of the Medicare compliance team are to improve physician documentation and ensure appropriate billing and appropriate reimbursement, says Maryann Vecchiotti, director of case management/social work.

The Medicare compliance team works six days a week and is backed up by a physician advisor company with which the hospital contracts to provide advice on Medicare issues, she says.

"We increased our revenue by reducing denials, reducing inappropriate observation, and having written documentation for compliance, particularly on the cases that fall into gray areas between inpatient and observation status," says Vecchiotti.

Much of the revenue the hospital has been able to recoup comes from ensuring that patients are in the appropriate status, she adds.

"We found that a lot of the problems arose because the attending physicians and our internal hospital physician advisor were overusing observation. They were automatically writing it because they were afraid of repercussions from Medicare if the patient didn't meet inpatient criteria," Vecchiotti explains.

Navigating gray areas

Having outside consultants who are extremely knowledgeable about Medicare regulations and admissions criteria has helped the hospital place patients into the proper status, she adds.

"There are a lot of cases that fall into a gray area. The outside doctors are the experts on Medicare and InterQual. A lot of times, they feel that the cases we question actually meet medical necessity guidelines," she says.

The hospital participated in a year-long project with the state Quality Improvement Organization (QIO) and 15 other hospitals. As part of the project, the hospital was required to produce monthly reports and undergo on-site audits.

"In April 2007, our state QIO recognized our compliance program, best practices, and successful completion of the pilot. We have received only a handful of cases that were questioned on retro-review by our QIO. This proves that our concurrent review system is working," Vecchiotti says.

The Valley Hospital is a large community hospital with 422 beds, including a cardiac surgery program, and about 850 private attending physicians. The hospital's overall length of stay is 2.9 days.

"We have one of the shortest lengths of stay in New Jersey and we have to move proactively to ensure that the patient is in the right status; it's time-sensitive. If we didn't have a dedicated staff to get the necessary information to determine patient status up front, we could be missing revenue and have compliance issues. This way, we can call the doctor and get the orders changed to inpatient status if appropriate. We can make the changes in real-time and get the record right before discharge," Vecchiotti says.

The hospital staff started its Medicare compliance program a year ago after a retrospective study of short-stay patients showed that patients were erroneously being put in observation, rather than inpatient status.

Observation vs. inpatient status

"Like people at other hospitals, we have been struggling to understand what is observation and what is inpatient. When we did a study of our one- to three-day stays, we found that we didn't always apply criteria correctly and consequently were putting too many patients in observation status," Vecchiotti says.

To alleviate the problem, the hospital administration decided to create a Medicare compliance team that handles nothing but Medicare issues. The team includes a supervisor and 2.5 full-time equivalent case managers and works from 8 a.m. to 5 p.m. Monday through Saturday.

"We promoted one of our experienced unit-based case managers, Janet Reyes [RN, BC,] to Medicare compliance supervisor. She was responsible for implementation as well as hiring a team of experienced utilization case managers. We saw immediate results, with no denials in the first three months of the program," Vecchiotti says.

The Medicare compliance case managers work closely with the emergency room case managers and the unit-based case managers to ensure that all patients' needs are met.

At Valley, the unit-based case managers perform utilization review and discharge planning and work with the managed care companies.

"You come to a point when the unit-based case managers are handling too many things. Our unit-based case managers' primary focus should be with the patients and families and providing a timely discharge plan. We needed to implement a concurrent, time-sensitive Medicare compliance program with case managers looking at what the status should be and working with the attending physician to get the patient in the right status up front," she says.

The hospital contracted with a physician advisor company that specializes in hospital compliance issues to work with the case managers on Medicare questions. The physician advisor company has a dedicated team of doctors who work with the Valley Hospital case managers and medical staff.

"These physicians understand the guidelines and the compliance regulations. That is their job. Often the physicians on the hospital level have so many other things going on and they aren't as knowledgeable about Medicare rules and regulations," she says.

Medicare compliance team

The Medicare compliance team is part of the case management department but works only on Medicare issues. They work out of the medical library but move throughout the hospital using laptop computers and portable telephones.

When the Medicare compliance case managers started work in January 2007, they initially reviewed all of the high-risk diagnoses, such as chest pain and syncope, and are now moving toward reviewing 100% of all Medicare admissions.

The team reviews Medicare patients admitted through the emergency department, from the physician offices, and those transferred from other hospitals.

The Medicare compliance case managers review the charts of all Medicare patients who come through the hospital to determine if the patient should be admitted as an inpatient or placed in observation and makes sure the documentation is complete.

"We are looking at the proper setting for the patients, what their needs are, where they fit into the guidelines, and whether the physician documentation supports it," she says.

If she has a question or needs more information after reviewing the chart, the case manager calls the attending physician and can take verbal orders if necessary to ensure that the documentation supports an acute care admission.

If the patient still doesn't appear to meet InterQual criteria, the case manager refers the case to the physician advisor company for review.

"The nurse who did the review calls up the physician advisor company and gives the physician a case summary. He or she will ask questions and make a decision on whether the patient can be admitted as an inpatient," Vecchiotti says.

When patients are admitted from a physician office, often it's only a matter of getting additional information from the physician, she points out.

"The doctor may want to admit a patient for near syncope, which doesn't meet inpatient criteria but he knows other information that would make an admission appropriate. Instead of basing admission on the initial information the doctor had, we find out about other issues, such as failed outpatient treatment, patient safety issues, and risk factors that may have influenced the decision to admit her," she says.

The physician advisor company conducts a review of every case referred to them and makes a decision by the end of the day, and then provides a letter explaining the rationale to the hospital. A copy of the letter goes in the medical records and in the billing folder.

"The staff inputs the cases into a shared database on a daily basis so we know concurrently what is going on with Medicare patients," Vecchiotti says.

Medical records and patient accounts have access to the database and have staff dedicated to the concurrent process.

"This allows questions to be addressed concurrently and not months later. This team approach ensures that we have a quality review process," Vecchiotti says.

When the Medicare compliance case managers come in each morning, they print out a list of all Medicare admissions within the past 24 hours and divide up the workload.

"We look at everyone with an overnight stay and determine if it should have been inpatient or observation and make sure that it is documented if the patient has any complications," she says.

(Editor's note: For additional information, contact Maryann Vecchiotti at e-mail: