Critical Path Network

Department takes control of managed care denials

'Buy-in of those above' required

Three years ago, the management team at Orlando Regional Healthcare System took a hard look at managed care denials, recalls Craig Pergrem, CHAM, MBA, corporate director of patient business, and asked, "What can we do to stop the bleeding?"

Those denials were at 4%, he says, and there were certain unalterable facts defining the situation: "What it came down to is there is no recourse for a physician [not getting] an authorization for a procedure. The managed care companies contract with us to provide a service, and they contract with the physician to provide a service. They require an authorization and they require the physician to get it."

Enticing physicians

Since physicians get paid either way, Pergrem adds, "there is no enticement for them to get the authorization, so we find ourselves chasing authorizations."

What typically happened, he says, is that access employees would schedule a high-end radiology procedure, such as a CT scan or MRI, reminding the physician's office staff that an authorization from the patient's insurance company was required.

Hospital preregistration staff would call days before the appointment and ask about the authorization, Pergrem adds. "[The office staff] would say, 'Oh, we'll get that,' but it just never happened."

That led to scenarios in which, for example, the patient arrives at 7:30 a.m. for a procedure without the authorization, the physician's office is closed, and a check with the insurance company reveals that the physician never made the necessary authorization call, Pergrem says.

"We would tell the patient, 'We don't have the authorization and you may be responsible [for the bill],' but in reality that is not always the case," he notes. "You can't always bill if you don't do the [preauthorization] job right."

Changing the paradigm

Looking for a way to change the paradigm, Pergrem and his department came up with a plan and presented it to "all the key revenue management players," as well as the managed care department.

With that approval obtained, he says, the health system began putting out the word to physicians that a new policy was in place.

"We said we would no longer schedule ancillary services — outpatient radiology — without the authorization," Pergrem says. Once given, he notes, such authorizations generally are in effect for 30 to 45 days.

There was some initial resistance to the policy, Pergrem says. "We sent out letters to all the physicians, put tent cards on the tables in the cafeteria, and it still went over like a lead balloon, but that [response] lasted only about three weeks."

At the root of the issue, he notes, was a lack of understanding on the part of the physicians. "They were getting paid, and they assumed everyone was."

In advance of the policy going into effect, Pergrem says, people calling the facility heard the message that, effective Jan. 4, 2004, authorizations would be required before a procedure could be scheduled.

Once the deadline passed, physician offices scrambled to adjust, he adds. "We had bogus [authorization] numbers given to us, and then [the physician's office] would call back and say, 'Now I have the right one.'"

In 90% of the cases, Pergrem explains, "[getting approval] requires going on-line and entering the data or calling, and you get it right away."

Dealing with radiology procedures

With high-dollar radiology procedures, however, many managed care entities have begun using third-party companies to handle the authorizations, he says. "The physician's office calls the radiology company, which has a screening script and asks questions about whether the MRI is really needed. Sometimes they ask for additional data and then you get the authorization.

"There have been times when the managed care company will deny the claim, and when they deny it, we will contact them," Pergrem says. "We have had meetings with major payers and we show them our authorization number and they show another [number]."

At that point, he adds, the hospital representative explains that the authorization is required at the time of service and that the hospital in good faith has taken the number from the physician with whom the managed care company has contracted.

"We tell them that we'll be happy to provide the date of the denial, who the physician was, and what the authorization [number] was," Pergrem says.

While he had some complaints from physicians about the policy, they died down after the individuals made calls to his superiors, who also didn't back down.

When putting such a program in place, Pergrem emphasizes, "You have to have the buy-in of those above you."