Preparing for RAC? Strengthen Your Denials Management Process

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Preparing for RAC? Strengthen Your Denials
Management Process
December 19, 2008
Practical, Innovative, Medical Management
Solutions
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PREPARING FOR RAC ATTACK

• Goal
• Develop a proactive attack plan to prevent
• financial risk for the organization
• Assemble a RAC Taskforce
• Interdisciplinary approach with core players
• Utilization Review
• Medical Records
• Risk and Outcomes Director
• Patient Financial Services Director
• Information Technology Representative
• Physician Representative (in-house or contracted)

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PREPARING FOR RAC ATTACK

• Determining the Action Plan
• Establish line of authority for hospital wide RAC
  program
• Use existing data to analyze/identify denial
  drivers
• Perform in-house audits and determine hospital
  wide and system weaknesses
• Establish process improvement plans
• Develop an interdepartmental tracking system

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PREPARING FOR RAC ATTACK

• In-House Physician Advisors
• PROS
• Decrease hospital expense
• No contingency fees
• Existing internal peer relationships
• CONS
• Increases existing physicians work load
• Physician often not be specialized in denials
  management
• Difficulty persuading others to embrace practice
  improvements
• Limited ability to produce valuable educational
  reports and denial tracking reports

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PREPARING FOR RAC ATTACK

• Results Achieved Denials Outsourcing
• FYE 2005
• - 29.54 of Total Cost denied
• - 21.00 overturned after in-house appeal
• FYE 2006
• - 27.53 of Total Cost denied
• - 44.90 recovered utilizing physician appeal
• Summary
• Significant Denials Decrease
• - 19.50 is the average recovery prior to
  program launch
• - 29.00 is the sustained recoveries since 2006

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PREPARING FOR RAC ATTACK

• Demonstration Project RAC Statistics
• 32 medical necessity denials
• 42 incorrect coding denials
• 9 insufficient clinical
• 88 inpatient
• 11 appealed
• 5 overturned
• 42 of hospitals had no denials issued

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PREPARING FOR RAC ATTACK

• Denials Increasing from Numerous Sources
• CMS Denials
• RAC Denials
• Emergence of Medicare Never Events Denials
• Increased Denials
• Medicaid MCOs
• FFS Medicaid
• Commercial Payors
• Use RAC Preparations as Catalyst to Revamp your
  Denials Management Process

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PREPARING FOR RAC ATTACK

• Key Components of an Effective Denials Strategy
• Primary Strategy - Proactive Prevention
• Use data to identify key drivers of denials
• Develop processes to mitigate these drivers
  thereby further reducing denials
• Minimize denials through an effective Concurrent
  Review/Case Management and notification process
• Supporting Strategy - Denials Recovery
• Aggressive appeals process recover denied dollars
  
• Close the loop between approval and payment

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PREPARING FOR RAC ATTACK

• Primary Strategy Data Management
• Audit existing data to identify opportunities for
  improvement including areas of RAC emphasis
• Use audit results to develop processes that
  address identified areas of opportunity
• Enhance existing UM/CM/SW processes based on
  audit findings
• Develop educational sessions as needed
• Re-assess and monitor impact of newly implemented
  processes

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PREPARING FOR RAC ATTACK

• Using Data to Identify Opportunities
• Audit charts for each RAC area of emphasis
• Objective chart review using CMS medical
  necessity criteria (InterQual)
• Subjective chart review using physician medical
  judgment
• Data capture and analysis of denial variables
• Analyze audited data and existing denials data
• Diagnosis
• Physician
• Denial type
• Delay reason

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PREPARING FOR RAC ATTACK
Denials Management Tracking and Audit Application
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PREPARING FOR RAC ATTACK

• Building Processes to Minimize Denials
• Obtain buy in from key stake holders to improve
  chances of success
• - Physicians, nursing, UM, IT
• Prioritize process improvement to maximize
  returns
• Select improvements with highest success rate
• - Broadest impact across all payor types
• - Simple implementation
• Primarily systems enhancements
• Minimal resource allocation
• - Enhance and strengthen existing processes

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PREPARING FOR RAC ATTACK

• Building Processes to Minimize Denials
• Examples of Process Improvement Activities
• Short stay denials
• RAC emphasis
• UM/CM/SW process enhancements
• - Improve communications with payors
• Education
• - Use data to identify educational activities for
  staff
• - Employ external resources as needed

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PREPARING FOR RAC ATTACK

• Short Stay Denials
• Case manager assigned to ER to review admissions
  for select diagnosis based on audit results
• Consult done in ER when possible prior to
  admission
• Consider implementing rapid chest pain protocol
• Educate ER staff on admissions criteria for
  commonly denied diagnosis

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PREPARING FOR RAC ATTACK

• UM/CM Process Enhancements
• Hold carriers to timely denial notification by
  denial log
• Use log to eliminate denials for no clinical and
  to drive peer-to-peer process
• Use denials audit results to focus case
  management and discharge planning activities
• Work closely with payor case manager on complex
  cases

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PREPARING FOR RAC ATTACK

• Education
• Use denial audit results to guide educational
  initiatives
• Physician and UM/CM/SW educational sessions based
  on frequently denied diagnosis
• Hospitalist groups respond positively with
  impressive end results
• Individual physician improvements more difficult
  to accomplish

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PREPARING FOR RAC ATTACK

• Secondary Strategy Denials Recovery
• Ensure processes are in place to maximize denied
  claims
• recovery
• Develop strong appeals capabilities
• Ensure aggressive payment follow through
• Ensure strong data capture and reporting
  capabilities
• Use data to identify areas of opportunity to
  enhance the entire process
• Close the loop on denials prevention CQI

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PREPARING FOR RAC ATTACK

• Advantages of Physician Led Appeals
• Recognized as clinical expert vs other clinicians
• Able to challenge payers and provide clinical
  conviction
• Peer-to-peer review shown to prevent 15 of
  denials
• RAC auditors must provide a physician for
  peer-to-peer when requested
• Select payors now require a physicians name on
  the appeal

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PREPARING FOR RAC ATTACK

• The Appeal Process
• Types of Appeals
• Informal peer-to-peer as soon as denial is
  identified, 1 day of denial
• First Level appeal with medical records, 15 to
  180 days depending on payor
• Second Level for some payors typically 30 to 90
  days
• Third Level for some payors typically 30 to
  90 days
• External appeals - usually through the MIA or CMS
• Complexity of Appeals
• Multiple payors ? Multiple rules
• Multiple levels ? Multiple time frames
• Multiple regulators

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PREPARING FOR RAC ATTACK
A Staged Approach to Appeals Management
Automation and Data Management
Research Approval Strategy Development
MCO Submission
Denial Mitigation through Education
MCO Process Management
Appeal Response Determination Process
Payment Management Process
Denial Process Intervention Reporting
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PREPARING FOR RAC ATTACK

• Internal Appeals Process
• A strong appeals process is critical in
  developing a successful denials mitigation
  program.
• The components of a successful appeals process
  include
• - Identifying the denial as soon as possible
• - Collecting medical necessity information
• - Generating the appeals letter
• - Managing the payors appeal response process
• - Appeal response determination process
• - Payment management process
• - Data management, reporting and performance
  improvement

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PREPARING FOR RAC ATTACK

• Identifying the Denial
• The EOB is the gold standard and should be cross
  referenced with other denial sources to ensure
  denials are correctly identified
• For carriers with a short appeal response
  timeframe the denial must be identified before
  the EOB is received
• Most denials are identified through the denial
  letter sent from the payor or phone calls
• Payors daily log is a good source for
  identifying denials

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PREPARING FOR RAC ATTACK

• The Medical Necessity Argument
• Critical components necessary for success
• Timeliness is critical and requires a complex and
  efficient process to meet the varying
  requirements of numerous insurers.
• Medical necessity knowledge is key to a
  successful appeal and often requires the
  leadership and input of a UM trained physician
• Intimate knowledge of criteria sets (Milliman,
  InterQual etc.)

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PREPARING FOR RAC ATTACK

• Managing The Appeal Response Process
• All appeals documentation must be
• - Sent by certified mail
• - Tracking option activated
• - Follow-up calls to facilitate return of late
  appeals
• Payors fail to return 35 of initial appeals for
  a variety of reasons
• Depending on the insurer, only 35 to 60 of
  appeals are completed within the required 30 days
• Process difficult to monitor without an appeals
  tracking system

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PREPARING FOR RAC ATTACK

• Once an appeal response is received a decision
  must be made on next steps
• If approved, clearly payment must be pursued
• If denied
• Should a Level 2 or 3 be pursued?
• Should the account be closed?
• Should an external review be filed?
• Between 10 to 25 of Level 2 or 3 appeals can be
  overturned
• Significant medical necessity knowledge is needed
  to assess which appeals warrant a Level 2 or 3

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PREPARING FOR RAC ATTACK

• From Approval to Payment
• Assign accountability for payment follow-up
• Close the loop between approval and payment
• Follow-up with payor to ensure 100 of approvals
  are paid
• Pay close attention to TPAs

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PREPARING FOR RAC ATTACK

• Data Management, Reporting and Performance
  Improvement
• Provide monthly results to key players
• Status reports provide updates on the appeals
  process
• Actionable reports drive the CQI process
• Monitor impact of process improvement activities
  with tracking and trending of data

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PREPARING FOR RAC ATTACK

• Summary
• Preparation is key
• Minimize operational disruptions its just
  another denial
• RAC demonstration 42 of facilities had zero
  denials
• Use the opportunity to enhance your denials
  management process and come out ahead
• Reporting and continuous process improvement are
  critical

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Case Management Covenants, LLC

• Case Management Covenants is a Maryland based
• healthcare consulting services company
  specializing in
• denial management, appeal management and RAC
  audit
• preparation services.
• Key Staff Contacts
• President Olakunle Olaniyan, M.D. still a
  practicing physician and former managed care VP
  and CMO.
• Chief Operations Officer Iskla Chris Brown -
  nurse executive with many years experience in
  healthcare accreditation organizations,
  commercial and government health insurance
  entities.
• Vice President, Business Development Doug Allen
  a strategic planning professional with
  significant experience in both the commercial and
  non-profit healthcare sectors.
• 410-715-4913