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HFMA Southern California Denials Management Session

Payor Trends and Reports

Becky Cloud GlaabMarch 22, 2012

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The St. Joseph Health System (SJHS) is an integrated healthcare delivery system. We provide a full range of care from facilities including 14 acute care hospitals, home health agencies, hospice care, outpatient services, skilled nursing facilities, community clinics, and physician organizations.

St. Joseph Health System

St. Jude Medical Center

Fullerton, CA

Mission Hospital

Mission Viejo, CALaguna Beach, CA

St. Mary Medical Center

Apple Valley, CA

St. Joseph Hospital

Orange, CA

Santa Rosa Memorial Hospital

Santa Rosa, CA

Petaluma Valley Hospital

Petaluma, CA

Covenant Medical CenterCovenant Children’s Hospital

Covenant Specialty Hospital (LTAC)

Lubbock, TX

Queen of the Valley

Napa, CA

St. Joseph Hospital

Eureka, CA

Redwood Memorial Hospital

Redwood, CA

Covenant Hospital

Levelland, TX

Covenant Hospital

Plainview, TX

ST. JOSEPH HEALTH SYSTEMAcute Care Hospitals

Net Patient Revenue~ $3.0B

Licensed Beds~ 3,800

Revenue Cycle FTEs(Patient Access, HIM, PFS)

~ 1,000

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SJHS revenue cycle functions are hospital-based with strategic oversight at the corporate level.

St. Joseph Health SystemRevenue Cycle Model

PFS

SJO

HIMPatient Access

PFS

SJMC

HIMPatient Access

PFS

SMMC

HIMPatient Access

MH

HIMPatient Access

PFS

Southern California

QVMC SRM PVH SJE RMH

Northern California

PFSHIM

Patient Access

PFS*HIM

Patient Access

HIM

Patient Access

PFS*HIM

Patient Access

HIM

Patient Access

CMC Children’s LTAC Levelland Plainview

Texas

Patient Access*HIM*

PFS*

PFSHIM

Patient Access

PFSHIM

Patient Access

Notes:* Some geographic regions partially centralize reve nue cycle functions.

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In October 2007, SJHS started standardizing its revenue cycle practices through an enterprise initiative, Revenue Cycle Excellence. The key denial focus areas included:

� Standard tracking and categorization (Clinical/Technical; Avoidable/Non-

Avoidable) of denials

� Identification of denial root causes

� Categorizing department accountability for denials

� Publishing Enterprise-wide Denial Scorecards

� Publishing Ministry Specific Denial Scorecards

St Joseph Health SystemRevenue Cycle Standardization

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• Technical vs Clinical Denial

• Number of Claims

• Dollars Denied

• Dollars Recovered in Fiscal Year

• Compare to 2 Previous Fiscal Years

• Net Denial Dollars

• Overturn Percentage

• Major Payor Denials

• Government Payors

• Non Government Payors

• Avoidable vs Non-Avoidable

• Clinical

• Technical

St Joseph Health SystemDenial Scorecard

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St Joseph Health SystemDenial Management Scorecard

Fiscal Year ComparisonCONSOLIDATED - ALL MINISTRIES

($$$ in thousands)

FY2011 FY2012

# Denied Overturn # Denied OverturnClaims Denial Recoveries Net Denial Percent Claims Denial Recoveries Net Denial Percent

As of 01/31/12 As of 01/31/12Technical vs Clinical

ClinicalTechnical

Total

By Major PayerCA State PrisonCalOptimaCMSPMediCal/MediCaidMedicarePartnership

Government

AetnaBlue CrossBlue ShieldCIGNAFirst CareHDNFHealthNetHealthSmartHeritage SMMCKaiserNo Major Payer AssignedPacifiCareQueen Medical PlanUnicareUnited

Commercial

Total

Net Patient Revenue

Denials as % NPR

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Avoidable 20006 T Bil l ing error 20105 T Lack of PCP referral20007 T Carve out 20115 T Missing itemized bi l l20010 T COB/Other insurance 20120 T Missing info from patient20015 C Delayed discharge 20125 C Non-acute care20016 T DOS does not equal authorization 20130 T Non-covered service20025 T Not eligible for DOS 20138 T Paid to patient20030 C Exceed approved IP days 20139 T Paid to insured20035 C Exceed approved OP visit 20151 C Pending physician information20045 C Extended stay due to service delay 20153 C Pre-existing condition20060 T Incorrect payer or address 20154 T Rev code requires service date20065 T Inadequate doc/claim form 20155 C Service classified as IP only20069 T Inval id coding ICD9 20160 C Service classified as OP only20070 T Inval id coding (ICD9/HCPCS) 20165 T Timely fi l ing20071 T Inval id policy # or HIC # 20170 T Unbundled service20072 T CDM inval id coding 20191 T Capitated service20080 T Lack of days extension notice 20195 T Hospice20085 T Lack of ER admission notice 20205 T Veri fy discharge date20090 C Lack of medical necessity 20220 T UPIN #20091 C Lack of medical necessity - OP 20221 C Investigational procedure20095 T Lack of Medicare ABN 20222 T Lack of admit notice20099 T Lack of pre-svc auth/IPA responsibil ity 20223 T Missing OP authorization20100 T Lack of pre service auth 20224 C No order

20225 C Missing IP UMNon-Avoidable20001 T Appeal denied 20145 C Pending medical review20008 T Chg is in pmt on other service 20149 T Pending no action necessary20040 T Exceed usual and customary 20150 T Pending other information20055 C Inappropriate use of ER 20152 T Pended for repricing20074 T Payer responsibil i ty confl ict 20161 T Service w/i 24/72 hrs of IP service20075 T IPA payer responsibil ity confl ict 20180 C Medical record request20110 T Miscellaneous/other 20185 T No explanation20135 T Non-participating provider 20190 T Medicare risk20140 C Pending chart audit 20200 T Overlapping DOS Medicare

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Revenue CycleDenial Tracking – Avoidable vs Non-Avoidable

# Denied OverturnClaims Denial Recoveries Net Denial Percent

As of 01/31/12Avoidable

20015 C Delayed discharge 9 $196 ($102) $94 52%20030 C Exceed approved IP days 514 $2,161 ($576) $1,585 27%20035 C Exceed approved OP visit 453 $537 ($260) $276 49%20045 C Extended stay due to service delay 3 $10 ($1) $9 10%20090 C Lack of medical necessity 4,454 $16,854 ($4,783) $12,072 28%20091 C Lack of medical necessity - OP 385 $1,175 ($786) $389 67%20125 C Non-acute care 8 $86 ($13) $73 15%20151 C Pending physician information 133 $2,594 ($422) $2,172 16%20153 C Pre-existing condition 104 $1,396 ($499) $897 36%20155 C Service classified as IP only 6 $19 $0 $19 0%20160 C Service classified as OP only 0 $0 $0 $0 ---20221 C Investigational procedure 45 $149 ($43) $106 29%20224 C No order 0 $0 $0 $0 ---20225 C Missing IP UM 0 $0 $0 $0 ---

Subtotal - Avoidable 6,114Non-Avoidable

20055 C Inappropriate use of ER 689 $1,444 ($43) $1,401 3%20140 C Pending chart audit 2 $32 ($31) $1 97%

20145 C Pending medical review 581 $2,469 ($2,006) $463 81%20180 C Medical record request 1,016 $9,296 ($5,670) $3,626 61%

Non-Avoidable 2,288 $13,241 ($7,750) $5,491 59%

Total 8,402 $13,241 ($7,750) $5,491 59%

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• Monitor Facility Denial Performance by various criteria on the account/remit

• By Denial

• By Payor

• By Facility/Region

• Financial Class

• Patient Type

• Payor Issue

Revenue CycleReports

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Revenue Cycle Services

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Revenue Cycle ServicesInitial Work

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Revenue Cycle Services

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Revenue Cycle ServicesStaffing

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• Lack of Medical Necessity (IP)

• Inappropriate Use of ER

• Exceed Approved IP Days

• Exceed Approved OP Visits

• Lack of Medical Necessity (OP)

• Pending Physician Information

• Pre-Existing Condition

Revenue Cycle ServicesTop Clinical Denials

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• Work with Physicians to clearly document reason for visit and length of stay

• Review coding of claim in Emergency Room and determine if account was coded correctly

• Work with Case Management and Physicians to prevent clinical denials through documentation and notification to carriers

• Verify all benefits prior to service to ensure there are no pre-existing clauses or lapse in coverage that would invoke a pre-existing clause

Revenue CycleAvoid Denials

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• Review the denial and appeal according to the guidelines used to deny the claim

– If payer uses Interqual guidelines, use Interqual guidelines to appeal

– If payer uses Milliman guidelines, use Milliman guidelines to appeal

– If payer uses NCCN guidelines, use NCCN guidelines to appeal

– If a payer uses the payer’s medical policy to deny, use the payer’s medical policy to appeal

– If payer denies according to updates to policy or clinical bulletins, verify if you (provider) accepted or denied the change

Revenue CycleClinical Appeals

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• Pharmaceutical Denial– Contact Drug Company for assistance (several pharmaceutical

companies have appeal assistance or at least drug replenishment programs)

• Experimental Procedure Denial– Contact physician and determine why experimental procedure performed

and what other treatments have been exhausted

– Contact vendor of supply/implant for supporting information of clinical trials

Revenue CycleClinical Appeals

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• Blue Shield

– If CT/MRI performed in ER, and reimbursement is at Case Rate, Blue Shield is refusing to pay “other services” rate for scans

– Oximetry is payable, one per day, except in NICU setting

– Trauma services are incorrectly paid if patient was initially seen at a facility and then transferred to a Trauma facility

• Blue Cross

– If procedure performed in ER setting, then services should be reimbursed at “Other Services” rate

– Applying “lesser of” contract rates to line item charges on outpatient claims, instead of aggregated charges

– When pre-op services are performed the day before OP Services and the from and thru dates do not match, Blue Cross is paying at per diem instead of OP Surgery Grouper Rate

Revenue CycleContinuing Payer Issues Identified at SJHS

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• Cigna– Disallows charges without review of Medical Records even though

contract states must have reviewed records prior to disallowing charges

• Aetna– If CT/MRI performed in ER, and reimbursement is at Case Rate, Aetna is

refusing to pay “other services” rate for scans

– With a DOFR, payer is splitting OP claims stating Ancillary Services are covered by medical group

Revenue CycleContinuing Payer Issues Identified at SJHS

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• Blue Cross/Aetna/Cigna• For pre scheduled high dollar radiology procedures, payors are notifying

patients that if services are rendered at a different hospital than SJHS, their out of pocket would be less

• Blue Cross is sending letters after services are rendered notifying patients that their out of pocket would have been less if they had elected to have services at a different facility

• Payors are refusing to issues retroactive authorizations for high cost procedures

Revenue CycleNew Payer Issues Identified at SJHS

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Next Steps

• Implement a Contract Management System that will automate the identification of payment variances according to Contract Terms and Conditions

• Standardized Insurance Plan Codes and Financial classes to ease the tracking of denials, along with enhance the efficiency of Contract loading

• Implement an A/R Management Workflow System that will workflow accounts based upon a set of criteria– Authorization days – Eligibility

• Standardize Billing edits to enhance the submission of clean claims

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Thank youBecky Cloud-Glaab

Director, Revenue Cycle714-347-7854

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Preventing Clinical DenialsPreventing Clinical DenialsHFMA, March 22, 2012Yaman KahfDirector, Central Business OfficeIntegrated Healthcare Holdings, Inc.yaman.kahf@ihhioc.com 714-953-3667

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Established 2005 with 4 hospitals in central OC: Western Medical Center Santa AnaWestern Medical Center AnaheimChapman Medical CenterCoastal Communities Hospital

Total 762 beds: Acute Care, Cardiac, OB, Trauma, Burn, Custody, Psych, Chemical Dep, and SubAcuteCentral Business Office

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Preventing Clinical DenialsPreventing Clinical Denials

Why?1. An ounce of denials prevention is worth a pound of appeals efforts.

2. All denials cannot be prevented: Utilize your (costly) appeals resources where they are needed most.

Preventing Clinical DenialsPreventing Clinical Denials

What won’t work:1. An easy fix2. Out-of-the-box solution3. People4. Process5. Technology

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Preventing Clinical DenialsPreventing Clinical Denials

What works?Prerequisites1. Identify and enlist top stakeholders2. Create a culture of compliance

Preventing Clinical DenialsPreventing Clinical DenialsIdentify and enlist top

stakeholdersWHO CEO, CFO, Director of Bus Dev, Contracting, Case Management, Patient Access, CMO, Physician Advisors, PFS, Business OfficeWHAT It is everyone’s problemWHERE Create or utilize existing venues: case review meetings, department meetings, denials taskforce, rev cycle workgroups, etc

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Preventing Clinical DenialsPreventing Clinical DenialsCreate a Culture of

Compliance1. Knowledge2. Strategy > Procedure

Preventing Clinical DenialsPreventing Clinical DenialsCreate a Culture of Compliance: Knowledge1. Statute (examples)

• 30, 60 minute rule• “Disagreement of Care”

2. Contracts• Know the basics (CM requirements, transfer,

eligibility, timeframes, etc)• Disseminate, keep them accessible

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Preventing Clinical DenialsPreventing Clinical DenialsCreate a Culture of Compliance

Create a Culture of ComplianceCreate a Culture of ComplianceCA HEALTH AND SAFETY CODES ARTICLE 5, aka Knox-Keene Health Care Service Plan Act of 1975; § 1371.4 (d) If there is a disagreementbetween the health care service plan and the provider regarding the need for necessary medical care, following stabilization of the enrollee, the plan shall assume responsibility for the care of the patient either by having medical personnel contracting with the plan personally take over the care of the patient within a reasonable amount of time after the disagreement, or by having another general acute care hospital under contract with the plan agree to accept the transfer of the patient as provided in Section 1317.2, Section 1317.2a, or other pertinent statute. However, this requirement shall not apply to necessary medical care provided in hospitals outside the service area of the health care service plan. If the health care service plan fails to satisfy the requirements of this subdivision, further necessary care shall be deemed to have been authorized by the plan. Payment for this care may not be denied.

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Preventing Clinical DenialsPreventing Clinical DenialsCreate a Culture of Compliance: Strategy > Procedure1. “The procedure” is to provide care and then get paid.

2. If it doesn’t make sense to you, it won’t make sense to a judge

3. It’s personal• Patient• Us (CM, Collections, Admitting, etc.)

Preventing Clinical DenialsPreventing Clinical DenialsWhat works?1. Identify and enlist top stakeholders2. Create a culture of compliance

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Preventing Clinical DenialsPreventing Clinical DenialsAction1. Celebrate your non-appeals2. Root cause correction3. Invest more in your front lines4. Create and continually reinforce your safety net / gatekeepers / control points

5. Contracts6. The appeals team

Preventing Clinical DenialsPreventing Clinical DenialsCelebrate your

non-appeals!1. The work takes a village… but it takes just one person

to communicate back to the entire village.2. Road show

• Typical payment timeframe by payor• Routine efforts really do pay off• Going the extra mile really does pay off

3. Kudos and recognition for a job done right the first time4. Create your own positive can-do point of reference

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Preventing Clinical DenialsPreventing Clinical DenialsRoot cause correction 1. Clinical, Operational, Technical2. Technology3. Process/Job Design4. Contract language5. Staffing, Staffing Model6. Control Points

Preventing Clinical DenialsPreventing Clinical DenialsInvest MORE in your

front lines 1. Patient Access2. Case Management 3. Clinical Documentation4. Collections5. Payors(The Appeals team is NOT your front lines)

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Preventing Clinical DenialsPreventing Clinical DenialsCreate and Continually Reinforce Control Points1. Daily follow up to CM clinical reviews2. Post discharge authorization validation3. Pre-appeal validation

Preventing Clinical DenialsPreventing Clinical DenialsContracts1. Guarantee of authorization2. Direct references to CA Health and Safety

Code (Knox-Keene), CA Title 28, and CMS-MA rules

3. The Contract Party4. Share the pain: engage your negotiator in

denials

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Preventing Clinical Preventing Clinical DenialsDenialsThe Appeals Team & Extended Appeals TeamWhy?

Prevention is half the battle

Preventing Clinical DenialsPreventing Clinical DenialsAppeals Team Sample Appeals Team Recruitment Ad:

Faster than an underpaying health plan; More powerful than a team of lawyers; Able to leap tall tales from payors with a single appeal letter. These are independent-minded go-getters from another planet who came to Earth with powers and abilities far beyond those of mortal clinicians and collectors. The Clinical Appeals Team - who can change the course of mighty payors, bend denials with their knowledge, wit, and strategy, and who, disguised as mild mannered Nurses, Analysts, and Collectors for a great metropolitan hospital, fight the never-ending battle for Truth, Justice and payment in full.

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Preventing Clinical DenialsPreventing Clinical DenialsThe Appeals Team & Extended Appeals Team

1. Comfortable with the uncomfortable2. Healthy paranoia: willingness to challenge anything:

collectors, hospital policy, physicians, coders, payors, case manager, contracts, etc.

3. Self-righteous and eager to prove it4. Highly competent, skilled, knowledgeable5. Understands or willing to understand hospital/physician

processes and perspectives6. Understands or willing to understand payor processes

and perspectives

QuestionsQuestionsHFMA, March 22, 2012Yaman KahfDirector, Central Business OfficeIntegrated Healthcare Holdings, Inc.yaman.kahf@ihhioc.com 714-953-3667

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Keys to An Keys to An Effective Clinical Appeal LetterEffective Clinical Appeal LetterHFMA, March 22, 2012Nadia White, BSN, RNClinical Appeals ManagerIntegrated Healthcare Holdings, Inc.nadia.white@ihhioc.com

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Know your payorKnow your statutesKnow the medical conditionEssentials for an effective appeals unitComponents of an effective appeal letterSample appeal letters (available on flash drive)

Handouts

Keys to an Effective Clinical Appeal Letter

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Know Your PayorKnow Your Payor� Benefits vs. Level of Care

◦ Properly screened denial: denied or non-covered, payor or provider adjudication error, billing or coding error?

� Contract Issues◦ Is your facility contracted with that payor to provide the level of care being denied, i.e., Trauma services, CCS, Psych?

◦ Which elements drive the particular reimbursement rate?◦ Definitions: IP vs OP, Trauma, Placement, CM/Auth requirements, etc◦ Billing and appeal timeframes, appeal levels and procedures

� Payor’s med/nec criteria◦ InterQual (800-274-8374) , Milliman & Roberts (888 464-4746), National Comprehensive Cancer Network (NCCN www.nccn.org ), ASAM, MediCal, or payor-specific, etc...

� Miscellaneous considerations:◦ Key payor contacts: Appeals Director, Compliance Officer◦ Support /participation of your Contract Negotiator and CEO◦ Contract specific appeal timeframes

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Know Your StatutesKnow Your Statutes(details listed on handout)(details listed on handout)

� EMTLA� Payor notification compliance� Reliance on insurance verification / penalized for

information the hospital cannot produce or possess� Denial notification content and timeliness compliance� Full name, credentials, and contact information of the

payor’s medical reviewer � Statute-based clinical definitions � Independent 2nd level review� Appeals Triage Checklist & Key Statutes (handout)

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Know the Medical ConditionKnow the Medical Condition(details listed on handout)(details listed on handout)

� Do your medical research if needed and include this additional information in your appeal

� Does the patient’s condition and intensity of services provided meet the specific criteria utilized by the payor?

1. Agree with the payor = not appealable2. Agree with the payor, but appealable due to additional clinical info

� Soft appeal vs Hard appeal3. Disagree with payor: incorrect criteria utilized by payor

◦ Verify that the payor is correct in their evaluation that the patient did not meet that particular set of criteria.

◦ Verify that the criteria utilized actually describes the patient’s condition/diagnosis.

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Essentials for an Effective Appeals UnitEssentials for an Effective Appeals Unit� The Appeals Nurse must have a clinical background, has attention to detail, and is organized.

◦ Understands the clinical denial issues at hand.◦ Willingness to challenge the payor’s determination and medical reviewer’s credentials.� http://www2.mbc.ca.gov/LicenseLookupSystem/PhysicianSurgeon/Search.aspx

� Discernment: Know your line in the sand, success feasibility score (1-2)1. Collector appeal2. Clinical Appeal

1. Strong clinical appeal2. Soft clinical appeal

3. MD appeal� Strong writing skills. � Knowledge of national criteria (InterQual, M&R, etc...), payor criteria, contract language and statutory-based clinical standards and regulations

� Change agent: Provides leadership to prevent future denials.� Research of relevant /current medical literature.� Availability of resources such as current CPT/ICD-9 and 10/DRG coding books.� Miscellaneous tools on hand. � It takes a team: must work in collaboration with the Denials Analyst, Physician Advisor, Attending Physician, Collections Manager, Legal, Admitting, Case Management, Ancillary Departments, etc.

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Components of an Components of an Effective Appeal LetterEffective Appeal Letter� Header/General Info: See sample appeal letters for reference . � Introductory remarks.

◦ Denied date (s) of service.◦ Level of care denied.

� The body of your letter should outline specifically what you want the reviewer to focus on, i.e., “We request your reconsideration based on the following: (make sure to specifically address the denial, list the issues at hand, i.e. clinical, contract, and/or statutory violations)”.

� Guide the reader toward the intended message. ◦ Your letter must be clearly defined, understandable, and specific to the issues at hand. ◦ Sentences should not exceed 3-4 lines. Shorter paragraphs are preferable. ◦ Use bullet points, headings, lists. ◦ Utilize footnotes if applicable. ◦ Proof read, edit, spell-check, proof read, edit and then edit again. Remember, this is a professional work product and is a reflection of your company.

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Sample Appeal LettersSample Appeal Letters� DRG downgrade� Second level of appeal � Appeal letter citing med/literature & statutes� Delay in discharge� OB: no medical necessity per Mcal ER criteria

� Behavioral Health: no medical necessity/pending placement

� Trauma8

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HandoutsHandouts�Medical research sites�Applicable statutes �Sample appeal letters (on flash drive) �Clinical appeals request form�Clinical appeals triage form�Clinical appeals review form

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QuestionsQuestionsHFMA, March 22, 2012Nadia White, BSN, RNClinical Appeals ManagerIntegrated Healthcare Holdings, Inc.nadia.white@ihhioc.com

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